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RED ALERT: FX Dislocation In Process
Market Ticker ^ | 2-16-2009 | Karl Denninger

Posted on 02/16/2009 7:47:40 PM PST by dangermouse

8:17 CT

I do not know what is going on here, and I don't think I want to.

Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading.

It originated at approximately 7:15 CT this evening and originated out of Asia somewhere. All of the primary currency crosses got hit at once - Euro, Pound, Yen - all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling.

At the same time the US futures markets got nailed as well, down some six handles on the /ES in a near-vertical drop. While this sounds "not that big" to move these markets in a coordinated fashion like this is a trillion-dollar enterprise - this is not some small company that went bankrupt, or even a large company.

There is no news coverage at the present time identifying the source of this but it is not small and contrary to some reports it is not "automatic selling"; this is forced liquidation.

Folks, if this translates into Eastern Europe where there are severe instabilities already brewing literally everything in the financial world could come apart "all at once."

The worse news is that if this happens Bernanke will have killed us (in the US) by extending those swap lines all over the planet during the last six months. These will become utterly uncollectable and they are massive, in the many hundreds of billions of dollars.

To those who are reading this, I hope if you're in the markets you are prepared for extreme levels of violence. You must expect that the authorities will try to arrest the destruction if they are able, but you must also be prepared for the possibility that we have reached a "critical mass" point beyond which "duck and cover" is the only winning strategy.

Unfortunately.

I hope I'm wrong; this is going to be a long night.


TOPICS: Business/Economy; Foreign Affairs; Japan; News/Current Events
KEYWORDS: asia; currency; denninger; dollar; economy; tm; yen
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To: aliquando

Great tagline!!!!


281 posted on 02/17/2009 7:43:02 AM PST by CPT Clay (Drill ANWR, Personal Accounts NOW ,)
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To: jsh3180
...Poland is about to default on debt. Same with Ireland. The Euro is tanking on this news, dollar soaring, temporarily at least. Big worry is that counterparty risk through derivatives will cause the defaults in Europe to “jump the pond” and the whole ball of wax starts melting down.

Jump the pond? The one between us and them?

282 posted on 02/17/2009 7:55:49 AM PST by GOPJ (A person who will lie for you, will lie against you.)
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To: IrishPennant

Overall, this move is deflationary in nature. Hold off on underwear. You may be able to get it cheaper next week.

Ammo tends to track with gold (panic market), and that’s heading up. I’d recommend buying both.

(Disclaimer: I also have a sloping forehead and slack jaw, and do not hold a Series-7 license)


283 posted on 02/17/2009 8:04:06 AM PST by CowboyJay (Blame me. I didn't vote for Perot.)
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To: dangermouse

I noticed this last night. Gold and silver spot prices up big, and dollar up big at the same time, which is somewhat unusual.

The update on the article suggests that the violent action was contained. So this is more of a heads-up or warning of what could happen than an actual catastrophe.

But the Dow ain’t doin’ too good this morning, is it? Obviously Hussein’s Porculus plan is not being well received.


284 posted on 02/17/2009 8:04:47 AM PST by Cicero (Marcus Tullius)
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To: FromLori; penelopesire; BulletBobCo; seekthetruth; Kevmo; gunnyg; television is just wrong; ...

That is more than jaw dropping.

http://www.newswithviews.com/Cuddy/dennis148.htm


285 posted on 02/17/2009 8:08:49 AM PST by STARWISE ( They (LIBS-STILL) think of this WOT as Bush's war, not America's war- Richard Miniter))
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To: SE Mom

It is breathtaking ... confounding.


286 posted on 02/17/2009 8:10:19 AM PST by STARWISE ( They (LIBS-STILL) think of this WOT as Bush's war, not America's war- Richard Miniter))
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To: STARWISE

Market down 231 points already this morning. Thanks for the ping. The Rockefellers have always been communists imho. Very scary times ahead for our country.


287 posted on 02/17/2009 8:25:32 AM PST by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
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To: thecabal

so far down 245 points.


288 posted on 02/17/2009 8:28:26 AM PST by television is just wrong
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To: dangermouse

The markets are down an avg of about 3.3% right now. This is probably the people behind what happened in Oct 2008 to sink Juan McCain. Hedge funds like Soros, Flower, Paulson and a few others could control $100 billion and leverage up maybe $300 billion. Countries with this sort of money are China/Hong Kong, Saudi Arabia, Kuwait and maybe a few others.

We are going to see crsis after crisis with stimulus after stimulus until dear leader and Pelosi have the power of Chavez. This is all manipulation for political power. prepare for the Islamification of America. We better get BC cases in every state quickly.


289 posted on 02/17/2009 8:35:18 AM PST by Frantzie (Boycott GE - they own NBC, MSNBC, CNBC & Universal. Boycott Disney - they own ABC)
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To: dangermouse
Rush said he heard a guy on CSPAN mention that something similar happened last Sept or Oct.

Someone is trying to destroy the USA and at this point I think they may be succeeding, especially now that the Marxist are in control of the economy.

290 posted on 02/17/2009 8:51:51 AM PST by Dustbunny (Freedom prospers when religion is vibrant and the rule of law under God is acknowledged. The Gipper)
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To: Dustbunny

READ MY TAGLINE REF . . .

THEY’VE BEEN

IN CHARGE OF THE ECONOMY AT LEAST A HUNDRED YEARS.

http://www.freerepublic.com/focus/religion/2130557/posts?page=81#81


291 posted on 02/17/2009 9:18:56 AM PST by Quix (POL BOSSES say fm1900 2 presnt: http://www.freerepublic.com/focus/religion/2130557/posts?page=81#81)
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To: nyconse
You got it backwards, we buy from them...look at the trade deficit.

More accurately, we buy from each other. While the trade deficit might be $677 billion, our exports still bring in almost $2 trillion annually.

If the rest of the world is even worse off than the U.S., how they gonna pay for those video games and consulting serevices...???

292 posted on 02/17/2009 9:24:11 AM PST by okie01 (THE MAINSTREAM MEDIA: Ignorance on Parade)
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To: CowboyJay
...I also have a sloping forehead and slack jaw, and do not hold a Series-7 license...

LOL

On a day like this, we have to laugh. What else can we do?

293 posted on 02/17/2009 9:30:01 AM PST by Petronski (For the next few years, Gethsemane will not be marginal. We will know that garden. -- Cdl. Stafford)
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To: Petronski

. . . TRUE ENOUGH . . .

though praying more does come to mind.


294 posted on 02/17/2009 9:35:13 AM PST by Quix (POL BOSSES say fm1900 2 presnt: http://www.freerepublic.com/focus/religion/2130557/posts?page=81#81)
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To: LucyT

Many thanks, LucyT

Ping.


295 posted on 02/17/2009 9:35:53 AM PST by Iowan
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To: Buddy B

some things should never change!


296 posted on 02/17/2009 10:01:08 AM PST by aliquando (A Scout is T, L, H, F, C, K, O, C, T, B, C, and R.)
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To: GOP_Thug_Mom

You should be!


297 posted on 02/17/2009 10:01:48 AM PST by aliquando (A Scout is T, L, H, F, C, K, O, C, T, B, C, and R.)
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To: CPT Clay

I did not create it just try to live by it.

YIS Aliquando.


298 posted on 02/17/2009 10:02:37 AM PST by aliquando (A Scout is T, L, H, F, C, K, O, C, T, B, C, and R.)
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To: aliquando

My Webelos would be very happy. Thanks


299 posted on 02/17/2009 10:58:57 AM PST by CPT Clay (Drill ANWR, Personal Accounts NOW ,)
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To: Frantzie; Calpernia; Fred Nerks; null and void; pissant; george76; PhilDragoo; Candor7; ...

8AM, EST: Major currencies.

Here:
http://www.freerepublic.com/focus/f-news/2187216/posts?page=270#270

This will jumpstart the remainder of your day:
http://www.newswithviews.com/Cuddy/dennis148.htm


300 posted on 02/17/2009 11:49:13 AM PST by LucyT
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