Free Republic

The chief executive of financial bookmaker IG Group has called the recent stock market gains a "false rally" and predicted the FTSE 100 and Dow Jones will tumble almost 30pc. Tim Howkins said he expects there to be further gloomy economic news around the world, causing the blue-chip index to fall to as low as 2,800 and Wall Street's leading index to crash to 5,700. The FTSE 100 is now at 3898.8 and the Dow Jones is at 7810.2 "Those falls would be pretty apocalyptic from where the markets are now," he said. "But the world is getting worse rather...

Canda's Globe and Mail has one real slash-your-wrists outlook today with their article by John Ibbitson titled Speaking of doom, what if Obama only makes it worse?I confess... watching the sheer illogic of what is going on in the beltway of late, this headline seems to fit that chill that runs thru my body when I think of the future. And apparently, I'm not alone. We could be entering a future that none of us wants to face, a future in which we will be much poorer, a future in which we realize that everything Barack Obama tried only made...

My God, there is a cop: March 26 (Bloomberg) -- New York Attorney General Andrew Cuomo subpoened American International Group Inc.’s credit- default swap data to see whether its customers including Goldman Sachs Group Inc., Societe Generale SA and Deutsche Bank AG were improperly compensated with taxpayer dollars. “Our investigation into corporate bonuses has led us to an investigation of the credit-default swap contracts at AIG,” Cuomo said in a statement. “CDS contracts were at the heart of AIG’s meltdown. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle...

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout. The mistake most people make in looking at the financial crisis is thinking of it...

UK to remain in deflation trap until 2012, economists warn Britain will be mired in a deflation trap for years despite the radical efforts of the Bank of England to pump extra cash into the economy, economists have warned. By Edmund Conway Last Updated: 10:26PM GMT 21 Mar 2009 The forecast, by a team at BNP Paribas, states that prices in Britain will keep falling for at least another two-and-a-half years, as Britain suffers an apparently intractable bout of debt deflation. The warning comes only days before official figures confirm this Tuesday that the Retail Price Index has dipped...

Most investors don't take seriously warnings about the future of the economy and the financial marketplace, but those who did avoided the dreaded "Cs" of finance: the Credit Crisis and Crash of '08. What warnings are we talking about you might ask? Well, it was the headlines of several years ago screaming that a 'Category 6 Fiscal Storm', 'Debt-Driven Meltdown', 'Systemic Banking Crisis', 'Financial Train Wreck', 'Wild Ride', 'God-Awful Fiscal Storm', 'Major Upheaval', 'Rude Awakening', 'Great Disruption', 'Debt Bombshell', 'Major Upheaval', 'Unwelcome Economic Spiral', 'Perfect Financial Storm', 'Serious Collapse', 'Drastic Fall', 'Financial Disaster', 'Major Bear Market' and/or an 'Economic Earthquake'...

Bernanke Inserts Gun In Mouth I'm not at all sure I believed what I read today.  (my comments in italics, indented) Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract.  Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending.  Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment.  U.S. exports have slumped as a number of major trading partners have also fallen into recession.  Although the near-term economic outlook is weak, the...

Credit isn’t wealth. A lot of people are discovering that the hard way. Welcome to the credit deflation prelude to hyperinflation. During a credit deflation, things get cheaper. Without lines of credit, people can’t bid things up and prices fall to their “cash on hand” level. Given a long enough time, things settle out and prices relative to wages actually become attractive. But it’s a long and bumpy ride from here to there. The trick is to maintain roughly the same level of income as others take wage cuts or lose their jobs entirely. Add this to the general lack...

Helicopter Ben is no longer the appropriate appellation for the Chairman of the Federal Reserve System. Under the tutelage of this former economics professor, Chairman Bernanke launched an ICBM into the market today and I will dub him ICBM Ben. The Committee voted to expand the balance sheet of the Fed by a whopping $1.150 trillion. The Fed will buy an additional $750 billion mortgages, an additional $100 billion agencies, and for the first time they have added $300 billion longer dated Treasuries to the list. The move in the market is huge, historical and hellacious. I do not have...

The Federal Reserve has no option but to start buying Treasurys as the government's needs for financing are huge, but the government bond market is a disaster in the making, Marc Faber, editor and publisher of The Gloom, Boom & Doom Report, told CNBC. Federal Reserve policymakers start a two-day meeting on Tuesday, weighing options on how to spur lending to help cash-strapped consumers kickstart the economy. Economists expect them to leave rates at zero and look to other ways of boosting liquidity, such as buying government bonds – a measure which has already been taken by the Bank of...

A big jump in foreign sales of long-term U.S. securities raised concerns Monday that the U.S., in the midst of a massive debt issuance to fund its economic revival plans, may run into trouble getting other countries to finance its deficit.

... the perfect storm against the United States dollar and against the present dollar-centric global financial order....For example, a number of experts warn that US Treasuries are increasingly taking on the characteristics of a bubble, By facilitating and encouraging the massive global flight into Treasuries, and by issuing a huge new supply of US sovereign debt... As the US government sucks all the air out of the global credit markets... ...high yields demanded by investors translate into high costs and mounting losses by banks across the financial system. The situation is moving rapidly to a potential massive wave of bank,...

1913 – A Bad Year for America Karl Marx published his Communist Manifesto in 1848. It included 10 planks. Two of the ten planks were as follows: * A heavy progressive or graduated income tax. * Centralization of credit in the hands of the State by means of a national bank with State capital and an exclusive monopoly.

Mr. McFadden has a soul mate in Representative Ron Paul from Texas. Mr. Paul has been on a one man mission to abolish the Federal Reserve for over a decade. He seems to be the only person in Congress with the courage, fortitude and intellect to understand ...

Aig-Systemic-090309 (This is an excerpt of the memo's headers) AIG: Is the Risk Systemic? STRICTLY CONFIDENTIAL DRAFT – February 26, 2009 What is Systemic Risk? Risk Assessment Summary How Big is the Systemic Risk in Insurance ? Impact on U.S. Government’s Efforts to Stabilize Economy AIG’s Global Impact General Impact on Economy Life Insurance Policyholders: “Run on The Bank” Impact on Retirement Savings Consumer Finance Impact Extensive Business Disruption Extensive Business Disruption (cont.) Impact on Global Capital Markets Direct and Indirect Impact of AIGFP failure Impact of Failure of ILFC Seizure of foreign assets Conclusion

President Obama has repeatedly said the $787 billion stimulus plan passed by Congress last month would save or create at least 3.5 million jobs. But today House Democrats heard a sharply downsized prediction: 1 million fewer jobs. In a closed-door meeting with House Speaker Nancy Pelosi and Democratic House leaders, two leading economists who have been advising Democrats predicted the stimulus would save or create only 2.5 million over the next two years. The assessment was offered by Mark Zandi of Moodys.com and Allan Sinai of Decision Economics Inc. That's significantly less than the White House has predicted. It's also...

Austrian Enginomics Fundamentals The fundamental premise of Austrian Enginomics is described on my home page (www.austrianenginomics.com), and it references two macroeconomic conditions, 1) Resource misallocation, and 2) Overvaluation of assets (bubbles) in Stocks, Bonds, and Real Estate. These conditions have built up to unprecedented extremes during the past 35 years reaching a pinnacle about one year ago. In our modern day world of virtual reality people have been conditioned to believe financial assets are "real wealth"(1). It’s not surprising because we are all used to exchanging financial assets for “real wealth”; hence we all believe that the greater our financial...

A.I.G. nearly barreled off the cliff last September, when it couldn’t meet its obligations to customers who had bought a version of derivatives called credit default swaps. Such swaps are like insurance policies; bondholders buy them to protect themselves from default on various forms of debt. When A.I.G. couldn’t meet the wave of obligations it owed on the swaps last fall as Wall Street went into a tailspin, the Federal Reserve stepped in with an $85 billion loan to keep the hobbled insurer from going bankrupt; over all, the government has pledged a total of $160 billion to A.I.G. to...

Subprime Tsunami to be followed by Option Arm / Alt A Asteroid - May you live in interesting times . Just as we thought we could stop holding our collective breath as the subprime tsunami starts to recedes, new specters appear on the horizon and you probably have not heard of them - yet. Meet subprime mortgage 's ugly cousins: Option ARM and Alt A mortgages . ARM stands for Adjustable Rate Mortgage and guess what: the rates are not about to go down. As Whitney Tilson explains on 60 minutes using data collected by Credit Swiss, this will cause...

<p>David Rosenberg, North American Economist at Merrill Lynch is talking about a " Depression-Style Jobs Report "</p> <p>Judging by the leading indicators – 600,000+ jobless claims, Challenger layoffs up an eye-popping 158% from a year ago, the 78,000 plunge in temporary employment, the record-low workweek – suggest that we will have to endure an 800,000 employment slide when the March data roll out, and a 1 million loss cannot be ruled out. We may have to redefine yet again what a ‘new normal' is at that point. The bottom line is that a recovery in domestic economic activity is, at best, a late-2009 story, but at this stage, even that could be a fairy tale.</p>