Sunday, November 25, 2007

The Global Finanacial System Meltdown

"A Generalized Meltdown of Financial Institutions"
Take a Look at Professor Roubini's Crystal Ball

By Mike Whitney
Reality has finally caught up to the stock market. The American consumer is underwater, the banks are buried in dept, and the housing market is in terminal distress. The Dow is now below its 200-Day Moving Average -- the first big "sell" signal. Anything below 12,500 could trigger program-trading and crash the market. The increased volatility suggests that we are watching a "real time" meltdown.
Forecast: U.S. Dollar Could Plunge 90 pct
"We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."
Banks Gone Wild
By Paul Krugman
"What were they smoking?" asks the cover of the current issue of Fortune magazine. Underneath the headline are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.

In the Realm of the Dying Dollar:
The plunging greenback threatens to cripple U.S. power. Why are the candidates ignoring this critical issue?
The Financial Tsunami: Sub-Prime Mortgage Debt is but the Tip of the Iceberg:
By now every serious reader has heard the term "It's a crisis in Sub-Prime US home mortgage debt." What almost no one I know understands is that the Sub-Prime problem is but the tip of a colossal iceberg that is in a slow meltdown. I offer one recent example to illustrate my point that the "Financial Tsunami" is only beginning.

Knowing the known unknowns of a possible market disaster


Satyajit Das is not the sort of person you want to meet after a really bad day in the markets. The renowned derivatives expert has such a gloomy outlook on the state of the world's financial system that you might have to be kept away from sharp objects after he leaves the room.

"I think this crisis has a long way to run," the globetrotting Mr. Das said yesterday from London. "It is an extra-innings baseball game and the national anthem still hasn't finished playing. So we really don't know what the worst is."

Unlike some permabears who see a dark lining to every silver cloud and who have waited vainly for years for what they are convinced will be the mother of all market crashes, Mr. Das backs up his concerns with an impressive track record as a banker, trader, corporate treasurer and risk consultant.

No one is better at explaining the opaque world of what he calls "supersized" leverage stemming from the slicing and dicing of risk and the vast expansion of credit derivatives, which now total $516-trillion (U.S.), accounting for an amazing 75 per cent of the world's liquidity.

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