Stock Market Down

The Stock Market is down over 300 points as of this posting. Don't know how it will close, but it doesn't look good.

If you have a 401K or retirement investment, now is the time to reconsider investments. This is very worrisome, and it appears that it will not abate, but only worsen.

And, sadly, it gets "worser than that"... even though most lightworkers think they can delete it with their light and love.


Cynicism aside and reality checking in... here is what my husband Magi and I got today from Chris Laird's financial newsletter. This financial meltdown is *global*:


*******************


The EU just lent an unprecidented $130 billion to banks to meet demand for cash in the ongoing sub prime mortgage derivatives losses and market chaos


THAT MARKET HAS FROZEN and caused holders of many types of derivatives and bonds to be unable to even value them - and we are talking about a market somewhere between $2 Trillion to $5 trillion in size depending on what derivatives are involved


Banks and institutions all over the world have bought heavily into those derivatives - and I think we are only seeing the beginning of losses - world wide from this sector of derivatives alone.


The overnight rates for money rose a great deal today in the EU


Check this out -


\"Aug. 9 (Bloomberg) -- The European Central Bank, in an unprecedented response to a sudden demand for cash from banks roiled by the subprime mortgage collapse in the U.S., loaned 94.8 billion euros ($130 billion) to assuage a credit crunch.


The overnight rates banks charge each other to lend in dollars soared to the highest in six years. The London interbank offered rate rose to 5.86 percent today from 5.35 percent and in euros jumped to 4.31 percent from 4.11 percent.


The ECB said it would provide unlimited cash as the fastest increase in overnight Libor since June 2004 signaled banks are reducing the supply of money just as investors retreat because of losses from the U.S. real-estate slump. BNP Paribas SA halted withdrawals from three investment funds today because the French bank couldn\'t value its holdings. Stocks in the U.S. and Europe fell, a turnaround from the past three days when investors concluded that credit market risks were abating. ...\"


http://www.bloomberg.com/apps/news?pid=20601087&sid=apKhWv7EHTR0&refer=home


Chris



Link: http://www.prudentsquirrel.com

Oh, Spring Miracles!


Here's more...


http://www.godlikeproductions.com/bbs/message.php?messageid=422345&mpage=1&showdate=8/9/07&forum=1


And more...

http://biz.yahoo.com/ap/070809/wall_street.html?.v=69

Wasayo thank you so much for that. I believe it closed down almost 400 points.

We are in for a terrible ride. It seems the high rollers are getting out while the getting is good. The small investors that cannot pull out are left holding the bag, and thus suffer the most when the big hit comes. It doesn't affect the ones not invested, or the big guys that know in advance how bad the situation is going to get, but I have to admit the warnings have been there.

We have a 401K retirement account, and the problem with that is by Federal Law you are not allowed to pull money out until a specified time. You can make a personal loan on it, but you practically have to go through an Act of Congress to get funds released for a personal emergency, which we had to do after Katrina. The insurance was not paying off.

So we are locked in with our meager funds, and when it crashes we are goners. We lost the majority anyway after 9/11. All funds were in aggressive accounts.

The government really knows how to stick it to us. "Let's tie up the middle class funds in IRA's and 401K's and not allow them to withdraw from the accounts, so when the crash comes we the elitist are secure." I am furious about this. I have moved all our funds into stable funds, but that didn't hold up either after 9/11. Plus it draws about .03 interest. Just unbelievable.

Spring Miracles wrote:

Wasayo thank you so much for that. I believe it closed down almost 400 points.

We are in for a terrible ride. It seems the high rollers are getting out while the getting is good. The small investors that cannot pull out are left holding the bag, and thus suffer the most when the big hit comes. It doesn't affect the ones not invested, or the big guys that know in advance how bad the situation is going to get, but I have to admit the warnings have been there.

We have a 401K retirement account, and the problem with that is by Federal Law you are not allowed to pull money out until a specified time. You can make a personal loan on it, but you practically have to go through an Act of Congress to get funds released for a personal emergency, which we had to do after Katrina. The insurance was not paying off.

So we are locked in with our meager funds, and when it crashes we are goners. We lost the majority anyway after 9/11. All funds were in aggressive accounts.

The government really knows how to stick it to us. "Let's tie up the middle class funds in IRA's and 401K's and not allow them to withdraw from the accounts, so when the crash comes we the elitist are secure." I am furious about this. I have moved all our funds into stable funds, but that didn't hold up either after 9/11. Plus it draws about .03 interest. Just unbelievable.

Dear Spring Miracles,


Lord, I am SO unhappy to hear that you and your dear soulmate hubby are "between a rock and a hard place". This is beyond sad.


And yet, more still keeps coming at us all:


http://www.godlikeproductions.com/bbs/message.php?messageid=422352&mpage=1&showdate=8/9/07&forum=1


Godlike Productions is a very controversial website (I've been personally burned there, lol)... but it is one of the very absolute best when it comes to *breaking world news and links*... and many financial professionals post there. So, that is why I post so many GLP links as to whassup $$$.


Here's another one (about home mortgages):


http://www.godlikeproductions.com/bbs/message.php?messageid=422364&mpage=1&showdate=8/9/07&forum=1


It just never ends.

LittleFire you are right. After Katrina all banks were closed for over a month, and then when one opened you were only allowed so much money. In addition the grocery stores that managed to open after a month, only accepted CASH - they had no means of taking credit cards, or debit cards, or to even process checks. All computer systems were down. So if you had no cash you were in serious shape. We had to drive over 300 miles to get to a bank, and we were lucky we were not with a local bank because I know some that were in a serious bind over that.

LittleFire wrote:

It is effecting globally. Even here in Canada, the economy is tied in with the US that even in the industrial market, many have to tighten the belt. Redfeather and I discussed this very topic a few years ago, that one day, what we have in the banks we will not be able to access it or they will refuse to let us have it. For that simple reason, I have been keeping some on hand.... but being a single parent, I can't put much away for the bills keeps coming, prices go up and salaries are stalemate.

And wasn't Hurricane Katrina a lesson for all of us? Can you get to the bank, let alone have anyone there to let you have your money? ATM's weren't working either.... Even here, in Eastern Ontario, when we had the ice storm of '98 we had a similar situation.... Sometimes that little coffee can for savings in the house is a lot safer.....

Dear LittleFire,


I'm so happy that you and your soulmate man RedFeather have been "prudent squirrels" and that you have been able to put even a little bit away. Us too!


Magi has long been a survivalist, and he is financially very, very conservative... having grown up in the times of the Great Depression in the 1930's. Neither of us have ever had credit cards (although we do have one debit card). He absolutely does not believe in fiat... and we have water, food storage, "cookie jars"... and we are set up for barter (if it comes to that).


You are SO right about this financial meltdown being *global*. Here's yet another "all-too-real" thread up at GLP about how *now* = 1929:


http://www.godlikeproductions.com/bbs/message.php?messageid=422368&mpage=1&showdate=8/9/07&forum=1

This economic downturn is actually going to take many by surprise. Some are so oblivious, and spending enormous amounts on credit that it boggles the mind. I mentioned to a person the other day that economy was getting ready to experience a record crash, thus a depression, and they were astounded. Tried to tell me how good the economy is, and that I was sorely mistaken that I had my facts wrong.

Thank goodness we have no credit card debt.

Oh Wasayo not good, not good.

Quote :

Bank losses

Also on Thursday, Dutch bank NIBC announced losses of 137m euros from asset-backed securities in the first half of this year.

The bank said "severe instability in the US credit fixed income markets" had been a factor behind the fall.

In June, US bank Bear Stearns had to spend $1.6bn to bail out two hedge funds, which had a strong focus on sub-prime loans.

The bank had invested heavily on securities that were backed by sub-prime mortgages.

http://news.bbc.co.uk/2/hi/business/6938425.stm

I copied this from another site. It was an anonymous poster - so no link

Quote :

Disruption reminiscent of LTCM collapse as market-neutral funds hit hard
By Alistair Barr, MarketWatch

Last Update: 3:54 PM ET Aug 9, 2007

SAN FRANCISCO (MarketWatch) -- The liquidation of a big hedge fund or investment-bank trading portfolio is wreaking havoc in some parts of the hedge-fund business, according to managers and investors.

Black Mesa Capital, a hedge-fund firm that uses computer models to track down investment ideas, said that at least one large hedge fund or investment bank is liquidating "massive" trading portfolios, according to a letter the Santa Fe, N.M.-based firm sent to investors Wednesday.

'Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before.'

— Letter to Black Mesa investors

The warning is causing disruptions and triggering big losses among other so-called market-neutral hedge funds, Black Mesa said in its letter, a copy of which was obtained Thursday by MarketWatch.

"Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before," Black Mesa's managers, Dave DeMers and Jonathan Spring, wrote. DeMers declined to comment Thursday.

The firm's hedge fund, which has about $1.9 billion in long positions and $1.9 billion in short positions, was down roughly 7.5% this month through Aug. 7. Those losses could grow to as much as 10% for August so far, Black Mesa noted.

A hedge fund run by Goldman Sachs (GS :182.25, -11.05, -5.7% ) , the North American Equity Opportunities fund, has sold some of its positions recently, The Wall Street Journal reported Thursday. Goldman's biggest hedge fund, the Global Alpha fund, has suffered losses and may also be selling positions, according to other published reports this week. A Goldman spokesman declined to comment Thursday.

'Quant' quake

The Global Alpha fund, which manages almost $10 billion, is a so-called quantitative fund, using computer models to locate investment opportunities.

Such "quant" funds are popular among hedge-fund investors. Many use a market-neutral strategy, which aims to balance long positions with short trades, or bets against securities. Others are so-called statistical arbitrage funds, which analyze the historical relationships between related securities and trade when those relationships get out of whack.

Many players in this part of the hedge-fund business have similar positions and use lots of leverage, or borrowed money, to increase their bets. However, that magnifies even small losses. Some of these hedge funds also have relatively permissive redemption periods, allowing investors to take their money out every month, with 30 days' notice or less.

So if losses trigger investor redemptions, these funds may have to sell lots of their positions. That, in turn, puts more pressure on the historical relationship between related securities, handing more losses to other hedge funds in the space.

If such positions are sold by lots of managers at the same time, the most leveraged funds get hit the hardest, possibly forcing big liquidations of portfolios, which triggers a chain reaction.

Thank you for all of the information :)

Nikkei is collapsing...

It's 1:30 a.m. Pacific... and this is just rolling in... "Bernanke, Paulson were wrong and the subprime mortgage contagion is spreading":


http://www.bloomberg.com/apps/news?pid=20601087&sid=a.pPEmZeZZCk&refer=home


Wonder what kinda day today is going to be when the stock market opens... and whether (or not) the PPT boys (the Plunge Protection Team) can prop it up.


Sure is global and sure is a meltdown. :shock: 8)


Would you believe, heh heh... I got an email today asking if I'd like to um... learn *real estate*? How's that for timing!!! :cyclops:

I'm just holding my breath...and thank God I don't have credit card debt. I was just about to get a business credit card, but I think I will wait on that.

Each of my children have an AIM Fund account and no one but the child can touch it ~ and they have to be 18 to access the funds.

Chels has 6 months before she can have hers, but I am praying by then it will still be worth something. This is not good. If I could, I'd take the money out of each one right now and stash it in a coffee can, that is for sure.

I'm not sure those funds will be worth anything over the next few years.

Magi and I just got this in our morning email from Chris Laird over at Prudent Squirrel:

*******************


Full blown liquidity crisis hits gold and stocks



As news of new subprime losses emerges around the world, stock markets are selling off. What began as the first string of losses at Bear Stearns has now become wider. In fact, it is beginning to look like a developing world liquidity emergency.


This week, the large French bank Paribas froze 3 funds worth about $2 billion after it became clear they cannot value the mortgage derivatives held by the funds. Soon after this news, EU banks and institutions started to flee to cash. The ECB had to lend an unprecedented $130 billion to stave off a banking/liquidity crisis. European investors said the ECB was acting on an emergency basis.


EU Bankers said it was not just concerns about Paribas, but like the Bear Stearns situation, investors were very worried about how many more losses are developing. The mortgage derivatives market is literally frozen, and no one will buy either the derivatives, nor buy mortgage originations, which is now paralyzing the US mortgage market. US lender Country Wide is having trouble selling its new mortgage originations – and having to carry them. Country Wide accounts for a huge 25% of the US mortgage market.


Mortgage lenders are stating that the mortgage market is in worse shape than they have ever seen. Investors are not buying mortgages, causing lenders to have to carry their own loan originations – which is going to totally kill the US mortgage market if things are not fixed soon. Alt A and sub prime mortgages (30% of US mortgages) are not selling – investors want nothing to do with them.


As these mortgage markets become illiquid, the trillions of dollars of mortgage derivatives – which EU banks have bought heavily – cannot be valued – which caused Paribas to have to freeze redemptions in their 3 funds which held those derivatives.


The implications of that situation is having broad and very bad ramifications to the world banking/financial industry which is wondering how bad things will get. Things are quite bad now, to say the least.


You cannot have multi $trillion markets just stopping – with out major building losses.


Of course, this spills over to stock markets as well as gold. The Yen is rising, and adding to the huge selling in general, as carry trade is being unwound in everything. The USD, which had been moderately rising again, rose over .40 on the USDX (US dollar index) Thursday as investors fled to US Bonds. Libor rates in Europe rose an amazing half point. (Libor is private short term money banks and institutions use). It is said that will harm brokerages and other institutions who need short term money.


Gold and precious metals are selling off again because funds and institutions are fleeing into cash, and gold is a liquid asset that they can sell. There was so much demand for cash in the EU that the ECB had to lend $130 billion, and said they will supply unlimited money if necessary.


The ramifications of the US mortgage derivatives losses are snowballing, and it is being said that this is unprecedented. The present situation has already been compared to the 1987 financial crash in severity.



Link: http://www.prudentsquirrel.com

Wasayo I believe it is going to be worse than the 1987 financial crash when all is said and done. I told my hubby to watch and when CountryWide started tanking that would be the sign.

This is going to be worse than terrible. I am not being a fear monger - I just think we need to get our eggs in our basket, and prepare for the long haul.

I was up last night watching the Nikkei index and it was tanking fast. Of course it is being blamed on the credit and mortgage mess here in the U.S.

I think this is what they have been waiting on. Now China will dump the dollar and it is all over for us.

More...


The Fed (Federal Reserve) has injected cash 2 times in the past 24 hours, which is unprecedented:


http://www.godlikeproductions.com/bbs/message.php?messageid=422692&mpage=1&showdate=8/10/07&forum=1


It begs the question... how can the Feds fix the problem... when they caused it?


But of course the sheeple will believe all is well. :shock:

Well, I just talked to one of my neighbors who is a stockbroker....and this is coming from him.... don't shoot the messenger... heh

He says the market is just making a necessary correction, that it isn't as bad as it looks, that it will even out over the next coming months. He said the problem is all those variable rate mortgages that people fell for. He told me that 110 million of them will come due in Jan. and that California, Arizona and Florida are likely to remain basket cases as far as that goes.

He said that January will be the month to watch, that once all those ballon payments are due, people will be forced out of their homes, such is the nature of buying things you can't afford. He also said that overall, the economy was strong

Well, I don't know enough about it to have an opinion, I am just watching carefully to see what happens next.

Oh Be The Miracle I hope your neighbor is right!

Here's one today (August 10th) from Market Oracle by Gary Dorsch, titled "The 'Plunge Protection Team' Working Overtime to Save US Stock Market":


http://www.blacklistednews.com/view.asp?ID=3972


With all my heart (too), I hope your neighbor is right, Melissa... but he makes his living as a stockbroker... and that gives him a vested interest in being a "true believer" that the US and global economy will recover.


Only time will tell. :shock: ;)