Hypotheken

When I took Economics, I was force fed Keynesian and basic Capitalist garbage, and I took that tripe as Gospel for years.

That all changed on my first meeting with Doug Casey.
Mr. Casey is a self confessed Anarchist and incidentally one of the smartest Libertarian investors on the planet.

Doug, and subsequently James Turk, David Morgan, Jay Taylor, Jimmy Rogers, and others convinced me that I was blind to the reality of what is happening.

Fiat money - financial malfeasance and manipulation has destroyed the World Financial system as we have come to know it, and we are entering a series of cataclysmic events, that will shake the World, as surely as the Great Depression of the 1930’s.

BUT WORSE BY A MAGNITUDE OF 30-50 - in line with the leverage used in the upswing/loosey goosey bubble days of only a year ago….

We are entering an era that will DWARF the pain of ANY downturn in History - and it’s all because of DERIVATIVES…and Alan Greenspan and a compliant US FED.

If I was going to give you the true picture that is emerging from the Balance sheets of Banks around the planet, you would be taking out all your cash - NOW.

I am going to drain every cent in my savings account and I am also stocking up on basic supplies.

I am praying that I can unload my Condo in the next few weeks and have some cash.

We are in uncharted waters and it is VERY - VERY - VERY dangerous.

Please make sure you talk with a LICENSED investment adviser before you do a darned thing - but listen my dear reader.

Yesterday - Bear Stearns said everything was FINE - ” we have cash” - no problem.
Today - They had to be bailed out - because they couldn’t even trade, and they were sunk.

We should all take a deep breath - but man, this is NOT going well, and we are facing HORRORS ahead.

Get rid of that car lease….and try and get a rental and sell the house and take the cash.

Cancel that vacation and discuss the plan for your survival……NOTHING is too big to fail.

The collapse of the subprime mortgage market will lead to record losses for insurance companies, overtaking Hurricane Katrina, the worst natural disaster in U.S. history.

The amount of asset writedowns and credit losses reported by the industry has reached at least $38 billion, just short of the $41.1 billion in claims from Katrina, which killed more than 1,500 people and left more than half of New Orleans homeless in 2005, data compiled by Bloomberg show.

American International Group Inc., the world’s biggest insurer, reported the largest quarterly loss in its 89-year history because of the decline in investments linked to mortgages. Chief Executive Officer Martin Sullivan told shareholders last month that more losses are possible amid the most depressed U.S. housing market in a quarter century. The KBW Insurance Index ended 2007 with its worst quarter in five years and fell another 15 percent this year through yesterday.

“This is a bigger event than Katrina,” said Robert Haines, an insuran

How Bad is it - ?

Federal Reserve Chairman Ben S. Bernanke invoked a law last used four decades ago to keep Bear Stearns Co. from collapsing after the securities firm approached the central bank for emergency funding.

The loan to Bear Stearns required a vote today by the Fed’s Board of Governors because the company isn’t a bank, Fed staff officials said. The central bank is taking on the credit risk from Bear Stearns collateral, lending the funds through JPMorgan Chase & Co. because it’s operationally simpler to accomplish than a direct loan, the staff said on condition of anonymity.

Bernanke took advantage of little-used parts of Fed law, added in the 1930s and last utilized in the 1960s, that allows it to loan to corporations and private partnerships with a special Board vote. The Fed chief probably sought to stave off a deeper blow to the financial system from a Bear Stearns collapse, former Fed researcher Keith Hembre said.

“The Fed really doesn’t have any obligation to help a non- bank aside from its role or responsibility to keep the financial markets functioning,” said Hembre, who helps oversee $107 billion as chief economist at FAF Advisors Inc. in Minneapolis. “They made a judgment, probably an accurate one, that they’re not going to function very well if you’ve got a full-blown crisis with a major Wall Street firm.”

The cost to protect the largest financial institutions from default soared after Bear Stearns Cos.‘ emergency bailout stoked concerns that other companies may also be on the brink of failure.

Credit-default swaps jumped on companies from student-loan provider SLM Corp. to commercial finance lender CIT Group Inc. and Lehman Brothers Holdings Inc., signaling a deterioration in investor confidence. Bear Stearns rose to a record after JPMorgan Chase & Co. and the New York Federal Reserve agreed to bail out the fifth-largest securities firm.

“It just adds to the fear,” said Tom Houghton, who manages $2 billion of corporate bonds at Advantus Capital Management in St. Paul, Minnesota. “This is the worst case scenario that’s playing out right now. It just raises all the fears now about counterparty risk, and it’s just a snowball effect.”

Credit-default swaps tied to most banks and securities firms have doubled in the past three weeks as the slump in credit markets that began last year with collapse of the supbrime-mortgage market worsened. Bear Stearns’s announcement that its cash position “significantly deteriorated” in the past 24 hours triggered new worries that other banks may also not be able to meet their obligations.

Bear Stearns plunged more than 50pc and financial markets were shaken around the world after US authorities and JPMorgan Chase stepped into bail out the troubled banking giant.

The shares, which have been battered all week by rumours that the lender was running out of cash, tumbled to below $30 and have lost more than 60pc of their value this year.

In the most dramatic rescue of a major US bank for years, the Federal Reserve Bank of New York and commercial rival JPMorgan Chase agreed to a temporary cash injection.

Bear Stearns said the liquidity lines were needed for it to continue normal operations. The bank, one of the most venerable names on Wall Street, has 10,000 employees worldwide, with more than 1,000 at its European headquarters in London’s Canary Wharf.

The move by the Fed and JP Morgan should allow Bear to continue trading while it looks for more permanent options of raising money.

However, Bear Stearns’ chief executive officer Alan Schwartz said in a short statement that the bank can “make no assurance that any strategic alternatives will be successfully completed.”

Should Bear Stearns collapse it will be the biggest failure of a major US financial instiution since the bankruptcy of Continential Illinois National Bank in the mid 1980s.

Editor:

Not to bang the drum too loudly, but I have been writing about Bear ( and other edifices) that are, in effect - totally insolvent.

Here are more up to the minute details of this unfolding drama -

From : Bloomberg.com

The regulator stepped in to prevent the collapse of the second-biggest underwriter of U.S. mortgage bonds and forestall a potential market panic as losses by banks and brokers reached $195 billion and stocks plunged for a third day this week. JPMorgan, which has suffered fewer losses than rivals during the credit crisis, may end up owning all or part of Bear Stearns, analysts speculated.

“I don’t think they can afford to let Bear go,” said Charles Geisst, the author of “100 Years on Wall Street,” referring to the New York Fed bailout. “At this particular moment in time, it would be a devastating blow to the markets.”

Bear Stearns led Wall Street shares lower this year as the world’s largest lenders and securities firms wrote down assets linked to the subprime mortgage market. The company’s fourth- quarter loss of $854 million was its first, and analysts in the past month have lowered expectations for earnings in the first quarter. JPMorgan has posted $3.7 billion in writedowns, far less than the $22.4 billion reported by Citigroup Inc., the biggest U.S. bank by assets.

“JPMorgan is not loaded up with bad mortgage debt,” said Vincent Farrell, principal at Scotsman Capital Management. “Bear has a couple of very good pockets that any other firm would want to have if you can clear up the balance sheet issue.”

Other financial shares also tumbled. JPMorgan dropped 3.1 percent to $36.93. American Express Co. (AXP:US) retreated 3.5 percent to $41.20. Bank of America Corp. (BAC:US) declined 3.7 percent to $35.76. Citigroup Inc. (C:US) slipped 4.7 percent to $20.09. Lehman Brothers Holdings Inc. (LEH:US) fell 11 percent to $40.74.

European stocks dropped, capping their third straight weekly decline, after Bear Stearns Cos. needed to get emergency funding from the Federal Reserve and JPMorgan Chase & Co.

UBS AG, Europe’s largest bank by assets, fell the most in a month in Zurich, while Deutsche Bank AG and HSBC Holdings Plc also declined after Bear Stearns said its cash position had “significantly deteriorated.” Tesco Plc led a retreat by U.K. retailers after Goldman Sachs Group Inc. downgraded the shares, citing “stagflation” concerns.

The Dow Jones Stoxx 600 Index dropped 3.11, or 1 percent, to 304.15, extending its weekly decline to 1.2 percent. The regional measure has fallen 17 percent in 2008 on concern losses stemming from the collapse of the U.S. subprime-mortgage market will curb profit growth.

“We’re going to see more turmoil,” said Felix Lanters, head of portfolio management at Theodoor Gilissen Bankiers in Amsterdam, which oversees $13 billion. “There is fear that we are going to see a real casualty and Bear Stearns seems to be close to the limits.”

Bear Stearns plunged more than 50pc and financial markets were shaken around the world after US authorities and JPMorgan Chase stepped into bail out the troubled banking giant.

The shares, which have been battered all week by rumours that the lender was running out of cash, tumbled to below $30 and have lost more than 60pc of their value this year.

In the most dramatic rescue of a major US bank for years, the Federal Reserve Bank of New York and commercial rival JPMorgan Chase agreed to a temporary cash injection.

Bear Stearns said the liquidity lines were needed for it to continue normal operations. The bank, one of the most venerable names on Wall Street, has 10,000 employees worldwide, with more than 1,000 at its European headquarters in London’s Canary Wharf.

The move by the Fed and JP Morgan should allow Bear to continue trading while it looks for more permanent options of raising money.

However, Bear Stearns’ chief executive officer Alan Schwartz said in a short statement that the bank can “make no assurance that any strategic alternatives will be successfully completed.”

Should Bear Stearns collapse it will be the biggest failure of a major US financial instiution since the bankruptcy of Continential Illinois National Bank in the mid 1980s.

Editor:

Not to bang the drum too loudly, but I have been writing about Bear ( and other edifices) that are, in effect - totally insolvent.

Here are more up to the minute details of this unfolding drama -

From : Bloomberg.com

The regulator stepped in to prevent the collapse of the second-biggest underwriter of U.S. mortgage bonds and forestall a potential market panic as losses by banks and brokers reached $195 billion and stocks plunged for a third day this week. JPMorgan, which has suffered fewer losses than rivals during the credit crisis, may end up owning all or part of Bear Stearns, analysts speculated.

“I don’t think they can afford to let Bear go,” said Charles Geisst, the author of “100 Years on Wall Street,” referring to the New York Fed bailout. “At this particular moment in time, it would be a devastating blow to the markets.”

Bear Stearns led Wall Street shares lower this year as the world’s largest lenders and securities firms wrote down assets linked to the subprime mortgage market. The company’s fourth- quarter loss of $854 million was its first, and analysts in the past month have lowered expectations for earnings in the first quarter. JPMorgan has posted $3.7 billion in writedowns, far less than the $22.4 billion reported by Citigroup Inc., the biggest U.S. bank by assets.

“JPMorgan is not loaded up with bad mortgage debt,” said Vincent Farrell, principal at Scotsman Capital Management. “Bear has a couple of very good pockets that any other firm would want to have if you can clear up the balance sheet issue.”

Other financial shares also tumbled. JPMorgan dropped 3.1 percent to $36.93. American Express Co. (AXP:US) retreated 3.5 percent to $41.20. Bank of America Corp. (BAC:US) declined 3.7 percent to $35.76. Citigroup Inc. (C:US) slipped 4.7 percent to $20.09. Lehman Brothers Holdings Inc. (LEH:US) fell 11 percent to $40.74.

European stocks dropped, capping their third straight weekly decline, after Bear Stearns Cos. needed to get emergency funding from the Federal Reserve and JPMorgan Chase & Co.

UBS AG, Europe’s largest bank by assets, fell the most in a month in Zurich, while Deutsche Bank AG and HSBC Holdings Plc also declined after Bear Stearns said its cash position had “significantly deteriorated.” Tesco Plc led a retreat by U.K. retailers after Goldman Sachs Group Inc. downgraded the shares, citing “stagflation” concerns.

The Dow Jones Stoxx 600 Index dropped 3.11, or 1 percent, to 304.15, extending its weekly decline to 1.2 percent. The regional measure has fallen 17 percent in 2008 on concern losses stemming from the collapse of the U.S. subprime-mortgage market will curb profit growth.

“We’re going to see more turmoil,” said Felix Lanters, head of portfolio management at Theodoor Gilissen Bankiers in Amsterdam, which oversees $13 billion. “There is fear that we are going to see a real casualty and Bear Stearns seems to be close to the limits.”