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New Martenson Report for Subscribers

Wednesday, October 1, 2008, 3:34 PM

In this report I review the recent data to conclude that a recession is
here right now.  Don't wait to hear this fact much later on the's time to start spending and behaving like we are at the
beginning of a pretty serious economic decline.

The Recession - It's Here And Now 

Note: This report is for subscribers only. 

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Another mid-game SEC rule change

Tuesday, September 30, 2008, 5:09 PM

Every possible effort is being made to make our banks healthier.  And if that is not possible, then to at least make them appear healthier.  The SEC just passed a new rule with this second aim in mind.

And I'm not sure how much it is really going to do, since the rule change will allow companies to place higher values on stricken assets that have already been "marked down."  As I point out below, many companies have not yet done this, so how much of a gain will result is questionable.

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Market pricing broken - no longer free, fair, or believable

Tuesday, September 30, 2008, 10:50 AM

While the actions of the SEC to suddenly change the rules mid-game were troubling, as were the recent Fed decisions to blatantly ignore its own charter, I am seeing something equally worrisome developing out there.

There is a breakdown between what the paper markets (futures, options, stocks, Foreign Exchange, etc) are saying is "the price" and what we are experiencing out in the real world.

Here's one example from the gas shortages plaguing the Southeast: » Read more


Bailout Bill Fails in House Vote (!)

Monday, September 29, 2008, 4:38 PM

The "Bailout Bill" has failed to pass the House by a vote of 228-205.  There were defections in both parties. (By my count, that leaves two individuals not voting - hiding in the restroom maybe?)

This has to mark one of the most important watershed moments for the people of this country.  They were heard and represented over and above those of the well-connected and paid.

From the Wall Street Journal: » Read more


Monday Market Watch

Monday, September 29, 2008, 7:41 AM

I am going to be keeping an exceptionally close eye on the markets today, obviously.  It is vitally important that the world respond 'appropriately' to the US bailout plan.

By appropriately, I mean that all paper assets need to go up in price.

At the outset, it's quite the mixed bag.

As expected, the dollar was bought with a vengeance all night long.  Don't open any economic textbooks, especially those that rely on any theories of "supply" and "demand," for an explanation of why this should be. » Read more


Paulson led bailout of AIG; saved $20 billion for Goldman Sachs

Sunday, September 28, 2008, 10:47 PM

This is another astounding article by the very respectable Gretchen Morgenson of the NY Times.

It is astounding because of all that is revealed in the opening paragraphs.

Two weeks ago, the nation’s most powerful regulators and bankers huddled in the Lower Manhattan fortress that is the Federal Reserve Bank of New York, desperately trying to stave off disaster.

As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.

The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.

Days later, federal officials, who had let Lehman die and initially balked at tossing a lifeline to A.I.G., ended up bailing out the insurer for $85 billion.

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Dollar Intervention Risk 'Meaningful'

Sunday, September 28, 2008, 10:17 PM

Having watched the currency markets for long enough to know, I am certain that they are among the most regularly interfered-with of them all.  

In this article it is openly speculated that perhaps a joint support of the dollar is in the works:

Sept. 29 (Bloomberg) -- A growing number of currency traders and strategists are starting to speculate that finance ministers from the world's biggest economies will join to support the dollar.

"We're getting closer to the right conditions for authorities to step in and prop up the dollar,'' said Maxime Tessier, who manages $151 billion as head of foreign exchange in Montreal at Caisse de Depot et Placement. "The nightmare scenario will be a wholesale loss of confidence in the dollar.''

"The central banks of the world have embarked on all sorts of extraordinary interventions,'' said Stephen Jen, the global head of currency research at Morgan Stanley in London. "Currency joint intervention would be the least surprising. And it would probably be the cheapest.''

Link (Bloomberg)

I find it remarkable that they did not find a single quote from somebody who thought that the 9% gain in the dollar against the Euro was already a clear sign of manipulation.

To me it is utterly improbable that the dollar rose, even as the US lost all but two of its investment banks, bailed out its largest insurance company, and suffered the largest bank failure in history. To explain this, I have to assume that whomever was buying the dollar and selling the Yen and the Euro was doing so for reasons that were not economic in nature.

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Breaking news! Bailout turns ugly (satire, obviously)

Sunday, September 28, 2008, 7:35 PM

Bailout is a done deal

Sunday, September 28, 2008, 7:48 AM

As predicted by many here and elsewhere, a great show of "protecting the taxpayer" commenced, but, in the end, the bailout bill sailed through largely unchanged.

WASHINGTON — Congressional leaders and the Bush administration reached a tentative agreement early Sunday on what may become the largest financial bailout in American history, authorizing the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse.

Link (NYT)

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Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says

Saturday, September 27, 2008, 3:21 PM

Uh oh.

File this one under "oops".

Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

"We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. "If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''

An agreement is needed so that no nation rushes to sell, "causing a collapse."

Link (Bloomberg)

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