Looks like Paulson and Bernanke have to get up early today!

[Tulpen]

Everything except the dollar is collapsing right now.

[grapejelly]

Re: Looks like Paulson and Bernanke have to get up early today!

It was bound to happen. The FIRE economy crashes.

Now as it crashes, the giant margin calls require trillions (quadrillions?) of USDs to be created in order to pay for the financial assets being sold.

And B&P lie about interbank lending "seizing up".

The money is being created to meet the banks' margin calls, simple as that. As much as is required.

The question is, what happens when this is finished?

This MUST lead the the USD being wiped out. Because you will have trillions of USDs and "real" goods worth little or nothing. That has to swing the other way in a hurry because at some point, nobody will want to part with real goods in exchange for worthless paper.

That's what I'm thinking. At some point there is massive flight out of dollars after the dollars are littering every street, and real goods that people need to live are worth little or nothing.

After all, if you see that there is going to be a general default, then you quit worrying about paying your bills and you go to the supermarket and stock up.

You worry about having the tangible necessities and you say to your creditors, "screw you, I ain't paying you, I have more important things to worry about."

That's what has to be coming up. Question is when. And what extreme measures will governments around the world carry out in the meantime?

[Chomsky]

Re: Looks like Paulson and Bernanke have to get up early today!

And the Dow and S&P futures were shut down because they fell below their limits.

http://www.bloomberg.com/apps/news?p...Fm8&refer=home

[Tulpen]

Re: Looks like Paulson and Bernanke have to get up early today!

There is real panic now.

I understand Bush can order the exchanges closed. :eek:

[friendly_jacek]

Re: Looks like Paulson and Bernanke have to get up early today!

At the same time TED spread was improving. Perfect bull trap in retrospect.

[Tulpen]

Re: Looks like Paulson and Bernanke have to get up early today!

At the same time TED spread was improving. Perfect bull trap in retrospect.

Indeed.

I do not think many expected the magnificent drop in Asia on Friday.

[friendly_jacek]

Re: Looks like Paulson and Bernanke have to get up early today!

I just started a free trial subscription to Elliot Waves site (for shear fun) and they said that (yesterday AM) that 10/23/09 would be an up day before a major crash. Of course I didn't believe, until the stocks closed green in the last minutes of trading. Then it was too late to make any moves.

[Tulpen]

Re: Looks like Paulson and Bernanke have to get up early today!

And the Dow and S&P futures were shut down because they fell below their limits.

http://www.bloomberg.com/apps/news?p...Fm8&refer=home

Spyders down over 7%, cubes down over 6%.

[jdv]

Re: Looks like Paulson and Bernanke have to get up early today!

I agree with you grapejelly, the dollar will crash.

But as I look at the complete destruction going on worldwide, I've gotta think that this will have to result in a Bretton Woods II of some sort. The goverments around the world will do anything to try to get things back to the prosperity and growth of the past. Including forgiving massive US debts.

We won't have hyperinflation of the dollar. We'll have a new worldwide currency before then.

[LargoWinch]

Re: Looks like Paulson and Bernanke have to get up early today!

I think Bretton Woods II is far away as all the CBs are still ganging up together.

They prefer flooding the system to "save" their poor over-indebted voters and corporate sponsors than drafting a whole new system at this point.

Of course, in the event of BWII, I think people would demand some form of gold backing.

[Laura]

Re: Looks like Paulson and Bernanke have to get up early today!

Where's Roubini this morning? I hope he isn't staring at his wallpaper.


Do you think there will be an emergency rate cut this morning?

Also, will the banks be operating on Wednesday?

Laura

[sutro]

Re: Looks like Paulson and Bernanke have to get up early today!

Remember the USA hosted Bretton Woods I during WWII when it was in a position to dictate terms. At a Bretton Woods II the USA would enjoy much less leverage and would have to yield accordingly.

[LargoWinch]

Re: Looks like Paulson and Bernanke have to get up early today!

Laura, why Roubini? He always been bearish and is now being vindicated.

For my part, I expect another round of talk this weekend between CBs and possibly - brace yourself - another "global" round of rate cuts.

As for the banks, the governments are standing ready and recently demonstrated their willingness to print at will, so yes, I think they will be operating Wednesday.

[Tulpen]

Re: Looks like Paulson and Bernanke have to get up early today!

...and possibly - brace yourself - another "global" round of rate cuts.

I would not be surprised we will get a US rate cut today.

[GRG55]

Re: Looks like Paulson and Bernanke have to get up early today!

Remember the USA hosted Bretton Woods I during WWII when it was in a position to dictate terms. At a Bretton Woods II the USA would enjoy much less leverage and would have to yield accordingly.

Bretton Woods II is in the closing phases of its short life.

Maybe a BW III?

Attached a paper by Roubini and Setser from early 2005 explaining why Bretton Woods II was unstable and why the official foreign country financing of the US trade deficit was unsustainable. Interesting read given the current circumstances.

I imagine Bernanke is wishing someone would bring back the "global savings glut"...