The Market is down over 300 pts. now at the opening. The more we try to prop up the bankruptcy of Europe the deeper we dig our own hole. IMHO
Collapse Roundup #1 – Drop It Like It’s Hot – Market Down Over 300 Points Again, As Plunge Protection Team Fights To Save The Day
August 8th, 2011 · · Economy
Here’s a roundup of today’s stock market drop…
Ever since July 13, when I posted and sent a note stating that “The Collapse Is Accelerating,” I have been working 16 hours a day every day except one, knowing days like today were coming. I have 4 extensive new reports that build on and will surpass any of the extensive reports I have published thus far. The report I have been working around the clock to get done, which I wanted to have done by the end of last week, has continued to evolve with vital new data releases. After working all weekend, I will finally release the first part of the report tomorrow. If you are not subscribed to our email list, please subscribe here to be notified of report releases as they are published.
The perfect storm that has been brewing finally began to hit last week, and continues today, as of noon the market is down 316 points, yet again. It was down 385 right out of the gates, before the Plunge Protection Team (PPT) could work their black magic and push it to -316 at noon. Imagine what this would look like if it wasn’t for the PPT working overtime and major central banks promising to create and pump more money into the dying market. As said many times before, these actions will only prolong the disaster and make it worse.
With central banks promising to pump more money into the market, major banks on the verge of collapse and talks of more bailouts, it’s a case of deja vu all over again.
Here is a roundup of reporting:
As I mentioned Friday, the S&P downgrade of US debt will be used by politicians to enforce even harsher austerity than they are already implementing and calling for. On cue, Moody’s rating agency chimed in this morning:
With U.S. markets still to open after rival Standard & Poor’s stripped the United States of its AAA rating late on Friday, Moody’s said in a statement its own decision to affirm the AAA rating on August 2 was on the condition that further cuts were found.
“For the Aaa rating to remain in place, we would look for further measures that would result in the ratio of federal government debt to GDP, for example, peaking not far above the projected 2012 level of near 75 percent by the middle of the decade and then declining over the longer term,” Moody’s analyst Steven Hess wrote in a report.
“Last week’s agreement suggests that coming to an agreement that would meet this criterion by early 2013 will be challenging, given the political polarization, but not necessarily impossible.”
Questions about whether U.S. lawmakers will be able to agree on further budget savings next year lie at the center of the disagreement between the two ratings agencies.
[read full report]
Matt Stoller gives a little background on S&P’s central role in creating the financial crisis by giving Triple-A ratings to garbage assets, and then echos what we’ve been saying about the motives behind the downgrade:
“The goal of S&P is to ensure that there is a bipartisan set of spending cuts to social programs that benefit ordinary people. That their “downgrade” is being taken seriously by Nancy Pelosi, Barack Obama, John Boehner, Bob Reich, Dick Durbin, and most American political leaders shows that they share this goal. S&P is just doing the lobbying work.”
[read full report]
S&P keeps the heat on:
S&P executive: 1 in 3 chance of future downgrade
A Standard & Poor’s official says there is a 1 in 3 chance that the U.S. credit rating could be downgraded another notch if conditions erode over the next six to 24 months. [read full report]
Bailout junkies / crony capitalists / welfare queens demand more free money, or as the Wall Street Journal puts it:
Markets Fear Gridlock Without Aid
“After the 2010 election, many on Wall Street welcomed divided government, on the theory that the less Washington does, the better markets do. Now, investors have changed their tune and once again are calling on Washington to fix things.
Markets have become addicted to government aid over the past decade, and a growing number on Wall Street are hoping again for a bailout from the Federal Reserve, Congress or both. Investors want decisive action…” [read full report]
And right on cue, the financial terrorist extraordinaire makes yet another threat: To Reassure Markets, Europe Needs Bigger Bailout Fund, Says Geithner
U.S. Treasury Secretary Timothy Geithner said Europe needs to boost the size of its emergency bailout facility to stem a sovereign-debt crisis threatening to engulf two of its largest economies and push the global economy back into a recession. [read full report]
As I posted last week, SocGen is in serious trouble:
SocGen, Unicredit On “Brink Of Disaster”
Over the past 48 hours we had heard pervasive rumors that at least one, maybe more, banks in Europe are on the verge of collapse… if the Daily Mail is correct, the two banks about to kick the bucket are French SocGen and Italy’s UniCredit. While the fact that these two banks are in trouble has not been lost on the market, which has been sending their CDS to near record highs, the speculation that they are far closer to implosion likely means that the equity value of the European banking sector is about to be decimated. As the News reports: “The merest hint a major bank might fall is likely to reignite panic…
[read full report]”
Speaking of Big Banks on the Brink:
Bank of America Defaults Risk Soars To Highest Since June 2009, Jumps By 10% Overnight
Last week, when discussing the ongoing collapse in the house of cards that Ken Lewis built and which Brian Moynihan is helping bring down, we asked readers if they “Got Bank Of America CDS?” both in general, and in the aftermath of the disclosure that “New York AG Says BAC’s $8.5 Billion Settlement Is “Unfair and Misleading”.” We hope the answer was yes for most, as BAC CDS just jumped to the highest since June 2009, hitting 235 bps after exploding by almost 10% overnight. And with the stock now trading with a $7 handle, we are very much concerned TARP 2 is coming soon, only this time BAC will be formally split up, for no other reason than to spin Countrywide off and most likely see it end up with Fed funding. Wherein lies the rub: what will end up happening when BAC loses its TBTF status is that CDS referencing CFC will grind tighter to a spread pari with the US, while those referencing BAC (and/or MER) will initially tighten only to surge on the realization that BAC will have lost its government backstopped status (courtesy of the “conservatorship” of its most atrocious division).
And in other news, Goldmnan CDS was wider 17 to 183, Wells 10+ to 120 and MS 22.9 to 221.6. Risk is finally coming home to roost. [ZeroHedge]
U.S. unease hits stocks; ECB supports Italy, Spain
World stocks slid to their lowest level in nearly a year on Monday, overshadowing relief that the European Central Bank was buying Italian and Spanish government bonds in the latest move to staunch the euro zone debt crisis.
U.S. stocks extended losses in early trading, falling more than 3.0 percent on the heels of its worst week in more than two years. MSCI’s all-country world stock index .MIWD00000PUS dropped 3.8 percent. The index was at its lowest level since September 2010.
[read full report]