---- On Fri, 9/26/08, don.stacey <[EMAIL PROTECTED]> wrote:
### FINANCIAL CRISIS: A few snapshots before the market opens ###
What a week to be away! Lousy scheduling on my part. LOL.
As I try to catch up on messages in my inbox and my favorite website,
here are a few snapshots of where we are
as of early morning on Friday, September 25:
>From indexcalls.com:
For openers...
"Biggest bank failure in history, WaMu[Washington Mutual] is ovah.
JPM [J P Morgan Chase] comes in to feed on the carcass."
MORE>>>>>>
1. Gold coin sales halted after retail rush
By Javier Blas in London
Published: September 25 2008 23:03
The rush by retail investors into gold on Thursday forced
the US government to “temporarily” suspend the sales of the popular
American Buffalo one-ounce bullion coin after depleting its inventories.
The shortage of gold coins is the latest sign of investors
seeking a safe haven into bullion amid Wall Street woes.
Gold prices this week surged above $900 an ounce, up about
20 per cent from its level before the collapse of Lehman Brothers.
Safe-haven buying spurred by a weakening dollar and rising inflation
on the back of high commodity prices
have also benefited gold sales, analyst said.
The US Mint said in a memorandum that
“demand has exceeded supply” and, therefore, it was
“temporarily suspending sales of these coins”.
“We are working *diligently to build up
our inventory and hope to resume sales shortly,” it added.
Spot gold in New York on Thursday traded at
$875 an ounce, down $5 on the day.
Traders said bullion prices came under pressure
from a strengthening in the dollar.
Gold set a record of $1,030.80 an ounce in March.
The US Mint said it has sold 164,000 ounces of gold
in American Buffalo one-ounce bullion coins since January,
almost 54 per cent more than in the same period of last year.
Demand for other gold coins from the US Mint is also very strong.
Last August, a shortage of American Eagles one-ounce bullion coins,
another popular gold investment, due to “unprecedented demand”
also forced the US Mint to suspend sales and later to place limits
on the number it ships to dealers.
The US Mint has sold since last January about
419,500 ounces of bullion in the form of
American Eagles coins, more than double the
198,500 ounces it sold during the whole 2007.
In 2006, it sold 261,000 ounces.
The scarcity of gold coins comes as investors in bullion-backed
exchange traded funds (ETFs) have amassed a record
1,054 tonnes of bullion, becoming the largest holders of gold
after the reserves of the US, Germany,
the International Monetary Fund, Italy, France and Switzerland.
2. Paulson down on one knee. lol
Here's the skinny to get you up to speed this am,
Source: Yahoo,
A bad day for the GOP on politics, bailout plan
Uncertainty dawns after bad day for Bush, McCain
and the $700 billion bailout plan
Even for a party whose president suffers dismal approval ratings,
whose legislative wing lost control of Congress
and whose presidential nominee trails in the polls,
it was a remarkably bad day for Republicans.
A White House summit meeting on Thursday
meant to shore up John McCain's shaky campaign
"devolved into a contentious shouting match."
And that's how McCain's own campaign described it.
The meeting revealed that President Bush's $700 billion bid
to combat the worst financial crisis in decades had been
suddenly sidetracked by fellow Republicans in the House,
who refused to embrace a plan that appeared close to acceptance
by the Senate and most House Democrats.
Treasury Secretary Henry Paulson begged Democratic participants
not to disclose how badly the meeting had gone, dropping to one knee
in a teasing way to make his point according to witnesses.
And when Paulson hastily tried to revive talks in a nighttime meeting
near the Senate chamber, the House's top Republican
refused to send a negotiator.
"This is the president's own party," said Rep. Barney Frank,
a top Democratic negotiator who attended both meetings.
"I don't think a president has been repudiated so strongly
by the congressional wing of his own party in a long time."
By midnight, it was hard to tell who had suffered a worse evening,
Bush or McCain. McCain, eager to shore up his image
as a leader who rises above partisanship, was undercut
by a fierce political squabble within his own party's ranks.
The consequences could be worse for Bush, and for millions
of Americans if the impasse sends financial markets tumbling,
as some officials fear. Closed-door negotiations were to resume Friday,
but it was unclear whether House Republicans would attend.
Republicans and Democrats alike seemed unsure
which way McCain was leaning.
His campaign's statement late Thursday shed little light.
"At this moment, the plan that has been put forth by the
administration does not enjoy the confidence of the American people,"
it said. It was unclear whether McCain would attend
Friday night's scheduled debate against
Democratic nominee Barack Obama in Oxford, Miss.
Ordinarily a Republican president's problems are with Democrats,
especially if they control the House and Senate. In this case,
Bush seemed almost over that hurdle.
To be sure, Democrats demanded a number of changes
in his $700 billion bailout plan, but administration insiders
signaled they probably were acceptable. They included
greater oversight, more protections for taxpayers,
efforts to head off home foreclosures and piecemeal allocations
of the federal money to buy toxic mortgage securities.
What caught some by surprise, either at the White House meeting
or shortly before it, was the sudden momentum behind
a dramatically different plan drafted by House conservatives
with Minority Leader John Boehner's blessing.
Instead of the government buying the distressed securities,
the new plan would have banks, financial firms and other investors
that hold such loans pay the Treasury to insure them.
Rep. Paul Ryan, R-Wisc., a chief sponsor, said it was clear
that Bush's plan "was not going to pass the House."
But Democrats said the same was true of the conservatives' plan.
It calls for tax cuts and insurance provisions
the majority party will not accept, they said.
At one point in the White House meeting, according to two officials,
McCain voiced support for Ryan's criticisms of the
administration's proposal. Frank, a gruff Massachusetts liberal,
angrily demanded to know what plan McCain favored.
These officials also said that as tempers flared,
Bush struggled at times to maintain control.
At one point, several minutes into the session,
Obama said it was time to hear from McCain.
According to a Republican who was there, "all he said was,
'I support the principles that House Republicans are fighting for.'"
Some at the table took that to mean the conservatives'
alternative proposal, which stands little chance of passage.
A few hours later, Paulson and the handful of negotiators
wearily headed for home. Frank told The Associated Press:
"I did tell Secretary Paulson that this whole thing is at risk
if the president can't get members of his own party to participate."
3. Chinese regulators have asked domestic banks to stop lending
to U.S. financial institutions in the interbank money markets
to prevent possible losses during the financial crisis,
the South China Morning Post reported Thursday.
The China Banking Regulatory Commission's ban
on interbank lending of all currencies applied to U.S. banks,
but not to lenders from other countries,
the report added, citing a source.
4. Robert McHugh:
"There is an ominous Head & Shoulders top in the Dow Industrials
that is confirmed, and has a downside target of 7,500.
That crash could start soon, maybe after one more rally leg,
but we cannot rule out that it could happen without any further bounce.
Same for the NDX: Ominous Head & Shoulders top pattern
is confirmed with a downside target of
1,200, about a 30 percent crash, which should start soon.
If you are a conservative investor, the next two months are dangerous.
We could witness the worst crash in over two decades.
Raising cash would be a solid conservative strategy
sooner rather than later."
5. The United States won't be the world's financial superpower
in the wake of the banking crisis, German Finance Minister
Peer Steinbrueck said Thursday, according to news reports.
Steinbrueck told the lower house of Germany's parliament
he would push for a global ban on speculative short selling
and limits that would prevent banks from fully securitizing loans
and selling them on to third parties, Dow Jones Newswires reported.
Steinbrueck criticized the U.S. government for a late response
to the crisis and laissez-faire market policies.
"The U.S. will lose its status
as the superpower of the global financial system," he said.
"The global financial system will become more multi-polar."
6. According to the FT[Financial Times],
The House of Representatives on Wednesday approved a
$25bn package of low-cost loans to help hard-pressed carmakers
and their suppliers finance plant modernisation
at a time of restricted access to public capital *markets.
The automotive loans are separate from the proposed
$700bn bail-out for the banking sector,
which is still being debated in Congress.
The House approved the measure
370-58, setting the stage for Senate approval within days.
7. "There is a structural risk we could exhaust our credit line,"
says Brad W. Setser, a former Treasury official now with
the Council on Foreign Relations. "We're asking foreigners
to keep lending to us when U.S. assets aren't looking good."
8. The banking system needs another $500 billion to survive
beyond the $700 billion rescue plan being contemplated by Congress,
said Pimco founder Bill Gross.
9. 8:02 a.m.[KBH] KB Home Q3 loss widens to
$1.87 a share vs 46 cents year ago
10. 8:11 a.m.[WB] Wachovia shares fall
16% in pre-open trade, to $11.50
11. Money Markets Grind To A Virtual Halt:
Interbank and Repo Rates At Record Highs
Sep 25:
The 3-mo USD LIBOR-OIS spread jumps to record 199bp.
3-mo EUR LIBOR-OIS at 86bp (record was 93bp in Nov 2007).
TED spread (3m LIBOR- T-bill) at 316bp
Sep 24:
LIBOR rates at or near record highs in USD, EUR, GBP.
There are no real term funding markets except for central banks.
The Libor is meaningless. It's for unsecured lending
and there is no unsecured lending-->
ECB auction of 3-mo loans was the strongest on record,
while banks paid a record premium for dollar loans
at the Sep 23 Fed sale
from Roubini' s RGE
12. a friend that works at a futures firm emailed me
to tell me they raised index futures margins by 150%
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