PowerSwitch

`Time To Protect Yourself` is the title of an email which is posted on the web here: http://www.jsmineset.com/ARhome.asp?VAf ... _ARID=5438

On Monday start to protect yourself to the degree it can be accomplished by removing people and institutions between you and your assets.

If you have accounts at Internet financial entities close them and transfer the accounts to a smaller firm that can confirm in writing that they have no over the counter derivative exposure. Be sure to ask for certificates for your share investments and take delivery of them.

Gold is going to range trade wildly, but it is as I see it targeted here and now for $1,050.

My greatest concern is that my longstanding price objective of $1,650 might be much too low an estimate.

So what could it be all about? Meryll Lynch was in the news, and here's a quick search of the news (this is a bit bigger than I intended...):

Bad news regarding 2 big banks via http://www.iii.co.uk:

Citigroup CEO Prince said to resign
Reuters Saturday 3 November 2007 03:13
NEW YORK (Reuters) - Citigroup <C.N> Chief Executive Charles Prince plans to resign this weekend, the Wall Street Journal said, as the widening subprime mortgage crisis deals a final blow to a reign long under attack. The largest U.S. bank by assets plans to hold an emergency board meeting on Sunday, at which Prince will step down, the newspaper said on Friday, citing people familiar with the situation.

On that site regarding Barclays:

would not Diamond be committing a criminal offence if he knowingly lied about Barcalays Capital sub prime exposure. He said it was limited to £75m, which is peanuts.

http://news.bbc.co.uk/1/hi/business/7074751.stm

Barclays shares hit 30-month low

Shares in Barclays Bank have fallen to two-and-a-half-year lows amid continuing speculation about funding problems linked to the credit crunch.

Northern Crock/Wreck:
http://news.bbc.co.uk/1/hi/business/7073556.stm

Rock expects ?30bn loan this year

The BBC's business editor Robert Peston says this means that the UK taxpayer's exposure to Northern Rock could be much more than currently thought.

"The extent of public sector support goes beyond these direct loans," he said.

"The Treasury has also indemnified a further ?20bn odd of retail deposits," he explained.

"So we are talking about total public-sector exposure to the Rock of ?40bn - equivalent to around 3% of our entire economy.

"And that exposure could become much bigger, as other loans to the Rock fall due for repayment. "

Later on Thursday, Mr Peston learned that Northern Rock and the Bank of England were projecting that the firm would have borrowed "a staggering ?30bn from the Bank of England" by year end, he said.

http://news.bbc.co.uk/1/hi/business/7074354.stm

Markets mixed on credit concerns

http://news.bbc.co.uk/1/hi/world/south_asia/7076670.stm

Musharraf imposes emergency rule

Pakistan's President Pervez Musharraf has declared emergency rule and suspended the country's constitution.

Chief Justice Iftikhar Chaudhry has been replaced and the Supreme Court surrounded by troops, who also entered state-run TV and radio stations.

Gen Musharraf defended his actions in a national address, saying he was curbing a rise in extremism in Pakistan.

The moves come as the Supreme Court was due to rule on the legality of Gen Musharraf's October election victory.

The court was to decide whether Gen Musharraf was eligible to run for re-election last month while remaining army chief.

Pakistan has been engulfed in political upheaval in recent months, and the security forces have suffered a series of blows from pro-Taleban militants opposed to Gen Musharraf's support for the US-led "war on terror".

http://news.bbc.co.uk/1/hi/world/americas/7076747.stm

Mass exodus from Mexico flooding

He said 100% of the state's crops were lost.

Mr Granier drew a comparison to the damage caused by Hurricane Katrina on the US Gulf Coast two years ago, saying New Orleans was "small compared to this".

Oil exports halted

The floods were triggered by storms that crippled Mexico's oil industry.

The storms have forced the closure of three of Mexico's main oil ports, preventing almost all exports and halting a fifth of the country's oil production.

http://news.bbc.co.uk/1/hi/world/middle ... 076233.stm

Iraq vows to arrest PKK rebels

But analysts say Baghdad has little influence over the semi-autonomous Kurdish regions in the north, and the success of its pledges will depend on the co-operation of Kurdish authorities.

Turkey has massed up to 100,000 troops on its southern border for a possible offensive to eliminate Kurdish rebel bases in Iraq.

http://news.bbc.co.uk/1/hi/business/7075503.stm

Chevron sees profits tumble 25%

I guess it's all to do with the credit crisis, but we have seen so much more...

It's a funny old world isn't it?

Hilarious . . .

On the subject of Northern Rock, I don't know why all the reports refer to such low projection of eventual borrowing from the BoE (at punitive rates). If I remember rightly, they have some ?120 billion worth of mortgages of which only about 20% are covered by deposits, thus leaving around ?100 billion covered by short term loans. And ALL of these will presumably eventually have to be replaced, in current circumstances, by loans from BoE (read me and you).

Or am I missing something?

PaulS wrote:On the subject of Northern Rock, I don't know why all the reports refer to such low projection of eventual borrowing from the BoE (at punitive rates). If I remember rightly, they have some ?120 billion worth of mortgages of which only about 20% are covered by deposits, thus leaving around ?100 billion covered by short term loans. And ALL of these will presumably eventually have to be replaced, in current circumstances, by loans from BoE (read me and you).

Or am I missing something?

No, I think you're right - and now they've started the process, there's no pulling out without losing our 20-something billion already put in. The fact nobody else wants to buy it tells you everything you need to know - the business is completely stuffed. The govt will be offering all sorts of nice things to help shift it and still nobody is interested.

Question is, what happens when Barclays hits the buffers?

PaulS wrote:On the subject of Northern Rock, I don't know why all the reports refer to such low projection of eventual borrowing from the BoE (at punitive rates). If I remember rightly, they have some ?120 billion worth of mortgages of which only about 20% are covered by deposits, thus leaving around ?100 billion covered by short term loans. And ALL of these will presumably eventually have to be replaced, in current circumstances, by loans from BoE (read me and you).

Or am I missing something?

"So we are talking about total public-sector exposure to the Rock of ?40bn - equivalent to around 3% of our entire economy.

So 2.5 times 3% gives 7.5% of our entire economy...

And oilslick has spotted the Catch-22 problem..., and won't Barclays be bigger?, or is it a different method of financing? Will Sterling will be following the Dollar pretty soon... now could be a very good buying opportunity for gold...

Smithy wrote: Will Sterling will be following the Dollar pretty soon... now could be a very good buying opportunity for gold...

I totally agree. Take a look at the Forex Gold Index for the last three months. Onwards and upwards.

http://newsvote.bbc.co.uk/1/shared/fds/ ... _month.stm

Very nice graphs and the opportunity to buy:
http://www.bullionvault.com/gold-price-chart.do
Try Currency=GBP and Period=20 years.

Smithy wrote:So 2.5 times 3% gives 7.5% of our entire economy...

And oilslick has spotted the Catch-22 problem..., and won't Barclays be bigger?, or is it a different method of financing? Will Sterling will be following the Dollar pretty soon... now could be a very good buying opportunity for gold...

Barclays have got a whole lot of other problems to NR - they have been investing using SIV (structured investment vehicles) which are basically 'off balance sheet' which means they've avoided the usual regulation to stop banks doing stupid things. This is exactly what's wrong with Citigroup.

It's likely that these SIVs have been the very money that was invested into the dodgy mortgages that people like NR were peddling. It's all one system the symtpons we've been seeing so far just point to much, much bigger problems in the heart of the system.

If Barclays and Citigroup are insolvent then it's hard to see how our financial system can continue. Sterling and the dollar must be history. I've got some Euros, some yen and tomorrow I'll have some gold.

Indeed it's time to protect ourselves...hopefully it's all internet crap but seeing as Citigroup is the top story on Bloomberg and BBC Business news, something's up beyond just booting out the CEO.

Would Premium Bonds and other govt savings be at risk in an - err "economic realignment"?

Vortex wrote:Would Premium Bonds and other govt savings be at risk in an - err "economic realignment"?

Umm, dunno - something very inflation-protected would be my only advice (and real inflation, not crappy government figures).

I would think they will fire up the printing presses to try and get out of this - look at all the money that's been created out of thin air to inject into the financial system lately. It might not be printing to pay off their bills just yet but how else can they even try to bail out the big banks?

I've not been a believer in gold up to now - Pippa will tell you - but I am now. Should have listened to her ages ago

If Barclays and Citigroup are insolvent then it's hard to see how our financial system can continue. Sterling and the dollar must be history. I've got some Euros, some yen and tomorrow I'll have some gold.

If this sort of post spreads around the Interweb then a major run on the banks could appear overnight ... even if the economy is sound.

Wild rumours can cause everyone to top up their petrol tanks and thus seize up the fuel supply chain.

The same sort of reaction could bring down our banking system.

Nevertheless ... where can I buy Krugerrands around here?

Pensions anyone:
http://www.prudentbear.com/index.php?op ... &Itemid=55

November 2 ? Bloomberg (Shannon D. Harrington): ?The risk of owning the debt of Merrill Lynch & Co. and Citigroup Inc. rose to the highest in at least five years on speculation that losses from the mortgage-market collapse will worsen.?

November 2 ? Financial Times (Gillian Tett): ?The mood in credit derivatives markets turned ugly on Thursday, with the cost of insuring corporate debt hitting multi-week highs on both sides of the Atlantic. Speculation was rife that leading major investment banks were facing additional losses linked to complex mortgage-backed securities, while worries mounted over the health of major financial guarantors. ?It?s scary out there ? there?s blood on the streets,? a trader at a US brokerage said. ?It?s a real mess.? Five-year credit default swaps tied to Citigroup widened to 60 bps, meaning it cost $60,000 annually to insure Citigroup's debt against default for five years. A couple of weeks ago, that figure stood at $27,000. Contracts on Merrill Lynch?rose $18,000 to $103,000?. Bond insurers, or monolines, were also hit hard. ?[These triple-A rated companies are] exposed to the crumbling housing market,?

November 2 ? Financial Times (Gillian Tett): ?This week, a banking friend made a startling confession. In recent weeks he has been furtively unwinding some large investment portfolios linked to subprime securities. But as he has embarked on this sordid task, he has discovered that the only effective way to get rid of these distressed assets is to avoid putting any tangible price on the trade. Instead, he has resorted to using a tactic more normally associated with third world markets than the supposedly sophisticated arena of high finance: barter. Barter is the only thing that works right,? he chuckles grimly. ?It is like the Dark Ages.? ?

The price swing in the index, known as the ABX, is particularly significant, since it is starting to reduce the value of credit instruments that carried high credit ratings, and were therefore supposed to be ultra-safe?

I wondered what these cliff edges were:http://www.markit.com/information/produ ... raphs.html

I'll post more from this URL as topic Road to Ruin:
http://www.powerswitch.org.uk/forum/vie ... 6307#46307

More generally, where have all those billions actually gone?????

Money doesn't just simply vaporise.

Is there really a need to print more?

Vortex wrote:Money doesn't just simply vaporise.

Perhaps it does. It seems to be created from nothing, after all.