THREE, BIG, FAT RED ALERTS
THREE THINGS FAILING, CALIFORNIA, WORLD TRADE, and TWO BIGGEST US BANKS
I. CALIFORNIA, failing. BIGGEST STRONGEST STATE GOING BELLY UP
II. INTERNAT'L COMMERCE/ TRADE is FAILING -- WORLD WIDE-
HEADLINE: Shipping rates from CHINA TO EUROPE hit zero as trade sinks
Freight rates for containers shipped from Asia to Europe have
fallen to zero for the first time since records began, underscoring
the dramatic collapse in trade since the world economy buckled in
"They have already hit zero," said Charles de Trenck, a broker at
Transport Trackers in Hong Kong. "We have seen trade activity
fall off a cliff. Asia-Europe is an unmitigated disaster."
A report by ING yesterday said shipping activity at US ports has suddenly
dived. Outbound traffic from Long Beach and Los
Angeles, America's two top ports, has fallen by 18% year-on-year, a far
more serious decline than anything seen in recent
A sobering discussion on the nature of the current economic crisis and why
this one may be very different from ones in the past.
The problem: globalization adds exponentially to the complexity of
potential outcomes, but the banking system is not designed to absorb
the kind of rapid and massive changes globalization makes possible.
These aren't two hippies railing against the system. This is one of most
insightful mathematicians and one of the most accomplished options traders of our time.
Globalization...The big banks wanted it...the huge industrial cartels wanted
it...agribusiness wanted it... all the "policy experts" pushed it...and White House
criminals like Bill Clinton and George Bush railroaded it. BECAUSE it puts all
affairs outside the borders of LAW. What LITIGATION can come for a U.S.
corp doing felonies between CHINA AND USA? War yes, but lawsuits? NONE.
So Who didn't want it? Labor unions...small farmers...citizens concerned about
the sovereignty of their own countries...human rights activists. AND ALL PEOPLE
who have a sense the borderless world put TYCOONS BEYOND THE LAW.
ENRON was in TEXAS, look what it did. Imagine all corps as ENRONS outside
the borders of the USA. Well, TOO LATE JAKE! We're economically "globalized" now.
And here's what one of the leading mathematicians in the world and one of
the currently most successful options traders in the world has to say about the
III. BANK OF AMERICA and CITIBANK BOTH NEAR FAILING.
Megabanks Could Fail Despite Federal Aid
by Martin D. Weiss, Ph.D.
Bank of America and Citigroup could fail despite the most radical
government rescues of all time.
Right now, after recent close calls with instant death, these two
megabanks are on life support, receiving massive transfusions of
government capital. But they're still hemorrhaging, and no one in
Washington has found a cure.
Already, they have received capital injections of $90 billion ($45
Already, this bailout is larger than the total combined capital of PNC
Bank, Suntrust Bank and State Street Bank — all among America's ten
Yet, ironically, that $90 billion is still a drop in the ocean compared
to their massive exposure to risky assets.
The shocking facts revealed in the banks' own balance sheets and in the
OCC's Quarterly Report demonstrate the enormity of problem:
Fact #1. Too big to save. Bank of America Corp. and Citigroup, Inc. have
combined assets of $3.9 trillion, or 43 times the size of the Treasury
bailout funds they've received to date.
Fact #2. Bigger losses ahead. Even before any further declines in the
economy, an unusually large portion of their assets are already in grave
jeopardy — commercial real estate loans going sour, credit cards loans
tanking, auto loans sinking, and residential mortgages turning to dust.
Now, as the economy continues to tumble, avoiding much larger losses
will be almost impossible.
Fact #3. Big derivatives players. Bank of America and Citigroup are the
nation's second and third largest high-rollers in the derivatives
market, with a combined total of $78 trillion in these bets outstanding.
That's over ten times the derivatives that Lehman Brothers had on its
books when it failed last year.
Fact #4. They've bet far too much on each other's failure. Bank of
America and Citigroup are also the second and third largest participants
in the most dangerous derivatives of all — credit default swaps. These
are the big bets that financial institutions make on the failure of
other major companies.
But participants in this market are like shipwrecked sailors in a
sinking lifeboat betting fortunes on who will live and who will survive:
If a company bets too heavily on failures and too many companies
actually fail, who's going to make good on those bets?
"Put your PAYCHECK THRU THE BANK but NOT IN." LaoTse Lewinstein
"TRUST NOT BRIGANDS TO CARRY YOUR PURSE if you still have a hip and a pocket." KARL MARX said it but written down by Frederich Engels
"WHEN IN DOUBT, BANK UNDER THE ROSEBUSHES" RALPH WALDO EMERSON
"WHO NEEDS MONEY ANYWAY?" Alfred E Neuman
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(also called "HOW TO SURVIVE WITHOUT A PAYCHECK WHEN ALL AROUND YOU THEY ARE LOSING THEIRS".