October 18, 2007

Ruh-Roh... Foreign investors flee the crumbling US debt markets like never before. Get ready for disaster.


I don't think anyone quite yet understands how bad this is about to get.

Foreign investors, having been burned by the lies and deception of Wall Street, and Bernanke's desperate dollar devaluation, pulled BILLIONS out of the US last month, and they won't be coming back. And I can't blame them. They bought rock-solid AAA paper, thinking they were buying gold, and instead they found out they bought a pile of choice grade-A US financial crap.

So the big banks set up a $100 Billion SIV fund why? Because no foreign investors will touch this mortgage-backed junk ever again, and they think this smokescreen will help avoid a true mark-to-market. We'll see.

Foreign money isn't going near US asset-backed paper for a long, long time. You can thank Moody's and S&P for destroying the credibility of the US financial markets, and you can thank the foreign investor exodus for taking the US housing and economic collapse to levels not even predicted here.

This is going to get massively, horrifically ugly now. And Bernanke, Paulson and their banker buddies can't stop it. They can only continue the lies and distortion for a bit longer. And then reality will set in.

Foreign Investors Flee Crumbling U.S. Credit Market

IF ANYBODY STILL IS WONDERING WHY the Treasury brokered the $100 billion superfund to clean up banks' off-balance sheet vehicles, the department's latest data on foreign investment in U.S. securities should dispel any confusion.

In August, at the height of the subprime-induced credit meltdown, some $163 billion of capital fled from U.S. securities, money markets and bank accounts, a record outflow and a stunning reversal from the July's $94 billion of inflows, according to Treasury International Capital data released Tuesday.

Foreign investors dumped $69 billion of long-term securities in August, including $39 billion in equities, an unusually big swing for the month, which was anything but usual. While small in size, the $4 billion liquidation of corporate debt securities was even more significant because it was the first in over 16 years.

Clearly, foreign investors are abandoning the U.S. credit market as conditions deteriorate. Whether contraptions such as M-LEV can replace them is an open question.

49 comments:

Anonymous said...

I don't think anyone quite yet understands how bad this is about to get.

_____

The Mogambo Guru does. He's been writing about it for a loooooong time.

http://news.goldseek.com/RichardDaughty/

sam said...

Market now thinks 75% chance of rate cut in October, up from 28% two days ago.

Like a crack addict looking for the next fix, a 1% drop in the market sends WS into a tizzy for cheap money.

Would that the Fed stick to its supposed policy that it is not concerned with asset values (ie. housing prices, propping up trash loans). The alternative con-game they are pursuing now is increasingly obvious to the market.

They don't have the ability to reflate the housing bubble, which would require additional third world peasants providing money losing loans to some US-wannabe-pimp for a new Hummer, but they are going to try anyway.

borkafatty said...

Well this is what happens when you let a former Junk Bond king run the show from behind the black curtain...Yes folks that would be former Junk Bond King Michael Milken, don't believe me do the research.

And the most comical thing going is a $100 billion fund that is funded with Monopoly money....0 credibility for the United States.

Thanks Bush Crime Family and all your rich constituents one hell of a job...Wake up you stupid Americans...we are heading down the tubes....and quick.

Real fast...why is it every time someone talks of the presidential election, and i mention Ron Paul as someone of interest...people average Americans say and I quote..." Who is that"..Are people really this disconnected???? We truly deserve our fate as a society.

bush and cheney crime watcher said...

Where are all the stupid tin foil hat republicans who think Bush and Cheney are better than jesus?

Their hats are about to be crushed.

BIG TIME!!!!!!

rcochran said...

They don't have the ability to reflate the housing bubble, which would require additional third world peasants providing money losing loans to some US-wannabe-pimp for a new Hummer, but they are going to try anyway.

____

Eloquent!

Anonymous said...

Hey, Great post over at Swann's bloodhound blog. Swann still won't EVER admit that the bubbleheads were right and he was wrong, but some of his own realtor bloggers are starting to "get it." A must read:

============================

The Magic of Numbers
By: Allen Butler, TheRealtyButler.com
Posted: Wednesday, October 17th, 2007, 10:07 am MST
Category: General, Real Estate, Realty Reality


A combination of magic and the truth seems to be where it’s it. In regards to the selling of homes, in this current market, agents are willing to try anything; witchcraft, voodoo, incantations, an appeal to Jesus Christ, and aside from these, more orthodox approaches, including bribery, trickery, flattery, and simple marketing. Having tried some of these methods (of which my conscience would dictate), I have discovered that Russell and Greg are right. In this market, price matters most.

I had begun to view myself as one of those scantily clad women at boxing matches parading with a placard. Instead of “ROUND 2,” my placard read, “A STEAL AT ONLY $739,000!!” Generally speaking, these women are afforded a certain measure of respect, even if only for their outward attributes. I, on the other hand, was being pelted with rotten eggs and tomatoes. This was evident because my “steal” was in fact, not a steal, and at the worst of times, my glorious placard was entirely ignored.

So began the quest for Truth. Having searched diligently, I discovered what others before me had discovered: price will sell anything. An old Floyd Wickman adage goes something like this:

“I can’t sell this house. Nobody will look at it!”

“The price is too high.”

“No, it can’t be that. I comp’d the property every which way. It is priced right.”

“Are people going to see it?”

“Uh. . .no.”

“Then it is priced too high.”

“Nonsense. Maybe I need some new photos. Maybe some more advertising, or an open house.”

“Do you think you could sell it for $100,000?”

“Well, of course! That’d be like giving it away!”

“Then the price is too high.”

I determined to really get to know my market. I needed answers. I began to study and research the hard numbers. How many homes are selling? What is peculiar about these homes. Are they the nicest? Are they the cheapest? Are there agent bonuses? Are there buyer concessions? What I began to learn is that the ones that were selling were, in most cases, both the nicest and the cheapest. If I wanted to sell my homes, I needed to have the nicest homes, for the best prices. Only then could I sell them.

So, I approached my sellers. I showed them the hard facts. Many were chagrined, but many were understanding. I’m certain that ALL had a sinking feeling in their collective guts. The price was simply too high. A simple illustration was in order.

“I have here a fabulous pencil. It is red, is inscribed with gold lettering, and contains top-grade #2 lead. I am offering this pencil for the ridiculously low price of only $2.00. Are you interested?”

“Uh. . .no.”

“What if it was only $1.00?”

“It’s not worth $1.00. In fact, it’s not even worth 50 cents.”

“Okay. So what would you be willing to pay for this pencil?”

“Well, if I even wanted a pencil, I suppose I would pay like, 10 cents.”

“Great. I’ll take it.”

Thus, the magic number. A house is not worth anything unless someone (the buyer) attaches a price to it that they are willing to pay. Unfortunately (or fortunately depending upon perspective), the seller is no longer in the driver’s seat. The buyer alone determines what a home is worth. (In fact, they always have. But that’s a different post.) My job is to simply find that number. So, our hunt began. What IS the magic number?

The price was dropped to $699,000. No lookers after two weeks. Again, the price was lowered. This time, to $675,000. Got two showings over the next week. Then, no more for the next two weeks. Okay, still a little too high. We lowered to $657,000. The very next day, the showings began in earnest. Over the next week, we had a total of six showings. The house was sold the following Monday for a negotiated price of $652,102.

Question: Did the sellers “lose” $86,898? Absolutely NOT, as they never “had it” to lose. The value of their home was “undeclared.” Now we know exactly what it is worth: $652,102.



Allen

Anonymous said...

Time to buy my plane ticket to flee this sinking ship!

Veronica Lodge said...

RE: Dollar devaluation and foreign investor pullout...

This reminds me of an old poem I heard in school:

Ching Chong Chinaman
Sitting on a fence.
Trying to make a dollar
Out of fifteen cents.

Now, I can fully comprehend its meaning.

V.L.

Anonymous said...

All those who disagreed with Pete Schiff are now quietly saying to themselves how correct he was and is.

borkafatty said...

Time to buy my plane ticket to flee this sinking ship!

-------------

Better start now Anonymous..if you plan on leaving the country, it takes months to get a pass port...or more like an act of Congress...HAHAH! CONGRESS!! Another joke in itself.

Ya we are f@cked..I am truly considering splits ville to Argentina myself...Family and all...And the best part is..the wife says " When are we leaving"..

The writing is on the wall.

Illegals Everywhere said...

Foreign Investors are not the only ones tired of the lies and deception. I had read somewhere the other day that lots of 401Ks are being liquidated. Granted lots of 401K Holders are debtors in need of cash, according to the article but I think many are just plain fed up.

Too many state employee funds etc.. were left holding the hedge fund bag and now Orangie under investigation, just where does it all end? With a bust dollar that’s where.

anon666 said...

"Time to buy my plane ticket to flee this sinking ship!"

Too late, I tried booking a flight yesterday but all the seats were taken due to the fact that the economy is doing so great.

Out at the peak said...

Also more domestic money is investing overseas. I am slightly part of the problem (37% of my assets are foreign investments), but everyone needs to hedge themselves. Compared to two years ago, I had 0% foreign assets.

Anonymous said...

soon 1 ounce of gold will buy a house...

ApleAnee said...

Illegals Everywhere said...

Foreign Investors are not the only ones tired of the lies and deception. I had read somewhere the other day that lots of 401Ks are being liquidated. Granted lots of 401K Holders are debtors in need of cash, according to the article but I think many are just plain fed up.

Our 401k is with Citigroup with husband's employer. We moved into the bond fund, but if you go and read Citigroup's bond info it is full of CDO's. We lost a chunk of change off the tech bust and now we are going to lose it again? We are too close to retirement to lose it again. We have a nice chunk saved in this 401k.

Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds? We can cash out now without penalty (barely) but taking the tax hit now will be terrible. Even so, I think that cashing out and maybe buying Canadian might be the way to go? The Canadian dollar is stable and Canada's economy is great (like ours used to be). Also, it is close if one might feel the need to bail??? Is anyone else in this predicament?

Anonymous said...

"Time to buy my plane ticket to flee this sinking ship!"

Too late, I tried booking a flight yesterday but all the seats were taken due to the fact that the economy is doing so great.
------------------------------------

Now, that is funny.

Anonymous said...


This reminds me of an old poem I heard in school:

Ching Chong Chinaman
Sitting on a fence.
Trying to make a dollar
Out of fifteen cents.


What kind of peom is that for a school? Did you guys burn crosses during recess?

Anonymous said...

Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds? We can cash out now without penalty (barely) but taking the tax hit now will be terrible. Even so, I think that cashing out and maybe buying Canadian might be the way to go? The Canadian dollar is stable and Canada's economy is great (like ours used to be). Also, it is close if one might feel the need to bail??? Is anyone else in this predicament?



I don't know, probably because the boomers have fucked everyone, including themselves.

ApleAnee said...

ApleAnee said...Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds?

Yes I am answering my own quote here LOL. Please don't tell me to guy gold. I can't wait for the day that you gold owners go down to Albertsons and hand the checker your gold coin for $100 of groceries. They can't even count change dudes. How are they going to do a gold exchange for you?? Are you going to carry little fanny packs for your gold coins? Designer fanny packs maybe?? You can brag and pull out your coins as you try and find some poor slob somewhere that knows what to do with your gold?

I know that there are a lot of you in here that are in exactly the same predicament as I and millions of others are. 401k hell. What the hell we gonna do people?

Anonymous said...

ApleAnee said...
ApleAnee said...Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds?

Yes I am answering my own quote here LOL. Please don't tell me to guy gold. I can't wait for the day that you gold owners go down to Albertsons and hand the checker your gold coin for $100 of groceries. They can't even count change dudes. How are they going to do a gold exchange for you?? Are you going to carry little fanny packs for your gold coins? Designer fanny packs maybe?? You can brag and pull out your coins as you try and find some poor slob somewhere that knows what to do with your gold?

I know that there are a lot of you in here that are in exactly the same predicament as I and millions of others are. 401k hell. What the hell we gonna do people?

October 18, 2007 10:34 PM



Its called dieoff through over extended world carry capacity. Within the next decade or two, if not sooner, many many people (old and young) will be gone - we have become unsustainable, sort of like the ponzi scheme 401k, medicare and other uber bull shit programs started by the gubermint and perpetuated by the boomers. Can you say GREED...

ApleAnee said...

Anonymous said...I don't know, probably because the boomers have fucked everyone, including themselves.

October 18, 2007 10:34 PM

You are right. But the thing that they did that is a bigger problem is that they didn't teach their kids the right lessons. They taught their kids that they could have it all. And with the help of the marketeers we have a society where the free lunch is the mantra.

Thats what the boomers did to screw things up. Doesn't change the fact that those of us who tried to teach their kids to live within their means, live by the rules, not buy a McMansion or BMW or other useless bullshit to impress and save a little money, have to suffer along with the greedy ones. I resent these people ruining my America with their greed and selfishness. I also don't feel the need to suffer along side them, and I won't. Even if it means packing my shit and leaving everything I love behind. Let the greedy have what they have created. I want to be on the outside like Keith watching from a distance as they all get what they so richly deserve.

Anonymous said...

ApleAnee

There's lots of good investment choices out there, you've just got to move your money into them.

Step 1: Can you move your money out of the 401k? Often these vehicles have a very limited selection of funds. Roll it into a brokerage IRA and start getting into the funds and stocks that will do well in an economic downturn.

Do you think the dollar is going to weaken further? If yes, then you want to buy foreign currencies, foreign stocks and bonds, commodities, oil and gold. All these things are going to the moon right now, way outpacing any pathetic gains in the Dow or Nasdaq.

It sounds like you're expecting an economic collapse and don't see the value in holding gold coins. But gold coins do have an inherent value and people will always desire gold. You will always be able to exchange it for currency or for goods. If gold continues to increase in price, you'll see more and more places that deal and trade in gold - simple economics.

You are in control of your own destiny. Take charge and don't be a victim. Look for where the opportunities are and put your money there.

Jymkata

yoski said...

Hmm, looks like our credit card has reached its spending limit. Quick, think up another way how we can con stupid foreigners into giving us more money.

bickerer said...

I really feel like this bastard Bernake is routinely breaking into my home and stealing a portion of my net worth.

This is freakin bulshit.

Anonymous said...

Don't cash out!

Just move your retirement accounts.

You can get rollover 401k's from lots of brokerages (e.g. Fidelity).

Once you are there, you can buy just about anything.

If you care about currencies, try MERKX, Merk Hard Currency fund.

Government bonds of Germany, Canada, Switzerland, Australia, etc.

Buy unhedged (in currency) ETFs of foreign markets.

borkafatty said...

Too late, I tried booking a flight yesterday but all the seats were taken due to the fact that the economy is doing so great.


----

Hmm I think I'll start smoking Marijuana again also.

Must be a nice place Fantasy Land.

Anonymous said...

.





FLUKTUATIONS!




.

LauraVella said...

All those who disagreed with Pete Schiff are now quietly saying to themselves how correct he was and is.

Yes, you're right. The hosts and other guests arent mocking him anymore.

It just surprises me the stock martet is so quiet this month. October is usually brutal. Maybe it's the calm before the storm...

LauraVella said...

"I know that there are a lot of you in here that are in exactly the same predicament as I and millions of others are. 401k hell. What the hell we gonna do people"?


What makes sense:
1) cash of stocks
2) keep cash in various banks, avoiding the majors who are in over the heads in subprime-WAMU, Wells fargo, BofA. Try to transfer money market funds or 4l0ks into FDIC insured institutions.
3) Buy back into the stock market after it corrects into-beer, fast food, gold, & solar.
4) keep a little cash, gold & silver at home in case ATM's or banking is interrupted.
5) Pray.

LauraVella said...

illegals everywhere said:"I had read somewhere the other day that lots of 401Ks are being liquidated. Granted lots of 401K Holders are debtors in need of cash, according to the article but I think many are just plain fed up".

Thats true, maybe also, some need cash to pay those increased mortgages.

LauraVella said...

Anon said:"soon 1 ounce of gold will buy a house..."



I have to agree with you there...

Anonymous said...

You will exchange gold for currency just like you do now - there are thousands of places that will exchange gold for a small cut.

Anonymous said...

.



"Soon 1 ounce of gold will buy a house"!



Give it a rest




What about those of us that have more than an ounce?






.

Anonymous said...

ApleAnee said...Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds?

Yes I am answering my own quote here LOL. Please don't tell me to guy gold. I can't wait for the day that you gold owners go down to Albertsons and hand the checker your gold coin for $100 of groceries. They can't even count change dudes. How are they going to do a gold exchange for you?? Are you going to carry little fanny packs for your gold coins? Designer fanny packs maybe?? You can brag and pull out your coins as you try and find some poor slob somewhere that knows what to do with your gold?

I know that there are a lot of you in here that are in exactly the same predicament as I and millions of others are. 401k hell. What the hell we gonna do people?

October 18, 2007 10:34 PM

FU boomer take nothing and like it like the future generations that you and your ilk have stollen from all of these years. Post boomers probably will not get social security let alone have a 401k. I recommend buying all home builders you P.O.S.

Anonymous said...

ApleAnee said...
ApleAnee said...Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds?

Yes I am answering my own quote here LOL. Please don't tell me to guy gold. I can't wait for the day that you gold owners go down to Albertsons and hand the checker your gold coin for $100 of groceries. They can't even count change dudes. How are they going to do a gold exchange for you?? Are you going to carry little fanny packs for your gold coins? Designer fanny packs maybe?? You can brag and pull out your coins as you try and find some poor slob somewhere that knows what to do with your gold?

I know that there are a lot of you in here that are in exactly the same predicament as I and millions of others are. 401k hell. What the hell we gonna do people?

October 18, 2007 10:34 PM
----------------------------------------

I'll bet you 401k people will be begging for a bag of groceries before us goldbugs.


BWAHAHAAAAAAAAAHAAAAAAAA!

http://www.bullnotbull.com/bull/

Take a look

Anonymous said...

Hey anyone who is interested!

I know some coyotes that can sneak
you into Mexico.

Meet me at the liquor store in San Ysidro.

Cost : 2 gold coins (no dollars please)


ALBERTO

JimAtLaw said...

Curious myself about what folks might advise as to the quickest/easiest way to emigrate to Europe. Italy in particular is attractive.

Anonymous said...

I can't wait for the day that you gold owners go down to Albertsons and hand the checker your gold coin for $100 of groceries. They can't even count change dudes. How are they going to do a gold exchange for you?? Are you going to carry little fanny packs for your gold coins?

See, this what's sad with America...so much financial ignorance. When are you going to realize that we, gold investors, won't be walking around with gold bars to buy food? I invest in gold in Switzerland and get my money in Swiss francs if I want to. Please, try to make an effort to understand basic things? We are losing patience already...catch up, would you?

Anonymous said...

Instead of everyone doing doom and gloom here what about some really practical advice for boomers trying to save their retirement funds? We can cash out now without penalty (barely) but taking the tax hit now will be terrible.

Get advice from a tax attorney specialized in international law. Always think taxes first.

Natural Eyebrows said...

Well there is still one thing USA can export: junk paper. Still one industry at which we excel: financial flim-flam.

Anonymous said...

This is going to get massively, horrifically ugly now. And Bernanke, Paulson and their banker buddies can't stop it. They can only continue the lies and distortion for a bit longer. And then reality will set in.
-----------

They don't want to stop it. They want to delay it so Hillary can eat a sh!t barrito. Then Faux News can tell you how it's "Clinton's Fault" all over again!

Bitterrenter said...

When it hits the fan, will you believe me that republicans are evil and should be rounded up and deported?

Naw, you'll just say both parties are the same.

Andrew Hac said...

Quote:
#####
This reminds me of an old poem I heard in school:

Ching Chong Chinaman
Sitting on a fence.
Trying to make a dollar
Out of fifteen cents.


What kind of peom is that for a school? Did you guys burn crosses during recess?
#####

No, they did not burn any cross during recess. What they did was having a good rom with their cousin in the bush and chewing redman at the same time.

Oops, I forget. They were also dreaming while thumping their cousins about how nice it would be to own a shiny trailer house just like their Pa and Uncle did...

Heeeee, Heeeee, Heeeee...

Anonymous said...

What you're probably going to have to do, apleanee, is swallow that bitter pill. Boomers blew it and now we're all going to pay.

Anonymous said...

Thank god, according to CNBC, BusinessWeek, and the White House, all below is good for the economy:

- unemployment is either high or low
- inflation is high or low
- value of dollar is high or low
- housing crash doesn't matter
- high deficit is good
- high price of oil makes the stock market rally

So, anything, no matter how absurd, is pretty much good for the economy. Oh boy, this country is going down so fast...IT'S ALL RIGGED AND THEY WANT MORE FOOLS IN!

Anonymous said...

And to think that now the BABY BOOMERS want to elect Giuliani into office to screw this country for good. Why don't you all just die?

Anonymous said...

unemployment is either high or low
- inflation is high or low
- value of dollar is high or low
- housing crash doesn't matter
- high deficit is good
- high price of oil makes the stock market rally

So, anything, no matter how absurd, is pretty much good for the economy. Oh boy, this country is going down so fast...IT'S ALL RIGGED AND THEY WANT MORE FOOLS IN!

October 19, 2007 9:29 AM

Great observation. And dont forget this piece of propaganda,

HEADLINE: "Economists warn that [insert latest economic catastrophe] may slow economic growth for the next quarter or two".

There is always the attempt to make people beleive that their latest disaster in policy is but a blip in a never ending cycle of prosperity.

But I love this line which is used repeatedly "may slow economic growth". The truth is there hasnt been any real economic growth in 40 years.

Anonymous said...

Anonymous said...
And to think that now the BABY BOOMERS want to elect Giuliani into office to screw this country for good. Why don't you all just die?

October 19, 2007 9:35 AM

Thats not true. I was first legal to vote during Carter vs Reagan (1980). I didnt want either candidate. Same thing in 1984, 1988, 1992, 1996, 2000 and 2004.

The current crop of presidential hopefuls in both parties are absolute disasters.

But you know what I've noticed that is even more frightening? The American population has degenerated to frightening levels since my days as a first time voter in November 1980. And thats the real problem this country faces today. The culture is rotten.

Fluuuuussssshhhhh! said...

The mtg backed paper is swirling down the toilet. No, this is NOT contained.

http://www.markit.com/information/products/abx.html