Financial Crisis - 2013 - ????

[American Patriot]

I reckon I'm a true adventurer with some limits. I don't deliberately jump out of planes, climb rock faces or ski down mountains. On the other hand, I've jumped off waterfalls, climbed mountains, dived without any kind of scuba gear to as deep as 30 feet (I know not a record for anyone lol), swam with sharks, fought the commies and been a lot of places.

But, I sincerely am not done.

Red pill it is.

[Ryan Ruck]

Doomsday Poll: 87% Risk Of Stock Crash By Year-End

June 5, 2013

New crash coming? When? Before year-end?

In “Stocks for the Long Run,” economist Jeremy Siegel researched all the “big market moves” between 1801 and 2001. Bottom line: 75% of the time, there is no rationale for “big moves.” No one can predict them. Maybe technicians and traders can pick short-term moves the next second. Maybe tomorrow. But the long-term “big market moves?” No way.

So why predict an “87%” chance of another meltdown in 2013? Because in the real world of statistical probabilities, historical facts and expert opinions danger signals are flashing wild. In mid-2008 we summarized the predictions of 20 experts over several years. Predicted a meltdown in a few years — markets crashed two months later. Fast.

In retrospect, it was inevitable, thanks in part to the hype, arrogance and incompetence of Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson who failed to prepare America.

The warnings are again accelerating. And so is the happy talk from Wall Street casino insiders, about rallies, housing recoveries, perpetual cheap money. Don’t listen. The next crash will happen by year-end.

Yes, there’s a 13% chance the next Fed chairman will keep printing cheap money into 2014. But on New Years Eve our aging bull will be 4½ years old, well past Bill O’Neill’s “average” 3.75 years for putting this bull out to pasture.

So unless you’re shorting, all bets on Wall Street casinos for 2014 are megarisk, like 2008. Like a Stephen King horror film, you feel it coming. Could happen anytime, even tomorrow, says Siegel’s research, or the unpredictable logic in Nassim Taleb’s “Black Swan.”

Here are 10 other predictions adding credibility to a crash by the end of 2013:

1. Warren Buffett ‘guaranteed’ new bubble, new recession four years ago

Actually he saw it coming early. Shortly after the 2008 crash Warren Buffett was asked: “Do you think there will be another bubble leading to a huge recession?” Yes, “I can guarantee it.” Cycles happen.

Next question: “Why can’t we learn the lessons of the last recession? Look where greed has gotten us.” Then with the impish grin of a Zen master, Uncle Warren replied, “Greed is fun for a while. People can’t resist it.” But “however far human beings have come, we haven’t grown up emotionally at all. We remain the same.”

Yes, one of world’s richest men was personally guaranteeing another bubble, another “huge recession.” Now, four years later, that time bomb is ticking louder, closer.

2. Federal Reserve’s Council: ‘Unsustainable bubble in stocks, bonds’

The International Business Times just reported on the minutes of the Federal Reserve Board Advisory Council’s mid-May meeting. Members expressed “strong concerns over the Fed’s low-interest-rate policies and its bond-purchase program, which they say could trigger unmanageable inflation and an ‘unsustainable bubble’ in the stock and bond markets.” Some “pointed out that near-zero interest rates could not be sustained in the long run.”

Why? “A spike in inflation could force the Fed to hike interest rates, hurting business confidence and consumer spending, and prove disastrous to the U.S. economy, which is still clawing its way back from the debilitating effects of the 2008 financial crisis.”

Get it? The Fed and Wall Street insiders hear something’s dead ahead.

3. Peter Schiff is ‘doubling down’ on his ‘doomsday’ prediction

Euro Pacific Capital CEO Peter Schiff, author of “The Real Crash: America’s Coming Bankruptcy,” is “not backing away from doomsday predictions about the U.S. economy,” wrote MarketWatch’s Greg Robb last week. He sees the no-win scenario: “Either the Fed stops QE and starts selling the Treasurys and mortgage-related assets on its balance sheet, thus triggering a recession, or else faces an inevitable, even-worse, currency crisis.”

The “idea that the U.S. economy is in recovery is based entirely on rising asset prices ... Asset prices are only rising because rates are low. As soon as rates go back up, asset prices will” fall.

Last year on Fox Business Schiff warned: “We’ve got a much bigger collapse coming.” Then last week: “I am 100% confident the crisis that we’re going to have will be much worse than the one we had in 2008.” His 100% beats our 87%.

4. Bill Gross: ‘Credit supernova’ turning 2013 bull into big bad bear

Yes, Gross sees a ‘credit supernova’ dead ahead. His firm has $2 trillion at risk when the Federal Reserve cheap money finally explodes in America’s face, brings down the economy, again. Gross warns: “Investment banking, which only a decade ago promoted small-business development and transition to public markets, now is dominated by leveraged speculation and the Ponzi finance.”

Bernanke’s Ponzi finance is self-destructive, lethal and massive. Endless cheap money upsets the balance between credit expansion and real economic growth, resulting in diminishing returns. Very bad news.

5. Gary Shilling predicts the ‘grand disconnect’ will trigger ‘shocker’

Yes, economist Gary Shilling predicts a “shocker” before the end of the year. Worse because investors are “paying little attention to weak and declining economies around the world, and concentrating on the flood of money being created by central banks.”

The “grand disconnect” is driving up stocks “while the zeal for yield, amidst low interest rates, benefited junk bonds and other low-quality debt.” Wall Street’s blowing a nasty new bubble, repeating the run-up to the 2008 crash.

6. ‘Kaboom ahead,’ an ‘ominous third phase’ of 2008 Meltdown

“Bond guru buying stocks. Sees ‘Kaboom’ Ahead,” shouted the Bloomberg Market headline about Jeffrey Gundlach, CEO of Doubleline Capital. Earlier he predicted the 2008 meltdown. But now he says the real damage is yet to come.

“The first phase of the coming debacle consisted of a 27-year buildup of corporate, personal and sovereign debt. That lasted until 2008.” Then cheap money “finally toppled banks and pushed the global economy into a recession, spurring governments and central banks to spend trillions of dollars to stimulate growth.” Next, an “ominous third phase,” a bigger crash, whose impact will far exceed the damage of 2008.

What’s he buying? Hard assets. Plus “sitting on cash,” waiting to scoop up more at “fire-sale” prices, “it’s worth waiting.”

7. ‘Tick, tick ... boom!’ InvestmentNews sees bond crash dead ahead

A few months ago InvestmentNews front page is so powerful you can hear sirens on a flashing, warning in huge bold type: “Tick, tick ... boom!” Their readers: 90,000 professional advisers who trust INews forecasts.

This was the biggest warning since 2008: “What will your clients’ portfolios look like when the bond bomb goes off?” Not “if” but “when.” Yes, they expect the bond bomb to explode soon.

Wake up, INews sees extreme dangers for millions of Americans who have “no idea what’s about to happen to them ... Tick, tick ... boom!”

8. Reagan’s budget director sees an ‘apocalypse ... get out now’

Recently David Stockman warned of an economic “apocalypse” dead ahead, “arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices ... get out of the markets and hide out in cash.”

Stockman’s not merely warning of a crash ending the bull rally since 2009. This “grand bubble” has been building for 32 years since the Reagan revolution. He’s atoning for a generation of politicians with no moral compass: “Capitalism has morphed into a monopoly ruled by politicians who are serving a wealthy elite. Competition is a joke.”

9. Nouriel Roubini: ‘Prepare for the perfect storm’ in an unstable world

Yes, prepare, prepare, prepare. Roubini told Slate.com: Our world is a game of dominos, any one of which could put in motion a global collapse: “Sooner or later, another ugly fight” over debt, markets will “become spooked” with “a significant amount of drag ... on an economy that has grown at barely a 2% rate.”

Scanning the world’s hot-button triggers in the euro zone, China, BRICs, Iran, Middle East, Pakistan, oil markets, Dr. Doom warns, the “drums of actual war will beat harder.” Any one of these trends “alone would be enough to stall the global economy and tip it into recession.”

10. Jeremy Grantham: America’s growth and prosperity ‘gone forever’

Grantham’s GMO firm manages $100 billion. He focused on Richard Gordon’s disturbing research: “Is U.S. Economic Growth Over?” Yes, says Grantham, “the U.S. GDP growth rate ... is gone forever.”

For centuries before the Industrial Revolution growth was under 1%. Then the growth trend till “1980 was remarkable: 3.4% a year for a full hundred years,” driving the American dream. “But after 1980 the trend began to slip,” says Grantham,“ by over 1.5% from its peak in the 1960s and nearly 1% from the average of the last 30 years.” By 2100, America’s GDP growth will fall back to where it started before the Industrial Revolution, to an annual rate less than 1%.

Buffett guarantees ... Schiff doubles down ... Gross sees supernova ... Shilling’s grand disconnect ... Gundlach’s ominous third phase ... Stockman’s apocalypse ... InvestmentNews tick, tick, boom ... Roubini’s perfect storm ... Grantham’s growth gone forever ... place your bets at Wall Street’s casinos ... the risk’s only 87% ... or is it 100%?

[American Patriot]

87%

America and the rest of the world is about to experience the "Super Depression" I think.

[Ryan Ruck]

I've got FNC on in the background and Ben Stein is on.

I just heard him say he opposes a 20% flat tax because, "a 20% flat tax would be highly regressive because it would mean a much, much higher tax on low income people than they currently pay so I don't think that's a good idea. I think there should be a progressive tax where high income people pay more tax rather than less tax."

Um... What? Really Ben Stein?



I always had the impression he was on the right side of economics. Guess I'll just stick with the tried and true Milton Friedman.

[American Patriot]

Ben Stein, like every other rich guy is wanting to protect his money (because you know he makes a lot, he pays his money and takes his chances you know) and just cuz he makes a bunch doesn't mean he needs it all. Thus a lot of guys like him don't MIND paying higher taxes, keeping the Feds off his ass and he still has "enough for him". So what?

In my case, I monitor every stinking dollar I make and spend. I can tell you what my exact daily budget is and I can tell you, with confidence how much I have to spend per day to do what it is I do, to live and survive. I can tell you what my boat budget will be within... probably 100 dollars per month (give or take a bit obviously) and people like Stein don't have to do that.

I have to.

extra taxes hurt.

BUT... switching to a 20% (15-18 would be better) you can tax EVERYONE. So the "kid" at the Taco Hell makes $1224 a month ($14688 a year) and doesn't PAY any taxes right now. So WHAT?

People like me make 50-80k a year and pay 38% taxes.... (I count what the IRS takes, ALL of it, PLUS I pay taxes when I go shopping, when I get gasoline, buy oil for the truck, pay for my phone bill and pay any other bills I have, plus my 69 dollars a year I get as dividends gets taxed too, assuming I even get any money) and if I try to save anything I get maybe .9% interest on that in the bank????????????

So what expenses does a 17 year old kid have? I have a home, a mortgage, I might have car payments, insurance payments etc. The older you get the more you should be making. Not paying MORE AND MORE taxes.

Progressive my ass.

[Phil Fiord]

The stock market is indeed in a position to do the drop as is feared. It is a faith based ride its on now and take away that faith and poof.

[Ryan Ruck]

18 Signs That Massive Economic Problems Are Erupting Everywhere

June 3, 2013

Submitted by Michael Snyder via The Economic Collapse blog,

This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control.

One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have "kicked the can down the road" by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the "sugar high" produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world - it is just a matter of time.

But for the moment, there are a lot of skeptics out there.

For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.

Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.

The following are 18 signs that massive economic problems are erupting all over the planet...

#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.
#2 Italy's economy has now been contracting for seven quarters in a row.
#3 Industrial production in Italy has fallen for 15 months in a row. It has now fallen to its lowest level in about 25 years.
#4 The number of people that are considered to be "seriously deprived" in Italy has doubled over the past two years.
#5 Consumer confidence in France has just hit a new all-time low.
#6 The number of unemployed workers seeking a job in France has hit a brand new all-time record high. Many unemployed workers in France are utterly frustrated at this point...

"I've sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there's never anything," said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.
#8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries...

In Greece, 62.5% of young people are out of work, in Spain it's 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.

#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots...

Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.

In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.

It is Sweden's worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.

#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#11 Economic growth in India is the slowest that it has been in an entire decade.
#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article...

-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.

-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker

-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker

#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.
#14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch.
#15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an "economy recovery", real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars)
#16 Wall Street is buzzing about the fact that "the Hindenburg Omen" appeared at the end of last week. So exactly what is "the Hindenburg Omen"? The following are the criteria that are used to determine whether it has appeared or not...

1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).

When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.
#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of "smart money" has been getting out of the market and lots of "dumb money" has been pouring in.
#18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article...

Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day

Whenever margin debt spikes like this, a stock market crash almost always follows. If you doubt this, just check out the chart in this article.
Wall Street has had a good couple of years, but it has been a "false prosperity" that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy...

The Fed has been flooding the system with money. The problem is the money doesn't flow into the system evenly. It doesn't increase economic activity and asset prices in concert.

Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the NASDAQ more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market - things like stocks, bonds, art, wine, jewelry, and luxury real estate.

Money-printing boosts the economy of the people closest to the money flow. But it doesn't help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.

The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.

Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.

There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic...

"Don't be afraid to let the drama play out."

Will he take his own advice when the next great financial crisis strikes the United States?

That seems very unlikely.

Unfortunately, things are not going to be so easy to fix this next time.

What happened back in 2008 was just a preview.

What is coming next is going to absolutely shock the world.

[American Patriot]

Should be interesting in a few weeks, then.....

[Ryan Ruck]

Albert Edwards: "Has The US Recession Already Begun?"

June 6, 2013

Some are surprised that inflation has failed to take off despite massive amounts of quantitative easing. The explanation, ECRI explains, is simple: recession kills inflation. For all the talk of the wealth effect, demand is falling and deflation is closer than at any time since 2009. The 'r' word is seldom heard on the lips of the mainstream media - how absurd - but as SocGen's Albert Edwards notes, if anyone is waiting for the ISM to tell them that a recession has started in the US, they are looking at the wrong data. Much more importantly, Edwards explains, we may well be in for a double dose of bad news - both falling revenues and falling margins. History suggests this as good a leading indicator as any other for whether the US economy will endogenously fall back into recession.

Via SocGen's Albert Edwards:

One of the axioms of economics I have always had a great deal of faith in is that profit margins mean revert.


But unfortunately at the height of a recovery most commentators forget this as they become intoxicated by the equity market's prior stellar performance and tend to continue to price the market off analysts' forward earnings - which inevitably always forecast further healthy gains ahead. Even the use of trailing earnings for PE calculations tends, in retrospect, to be too optimistic. That is why cyclically adjusted PEs are so important.

...

excluding financials, profit margins have failed to break out above their usual range. As night follows day, the market should be pricing in a decline in the margin cycle from here.




The surprisingly weak out-turn in May for the US manufacturing ISM seems to me just a continuation of what we have seen for the last few years, with mini-cycles of optimism and pessimism anchored to a clear downtrend.




It is also notable that just as the last recession was starting in November 2007, the ISM was embarking on a surprising six month long H1 2008 recovery back above the key 50.0 mark, before plunging in August and September ahead of the Lehman bankruptcy... The bottom line here is that if anyone is waiting for the ISM to tell them a recession has started in the US they may be looking at the wrong data.

...

We find profits data far more useful to determine if a recession has started or indeed about to start. The results are 'shocking':

"In the S&P 500, there have been 91 negative EPS preannouncements issued by corporations for Q2 2013 compared to 13 positive EPS preannouncements. By dividing 91 by 13, one arrives at an N/P ratio of 7.0 for the S&P 500 Index. This 7.0 ratio is higher than the N/P ratio at the same point in time in Q2 12 (3.4), and is above the long-term aggregate (since 1995) N/P ratio for the S&P 500 (2.4)."

Reuters goes on to say that if this persists it would be a record pace of downgrading ahead of a reporting round.

...

In addition to the margin downturn, revenue growth is also flagging badly. Thomson Reuters also reports that revenue forecasts are being missed at an increasingly rapid rate. Indeed, the latest slide in the ISM below 50 suggests we are now close to outright yoy decline




Thus we may well be in for a double dose of bad news - both falling revenues and falling margins. History suggests this as good a leading indicator as any other for whether the US economy will endogenously fall back into recession.

AS ECRI confirms:

Despite surging prices for homes and equities, consumer spending is contracting, registering its biggest monthly decline since September 2009. Quite simply, the wealth effect is rendered moot by languishing incomes.

No wonder yoy U.S. import growth has also plunged into negative territory, whether or not oil imports are included. In recent decades, this has happened only during U.S. recessions. Notably, unlike data for GDP and jobs, imports data are not revised substantially, long after the fact.

As a result, core inflation – defined as yoy growth in the Personal Consumption Expenditure (PCE) deflator excluding food and energy – has now dropped under 1.1%, to the lowest reading in its entire 53-year record.

Meanwhile, yoy growth in the headline PCE deflator has dropped to 0.7%, its lowest reading since October 2009, and far below the Fed's official 2.0% target. This inflation measure has never been this low except during or in the immediate aftermath of recession.

The bottom line: for all the talk of the wealth effect, demand is falling and deflation is closer than at any time since 2009.

[Ryan Ruck]

Uh oh.

Asian markets are looking pretty nasty right now. NASDAQ futures aren't too hot either.





Guess we'll see what tomorrow brings for the US markets. Probably up 150.

[BRVoice]

Deutsche Bank "Is Horribly Undercapitalized... It's Ridiculous" Says Former Fed President Hoenig


Submitted by Tyler Durden on 06/15/2013 13:11 -0400


Back in May 2012, when we were making fun at the latest iteration of the now fatally discredited European stress tests, we took the first of many jabs at the what may currently be the world's most systematically important, and undercapitalized, bank in the world:

Finally, if anyone is still confused where the pain is headed next, here is a list from Morgan Stanley of all Euro banks with a Core Tier 1 ratio that is so low, that the banks will soon regret not raising more capital in the period of calm that the ECB's LTRO bought them.



Also, one bank is missing from the list above: Deutsche Bank. CT1/TA: 1.68%. Oops.

That's right - Deutsche Bank was so bad that it wasn't even allowed to appear on a screen of Europe's most undercapitalized banks - and we helpfully pointed out its true capital ratio of just under 2%, and an implied leverage of 60x!

Fast forward 13 months to a Reuters interview with former Kansas City Fed president and FOMC dissenter and sole voice of reason at the Federal Reserve, and current FDIC Vice Chairman Tom Hoenig, who confirmed that once again Zero Hedge was just a year ahead of the curve.

A top U.S. banking regulator called Deutsche Bank's capital levels "horrible" and said it is the worst on a list of global banks based on one measurement of leverage ratios. "It's horrible, I mean they're horribly undercapitalized," said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. "They have no margin of error." Deutsche's leverage ratio stood at 1.63 percent, according to Hoenig's numbers, which are based on European IFRS accounting rules as of the end of 2012.

In other words, the slighest systemic shock in Europe and Deustche Bank gets it. And as Deutsche Bank goes, so does Germany, so does Europe, so does the world.

Immediately confirming Hoenig's (and Zero Hedge's) observations, was Deutsche's prompt repeat that "all is well" and that "these numbers" are not like "those numbers."

"To say that we are undercapitalized is inaccurate because if you look at the Basel framework, we're now one of the best capitalized banks in the world after our capital raise," Deutsche Bank's Chief Financial Officer Stefan Krause told Reuters in an interview, when asked about Hoenig's comments. "To suggest that leverage puts us in a position to be a risk to the system is incorrect," Krause said, calling the gauge a "misleading measure" when used on its own.

Of course, DB's lies are perfectly expected - after all it is a question of fiath. So let's go back to Hoenig who continues to be one of the few voices of reason among the "very serious people":

Hoenig pointed to the gain in Deutsche Bank shares in January on the same day it posted a big quarterly loss, because it had improved its Basel III capital ratios by cutting risk-weighted assets.

"My other example with poor Deutsche Bank is that they lose $2 billion and raise their capital ratio. It's - I don't want to say insane, but it's ridiculous," Hoenig said.

A leverage ratio is a better method to show a firm's ability to absorb sudden losses, Hoenig says, and he has floated a plan to raise the ratio to 10 percent. He said the 3 percent leverage hurdle under Basel was a "pretend number."

Opponents of using such a ratio say that it ignores the risk in a bank's loan books, and can make a bank with only healthy borrowers look equally risky as a bank whose clients are less likely to pay back their loans. It also fails to take into account how easily a bank can sell its assets - so-called liquidity - or whether it is hedged against risk.

Still, equity analysts said that while Deutsche Bank likely will meet regulatory capital requirements, its ratios look weak.

Ugh: terminology, ratios, numbers. It's gives a chap the belly-ache.

But just as we were about a year ahead with our warning of DB's "off the charts" leverage, so we wish to remind readers that some time around June 2014, the topic of Deutsche Bank's $72.8 trillion in derivatives, or about 21 times more than the GDP of Germany, will be the recurring news headline du jour.

Recall from April: "At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)" which for those who missed it, we urge rereading:

[American Patriot]

Rotting, Decaying And Bankrupt – If You Want To See The Future Of America Just Look At Detroit

Posted on June 17, 2013 by Land & Livestock Interntional, Inc.
via The Economic Collapse


Eventually the money runs out. Much of America was shocked when the city of Detroit defaulted on a $39.7 million debt payment and announced that it was suspending payments on $2.5 billion of unsecured debt, but those who visit my site on a regular basis were probably not too surprised. Anyone with half a brain and a calculator could see this coming from a mile away. But people kept foolishly lending money to the city of Detroit, and now many of them are going to get hit really hard. Detroit Emergency Manager Kevyn Orr has submitted a proposal that would pay unsecured creditors about 10 cents on the dollar. Similar haircuts would be made to underfunded pension and health benefits for retirees. Orr is hoping that the creditors and the unions that he will be negotiating with will accept this package, but he concedes that there is still a “50-50 chance” that the city of Detroit will be forced to formally file for bankruptcy. But what Detroit is facing is not really that unique.

In fact, Detroit is a perfect example of what the future of America is going to look like. We live in a nation that is rotting, decaying, drowning in debt and racing toward insolvency. Already there are dozens of other cities across the nation that are poverty-ridden, crime-infested hellholes just like Detroit is, and hundreds of other communities are rapidly heading in that direction. So don’t look down on Detroit. They just got there before the rest of us.


The following are some facts about Detroit that are absolutely mind-blowing…


1 – Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.
2 – Over the past 60 years, the population of Detroit has fallen by 63 percent.
3 – At this point, approximately 40 percent of all the streetlights in the city don’t work.
4 – Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.
5 – 210 of the 317 public parks in the city of Detroit have been permanently closed down.
6 – According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.
7 – Approximately one-third of Detroit’s 140 square miles is either vacant or derelict.
8 – Less than half of the residents of Detroit over the age of 16 are working at this point.
9 – If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.
10 – According to one very shocking report, 47 percent of the residents of Detroit are functionally illiterate.
11 – Today, police solve less than 10 percent of the crimes that are committed in Detroit.
12 – Ten years ago, there were approximately 5,000 police officers in the city of Detroit. Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.
13 – Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.
14 – The murder rate in Detroit is 11 times higher than it is in New York City.
15 – Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.
16 – Right now, the city of Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.
As Detroit Emergency Manager Kevyn Orr noted last week, it took a very long time for Detroit to get into this condition…

“What the average Detroiter needs to understand is that where we are right now is a culmination of years and years and years of kicking the can down the road,” said Orr, adding that his proposal should not be seen as a “hostile act” but as a step in the right direction.

Does that sound familiar?


It should.


U.S. politicians have also been kicking the can down the road for “years and years and years”.


But eventually you can’t kick the can down the road anymore.


Sometimes it is helpful to step back and look at what we have done to ourselves over the past several decades.


For example, back in 1980 the U.S. national debt was less than one trillion dollars. Today, it is rapidly approaching 17 trillion dollars.


And our debt binge has greatly accelerated under Barack Obama.


During Barack Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.


Isn’t that insane?


In fact, if you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.


The following are a lot more facts about our exploding national debt from one of my previous articles entitled “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“…


#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.


#2 During the fiscal year that just ended, the U.S. government took in 2.449 trillion dollars but it spent 3.538 trillion dollars.


#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.


#4 Over the past four years, welfare spending has increased by 32 percent. In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years. At this point, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. Once again, these figures do not even include Social Security or Medicare.


#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent. Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.


#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps. Now, 47 million Americans are on food stamps. And this has happened during what Obama refers to as “an economic recovery”.


#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.


#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.


#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called “Prom Week”, which apparently simulates “all the social interactions of the event.“
#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.“


#11 The National Science Foundation recently gave researchers at Purdue University $350,000. They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.


#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.


#13 The National Science Foundation recently gave a whopping $697,177 to a New York City-based theater company to produce a musical about climate change.


#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.


#15 The National Science Foundation has given 1.2 million dollars to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.


#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.


#17 The National Science Foundation recently spent $30,000 on a study to determine if “gaydar” actually exists. This is the conclusion that the researchers reached at the end of the study…

“Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features”

#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.


#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO combined. In fact, the United States accounts for 41.0% of all military spending on the planet. China is next with only 8.2%.


#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.


#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year. Now, approximately 22 percent of all federal workers do.


#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.


#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.


#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005. When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more. By June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.


#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.


#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually. That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.


#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.


#28 During 2010, U.S. Senators pulled $72,370 out of the “Senate Restaurant Fund”.


#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.


#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.


#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.


#32 When you combine all federal government spending, all state government spending and all local government spending, it comes to approximately 41 percent of U.S. GDP. But don’t worry, all of our politicians insist that this is not socialism.


#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983. Today, that number is sitting at an all-time high of 49 percent.


#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America. This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.


#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.


#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.


#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for each and every household in the United States.


#38 In the United States today, more than 61 million Americans receive some form of Social Security benefits. By 2035, that number is projected to soar to a whopping 91 million.


#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.


#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars. Now it is about 16.7 trillion dollars. That is an increase of 6.1 trillion dollars in a little more than 4 years.


#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.


#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.


#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.


#44 Some suggest that “taxing the rich” is the answer. Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.


#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.


#46 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.


#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.


#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.


#49 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.


#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.


#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.


#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.


#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent. If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.


#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.


#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay. Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”. His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.


Please share this article with as many people as you can. We are in the process of committing national financial suicide and time is rapidly running out to do anything about it.


Just like Detroit, a day is rapidly approaching when America will not be able to kick the can down the road anymore.


Sadly, our politicians don’t seem inclined to do anything about it and most of the population seems to think that our exploding national debt is not a significant problem.


By the time it becomes clear how wrong they were, it will be far too late to do anything about it.

[American Patriot]

oh oh


Wall Street drops in wake of Fed stimulus wind-down plan

Reuters – 1 hour 19 minutes ago

• View PhotoTraders work on the floor at the New York Stock Exchange June 20, 2013. REUTERS/Brendan McDermid

RELATED QUOTES

Symbol	Price	Change
^DJI	14,889.25	-222.94
^INX		0.00
^IXIC	3,387.62	-55.58
DRX.IR	10.53	0.42
EBIX	11.3599	-8.36

By Alison Griswold


NEW YORK (Reuters) - The Federal Reserve's plans to begin winding down its massive monetary stimulus later this year hurt shares on Wall Street for a second day Thursday, putting the S&P on track for its worst two-day run in seven months.


Stocks were down across all sectors, extending a selloff sparked by Fed Chairman Ben Bernanke's comments Wednesday on how the Fed might begin to withdraw its $85 billion in monthly bond purchases before the end of the year as the economy improves. Those stimulus measures, along with sturdy corporate profits, have propped up the U.S. equity market so far this year, and boosted the markets to record highs in May.


The selling pushed the S&P 500 below its 50-day moving average, a key technical measure of the recent trend in stocks. It has closed below that technical level on only one day this year, in mid-April, and a break below it could add to selling pressure.


Bernanke's comments triggered selloffs in other markets supported by the Fed purchases, including Treasuries and U.S. commodities.
The S&P now sits around 4 percent below its all-time closing high on May 21 of 1,669.16.


Other markets around the world have been hurt much more, and Gordon Charlop, managing director at Rosenblatt Securities in New York, said a U.S. pullback was "somewhat inevitable."


"While we're seeing a turnaround in the selloff, the flow up to this point has not been disorderly. It's been a reasonably measured selloff," he said.


Investors were likely to watch the 1,600 level on the S&P 500 as support. Each of the 10 S&P sectors was down more than 1 percent, with consumer staples leading the losses with a 1.8 percent drop. Kroger fell 5.1 percent after the company said its sales growth missed expectations in the first quarter.


The Dow Jones industrial average was down 235.72 points, or 1.56 percent, at 14,876.47. The Standard & Poor's 500 Index was down 27.87 points, or 1.71 percent, at 1,601.06. The Nasdaq Composite Index was down 55.51 points, or 1.61 percent, at 3,387.69.


Specialty drugmaker Forest Laboratories Inc is among a handful of companies interested in bidding for Irish drugmaker Elan Corp Plc, two people familiar with the situation said. Elan's U.S.-traded shares shed 0.6 percent to $14.07, pressured by a rally in the greenback.


Walt Disney shares fell 2.8 percent to $62.55 after Goldman Sachs removed the stock from its "conviction buy" list.


Shares of Ebix Inc lost 37.4 percent to $12.35, a day after the insurance software provider said that it and an affiliate of Goldman Sachs would cancel their planned merger after U.S. regulators started an investigation into allegations of misconduct at Ebix.


Resales of U.S. homes rose in May to the highest level in 3-1/2 years and prices jumped, a sign that the housing sector recovery is gathering steam and could give the economy a significant boost this year.


Elsewhere, weaker factory output in China and a continued recession in the euro zone kept investors concerned about global growth, pressuring stock markets worldwide.
(Additional reporting by Rodrigo Campos; Editing by Bernadette Baum)

[American Patriot]

Stocks Tumble With Bonds as Gold Slides in Global Rout

By Stephen Kirkland & Inyoung Hwang - Jun 20, 2013 11:19 AM MT


Pimco's Gross on Bond Market, Bernanke, Fed Policy

Stocks tumbled, with the benchmark index of global equities sinking the most in 19 months, and bonds fell around the world after the Federal Reserve said it may phase out stimulus and China’s cash crunch worsened. Gold led commodities lower as the dollar rallied for a second day.
Enlarge image
A trader monitors financial data on his computer screens beneath a display of the DAX Index curve at the Frankfurt Stock Exchange. Photographer: Ralph Orlowski/Bloomberg



June 19 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke offers his views on the outlook for the U.S. economy and labor market, and the central bank's unprecedented bond-buying program and benchmark interest rate. Bernanke speaks at a news conference following a meeting of the central bank's policy-setting Federal Open Market Committee in Washington. (Excerpts. Source: Bloomberg)





June 20 (Bloomberg) -- Bill Gross, co-chief investment officer of Pacific Investment Management Co., Diane Swonk, chief economist at Mesirow Financial Inc., and Leon Cooperman, chief executive officer of Omega Advisors LLC, talk about Federal Reserve policy and market reaction. This report also includes comments from BNP Paribas's Julia Coronado, ABN Amro Private Banking's Didier Duret, Jefferies & Co.'s David Zervos, Bank of America Corp.'s Michael Hanson and Global Financial Private Capital's Chris Bertelsen. (Source: Bloomberg)



Enlarge image
A trader works on the floor of the New York Stock Exchange (NYSE) as Ben S. Bernanke, chairman of the U.S. Federal Reserve, speaks on television, in New York, on June 19, 2013. Photographer:Jin Lee/Bloomberg

Enlarge image
Employees work on the trading floor at the Tokyo Stock Exchange in Tokyo, Japan. Photographer: Junko Kimura/Bloomberg

Enlarge image
The rupee sank to a record. Photographer: Dhiraj Singh/Bloomberg





The MSCI All-Country World Index (MXWO) lost 3 percent, the most since November 2011, and the Standard & Poor’s 500 Index sank 1.6 percent at 1:17 p.m. in New York to extend its biggest two-day drop of the year. Ten-year Treasury note yields rose nine basis points to 2.44 percent, the highest since August 2011, as rates surged from New Zealand to Germany. Emerging-market assets fell with India’s rupee and Turkey’s lira touching record lows. The S&P GSCI gauge of raw materials slid 2.8 percent, the most since September, as gold sank below $1,300 an ounce for the first time since 2010.


Chairman Ben S. Bernanke said the Fed may start reducing bond purchases that have fueled gains in markets globally, and end the program in 2014 should risks to the U.S. economy abate. Data from China, the biggest developing-nation economy, indicated manufacturing shrank at a faster pace and the benchmark money-market rate climbed to a record.


“It’s a knee-jerk downward reaction because everyone is afraid that if you’re taking the punch bowl away that must be bad for markets,” Philip Orlando, the New York-based chief equity strategist at Federated Investors, which has about $380 billion in assets under management, said by telephone. “The market is choosing to ignore the good news embedded in the Fed’s comments. All it’s looking at is the reduction of the accommodation.”
Slump Extended

The S&P 500 (SPX) extended yesterday’s 1.4 percent drop as all 10 of its main industry groups retreated more than 1 percent, with only 40 stocks advancing. Walt Disney Co., Intel Corp. and Bank of America Corp. lost at least 2.2 percent to lead declines in all 30 stocks in the Dow Jones Industrial Average, sending the gauge down as much as 253 points for its worst decline in two months.


Ebix Inc. tumbled 43 percent as Goldman Sachs Group Inc. terminated an agreement to acquire the insurance-software maker after federal prosecutors opened an investigation into allegations of intentional misconduct.


An S&P index of homebuilders tumbled 7.3 percent even after sales of previously owned U.S. homes climbed more than forecast in May to the highest level since November 2009. Purchases of existing houses increased 4.2 percent to an annualized rate of 5.18 million from 4.97 million in April, National Association of Realtors figures showed today. The median forecast in a Bloomberg survey called for a 5 million rate of sales.
Economic Watch

Another report showed the index of U.S. leading indicators rose less than projected in May, a sign the world’s largest economy may take time to accelerate. The Conference Board’s gauge of the outlook for the next three to six months increased 0.1 percent after a revised 0.8 percent gain in April that was higher than initially reported. The median forecast of economists surveyed by Bloomberg called for a rise of 0.2 percent.


More Americans than forecast filed applications for unemployment benefits last week, with claims climbing by 18,000 to 354,000 in the week ended June 15 from a revised 336,000 the prior period, the Labor Department reported today. The median forecast of 46 economists surveyed by Bloomberg called for 340,000.


“Employment is the most important thing at the end of the day,” Uri Landesman, president of New York-based hedge fund Platinum Partners, which manages about $1.2 billion, said by telephone. “The unemployment numbers today underscored the fact that despite the fact that balance sheets are fairly strong, no one is hiring because nobody believes that this is really going to be a long, sustained recovery.”
Volatility Gauges

Speculation that the Fed will begin withdrawing its stimulus measures has boosted trading in an exchange-traded note tracking U.S. volatility. The iPath S&P 500 VIX Short-Term Futures ETN was the third most-active ETF in the U.S. yesterday, with 86.7 million shares changing hands, according to data compiled by Bloomberg. While the Nikkei 225 Stock Average Volatility Index (VNKY) fell 3.6 percent today, a similar measure for Hong Kong’s Hang Seng Index jumped 7.7 percent.


The stock selloff pushed the MSCI all-country gauge down 6.7 percent from the five-year high reached on May 21, the day before Bernanke raised the possibility of reducing stimulus should economic indicators improve. About $2.4 trillion was erased from global equity values over that stretch, with indexes in Hong Kong and Japan sliding more than 20 percent into bear markets.


Germany’s 10-year bund yield climbed as much as 12 basis points to 1.68 percent, a four-month high. Spanish bonds stayed lower, erasing six days of gains, as the nation sold 4.02 billion euros ($5.3 billion) of debt maturing in 2018, 2021, and 2023, compared with a maximum target of 4 billion euros.
Australia’s 10-year yield rose as much as 23 basis points to 3.65 percent, a level unseen since March 15, and New Zealand’s 10-year rate surged 30 basis points to 4.09 percent.
Treasuries, Dollar

Volatility in Treasuries as measured by the Bank of America Merrill Lynch MOVE Index (MOVE) was at 86.89 yesterday, the highest since June 2012.
The dollar strengthened against all 16 major peers except the franc, surging 1.7 percent to 97.93 yen and appreciating 0.5 percent to $1.3233 per euro. Norway’s krone tumbled more than 4 percent versus the dollar, the most since 2008.


The Australian dollar dropped for a fifth day, sliding 0.9 percent to 92.15 U.S. cents and reaching 91.64, the weakest since September 2010.
The JPMorgan Global FX Volatility Index increased to as high as 11.51 percent, the highest in a year. The average in the past 12 months is 8.66 percent.
European Shares

The Stoxx Europe 600 Index (SXXP) slid 3 percent, the most since November 2011, and closed at its lowest level of the year as all 19 industry groups retreated. Randgold Resources Ltd., a producer of the precious metal in Africa, led materials stocks lower, sinking 7.5 percent. BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, lost at least 4.5 percent.


The number of shares changing hands in Stoxx 600 companies today was 32 percent greater than the 30-day average, according to data compiled by Bloomberg. The VStoxx Index (V2X), which measures the cost of options hedging against moves in the Euro Stoxx 50 Index, climbed 16 percent.


The MSCI Emerging Markets Index (MXEF) slid 4 percent, the most since 2011. Indonesia’s Jakarta Composite Index tumbled 3.7 percent India’s Sensex and Russia’s Micex index lost at least 2 percent and Brazil’s Ibovespa extended its two-day plunge to 4.2 percent to reach a four-year low.


Investors are pulling money from emerging markets at the fastest pace in two years as slowing growth, prospects for lower stimulus and anti-government protests from Brazil to Turkey rattled investors. More than $19 billion left funds investing in developing-nation assets in the three weeks to June 12, the most since 2011, according to EPFR Global.
‘Another Round’

“We expect another round of correction in the period ahead, across the board, be it in emerging market currencies or emerging market fixed income,” a team led by Benoit Anne, head of strategy at Societe Generale SA in London, wrote in a report today. “We are positioned quite defensively.”


The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong slid 3.3 percent to the lowest since Sept. 6, 2012. The preliminary reading of 48.3 for a Chinese Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists.
China Rates

China’s seven-day repurchase rate, a gauge of interbank funding availability, rose to the highest since at least 2006. The central bank has refrained from using reverse-repos to inject funds into the interbank market since Feb. 7.


Gold for immediate delivery lost 4.3 percent to $1,292.57 an ounce, after dropping to $1,286.20, the lowest price since September 2010. Gold futures declined 5.8 percent in New York. Holdings (GDTRGOLD) in the SPDR Gold Trust, the world’s largest exchange-traded product backed by bullion, fell below 1,000 metric tons for the first time in four years. Silver plunged as much as 7.8 percent to $19.7345 an ounce, the lowest since Sept. 10, 2010, and palladium declined 3.7 percent, retreating for a sixth day in its longest slump in almost a year.


Copper for delivery in three months retreated 2.8 percent to $6,765 a metric ton on the London Metal Exchange. Nickel dropped as much as 3.5 percent to $13,701 a ton, the lowest price since May 2009.


West Texas Intermediate crude fell for a second day, declining 2.9 percent to $95.43 a barrel. The volume of all futures traded was more than 57 percent above the 100-day average.

[American Patriot]

Well....


so much for retirement.

The Dow is in Freefall.....


Down over 350 points in the last hour or so.

[Phil Fiord]

I had advised people to sell two months ago. yes, the markets still went up some, but these folks had recovered what they lost in 2008 and had modest gains, so I advised them to not lose it all and cash out to some other form, even just cash.

[AGEUSAF]

I moved 100% on the books stuff to safety this past week.

Personal under the radar stuff I just took a bath in. I knew this was going to happen though I knew three months ago it was time to move into something else and just cash out but I got lazy because it would have taken some leg work to get it done. This is what happens when one has a toddler to chase I guess. So...I am in dollar cost averaging all the way down on this probably very rough ride and wait for the next version of "easing". If the jig is up though and they can't actually control interest rates no matter what the fed does then this could get interesting. Maybe it's just stagflation too, I haven't thought about that much could be just a mucky lose gain lose economy...too much volatility.

You rock a boat too much to the good or bad in a short period of time she just might tip :-)

[American Patriot]

My stuff is "stable". I lost some money. Not much though. It looks like the IRAs are taking a beating but given what I've got in there it's not a big loss at this point. Hope it doesn't crash.

[American Patriot]

Dow Suffers Biggest Drop Of 2013 As Markets Continue To Panic About The Fed

Posted: 06/20/2013 3:55 pm EDT | Updated: 06/20/2013 4:38 pm EDT







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The Fed, Fed Chairman Ben Bernanke, Fed Forecasts, Federal Reserve Chairman Ben Bernanke, Dow Biggest Drop 2013, Fed, Federal Reserve Forecasts, Mark Gongloff on Money, Business News


Does it feel unusually hot to you today? That is because all of your money is on fire, thanks to the Federal Reserve.
And it didn't have to be this way! Blame Fed economic forecasts that will probably be useless, along with chronic miscommunication between the markets and the Fed.
The Dow Jones Industrial Average tumbled on Thursday by 353.87, or more than 2 percent, to 14,758.32, the index's worst single-day selloff since November 2011. All 30 of the Dow's components were in the red. Thursday's pummeling followed a 200-point drop on Wednesday, adding up to the worst two-day selloff since November 2011. The broader S&P 500-stock index and the tech-heavy Nasdaq both fell 2 percent, as well.
More worrisome for the Fed, bond markets were also taking a beating, driving interest rates, which move in the opposite direction of prices, to their highest levels in nearly two years. The Fed has been buying up $85 billion worth of bonds per month in an effort to keep interest rates low. It cannot be happy watching the yield on the 10-year Treasury note surge to 2.44 percent -- the highest since 2011, according to data tracker Tradeweb.
And the pain wasn't limited to stocks and bonds. Gold was just getting flat-out massacred, down nearly 7 percent. Foreign markets were also a sea of red, with Europe's top stock index down nearly 4 percent and Japan's Nikkei index down nearly 2 percent. Investors are also fleeing emerging markets like Brazil and China, with its juggernaut of an economy lately showing troubling signs of a slowdown.
All of this follows Fed Chairman Ben Bernanke's announcement on Wednesday that the Fed thinks the U.S. economy is enough on the mend that it can start slowing down its bond-buying program known as "quantitative easing," or "QE," later this year. Bernanke warned that the Fed might yet be wrong in its relatively rosy outlook, which could mean more QE, not less. Markets are choosing to go stark-raving bananas first and wait for the economic numbers later.
Markets probably need not worry. The Fed is in fact chronically awful at predicting the economy, notes the Washington Post's Dylan Matthews. And since the end of the Great Recession, it has mostly been too optimistic about growth.

At first glance, the bond market seems to agree with the Fed: Higher interest rates can be seen as a sign of optimism about the economy. The yield on the 10-year Treasury note has jumped all the way to 2.44 percent from 1.63 percent back in early May. That would seem to be an awful lot of optimism indeed.
But there's something funny going on in the bond market: Namely, inflation expectations are disappearing. One reason bond traders like to drive up interest rates is if they think inflation is going higher. They want to get paid more money in the future, to keep up with rising prices.
Instead, market expectations of future inflation, as measured by the spread between 10-year Treasury yields and the yield on Treasury Inflation Protected Securities (TIPS), have tumbled from more than 2.5 percent inflation growth per year in early May to about 2 percent recently, as you can see in the chart below. (Story continues below chart.)

"If bond markets believed the Fed’s new policy reflected stronger growth prospects, they would have raised inflation expectations," Charles Dumas, chairman of the London consulting firm Lombard Street Research, wrote in a note. "These have in fact dropped sharply."
The Fed may of course turn out to be right, and economic growth and inflation might pick up. But financial markets aren't buying it, obviously. And if they throw enough of a tantrum about the Fed, driving interest rates higher and hammering asset prices, then their pessimism might turn out to be a self-fulfilling prophecy.
This isn't the first time the market has thrown a hissy fit after Fed warnings about possibly choking back on stimulus. In the past, Bernanke & Co. have taken to speeches and the media to clarify their previous clarifications. You'd think they might have figured this communication thing out by now.

[Ryan Ruck]

It's shaping up to be another down day on the market.