Is the Big One Coming? (Jolt to the Financial System)

[marmar]

from Minyanville:



by Todd Harrison


The market is rumbling and absent the implicit Government guarantee—which differs from the explicit guarantee we saw on Sunday—the question is simple:

Who will step in and save the day?

We've long discussed the laws of diminishing ammunition, offering that the last bullet would be pointed inward.

Using another analogy, leaks are springing all over the financial dam and there are only so many fingers to plug those holes, particularly after two fingers—the middle one on each hand—were used on Sunday.

Faith in the system--credibility, psychology, perception, social mood and risk appetite--is paramount here.

We've been watching it closely for a long time but the shelf life has seemingly shortened.

I'm not smart enough to know if this is the big one or simply a case of Turnaround Tuesday shaking the tape.

What I will say—and as we have said— is that credit problems persist, debt needs to be destroyed and equity markets aren’t pricing in that risk.

Either the former improves in time to absorb the year-end issuance or we're in for a harsh comeuppance that will remind the world that profiting is a privilege rather than a right. ......(more)

The complete piece is at: http://www.minyanville.com/articles/psychology-perception-markets-wamu-wm-lehman/index/a/18880

[whistle]

1. Are you referring to the economic and financial melt-down on a scale not seen

...since the dark ages of the 14th century?

[marmar]

2. I can't speak for the author of the article, but, yeah, pretty much......

:scared:

[AlCzervik]

3. Did you see this yet?

http://biz.yahoo.com/ap/080909/wall_street.html

[elfin]

4. Watching last night's Charlie Rose

and all the experts in the roundtable are extremely pessimistic, while TRYING to sound calm. We may not have a huge, sudden jolt - but it will continue to erode over the next year or so, with worldwide problems ensuing from Bushco's mismanagement and unregulated crony capitalism knowing that there would not be any significant oversight from this administration.

[AlCzervik]

5. i watched that show and it was in a word, scary.

[whistle]

6. The Fannie Mae/Freddie Mac unlimited bailout requested by Treasury Secretary

...Henry Paulson could escalate the Federal Debt which is now $9.68 trillion to over $23.0 trillion by the end of 2010.

Now that would cause hyperinflation on the scale of Weimar Republic of Germany 1922-23 and completely destroy the U.S. economy