Just the Facts, no Tinfoil Hats

Some of my best friends wear tinfoil hats. These days, though, no sooner has a good conspiracy theory made the rounds, but it’s proven to be fact. This past weekend there were outrageous rumors that Argentina would confiscate citizens’ pension money. By Wednesday afternoon it was a done deal. There’s little point in providing a link; it’s old news now.

However, and borrowing heavily from a comment on Global Economic Trend Analysis, let this be a warning to us all. The Argentine state is taking control of its citizens’ privately-managed pension funds in a drastic move to raise cash. This could be a harbinger of what will happen across the world as governments discover that tax revenues are insufficient and bond markets unwilling to cover their obligations and deficit spending.

Then there was the one about war-hardened troops coming home from Iraq being stationed in cities across America. To fight terrorism, of course. Isn’t it illegal to use the armed forces for domestic law enforcement you ask? Sort of. Excluding Katrina, it happened before. That’s what the Civil War was about and, in particular, the aftermath. Regardless, they’re home and at their new battle stations throughout the country. Here’s a link to a link with the original story from Army Times plus insightful commentary: http://tinyurl.com/6dtgmn Having combat-ready troops on domestic soil will come in handy at some point, I’m sure.

So, howz about the Lehman CDS payout on Tuesday. Seamless. Nothing untoward picked up by the mainstream news or the blogosphere, nothing on Bank Implode-O-Meter and nothing on Hedge Fund Implode-o-Meter. Bit of a worldwide stock market crash, but probably unrelated. Unlimited lending from the Fed covered the banks, but what about the hedge funds? Well, hedge funds have a prime broker and the largest prime brokers are now subsidiaries of the largest banks and, to complete the loop, the banks have unlimited borrowing power. This story may not be over. For a few erudite observations, scroll down on Jim Willie’s new site: http://globaltinfoilanalysis.blogspot.com/

The Dow is back to bungee jumping, closing down almost 6% Wednesday and taking world stock markets with it on Thursday. Bloomberg reports that “Asian stocks slumped, driving the region's benchmark index to the lowest level in four years, as Japanese exports missed estimates, commodities prices tumbled and South Korea's worst financial crisis in a decade deepened.” Japan was down 2.46%, the Hang Seng 3.55% and Singapore 4.14%.

One of these days the markets are going to go down and stay down. That day could even be today.
mg