OT: Countdown: Three Weeks to Chaos

User Forum Topic
Submitted by partypup on September 17, 2008 - 10:37pm

I know that I have been characterized as "alarmist" and a "doomsayer" by many on this board in the past, but I would be remiss if I did not pass along some information to you all that I have learned from a very knowledgeable and well-placed source in the finance industry who has guided me for the past two years as I have attempted to navigate this crisis.

This source predicted, four (4) months ago, that the market would enter a heart-pounding phase in mid-late September. It would be as though, in his words, "the world would hold its breath" in anticipation of what would follow.

And then, on or about the first week of October, the dam would suddenly burst and the ride to hell would begin -- for months. He predicted that the system would experience a massive seizure, such that all electronic forms of trade (stocks, banks, ATMS) would simply fail. And the much-delayed death of the dollar would begin in earnest.

This coincides almost exactly with what the think tank at LEAP (http://leap2020.eu/GEAB-in-English_r25.html) has been predicting for the past 18 months. I have studied each of their reports, in which they have consistently labeled Fall 2008 as the point in which the world in general, and the U.S. in particular, would enter the heart of the system crisis. The only variation I note is that LEAP estimates that the dollar's role as the world's reserve currency will cease around the end of the 2nd quarter of 2009. My source believes that it will happen sooner. Or perhaps it is the case that the process begins in October and culminates in June. In any event,
the Fall and Winter are going to be extraordinarily brutal.

I am hoping that all who read this will understand the message that I am trying to relay to you: time is short. Many of us have been expecting what is coming from months or years. Some have only awaken to what is coming a few months ago. Others still don't understand what is coming. But as Wall St literally disintegrates before our eyes, I don't think there can be any question at this point that we are on the verge of something unprecedented and catastrophic.

If you have money in the markets, you need to get it out NOW.

If you have a 401K and are fearful of a withdrawal penalty and taxes, keep in mind that 60% of something is better than 100% of nothing.

If you have more funds in your bank than the absolute minimum necessary to pay your expenses, then you're playing Vegas odds. FDIC is technically insolvent as I write this, and one more major bank failure will trigger an unstoppable run on our retail banking system.

Buy a safe. Keep as much cash at home as you feel comfortable storing. BUY METALS. They will be volatile in the near term, but they are truly your best bet for asset protection in a world that is about to implode in a derivatives supernova.

The Chinese did something astounding today: they effectively broadcast to the world that a new world reserve currency is needed. The world heard them. And gold soared almost $100 today. I think that any thinking person can see that the unthinkable is now about to happen. The dollar is about to become irrelevant.

http://us.mobile.reuters.com/mobile/m/An...

And lastly, at the risk of sounding completely alarmist, I would advise you all to begin stocking up on goods that you will need to keep your household functioning in the near (and possibly long) term. When the system fails, there will be massive supply disruptions for a variety of reasons, not the least of which will be that panic will trigger a hoarding mentality, gas will be in short supply and inventories will be easily wiped off of store shelves. Can we buy enough food and supplies to last the rest of our lives? Of course not. The goal here is simply not to be a casualty in the first wave of the tsunami that will wipe out millions. Once the first wave has passed, we can pick ourselves up, look around for a place of safety and start moving.

I'm not advising anyone to buy a gun or any form of protection, although I think civil unrest is entirely possible, particularly in large metropolitan areas.

I am simply advising that, at a minimum, we all be prudent in preparing for what now seems inevitable. An ounce of prevention in these times is easily worth a ton of cure.

For those who may disagree with my post, I respect your opinion and would only ask that you not denigrate mine and simply move on to the next thread. I share this information with you all solely out of a concern for my fellow citizens.

I am hoping this thread will allow like-minded individuals to share practical information and advice as we all move into a grim and unchartered period in our nation's history.

Good luck to us all.

Submitted by svelte on October 2, 2008 - 2:27pm.

arraya wrote:

"Reliable word that Bank of America branch managers just received a letter or memo from the USFed instructing them to perhaps be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards. Reliable word has it that BofA bank branches received a shipment of signs last week, reading "WE'RE SORRY, BUT DUE TO CIRCUMSTANCES BEYOND OUR CONTROL, WE CANNOT BE OPEN AT THIS TIME."

Riiiiigggghhhht.

With printers in virtually every office in every bank across the country, the BofA HQ would need to pre-print "we're closed for a week" signs and distribute them to branches...knowing full well that branch employees who viewed said signs would spread that news to the world within minutes.

The persons spreading this rumour need to come out of their stinky bomb shelters and take a long, deep breath of fresh air.

Submitted by Arraya on October 2, 2008 - 2:36pm.

svelte wrote:
arraya wrote:

"Reliable word that Bank of America branch managers just received a letter or memo from the USFed instructing them to perhaps be ready for a one-week universal shut-down of the banking system, including access to checking accounts, savings accounts and credit cards. Reliable word has it that BofA bank branches received a shipment of signs last week, reading "WE'RE SORRY, BUT DUE TO CIRCUMSTANCES BEYOND OUR CONTROL, WE CANNOT BE OPEN AT THIS TIME."

Riiiiigggghhhht.

With printers in virtually every office in every bank across the country, the BofA HQ would need to pre-print "we're closed for a week" signs and distribute them to branches...knowing full well that branch employees who viewed said signs would spread that news to the world within minutes.

The persons spreading this rumour need to come out of their stinky bomb shelters and take a long, deep breath of fresh air.

Willie has been around the block enough times and should be weighted.

It could well be false, but Jim Willie is NOT a Rense et al weird site/writer.

I've been reading him for about 2 years and he has been way ahead of the curve most of the time.

btw, he's outside the US in Costa Rica I think...

If anyone has not read him before read some of his past stuff before you judge.

Look at these.

Corruption, Whispers & Receivership
September 24, 2008
http://www.financialsense.com/fsu/editor...

Panic, Consolidate, Game Over
September 18, 2008
http://www.financialsense.com/fsu/editor...

Submitted by zzz on October 2, 2008 - 5:44pm.

That rumor about BofA sounds quite ridiculous and probably posted by someone who wants to see a run on the banks, for whatever their pleasure, reasoning may be - maybe to buy in or buy up an American bank on the cheap. BofA would never send out a letter like that to their retail branches as the word would have gotten out and we wouldn't be reading it on a blog, itd be on major newswires.

Submitted by Arraya on October 2, 2008 - 5:57pm.

zzz wrote:
That rumor about BofA sounds quite ridiculous and probably posted by someone who wants to see a run on the banks, for whatever their pleasure, reasoning may be - maybe to buy in or buy up an American bank on the cheap. BofA would never send out a letter like that to their retail branches as the word would have gotten out and we wouldn't be reading it on a blog, itd be on major newswires.

I hate to tell you this but the reason there are blogs is because people stopped trusting the mainstream media. Why do you think that is? Because they do such a good job?

Submitted by CA renter on October 2, 2008 - 5:59pm.

Isn't it very possible that banks begin to "ration" withdrawls?

A bit like gasoline (which will also be rationed in this case), where if your name or account number begins/ends with [XXX], you can make withdrawls on Mondays and Fridays, maximum of $200 or some other limit.

Yes, it's tin-foil hat, but we should consider all the possibilities, no?

Submitted by Ricechex on October 2, 2008 - 7:45pm.

Partypup, Arraya and anyone else....

I am planning on getting my money out of the bank. Partypup, you recommend 10K if possible. Since currency denominations are up to $100 dollar bills only...this amounts to a lot of cash.

The problem is...where to store the cash? If my house were to get broken into, all the money could be gone...

Where would you recommend? Also, what if I died? Do I send my beneficiary a treasure map to the house? X marks the spot kind of thing?

Submitted by Arraya on October 2, 2008 - 8:04pm.

CA renter wrote:
Isn't it very possible that banks begin to "ration" withdrawls?

A bit like gasoline (which will also be rationed in this case), where if your name or account number begins/ends with [XXX], you can make withdrawls on Mondays and Fridays, maximum of $200 or some other limit.

Yes, it's tin-foil hat, but we should consider all the possibilities, no?

CA-Yes it's definitely possible. For god sakes, the fed and treasury are taking hostages and giving us ransom notes. This is madness. They need money bad and the world seems to be turning on them.

Submitted by svelte on October 2, 2008 - 8:28pm.

Ricechex wrote:
Partypup, Arraya and anyone else....

I am planning on getting my money out of the bank. Partypup, you recommend 10K if possible. Since currency denominations are up to $100 dollar bills only...this amounts to a lot of cash.

Where would you recommend? Also, what if I died? Do I send my beneficiary a treasure map to the house? X marks the spot kind of thing?

Family legend in my tree is that my gr-grandfather hid cash in coffee cans in holes around the farm during the great depression. I don't know if that is true, and isn't really what I would do.

Every house has hidden cavities. I would probably find one of those, or create a false back in a cabinet or closet...that would make a nice w/e project. Worst case, get a coffee can and stash it in the attic under the insulation!

I really think you all are panicking for nothing, but I may take out a couple hundred this weekend just to hedge my bets. :oD

Submitted by partypup on October 2, 2008 - 10:01pm.

"Partypup, Arraya and anyone else....
I am planning on getting my money out of the bank. Partypup, you recommend 10K if possible. Since currency denominations are up to $100 dollar bills only...this amounts to a lot of cash.
The problem is...where to store the cash? If my house were to get broken into, all the money could be gone...
Where would you recommend? Also, what if I died? Do I send my beneficiary a treasure map to the house? X marks the spot kind of thing?"

There are definitely risks involved with keeping cash at home, no doubt. The problem is, there is no path we can take at this point that is completely without risk.

We have no control over money in a bank. We do, however, have some control over our homes.

Get a safe. Bolt it to the floor. Hide it well, preferable behind boxes or other items that are difficult or cumbersome to move. An alarm is ideal. I just had one installed for $600. Very doubtful that any thief would take the time to rummage through boxes to find a safe and attempt to crack it while an alarm is going off.

As to events following your death...just remember, you can't take it with you. It's only cash. If you're dead, you no longer need it :-)

Submitted by svelte on October 3, 2008 - 6:45am.

Forgot the most important part...DON'T TELL ANYONE you are going to be keeping 10 large at home. Even the bank teller - tell them you are doing something else with it, anything but keeping it at your house.

It greatly increases your risk of being robbed - and perhaps tied up, threatened, and killed - if any other human on the planet knows you have cash at home.

Even if you tell an honest individual, they are likely to tell the story to someone else who will tell someone else and so on. As the economy continues downhill and someone needs quick cash, guess where they'll come?

Submitted by jficquette on October 3, 2008 - 12:40pm.

esmith wrote:
Answer this: if the currency is backed by precious metals, what backs PMs?

Paranoia. If we ever need to use Gold to buy essentials then I doubt if there will be any essentials to buy.

Submitted by afx114 on October 3, 2008 - 12:51pm.

This all reminds me of the scene in National Lampoon's Vegas Vacation where Chevy Chase needs to pay off his gambling debts, so he asks Cousin Eddie to borrow some money. Randy Quaid and Chevy Chase proceed to dig throughout Eddie's trailer park front yard looking for buried cash.

Submitted by Arraya on October 3, 2008 - 2:25pm.

"The one thing that's been proven is the absolute fear-mongering that's being used to drive us is false," Sherman said. "I've seen members turn to each other and say if we don't pass this bill, we're going to have martial law in the United States."

http://www.baltimoresun.com/news/nation/...

Submitted by Arraya on October 4, 2008 - 8:43am.

What does it mean if you "cant maintain government operations?

"Absent a clear resolution to this financial crisis," Schwarzenegger wrote in a letter Thursday evening e-mailed to Paulson, "California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."

Well at least all is well in Iraq

http://www.mathaba.net/0_index.shtml?x=6...

Upon arrival in Iraq from Washington, President Jalal Talabani told reporters that he is concerned over Washington threats.

"Washington threatened to use any means to seize Iraqi assets if we do not support the security pact," Marsadiraq quoted Talabani as saying.

Washington currently seeks to sign a Status of Forces Agreement (SOFA) with Baghdad to give legal basis to its military and political presence in oil-rich Iraq after a UN mandate defining its status expires on December 31.

Submitted by Arraya on October 9, 2008 - 10:00pm.

October 7th was three weeks after this post. I'd say good call so far.

Submitted by partypup on October 9, 2008 - 9:31pm.

"October 7th was three weeks after this post. I'd say good call so far."

Yes... it is eerie, Arraya. Although the cascading crash is much more dramatic than even I expected. Everyone is asking, "When will the bottom come?" The same sources that told me the first week of October would be a watershed have also told me that the Dow will hit 3,500 and martial law, in some form, will occur by January 2009, with food and gas shortages to occur around the same time, if not before.

Folks, this is not a drill. Chaos is truly right around the corner. If you believe the *system* can withstand 300-600 point drops in the Dow on a daily basis, you're fooling yourself. At a certain point, the foundation will give way and chaos WILL erupt. It is only now a matter of time.

I have been in Colorado for the past week, scouting land for a possible escape in the next 6-9 months. The folks out there have been expecting a collapse -- or something like it -- for the past decade, as far as I can tell. Many, if not most, are self-sustaining and will fare relatively well in the coming catastrophe: many communities are difficult to access and have small populations.

The same cannot be said for those who are living in Southern California and places like it.

This time next year, the primary concern for most of the U.S. population will not be their 401Ks, but rather (a) how to secure food on a reliable basis and (b) how to keep others from taking what belongs to you.

Please take my advice and begin to stock up on food and other essentials so that you will be able to weather the storm when it first hits. Don't be a casualty in the first wave; live to stand and fight another day.

On another note: my broker at Fidelitrade, from whom I have been buying metals for the past two and a half years, informed me last week that his clients were now limited to purchasing 500 ounces of silver PER ACCOUNT, not per transaction,

However, today he informed me that he cannot buy any silver, gold or palladium, whatsoever -- although he has a contact at CitiGroup who claims to be able to buy silver for $40/oz. This jibes with what a colleague told me today: he can't find any gold or silver for sale at APMEX, and gold on eBay is going for $100+ over spot.

I don't know what TPTB are doing to manipulate metals prices, but the laws of supply and demand do not lie. And when someone goes to such extreme lengths to deceive regarding the market price of any product, you'd best believe there is an agenda. I don't trust stocks. I don't trust bonds. I don't trust Euros. I no longer trust Swiss Francs. And I most certainly don't trust USD cash money.

I trust no paper from this point on.

The only thing I trust are metals -- the very things that are almost impossible to obtain in quantity now.

Submitted by paramount on October 9, 2008 - 9:40pm.

partypup: I pray to God you are wrong....

Submitted by Arraya on October 9, 2008 - 10:00pm.

Yes... it is eerie, Arraya. Although the cascading crash is much more dramatic than even I expected. Everyone is asking, "When will the bottom come?" The same sources that told me the first week of October would be a watershed have also told me that the Dow will hit 3,500 and martial law, in some form, will occur by January 2009, with food and gas shortages to occur around the same time, if not before.

It's interesting your timeframe is very much similar to some of my sources and personal analysis. Honestly, part of it is just felt right. I was expecting the crash to come about now for like 6 months.

I can't see martial law passing. Not enough troops and the police are pissed about losing half there pensions. I definitely see civil unrest and angry mobs in the street.

-So far food shortages have sprouted up worldwide
-Gas shortages in the SE are worsening(no response from the USG and oil companies said "It is just not profitable to break supply chains"
-Short term credit lines drying up that companies depend on to keep supply chains running in food and fuel alike

The world has two choices at this point. 1) to go down in flames with the US 2) To break the dollar peg and instantly make the US third world

If TPTB want to keep the dollar peg in place they are going to take out Iran. I personally think they have abandoned that idea. At least I hope.

The endgame is close. We are definitely not in Kansas anymore.

Submitted by Arraya on October 10, 2008 - 10:34am.

http://www.bloomberg.com/apps/news?pid=2...
Berlusconi Says Leaders May Close World's Markets

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

Submitted by Arraya on October 10, 2008 - 10:43am.

The credit freeze has real life consequences:

Grain piles up in ports

http://www.financialpost.com/story.html?...

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

Submitted by CA renter on October 10, 2008 - 11:38pm.

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.
-----------------

Anyone else think this will cause even more panic?

Submitted by gandalf on October 11, 2008 - 9:14am.

Yeah. I do. I think it will contribute to the panic. I think it will contribute to the obfuscation and loss of trust among market participants.

Part of the reason we find ourselves here, in addition to basic leveraging and imbalances between risk/return, is gaming of the rules and obfuscation. The bailout is a really, really tough pill to swallow. If they had let everything fail, I am of the mind it would have gotten bad very quickly. Insolvency all over the place. Good business going down. Extremely high unemployment and overall bad for everybody.

At the same time, the solutions they seem to have proposed are just mind-boggling, and they don't really get at the issues of transparency, obfuscation and gaming of the rules. In fact, the allocation of bailout money strikes me as the 'ultimate game'. Enormous sums of money for the firms tapped to succeed. Process for determining the winners occurs behind closed doors. Welcome to new American economy, the national bank, and the end of an era in free-market capitalism. Utterly inane. Some basic transparency, regulation and a sense of responsibility among the bankers would have avoided all of it.

Submitted by peterb on October 11, 2008 - 9:45am.

@Gandalf - Very nicely put. Thank you!!

Lack of transparency has not only been made worse, it's also been validated by govt activity and gaming the system by changing the rules as they go.
Christ, who wouldnt pull their money out of market like that? Insiders, that's who!

Submitted by 92024 on October 11, 2008 - 10:27am.

Gandalf,
Could you use the word "obfuscation" again. Three times was not enough.

Obfuscation is the concealment of meaning in communication, making it confusing and harder to interpret. wiki

Submitted by Arraya on October 12, 2008 - 12:23am.

You blow up the economy it takes a lot of power away from oil producing states.

http://www.reuters.com/article/businessN...

TEHRAN (Reuters) - Iran will ask for an oil output cut at an OPEC emergency meeting scheduled for mid-November in Vienna, Oil Minister Gholamhossein Nozari told an Iranian newspaper.

"At this meeting our country's request to cut production ... will be submitted," Nozari was quoted as saying by the Poul daily.

"It seems that if OPEC does not take a major decision to confront falling oil prices, investment conditions in the oil industry would be faced with a serious danger."

The big question is will the US go for the hat trick? Could be a game changer for McCain.

http://www.timesonline.co.uk/tol/comment...

Some key decision makers in Israel fear that unless they attack Iranian nuclear enrichment facilities in the next few months, while George W Bush is still president, there will not be another period when they can rely on the United States as being anywhere near as supportive in the aftermath of a unilateral attack.

In the past 40 years there have been few occasions when I have been more concerned about a specific conflict escalating to involve, economically, the whole world. We are watching a disinformation exercise involving a number of intelligence services. Reality is becoming ever harder to disentangle

Submitted by Arraya on October 12, 2008 - 12:28am.

Ah ha, and now we have a problem with Pakistan. Hmmm, we lose the puppet Musharef and look what happens.

ISLAMABAD (AFP) — Pakistan and Iran on Friday said they were willing to undertake bilaterally a stalled multi-billion-dollar gas pipeline even if India does not join the project.
The pipeline, to carry gas from Iran to Pakistan and India, was first mooted in 1994 but has been delayed by repeated disputes over prices and transit fees.
The foreign ministers of Pakistan and Iran met in Islamabad and announced that the 7.5 billion dollar pipeline could start without India's involvement.
"Iran is willing to undertake the project bilaterally," Pakistan Foreign Minister Shah Mehmood Qureshi told reporters after talks with Manouchehr Mottaki.
Mottaki endorsed the plan, saying that "India may join the project whenever it is ready for this."
Talks on the project to supply gas to India and to Pakistan through the 2,600-kilometre (1,600-mile) pipeline have been hobbled by tensions between the two rival nuclear powers.
India, which imports more than 70 percent of its energy needs, has been seeking new supplies of oil and gas while ramping up domestic production to sustain its booming economy.
New Delhi has also been under pressure from the United States not to do business with Iran, viewed in Washington as a state sponsor of terrorism that is bent on acquiring nuclear weapons.
Qureshi previously guaranteed Pakistan would "provide fool-proof security" for the pipeline, which is expected to pass through Pakistan's volatile Baluchistan region.

Submitted by Arraya on October 12, 2008 - 7:31am.

In a speech before the United Nations last month, Georgian President Mikheil Saakashvili implored world leaders to set up an international investigation to find out the truth about the war in South Ossetia.

I couldn’t agree more. But I think the results of an honest investigation would reveal a very different “truth” than what President Saakashvili claims.
I know this because I was in Tskhinvali, the capital of South Ossetia, on Aug. 7 when Georgian troops marched into the city and killed my friends and neighbors. I huddled with my family in terror for three nights while Saakashvili’s tanks and rockets destroyed hundreds of our homes, desecrated cemeteries, gutted schools and hospitals.

I also have good reason not to trust what Saakashvili says. For three days before the attack I had been getting calls from many Georgian friends warning me to get out. They said Saakashvili was planning an attack. Most of the Georgians living in South Ossetia left because they knew what was coming.

On the night of Aug. 7, Saakashvili went on television and assured the frightened civilian population of South Ossetia that he would not attack us. This was long after the time Saakashvili now claims Russians had begun “invading” Georgia.

Ossetians went to bed relieved and thankful for a peaceful night.
Less than two hours later, according to credible international accounts, his artillery, bombers, and three brigades of ground troops unleashed what I can only describe as a fierce hell on our city. In the moment, we knew only our fear as we hid. Afterward I spoke with hundreds of Ossetians to find out what was done to us.

My friend’s elderly father tried to douse the flames set by Georgian fire on the home he had built with his hands. His leg was severed by shrapnel from Georgian weapons. He bled to death while his disabled wife crawled from their burning home.

Ossetians saw Georgian tanks firing into basements where women and children hid for safety They saw fleeing families shot down by Georgian snipers. We learned that the Georgian military had used Grad rocket systems and cluster bombs against Tskhinvali.
Yes, I would very much like to see an international commission investigate the truth of what happened.

When I came out from hiding, thanking God that the Russians had saved our lives, I was dismayed by the reaction of the international media to what had happened. There was nothing about Ossetian deaths and the unprovoked horrors inflicted by Saakashvili’s military. It made my heart sick.
The truth has been crushed by Georgia’s powerful public relations machine as mercilessly as Georgian tanks rolled over the defenseless civilians of Tskhinvali.

I know that Americans are a generous and fair people. But Americans haven’t been told the truth about what happened to us. Americans don’t understand that Ossetians are an independent, Christian Orthodox people with a deep history in our land. The world talks only about Georgian freedom. What of freedom for my people? Does our suffering, do our voices, mean nothing?
I don’t blame the Georgian people for what happened to us. The vast number of Ossetians and Georgians want to live in peace. I blame Georgia’s leaders.

Saakashvili has persuaded the world that he is a “beacon” of democracy and openness. But he won’t even tell his own people the truth. My Georgian friends weren’t allowed to see any Russian news sites during the conflict because all of those sites were blocked by Saakashvili’s government.
I know we are a small people, and I make no claim to understanding the experts in geopolitics with their theories and pronouncements about the great powers. But I have fought for women’s rights in Ossetia for 12 years and I believe in the truth.

In a recent article, Saakashvili cynically dismissed Ossetian suffering and deaths because, he said, Russia had “lied” about how many of my people were killed by the Georgian military.

It breaks my heart to even engage in this discussion. No one – including Saakashvili – knows how many Ossetians were killed by his Army. I have friends who buried loved ones in their backyards because there were no alternatives. Many people are still missing.

Does Saakashvili believe his vicious attack on a civilian city was justified if he only killed a few hundred rather than a few thousand? Do Americans realize that a military trained and equipped by the US government attacked a civilian population as they slept in their beds? Can they justify sending another billion dollars to Georgia and nothing for those Georgia attacked?
I have made an urgent appeal to the world for humanitarian relief for our people at the website helpossetianow.org. I beg the United States and the world to find out the truth. Please hear our voices.

Lira Tskhovrebova is the founder of the Association of South Ossetian Women for Democracy and Human Rights and has worked for more than a decade to improve relations between people of Georgian and Ossetian descent in the Caucasus.

Submitted by Arraya on October 12, 2008 - 10:06am.

http://www.nakedcapitalism.com/2008/10/i...

I have been more than a tad concerned about near-paralysis in the money markets and imploding equity prices. But this e-mail, from a well connected international investor not prone to alarm or (normally) the use of capital letters says that the banking crisis is staring to bring international shipping to a halt.

By way of background, letters of credit of various sorts are essential for trade. For instance, imagine the difficulty if you are, say, a Chinese manufacturer who wants to sell his wares to buyers overseas. How can he be sure the goods he ships will ever be paid for? Imagine the considerable difficulty and cost of chasing a deadbeat in a foreign country. Letters of credit. issued by banks, assure payment. They can also serve to finance the shipment (ie, fund the inventory while it is in transit).

Not only are banks now leery of lending to each other for much longer than overnight, they are also starting to refuse to honor letters of credit from other banks. From the above-mentioned reader:
At the end of the day, if every counterparty is bad then you don't have a market and you don't have an economy. I spoke to another friend of mine this afternoon, whose father has been in the shipping business forever. Pristine credit rating, rock solid balance sheet. He says if he takes his BNP Paribas letter of credit to Citi today for short term funding for his vessels, they won't give it to him. That means he can't ship goods, which means that within the next 2 weeks, physical shortages of commodities begins to show up. THE CENTRAL BANKS CAN'T LET THAT HAPPEN OR WE HAVE NO ECONOMY, LET ALONE A CREDIT SYSTEM.

Submitted by Arraya on October 12, 2008 - 3:18pm.

And the hits just keep on rolling in....

http://www.guardian.co.uk/uk/2008/oct/12...

The chancellor must take emergency steps to prevent rail, water and power companies going bust in the global economic storm, former cabinet minister Peter Hain has warned.

Hain, the former work and pensions secretary, urged the government to draw up reserve powers that could be used in the event of a major utility collapsing and taking vital services with it. His words follow jitters in the City about the damage a freeze in bank lending could do to some companies that have borrowed heavily to invest in infrastructure.

Submitted by CardiffBaseball on October 12, 2008 - 8:57pm.

Interestingly I had a conversation with a friend who sells alternative electricity contracts to business, and a big sale is being held up because his company is asking the prospective buyer for an LOC.

Apparently this is completely new, i.e. asking for the LOC before agreeing to do business. The company so far is ignoring the LOC so he could lose the sale.

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