[IWE] Tin Foil Hats At The Ready

[D. Scott Katzer]

Hi Peter,

Peter Whysall wrote:
> http://theinternationalforecaster.com/International_Forecaster_Weekly/The_Bailout_Wont_Work_and_the_System_Will_Implode

It's certainly a little hyperbolic, but his links to RGEMonitor are 
pretty scary.

http://www.rgemonitor.com/roubini-monitor/253853/financial_and_corporate_system_is_in_cardiac_arrest_the_risk_of_the_mother_of_all_bank_runs

Roubini's had a pretty good record on predicting the current crisis.  I 
hope he's wrong about upcoming events, but thus far the US financial 
market isn't moving in the right direction.

Things aren't looking too good in the UK either:

http://calculatedrisk.blogspot.com/2008/10/uk-homeowners-stop-mortgage-equity.html

Too many of us have lived too long on cheap credit, but things have 
locked up too quickly for the economy to adjust.  :-(

Someone is probably going to have to start spending Real Money to loosen 
lending again.  The US Treasury inflating the system with manufactured 
cash, or swapping paper in an apparently cash-free way (but putting the 
US on the hook for eventual losses), is unlikely to do it by itself.  I 
suspect that means the Chinese and/or the OPEC countries are going to 
have to go on a serious buying spree.  They're the ones with all the 
cash these days.

http://www.census.gov/foreign-trade/balance/c0001.html
http://www.census.gov/foreign-trade/balance/c5700.html

So, I would look for announcements of large equity investments in the US 
banking systems and real estate by foreigners, and positive reactions in 
the TED Spread.  Until they start spending their vast cash hordes, it's 
hard for me to see things improving.  But IANAE, so take this with a 
grain of salt.

Cheers,
Scott.