FX Dislocation In Process

[Duddy]

RED ALERT: FX Dislocation In Process



8:17 CT

I do not know what is going on here, and I don't think I want to.

Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading.

It originated at approximately 7:15 CT this evening and originated out of Asia somewhere. All of the primary currency crosses got hit at once - Euro, Pound, Yen - all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling.

At the same time the US futures markets got nailed as well, down some six handles on the /ES in a near-vertical drop. While this sounds "not that big" to move these markets in a coordinated fashion like this is a trillion-dollar enterprise - this is not some small company that went bankrupt, or even a large company.

There is no news coverage at the present time identifying the source of this but it is not small and contrary to some reports it is not "automatic selling"; this is forced liquidation.

Folks, if this translates into Eastern Europe where there are severe instabilities already brewing literally everything in the financial world could come apart "all at once."

The worse news is that if this happens Bernanke will have killed us (in the US) by extending those swap lines all over the planet during the last six months. These will become utterly uncollectable and they are massive, in the many hundreds of billions of dollars.

To those who are reading this, I hope if you're in the markets you are prepared for extreme levels of violence. You must expect that the authorities will try to arrest the destruction if they are able, but you must also be prepared for the possibility that we have reached a "critical mass" point beyond which "duck and cover" is the only winning strategy.

Unfortunately.

I hope I'm wrong; this is going to be a long night.





That is the latest news from market-ticker.org

Can anyone explain this to me and why everyone is in panic mode right now?

 

[nullzero]

Fears that all of Eastern Europe is insolvent and close to default is one of the main reasons we are seeing this crazy market move right now. I am sure there are other good reasons as well that are leading to the fear.

 

[IronWing]

Originally posted by: Duddy
RED ALERT: FX Dislocation In Process

Can anyone explain this to me and why everyone is in panic mode right now?

Because people spread rumors like this?

 

[soccerballtux]

What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

 

[palehorse]

I'd like to see someone who knows what they're talking about comment on this...? I only understood every 3rd or 4th word myself... lol

 

[IronWing]

Originally posted by: palehorse
I'd like to see someone who knows what they're talking about comment on this...? I only understood every 3rd or 4th word myself... lol

"'The space-time wash,' said Ford....

Arthur nodded, and then cleared his throat.

'Are we talking about,' he asked cautiously, 'some sort of Vogon laundromat, or what are we talking about?'

'Eddies,' said Ford, 'in the space-time continuum.'

'Ah,' nodded Arthur, 'is he? Is he?' He pushed his hands into the pocket of his dressing gown and looked knowledgeably into the distance.

'What?' said Ford.

'Er, who,' said Arthur, 'is Eddy, then, exactly?'"

"'There!' said Ford, shooting out his arm. 'There, behind that sofa!'

Arthur looked. Much to his surprise, there was a velvet paisley- covered Chesterfield sofa in the field in front of them. He boggled intelligently at it. Shrewd questions sprang into his mind.

'Why,' he said, 'is there a sofa in that field?'

'I told you!' shouted Ford, leaping to his feet. 'Eddies in the space-time continuum!'

'And this is his sofa, is it?' asked Arthur, struggling to his feet and, he hoped, though not very optimistically, to his senses."

 

[nullzero]

The majority of the worlds debt is priced in USD... What is happening right now is other countries are scrambling for USD to close out the debt obligations. As the USD goes up in value the price skyrockets for the debtors to pay back (its kind of like rising interest rates on a credit card).

 

[nullzero]

Gold up to almost $960

 

[palehorse]

Originally posted by: ironwing

Originally posted by: palehorse
I'd like to see someone who knows what they're talking about comment on this...? I only understood every 3rd or 4th word myself... lol

Eddies in the field!

was that a Physics reference?! lol... ok, you're not helping... :|

EDIT: Douglas Adams... nice pull. Now, where's my fish damnit!?

 

[soccerballtux]

Originally posted by: palehorse
I'd like to see someone who knows what they're talking about comment on this...? I only understood every 3rd or 4th word myself... lol

It means someone wants lots of USD, in exchange for their current holdings in other currencies, whatever the cost.

Checking google/yahoo finance, as of a few days ago the dollar is gaining on other currencies (except the Japanese Yen), but its only 4 cents from when I checked last. Hardly something to crap pants over.

 

[IronWing]

Originally posted by: palehorse

Originally posted by: ironwing

Originally posted by: palehorse
I'd like to see someone who knows what they're talking about comment on this...? I only understood every 3rd or 4th word myself... lol

Eddies in the field!

was that a Physics reference?! lol... ok, you're not helping... :|

I edited it above to give the un-learned a fighting chance.

 

[Slew Foot]

So is this good or bad for the US?

 

[nullzero]

Originally posted by: Slew Foot
So is this good or bad for the US?

Bad for everyone... what we are seeing the past year and of current is the unwinding of the global economy .

 

[palehorse]

I know that this isn't good news, but why the overnight-panic referred to in the OP? I still don't get it...


I found this so far:
--------------------

http://www.bloomberg.com/apps/...7rstGPFeihs&refer=home

Banks Face Downgrades on Eastern European Losses, Moody?s Says
By Zoe Schneeweiss and Niklas Magnusson

Feb. 17 (Bloomberg) -- Austrian, Swedish and other banks with subsidiaries in eastern European may face rating downgrades as economies in the region deteriorate, according to Moody?s Investors Service.

East European banks, which are mainly subsidiaries of financial institutions such as Raiffeisen Zentralbank Oesterreich AG and Swedbank AB, are likely to come under ?downward pressure? which may also weaken their parent companies, Moody?s wrote in a report released today in London.

Banks from Austria, Italy, France, Belgium, Germany and Sweden account for 84 percent of western European bank loans in eastern Europe. The region?s economies are weakening, with the International Monetary Fund already offering aid to Latvia, Hungary, Serbia and Ukraine. Bailouts may be extended to Bulgaria, Romania, Lithuania and Estonia as the global recession derails more banks, according to Capital Economics research.

?The downturn in eastern Europe will be more severe as a consequence of many countries? dependence? on capital flows from west Europe banks, Moody?s analysts led by Reynold Leegerstee wrote in the report.

West European banks might become selective in supporting their subsidiaries and ?banks in countries that are associated with higher systemic risks might face reduced support,? the report said. Western governments may also establish rules to ensure banks receiving state support do not aid foreign subsidiaries, Moody?s said. On the other hand, limiting support for a subsidiary could hurt confidence in the parent.

Austria ?Most Exposed?

Austria, whose banking system is ?most exposed? to central and eastern Europe, has two of the biggest lenders in the region. RZB made 79 percent of its 2007 pretax profits in eastern Europe, including Russia and Ukraine through its Raiffeisen International Bank Holding AG unit, and Erste Group Bank AG earned 65 percent of its pretax profits in countries including Romania, the Czech Republic and Slovakia.

Erste, which said last week that full-year profit probably slumped about 26 percent, is in talks with the Austrian government to get 2.7 billion euros ($3.4 billion) in state aid. RZB, which owns a 69 percent stake in Raiffeisen International, which is active in 18 eastern European countries, is also in talks with the Austrian state and has asked for 1.75 billion euros.

In December, the Austrian banks, together with Italy?s UniCredit SpA and Intesa SanPaolo SpA, Societe Generale SA of France and KBC Groep NV of Belgium, asked the European Union to organize financial aid for countries on its eastern fringes, like Romania and Ukraine.

Swedish banks began their Baltic expansion in 1998. Swedbank, the largest lender in the region, bought a stake in Estonia?s Hansabank in 1998 and took full control in 2005. SEB AB took full control of Estonia?s Eesti Uhispank, Latvia?s Latvijas Unibanka and Lithuania?s Vilniaus Bankas in 2000.

Special Units

As the Baltic states enter their worst recession since gaining independence from the Soviet Union in 1991, Swedish banks have been forced to raise cash from shareholders to boost capital and establish special units to deal with delinquent loans.

Impairments and provisions for anticipated future loan losses at Swedbank soared more than sixfold to 1.63 billion kronor ($190 million) in the fourth quarter from 238 million kronor a year earlier, mainly because of the Baltic states, it said earlier this month.

 

[Duddy]

Originally posted by: soccerballtux
What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

I didn't submit that to Digg. What are you talking about?

And yeah I don't get it. That's why I posted it to see if there were any smart people on here to translate. I have no idea if it could collapse overnight or not. I literally know nothing about it. Thats why I'm asking. Not spreading gloom and doom, just want an answer.

 

[nullzero]

Palehorse,

Its basically a fear that Eastern Europe will drag everyone down in a domino rally effect. Bloomberg is behind atm and has not released a article regarding this situation. I would guess we will see articles once the U.S. market opens.

http://ftalphaville.ft.com/blo...e-continues-in-poland/

 

[soccerballtux]

Originally posted by: Duddy

Originally posted by: soccerballtux
What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

I didn't submit that to Digg. What are you talking about?

And yeah I don't get it. That's why I posted it to see if there were any smart people on here to translate. I have no idea if it could collapse overnight or not. I literally know nothing about it. Thats why I'm asking. Not spreading gloom and doom, just want an answer.

It only has 14 diggs, and my suspicion is that you wanted extra views + diggs for yet-another-doomsday article. This article is sparse on logic, even more devoid of sources. It could do well by explaining why the author thinks this is a big deal. Currently, it's sensationalism.

 

[palehorse]

Originally posted by: soccerballtux

Originally posted by: Duddy

Originally posted by: soccerballtux
What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

I didn't submit that to Digg. What are you talking about?

And yeah I don't get it. That's why I posted it to see if there were any smart people on here to translate. I have no idea if it could collapse overnight or not. I literally know nothing about it. Thats why I'm asking. Not spreading gloom and doom, just want an answer.

It only has 14 diggs, and my suspicion is that you wanted extra views + diggs for yet-another-doomsday article. This article is sparse on logic, even more devoid of sources. It could do well by explaining why the author thinks this is a big deal. Currently, it's sensationalism.

it's interesting that you would say that... this is from the article nullzero just linked to:

Polish business daily Puls Biznesu described the zloty rout as nothing more than a panic ?in the absence of any other major fundamental news the paper blamed unfavourable reports in the western press, among them The Telegraph, for the intensifying deterioration.

 

[nullzero]

Originally posted by: palehorse

Originally posted by: soccerballtux

Originally posted by: Duddy

Originally posted by: soccerballtux
What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

I didn't submit that to Digg. What are you talking about?

And yeah I don't get it. That's why I posted it to see if there were any smart people on here to translate. I have no idea if it could collapse overnight or not. I literally know nothing about it. Thats why I'm asking. Not spreading gloom and doom, just want an answer.

It only has 14 diggs, and my suspicion is that you wanted extra views + diggs for yet-another-doomsday article. This article is sparse on logic, even more devoid of sources. It could do well by explaining why the author thinks this is a big deal. Currently, it's sensationalism.

it's interesting that you would say that... this is from the article nullzero just linked to:

Polish business daily Puls Biznesu described the zloty rout as nothing more than a panic ?in the absence of any other major fundamental news the paper blamed unfavourable reports in the western press, among them The Telegraph, for the intensifying deterioration.

Palenhorse,

We have heard this BS before.... The polish government is trying to talk down what the market is figuring out... That they are insolvent.

 

[nullzero]

Here is a good read into why this is important and what is going on right now.

http://www.telegraph.co.uk/fin...orldwide-meltdown.html

Failure to save East Europe will lead to worldwide meltdown
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

 

[CLite]

I'm slightly confused. The west had trillions upon trillions of dollars of over-leveraged/under-valued assets. However Eastern Europe is going to cause a global meltdown? The sum of their GDP's probably doesn't even touch the amount of bad debt U.S. Wallstreet had. Yeah Yeah I know about cumulative effects but I highly doubt Eastern Europe's debt is going to be the source of a global economic apocalypse. I'm sure everyone already had it rated like trash and there will be some panic regarding it, but come on you think Latvia is a source of a significant amount of debt?

 

[nullzero]

Clite,

Remember what happened after Lehman failed? It trigger a reaction like a domino rally. Now just think of 10-20 countries defaulting and the domino rally effect it will cause. This is the global economy imploding as we watch.

 

[Duddy]

Originally posted by: soccerballtux

Originally posted by: Duddy

Originally posted by: soccerballtux
What did you submit this to digg yourself? 2/10, not even a single link in that "spam".

I didn't submit that to Digg. What are you talking about?

And yeah I don't get it. That's why I posted it to see if there were any smart people on here to translate. I have no idea if it could collapse overnight or not. I literally know nothing about it. Thats why I'm asking. Not spreading gloom and doom, just want an answer.

It only has 14 diggs, and my suspicion is that you wanted extra views + diggs for yet-another-doomsday article. This article is sparse on logic, even more devoid of sources. It could do well by explaining why the author thinks this is a big deal. Currently, it's sensationalism.

Changed the link for you Nancy.

 

[CLite]

Originally posted by: nullzero
Here is a good read into why this is important and what is going on right now.

http://www.telegraph.co.uk/fin...orldwide-meltdown.html

Failure to save East Europe will lead to worldwide meltdown
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

Interesting article...

so 1.7$ trillion dollars are loaned to Eastern Europe. It has to repay $400B this year (article claims this is 1/3 region's GDP. hence $1.2 Trillion GDP). This is bad, but I don't think it would destroy the world's economy. Btw OP is wrong, the article states a lot of the loans are in the bank's country's of origin's currency. Therefore this could hurt those currencies.

Basically:

Article definitely predicts doom and gloom for Eastern Europe, but OP is pretty off-base with level of disaster imo.

 

[First]

You don't have a clue what's going on nullzero.