The Credit Crisis

The credit crisis continues. On Thursday Citigroup saw its shares drop almost 7%, while Bank of America saw a drop of 5.3% as analysts expressed concern that these major banks " will be forced to sell assets, raise capital or cut its dividend to shore up its capital ratios."

In the past week we have seen the CEOs of both Citigroup and Merrill Lynch get canned. These are two of the largest banks in the US and they have both fired their CEO in the last week. Apparently, losing a lot of money is not a good career move, as Merrill's Stan O'Neil and Citi's Charles Prince just found out. We said it when Bear Sterns and Lehmans had trouble and we said it again when British Bank Northern Rock had to be bailed out; " there is never just one cockroach."

During the summer, we saw the Fed and many other central banks around the globe add enormous amounts of liquidity into the system. Last week, the Fed was at it again injecting $42 billion into the system - which is the largest one time injection that has ever been made. Now we are seeing one bank after another make huge write-downs of sub prime debt on their books.

We have written numerous pages on this topic, but will give it a bit more ink here as we want our readers to understand the severity of this problem. In the last 10 years or so, the US has run up a massive trade deficit. This deficit was caused by the US buying more imported goods than they exported, which was assisted by many foreign central banks playing what we like to call "the great race to the bottom currency game." What these foreign bankers would do was keep their currency low, so that their goods looked well priced for the American consumer.

To add insult to injury, these foreigners who held all these new US dollars, then decided to re-invest these dollars back into the US via bonds and treasuries, which would help keep the dollar propped up. During this time, the US interest rates were still quite low, but because all of this foreign capital invested into the US treasuries, the dollar remained reasonably strong - so everyone was a winner.

Ever since we started publishing The Trend Letter, we have asked the question "when will these foreign holders of US dollars finally decide enough is enough - and diversify out of the declining dollar?" The answer appears to be last August this year. As the real risks of the sub prime credit problems started to surface, many holders of the US dollar decided it was time to get out. In October of this year we posted the headline on our web site that read "Record Flight of Foreign Investors" (visit the In The News section daily for timely articles). In that article it described how

"Mortgage market and credit turmoil showed in a Treasury Department report that said foreigners dumped a record net $163 billion of U.S. securities in August, when credit fears roiled markets and forced the U.S. Federal Reserve to cut its discount rate charged on loans to banks." This was the largest exodus of funds out of the US since they started tracking this data in 1978. Up to that point we typically saw an inflow of capital to the tune of over $100 billion per month.

There have been many financial situations in the past number of years and many of them have been called a "crisis." But we believe that this current credit crisis will turn out to be the grand daddy of all crises. We are seeing bank after bank declare massive new losses. And these are not little banks either as we saw with Merrill Lynch and Citigroup in the past week. We have been keeping tabs on the meltdown in this sector reporting on the number of failed lenders each month. Today the total of failed lenders is up to 179. Around the world we are hearing of more and more banks requiring central banks to bail them out.

In our October 21 st Flash Report we talked about the new bail out fund that the Treasury orchestrated with Citigroup, Bank of America, JP Morgan and others. What these banks are attempting to do with this bailout fund is to put some stability into the credit market.

These banks and the Treasury department all knew that there is going to be a huge liquidation of assets in the next year, so they are attempting to try to make it an organized liquidation. The reason for the concern is the massive amount of Structure Investment Vehicles (SIVs) floating around. Many of these SIVs are associated with banks and this is why we are now starting to see the fallout with all of these banks having to write down massive losses. Please review the October 21^st Flash Report for the rest of that story.

The result of all of this mess has been that much of the source of credit is getting squeezed now. A report shows that last week for the 12^th straight week, asset backed commercial paper declined - this time by $9 billion. The fact is that since August, we have seen a decline of over 26%, as mortgage linked commercial paper is simply not coming back to the market - resulting in less credit available for mortgages and other loans. With a declining inventory of mortgage and loan credit available, fewer businesses and homeowners will be able to get financing.

The main reason for all of these problems was a practice of over lending money to people who simply did not qualify for mortgages on homes they could not afford. As all of these sub prime mortgage holders have their mortgages come up for a rate rest, they are facing huge increases in their monthly payments - some up over 100%. Many if not most of these homeowners bought their home with very little if any equity. Today, the value of that home is 15%, 25%, or more, below what they paid for the home. So now these folks are facing a huge increase in payment, on a mortgage that is 15% - 25% more than the house is worth. With no equity in the home, as the pool of capital available for mortgages shrinks, many of these sub prime homeowners will not be able to get financing. As this sad scenario continues to unfold, we can expect to see more and more foreclosures on many of these sub prime homes.

This is not a pretty picture, in fact it may turn out to be one of the ugliest economic crises the west has ever seen. We hope not, but with this credit crisis, the bursting of the housing bubble and what we see as rising unemployment, the Fed will have no options left but to inflate. Therefore, we expect to see the Fed continue to lower rates as it is pretty much all they can do - the result will be rising inflation. The question is will it be enough to rescue the lagging US economy?

If you wondered why the dollar is at a record low at 75.99, why gold is at a 30 year high at $837 and why oil is at over $95 - now you have a pretty good idea.

Martin Straith - http://www.thetrendletter.com

Cockroachrepellent

GAGGED While Giving Birth

A name that will haunt me for a long time to come after reading an article in the local newspaper is that of science fiction author Mr L Ron Hubbard the creator of a controversial organisation called Scientology. Many famous stars are devout dedicated followers and Tom Cruise is the one that comes to mind that impelled me to write this article

Before I go any further passing any judgement on the rules of this establishment. First let me congratulate Tom Cruise and Katie Holmes who are expecting their first baby, which brings me back to Mr L Ron Hubbard and Tom Cruise his apostle.

Many cult rules and regulations will never make sense to the outsider, but this is one outsider trying to come to terms with one of the rules of the Scientology organisation.

And that is to gag the woman in childbirth

Expecting a baby is a happy event, but childbirth comes with pain for the one who is heavily pregnant. Even though this a wonderful time for the future parents it is the woman who gets to suffer. For the partner in crime they stand back and watch while wiping the sweat from the brow of the woman struggling to bring the baby/infant into the world.

Women on the labour bed will never be a pretty sight, most images that the husband/boyfriend sees of there beautiful wives or companions are like that of a drowned rat or a cockroach on its back fighting for survival to get through the agony. Scientology rules state, that mother remains silent through the birth and to decline a dose of comforting medication to ease the pain.

Does this organisation not teach the meaning of the word compassion?

Women are stressed enough when giving birth without being bullied by people who think they know what is best. How could they possibly know?

Doctors have a tough job as it is making sure that there are no complications with the delivery, so should the patient become anxious at any stage then matters can become dangerous, especially if the patient has her sights set on obeying orders from an organisation instead of the medical staff.

In some cases you could be faced with a life and death situation for mother or unborn child where lack of concentration in the right department is ignored.

Be sure to consult a doctor if you have any concerns about your pregnancy not an author. For an example, who do you approach with a toothache, definitely not Joe Bloggs next door?

Childbirth can be dangerous for mothers who may not go the full term; childbirth has been the cause of death in the labour room. Pain comes with child bearing to an extent where choices have to be made where the tears of joy are for the birth of a bouncing baby girl or boy not tears of pain after following orders from dictators. Put the shoe on the other foot.

Why do actors have stunt men? I rest my case.

Scientology says if mother as much as groans it will affect baby's sanity, a lame excuse for such absurd nonsense, lets not go down the road of sanity.
Listen up guys especially science fiction writers and actors. Stick to what you know and do best. God had his reason for planting the seed into the female species to amass population and bear the pain of childbirth.

Doctors/surgeons whether delivering babies or giving patients a face lift are very intelligent clever and educated people who you may bet were brought into this world by a screaming mother, no one is exempt..

If taking someone's sanity means more doctors dentists nurses psychologists teachers professors I could go on and on, I say scream the house down

If you are uncomfortable with how others are treating you while pregnant. Talk to someone, check my information page for counselling. or pregnancy tips http://www.benidormbeaches.com

Cockroachrepellent

How to Stop Mosquitoes

Encephalitis is a rare inflammatory disease of the brain caused by a viral infection. Some 1.500 to 2,000 cases are reported yearly in the United States.

Epidemics are usually caused by insects like mosquitoes such as the one that hit St. Louis in 1933. The insect-borne type, which one can acquire from either the Aedes or Culex mosquito, is called primary encephalitis and is picked up from domestic or wild animals.

Typical symptoms of encephalitis are acute and sudden headache, fever, restlessness, nausea and vomiting. In severe cases, there is stiffness of the neck muscles, tremors and drowsiness that may lead to coma.

"In infants, a bulging in the soft spot of the skull (the fontanelle) and a stiff neck are the key symptoms. In older children, severe headache and sensitivity to light may be more significant. In adults, mental disturbances, from severe disorientation to coma, may be the most outstanding clinical feature," according to Dr. David E. Larson, editor-in-chief of the "Mayo Clinic Family Health Book."

The outcome of encephalitis varies from person to person. In some, it may be transient and benign. In others, encephalitis may result in loss of memory, speech impairment, paralysis, hearing or vision defects. Insect-borne encephalitis also has a high mortality rate.

Since mosquitoes are the harbingers of death and disease, you should declare war against these deadly insects. Don't give them room to breed.

To add more muscle in your fight against them, here are some guidelines from "Insect and Rodent Control Through Environmental Management: A Community Action Program" published by the World Health Organization:

Reduce water storage within the house to a minimum. However, this may not be possible in areas without a piped water supply or where water is intermittent. In such cases, care should be taken to keep all water containers securely covered.

Eliminate all unwanted standing water and invert containers. This is necessary because mosquito larvae dive to the bottom of the container when disturbed, and may survive in the water left at the bottom.

Remove rain water which has collected in roof gutters.

Replace water in animal drinking pans and flower vases everyday.

Control the breeding of mosquitoes in pit latrines by covering the water surface with paraffin oil. Another control method is the use of polystyrene balls (Styrofoam) to form a complete physical barrier over the water to prevent the female mosquito from laying eggs. These balls are cheap, non-toxic, and virtually indestructible.

Screen doors and windows to prevent mosquitoes from entering the house. (Next: More ways to stop mosquitoes.)

To strengthen your body against diseases that bugs bring, take Immunitril - your first line of defense in maintaining a healthy immune system.

For details, visit http://www.bodestore.com/immunitril.html

Sharon Bell is an avid health and fitness enthusiast and published author. Many of her insightful articles can be found at the premier online news magazine http://www.HealthLinesNews.com

Cockroachrepellent