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RED ALERT: FX Dislocation In Process
Market Ticker ^ | 2-16-2009 | Karl Denninger

Posted on 02/16/2009 7:47:40 PM PST by dangermouse

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.


TOPICS: Business/Economy; Foreign Affairs; Japan; News/Current Events
KEYWORDS: asia; currency; denninger; dollar; economy; tm; yen
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To: dangermouse

http://www.fxstreet.com/rates-charts/currency-rates/

Click on live cuyrrency rates on the side and choose the US dollar

I think this is a hoax


101 posted on 02/16/2009 8:31:52 PM PST by RaceBannon (We have sown the wind, but we will reap the whirlwind. NObama. Not my president.)
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To: steve86

That gap will be filled sooner or later.


102 posted on 02/16/2009 8:32:05 PM PST by steve86 (Acerbic by nature, not nurture)
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To: RaceBannon

I agree right now it look relative calm. Have seen lots worse. Someone may be trying to spook the global markets into a crash.

Everybody calm down - dont buy or sell on raw emotion. If the world dies tonight its already to late for you to do anything.


103 posted on 02/16/2009 8:32:52 PM PST by Bailee
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To: farlander

thanks for interjecting sanity,,,

now, I’m off to the ATM and then the lifeboats! :-)


104 posted on 02/16/2009 8:32:58 PM PST by RobFromGa (I want to panic but I'm too confused...)
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To: dangermouse

probably Clinton’s trip to Asia.
Is there a run on pantsuits?


105 posted on 02/16/2009 8:33:24 PM PST by nuconvert ( Khomeini promised change too // Hail, Chairman O)
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To: Markos33

Have to admit this thread has told me that I don’t have a clue about what is going on in the world financial markets. Layman’s language would be nice.

Have little left in the stock market so I am sitting back watching what is going on worldwide and understanding very little.


106 posted on 02/16/2009 8:33:49 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: RaceBannon; muawiyah
That's what it sounds like to me too, and conventional wisdom is Soros is behind it. It wouldn't be the first time for him to pull this. Which begs the question, since so many know about his Korea escapades why has he not been punished? The sleaze has been trying to destroy the US for a generation now.

And yes he should be screwed if it is found out, but since when does he get tagged, by those in govt or the media! When he pulled it in Sept, and I have no doubt it was him, not a peep out of anyone. Of course there is always the possibility that a lot in govt are not only aware, but helping. Being who is in charge now, and who was in charge in Sept. at Treasury, I wouldn't doubt it.

107 posted on 02/16/2009 8:33:52 PM PST by gidget7 (Duncan Hunter-Valley Forge Republican!)
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To: SouthTexas
Any day is a good day to buy ammo!

You have gone in to the Tag Line business, I see :)

108 posted on 02/16/2009 8:34:34 PM PST by IrishPennant ("We're surrounded...That simplifies our problem.")
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To: Ernest_at_the_Beach
TREASURIES-Rise in Asia on stock slide, banking concerns

OKYO, Feb 17 (Reuters) - U.S. Treasuries rose in Asia on Tuesday as a slide in share prices and concerns over a new round of troubles in the global banking sector prompted investors to seek the safety of government debt.

---snip---

Moody's Investors Service said on Tuesday the recession in emerging Europe will be more severe than elsewhere due to large imbalances, and will put financial strength ratings of local banks and their West European parents under pressure.

109 posted on 02/16/2009 8:34:42 PM PST by icwhatudo
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To: Bailee; RaceBannon

I like your comments! Chill seems to be the word right now.


110 posted on 02/16/2009 8:35:24 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: dangermouse

Not sure they want dollars so much as they want to sell dollar denominated assets.


111 posted on 02/16/2009 8:35:38 PM PST by djf
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To: Jim Robinson

Burning the printing presses certainly worked for Zimbabwe

/sarc


112 posted on 02/16/2009 8:35:54 PM PST by GeronL (Hey, won't you be my Face Book friend??)
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To: PhiKapMom

It’s the same problem that we have, overleverage. “Innovations” in finance that supposedly reduced risk, but did no such thing, credit bubble, real estate bubble, etcetera. It appears that Europe, at least, went further into financial lala land than we did. I’ve seen estimates ranging from US$16 trillion to US$27 trillion for EU problems alone. Makes Obama look like a piker, but then he’s just getting started.


113 posted on 02/16/2009 8:37:34 PM PST by RegulatorCountry
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To: PhiKapMom

it’s not that hard, you take the square root of the beta of the short derivative price divided by the value of the British pound in yen, multiply by pi, convert to euros using the 6 month forecast value and the spot price of crude oil, then buy ammo and three 50# bags of rice at Sam’s Club...

and don’t forget to hit the cash machine afterwards.

works for any situation...


114 posted on 02/16/2009 8:37:44 PM PST by RobFromGa (I want to panic but I'm too confused...)
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To: IrishPennant

LOL


115 posted on 02/16/2009 8:39:16 PM PST by SouthTexas (oops there goes another trillion bucks...)
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To: gidget7
South Korea has agents abroad who will undoubtedly take care of Soros at the first chance. It's just a matter of time.

He's a sneaky guy. He doesn't go to France (where he's been prosecuted and convicted) and a number of other places.

Modern electronic communication systems allow him to mess around with wherever he wishes.

116 posted on 02/16/2009 8:39:52 PM PST by muawiyah
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To: jiggyboy

Well, being a FX and S&P index tactical trader (run my CTA firm), I can tell you it’s a bit uncertain as to what turn all this will take. My models got completely blown up in Oct, BUT, with a bit of adjustments we made a killing in Nov. And, now, things have definitely come back down to ‘normal’, ie, daily swings are not hair raising and VIX (the fear index) has come down to a much less ulcer inducing 40s from the (’run for the hills’) 80+.

I’m keeping an eye on the eastern Europe, BUT, all this was known long time ago. All of them went begging to the IMF in October, and they’ve been taking steps to mitigate things. Even though things look pretty rough, most of the money that was going to has already pulled out of Russia and Eastern Europe.

Of course, with the damn Spendulus, inflation will be rearing its ugly head sooner rather than later. But I don’t expect that to start seriously showing up until later this year.


117 posted on 02/16/2009 8:40:26 PM PST by farlander (Sic Semper Tyrannis)
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To: RobFromGa

ROFLOL! ATM I understand completely along with the ammo and rice! :)


118 posted on 02/16/2009 8:42:01 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: icwhatudo
OKYO, Feb 17 (Reuters) - U.S. Treasuries rose in Asia on Tuesday as a slide in share prices and concerns over a new round of troubles in the global banking sector prompted investors to seek the safety of government debt.

That's the money quote. Someone making a run on currency to destabilize things so that the INEVITABLE sell of treasuries notes (Bonds) will be welcomed by people that are scared pooless of what's going on in FOREX.

Almost like someone is setting all this up for a sale of bonds ... maybe related the porkulus being passed and a need for dollars?

/semi-paranoid rant.

119 posted on 02/16/2009 8:42:36 PM PST by Centurion2000 (01-20-2009 : The end of the PAX AMERICANA.)
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To: muawiyah

I rooting for the S. Koreans because this Country would be a lot better off and ZERO would lose his benefactor.


120 posted on 02/16/2009 8:43:09 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: nuconvert

No, but from the looks of her there might be a run on hair gel and pancake makeup.


121 posted on 02/16/2009 8:43:18 PM PST by abigailsmybaby (Always carry a flagon of whiskey in case of snakebite and furthermore always carry a small snake.)
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To: PhiKapMom
Have to admit this thread has told me that I don’t have a clue about what is going on in the world financial markets. Layman’s language would be nice.

You're not alone, PhiKapMom...I've read a lot of the great articles posted on here by fellow FReepers, and I think I've learned a hell of a lot more about economics than I did in school. But just when I think I have a grasp on things...I am quickly reminded that I don't.

I want to do something...awaiting a firearm permit, stocking up on food a bit here and there...but financially...well, I have some money in savings and a tad in mutual funds. Inflation, deflation, stagflation, Obamanation...not sure what to expect!
122 posted on 02/16/2009 8:43:21 PM PST by LostInBayport (When more than 98% of the Republicans on Capitol Hill vote against a bill, it is not bipartisan.)
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To: farlander

“Ok, there IS NO ‘run’. A 150 pip move is not a ‘run’.”

Thanks for bringing some sanity to this post. I’m with you on this one. But absolutely nothing would surprise me right now...


123 posted on 02/16/2009 8:43:37 PM PST by Sleeping Freeper
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To: Centurion2000

Five letter word — SOROS!


124 posted on 02/16/2009 8:44:59 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: dangermouse

bump for tomorrow.

Thanks for the post.


125 posted on 02/16/2009 8:45:05 PM PST by the crow (typical and bitter)
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To: freedumb2003

well, I bought extra dish soap and salt today...I am stocked on plastic wrap,many spices, paper plates and napkins,hand soap,liquor,plastic zip lock bags,canned goods,sugar,oil,rice,personal items,etc...hubby has the ammo....wood is cut and stacked....now if we just had some money...


126 posted on 02/16/2009 8:45:09 PM PST by cherry
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To: IrishPennant

Buy both..and lots and lots of ammo.


127 posted on 02/16/2009 8:46:47 PM PST by celtic gal (I think the democRATs should change their logo from a jackass to a RAT with a long tail.)
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To: LostInBayport

I am with you 100% — thought I had things figured out and then got caught up in this thread. Usually I read something once and understand — second time through the original post and I still didn’t have a clue.


128 posted on 02/16/2009 8:47:07 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: Ernest_at_the_Beach
Markets are always such confusing things....

That's why Democrats like 5-year plans. That way you only have to worry once every 5-years.

129 posted on 02/16/2009 8:47:26 PM PST by VeniVidiVici (If the Democrats wish to foist national health care on Americans, give us the same plan Congress has)
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To: Bailee; RaceBannon

Thanks you two!


130 posted on 02/16/2009 8:48:58 PM PST by gidget7 (Duncan Hunter-Valley Forge Republican!)
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To: PhiKapMom
I rooting for the S. Koreans because this Country would be a lot better off and ZERO would lose his benefactor.

Me, too. I have this vision of a Korean 007 taking out Soros the bad guy.

131 posted on 02/16/2009 8:49:37 PM PST by conservative cat (America,%2Byou%2Bhave%2Bbeen%2BPWNED!)
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To: dangermouse

Hey, I did my part.

I bought a Polish canned ham yesterday at the supermarket.

You all can thank me tomorrow.


132 posted on 02/16/2009 8:50:01 PM PST by VeniVidiVici (If the Democrats wish to foist national health care on Americans, give us the same plan Congress has)
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To: farlander
"There’s definitely some buying going on. But if you only go back a little while "

Yeah. Bloomberg doesn't have a panic signal.

Euro is at $1.26+, down 120+/-. Been looking for parity at $1.20 since the flight to foreign currency ended in 2007.

Sterling at $1.42+, down 49, looking for a historical conversion at $1.40.

Someone who likes gold also likes red lights?

yitbos

133 posted on 02/16/2009 8:50:19 PM PST by bruinbirdman ("Those who control language control minds.")
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To: muawiyah
I know!! And he has been messing with our govt and economy for years. This slime needs to be taken down!I hope S. Korea gets him.
134 posted on 02/16/2009 8:51:47 PM PST by gidget7 (Duncan Hunter-Valley Forge Republican!)
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To: PhiKapMom

WHo were the two Daves tha taught us so much the other evening?


135 posted on 02/16/2009 8:52:00 PM PST by hoosiermama (Berg is a liberal democrat. Keyes is a conservative. Obama is bringing us together already!)
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To: RegulatorCountry

From your comments, it sounds like a lot of people in charge were clueless and didn’t stick with what works. I can remember when Rubin was using the Federal Thrift Savings money to prop up the market so it wouldn’t correct under Clinton so he could have everything on the rise. I was appalled but it sounds like it is even worse with the “innovations” in finance. Stupid people, media, and voters who buy into all of this and give us people with no experience like ZERO.

Cannot even fathom $16T to $27T in US dollars. What were they smoking?


136 posted on 02/16/2009 8:52:07 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: dangermouse
I noticed this happening at the time because I was holding a temporary short position in the USDollar/CanadianDollar, and the trade went exactly the wrong way I expected it to go, and it did it very quickly. It was a dramatic shift across most major currencies and I couldn't account for it from any of the usual sources. It puzzled me, but this seems to explain it.

The currency markets have been quite hinky lately. Something is happening below the surface. The markets have quieted down now but who knows what tomorrow will bring?

137 posted on 02/16/2009 8:52:09 PM PST by Gritty (Explaining the economy to dumb people is impossible in 30 second commercials-Ted Nugent)
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To: hoosiermama; RegulatorCountry; RaceBannon

I have been sitting here trying to remember. I think I am getting closer to figuring out what they are talking about thanks to Regulator Country and RaceBannon. Two Dave’s are always right on top of things and explain very well what is happening and yet I cannot remember their screen names. This time I am writing them down.


138 posted on 02/16/2009 8:54:05 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: conservative cat

That would make a very good movie!


139 posted on 02/16/2009 8:54:54 PM PST by PhiKapMom ( BOOMER SOONER! Sam Bradford Heisman! LetsGetThisRight.com RED STATE Oklahoma Republican)
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To: dangermouse
This is another indication that deflation not inflation is the major threat to the world and US economies. As banks and countries fail the value of hard assets will decline. This particular event seems to be over-hyped a bit but IMO any light at the end of the tunnel at this point is the train to a deflationary spiral and worldwide depression..hope I'm wrong.
140 posted on 02/16/2009 8:55:38 PM PST by montanajoe
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To: muawiyah
I suspect that if we dug deeper we'd find George Soros and his pack of jackals in there trying to run the banks in Korea AGAIN. This tactic may screw Soros.

That would make this great news. Maybe enough people can spot Soros' MO at work that it's no longer effective.

141 posted on 02/16/2009 8:57:00 PM PST by Tellurian (Sanctity of life and sanctity of property ... define our free country. (Star Parker))
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To: PhiKapMom

Was cedardave one of them?

Then there’s davefromnevada...

I wasn’t on the thread, just throwing daves off...


142 posted on 02/16/2009 8:58:47 PM PST by txhurl (ralph)
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To: muawiyah

If only.........but the bad and evil seem to go on and on and on.....


143 posted on 02/16/2009 8:59:16 PM PST by cherry
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To: VeniVidiVici

LOL...good answer.


144 posted on 02/16/2009 8:59:50 PM PST by Ernest_at_the_Beach (No Burkas for my Grandaughters!)
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To: All

Just got off a chat with an Australian trading contact of mine. Nothing to see here folks. Just a bit of trading going on after the Bank of Japan discussions. Looks like market will be selling a bit but let’s all chill and see how we fare through the London session that opens in a few hours.


145 posted on 02/16/2009 9:00:46 PM PST by farlander (Sic Semper Tyrannis)
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To: PhiKapMom; CedarDave

ping.


146 posted on 02/16/2009 9:00:51 PM PST by Jet Jaguar (Atlas Shrugged Mode: ON)
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To: farlander

I bet that is what the Caption of the Titantic said as the ship was going down.


147 posted on 02/16/2009 9:01:19 PM PST by Orange1998
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To: LostInBayport

LostInBayport: IMHO, we are now in a deflationary period. When you see something you need that is at a price you can’t resist, buy it if you can afford it. Inflation is around the corner, but only God knows if it will be in 3, 6,12 or 24 months. My guess is sometime next year. This is a great time to have a kid’s coin collection; real silver dimes and quarters that aren’t in pristine condition. Much easier to get food with if things get that bad. And, if things DO get that bad with guns and ammo you can shoot something to eat or shoot someone that wants to rob you.


148 posted on 02/16/2009 9:01:49 PM PST by jdsteel (CONGRESS: Take it again in twenty ten.)
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To: montanajoe
bad deflation is equal to hyperinflation in that goods...the stuff you really need...will either be not available or too expensive.....

the sheeple will suffer...then again, they deserve what they want and they are going to get it good and hard.

149 posted on 02/16/2009 9:02:41 PM PST by cherry
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To: RobFromGa

ROFL....math solves all...


150 posted on 02/16/2009 9:03:09 PM PST by Ernest_at_the_Beach (No Burkas for my Grandaughters!)
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