CNBC SMACKDOWN - Simon Hobbs Tells Cramer: "You Told People To Buy Bear Stearns!"

Video

CNBC Video - Simon Hobbs & Jim Cramer battle over European banks - Aug. 18, 2011
Pretty brilliant moment from yesterday.  Runs 2 minutes.
Source - BI
A debate between CNBC anchors Jim Cramer and Simon Hobbs went out of control this morning amid the European bank rout.  Cramer opined that traders have to consider the possibility that this is a Lehman moment, and after the commercial break Hobbs cries foul over the comment.
Hobbs criticizes Cramer, arguing that even the suggestion of a Lehman moment could cause markets to convulse.  Cramer argues that he's bound to acknowledge it in order to prevent being "crucified" again by viewers who listen to his advice.

There is No Depression On Wall Street, Just on Main Street.

    If we really look around and see the sad reality of our economic state. Before the newsrooms blames it on the bad people behind on mortgages making our fault. It is not our doing that created this economic mess. This is a result of congress turning over their power to coin money and determine the value over to a Private central bank Ever since 1913, our nation has been in a choke hold to these bankers. Right now we are at the mercy of people we have no control over,we cannot elect them or remove them. They are the oligarchs of Wall Street and the Federal Reserve Bank.

               When a few people control the wealth of the world who position themselves on the winning side even if the people live in run down shacks as a result. They erected Monopolies like Wal Mart that killed Main Street USA. They influenced Politicians to repeal the Glass Steagle Act of 1933 that kept a barrier between Commercial Banks and Investment Banks. When this law was repealed,they created a fraudulent financial instruments called derivatives.  These derivatives are a black hole of printed paper with no value the Mega Banks owe. A fraudulent debt that is not real. These Banks  want the government and taxpayers to pay the debt they do not owe. This is why the people of Spain and Greece are angry because the politicians who are paid for by the banks to make sure the taxpayers pay for their recklessness at the people expense and the Oligarchs will not take the loss.

              While I read about tent cities springing up nationwide and the criminality of foreclosures taking homes they do not own. It seems Wall Street is doing well at our expense,While Uncle Ben at the Federal Reserve prints money to help these big banks on Wall Street that we have to pay in inflation having less purchasing power in our earnings when we shop for food and fuel our cars. Wall Street is getting record bonuses while the American people are starving. People are out of work and living day to day while the Money junkies celebrate their ill gotten gains. So what is the President's solution to all this? Bail out Wall Street and raise taxes on us to pay for the money junkies reckless investments.

               We are looking at a two tier society of the super rich and the super poor with no middle class. While we struggle day to day just to feed our children. The Wall Street fat cats and the Bankers are really making out like bandits on the backs of us. What is different today is with the flow of information thanks to the internet bypassing the controlled media. They will not succeed in impoverishing us like they did other third world countries. I believe the party is over and the robber barons will be brought to justice. These ruling families that have controlled the wealth of Europe will be accountable in a court of law with the sell out politicians doing their bidding. Humanity will prevail and their New World Order will fail. When we lose everything so the bankers can gain. People will lose it saying finally like times of old when they went after an evil kings, polticans and the robber barons chanting,"off with there heads,off with their heads".

Freedompalooza.com 2011 Jim Traficant Speech Day 1

Hugo Chavez, Gold Runs, Bank Runs And Bank Holidays

Here comes Hugo Chavez demanding the return of 211 tons of Venezuelan gold from the criminal bankers of London and New York. Max Keiser said today that the Bank of England does not have the Venezuelan gold and will be forced to go into the markets and buy it at increasingly higher prices.
Hugo Chavez has sent the gold market into backwardation. That means that the price of physical bullion delivered today is worth more than a paper promise of a delivery at some future date. That has driven the gold market higher since yesterday. $1,900 and $2,000 gold are in sight.
There is a difference between paper and physical gold. The US and UK governments lease their gold out to banks. They are not supposed to deliver the bullion. For example, they deliver a piece of paper saying you owe the government one million ounces of gold. This is mistakenly treated as an asset. Stock analysts report a bank in New York just bought a million ounces of gold. Then that bank sells that same paper gold five times. The proceeds of those five sales generate cash from the sales which also adds to revenues. But the original bank still shows the paper gold as an asset on its books. Then banks like HSBC and JP Morgan open ETFs (Exchange Traded Funds) GLD and SLV. People deposit real money into these ETFs thinking they own gold and silver. These funds have a mixture of bullion and lots of paper derivatives. (A derivative is a bet on the future value of a bond or a commodity like gold or oil.)
To make the dollar look good the Federal Reserve creates hundreds of billions of dollars which it gives to the banks to sell short the paper price of gold and silver. Note the US Plunge Protection team through the Treasury has a conference call every morning to 27 brokers and banks. The The Treasury and the FED ask these groups to manipulate all the markets with all losses to be picked up by the Federal Reserve printing more money. That is why I do tell the average investor to stay out of the futures markets.
A few weeks ago the run up in silver was stopped temporarily by 5 raises in margin requirements and by a bank selling short one third of the world’s entire silver production for the whole year in just one minute in the futures market with a potential loss of ten billion dollars. The banks do not care if they lose ten billion dollars a minute because it is your money and not theirs they are playing with.
Enter Jeff Christian and Alan Greenspan. Jeff Christian is infamous for saying there is and should be 50 to a 100 dollars of paper gold and silver for every dollar of bullion. Alan Greenspan’s is now most famous for saying that the US will never default on its debt because we can print lots and lots of money.
Investors all over the world now clearly understand the banks are playing musical chairs with tens of trillions of dollars in currencies and bonds and more than a quadrillion dollars in derivatives and Credit Default Swaps. A CDS is a hybrid between a derivative and insurance. It insures the values of your financial bets. A few US banks have insured the world for 6oo trillion dollars in potential losses. In theory you are supposed to pay of a few hundred trillion dollars in banker gambling losses by being willing to accept a 100% tax rate for a century or two.
This game of musical chairs will end very badly and very soon with 90% of all savings and 99% of all paper gold and silver and 100% of all CDS going to zero value.
We are in gold backwardation. There are gold runs, bank runs and multiple currency runs. This will take down the banks and the dollar. Bernanke will print even more money and we will soon have a 25% American inflation rate which will go from there to 50%.
Compare this to the September 21, 1931 English default. A deflation of this magnitude is a default of a reserve currency and will grind the world economy to a halt as it did in the last Great Depression. Please note that the Last Great Depression was only solved by World War II. Also please note that we are already over loaded with both public and private debt so a war or any massive increase in debts will mean hyperinflation.
Let us put the last Great Depression in a time frame. The American stock market crashed on October 24, 1929. There were indications of a recovery until the Rothschild owned Credit-Anstalt bank of Austria went bankrupt on May 11, 1931 and England effectively defaulted on its debts by going off the gold standard on September 21, 1931. Then markets froze, international trade plummeted, unemployment soared to new highs and hundreds of millions of people were thrown out of their previously good lives into abject poverty and war.
Zero Hedge told us that there are rumors of a bank holiday in Europe. This has sent stock markets all over the world into a slide. There have been bank runs in Italy. Max Keiser said one of France’s largest banks Societe General is insolvent due to hundreds of trillions of dollars in derivatives. That is hundreds of trillions and not hundreds of billions. JP Morgan has 90 trillion dollars (not 90 billion dollars) in derivatives. JP Morgan sells all of its bad paper to the Federal Reserve. The FED finance this by printing money which allows you to subsidize Morgan and Goldman Sachs every time the price of food goes up at the store where you shop.
As I said previously, the euro is printed with markers clearly indicating which country printed it. That means when Italy, Greece, Spain, Portugal and Belgium pull out of the euro, the people will be given lira, drachma, escudos and francs. That means a 30% cut in the value of a European’s savings and pensions could happen as soon as September. That is why so many Europeans are bailing out of euros into Swiss francs and gold bullion. This will accelerate after the Europeans return from their August vacations.
Hugo Chavez and Fidel Castro subscribe to Bob Chapman’s newsletter as do a lot of US military and the organizers of the Greek riots. Bob Chapman, Max Keiser, Michael Hudson, Alex Jones and Birgitta Jonsdottir are well known on European radio and TV. They have been telling the Europeans from Latvia to Ireland to England to France to Italy to Spain and to Greece to default on your debts and to pull out of the euro. You owe the banks nothing.
The above is a short explanation why there are runs on bullion, on banks and on currencies.
Many of us no longer believe in the fallacy of the Left Right paradigm. Others are beginning to see the world as being split into two political parties. There are the bankers and there is everyone else.
Go beyond who is Right and who is Wrong. Get to What is Right and What is Wrong.
Until further notice the bankers are always wrong.

Delors: 'Europe and euro on brink of abyss'

Former European Commission president Jacques Delors warned on Thursday that too little was being done to stop Europe and the euro sliding towards disaster.

In a hard hitting interview with Belgium's Le Soir newspaper and Switzerland's Le Temps, he criticized the outcome from Tuesday's summit between German chancellor Angela Merkel and her French counterpart, Nicolas Sarkozy.

"Open your eyes: the euro and Europe are on the brink of the abyss," he said. "To avoid falling, the choice looks straightforward to me: either member states accept the robust economic partnership I always demanded, or they transfer additional powers to the Union."

The response of the two leaders, in his view, had been "vague and insufficient."

Jacques Delors is a veteran of the political scene whose opinions still carry a lot of weight in France.

He served as finance minister under François Mitterrand from 1981 to 1984 and was president of the European Commission from 1985 to 1994. Le Figaro described him as "the father of modern Europe" in its coverage on Friday.

Delors' daughter is Martine Aubry, a former minister herself and architect of France's 35-hour week legislation. She is currently running to be selected as the Socialist party candidate for the presidential elections in April 2012.

Delors was particularly critical of the plan to create a pan-eurozone finance minister. In a barely concealed swipe at the EU's head of foreign affairs, Catherine Ashton, he doubted the impact the proposal would have.

"Does European diplomacy work any better since the creation, through the Lisbon Treaty, of a pseudo 'EU foreign minister'?" he sniffed.

Delors supported the idea of eurobonds, which was rejected by Merkel and Sarkozy in their Tuesday meeting. The French Socialist party has also called for eurobonds to be issued.

"Right since the start of the crisis, Europe's leaders have failed to see the reality in front of their eyes," he said.

Matthew Warren (news@thelocal.fr)

Hoarders Rush Gold to Federal Reserve - Threat of Imprisonment March 10, 1933

http://news.google.com/newspapers?id=mXAbAAAAIBAJ&sjid=XksEAAAAIBAJ&pg=2522,6769760&dq=federal+reserve&hl=en

Fatal Facebook: 'UK on edge of civil war'

Biden seeks to reassure China on U.S. debt

BEIJING (Reuters) - U.S. Vice President Joe Biden on Friday said China had "nothing to worry about" concerning the safety of its vast holdings of Treasury debt, while China's Premier Wen Jiabao gave a ringing endorsement of the resilience of the debt-ridden U.S. economy.
The exchange came on the second day of Biden's five-day visit to China where he is seeking to reduce distrust between the world's two largest economies and build relations with Chinese leaders.
Wen said he was confident that the U.S. economy would get back on track for healthy growth, echoing earlier comments from China's vice president and heir apparent, Xi Jinping.
"It's particularly important that you sent a very clear message to the Chinese public that the United States will keep its word and its obligations with regard to its government debt, it will preserve the safety, liquidity and value of U.S. Treasuries," Wen told Biden.
Both sides have been at pains to project a harmonious image during the trip, although there was an unscripted note of discord on Thursday night when a basketball game between a U.S. college team and a Chinese professional side erupted in a fight.
Wen's comments were the first by a senior Chinese leader to directly address the roiling debt crisis in Washington since this month's credit rating downgrade by Standard and Poor's.
In response, Biden told Wen that Washington appreciated and welcomed China's investment in U.S. treasuries.

"Very sincerely I want to make clear you have nothing to worry about," Biden said.
"DON'T BET AGAINST AMERICA"
Earlier, the U.S. vice president told his hosts that "no one has ever made money betting against America," according to a transcript of remarks made with Xi.
Biden's China stop is the first leg of an Asia tour that will include visits to Mongolia and Japan.
The upbeat tone from Wen and Xi, who is expected to be China's next president, was in stark contrast to the sharp criticism by state media of Washington's handling of its economy, for which China is the biggest foreign creditor.
Their words highlighted the complex and intertwined relationship between the world's two-largest economies. While China has tussled with the United States on trade, Internet censorship, human rights and U.S. arms sales to Taiwan, it has also sought to steady ties with Washington.
Chinese officials have long sought assurances that Beijing's vast holdings of dollar assets including U.S. Treasury debt remain safe, despite the downgrade.
Chinese state media have repeatedly accused Washington of reckless fiscal policies that have created uncertainty about Beijing's dollar assets. Analysts estimate two-thirds of China's $3.2 trillion in foreign exchange reserves, the world's largest, are in dollar holdings, making it the biggest foreign creditor to the United States.
Wu Zhifeng, an economist with China Development Bank, a state bank in Beijing, said Beijing can do little to divest its existing dollar holdings.
"Biden's promise is right in the sense that there will be no U.S. treasury defaults, but his promise does not mean the purchasing power of China's treasury holdings will not be eroded," Wu said.
"MORE PRECIOUS THAN GOLD"
Xi said Biden had briefed him on Thursday "about the efforts of the U.S. government in spurring growth and jobs, cutting (the) budget deficit, properly handling the debt problem, and preserving the confidence of global investors."
"The U.S. economy is highly resilient and has a strong capacity for self-repair," said Xi, who was speaking to business leaders at the roundtable event. "We believe that the U.S. economy will achieve even better development as it rises to challenges."
Xi reiterated the need for China the United States to work together to restore confidence in international markets, adding that "confidence is more precious than gold."
Dong Xian'an, chief economist of Peking First Advisory in Beijing, said China and the United States "need to coordinate their macro policies and make their fiscal system transparent to each other."
"China and the United States are walking through this crisis together. If one loses, the other will, too," Dong said.
Earlier, Biden acknowledged that China had legitimate concerns about its access to U.S. markets, just as Washington is worried about problems U.S. firms face in China.
Xi voiced optimism that China would avoid a so-called hard landing and that China hopes Washington will ease trade restrictions and provide fair treatment to Chinese firms.
He said that China would give all businesses equal treatment when seeking government contracts, addressing concerns raised by U.S. executives that they were being shut out in some cases.
Separately, a U.S. official said the United States would announce nearly $1 billion in commercial deals between U.S. companies and China.
Despite the positive official statements, occasional discordant notes interfered with the two sides' efforts to build trust. At one press conference, media handlers suddenly ushered reporters out of the room while Biden was still speaking, citing an arbitrary time limit.
The previous evening, goodwill between the two nations briefly unraveled at a basketball court at the former Olympic grounds where a 'friendship' game between the Georgetown University Hoyas and the Bayi Military Rockets degenerated into a brawl.
(Additional reporting by Langi Chiang and Zhou Xin; Writing by Sui-Lee Wee; Editing by Ken Wills and Alex Richardson)
mochila insert follows

Tokyo stocks tumble

Tokyo stocks ended sharply lower on Friday. A strong earthquake in northeastern Japan just before the market-close spread jitters among investors, triggering increased falls in share prices.

The market had opened lower on Friday morning, as investors responded to an overnight plunge in New York by selling a broad range of issues.

The benchmark Nikkei average closed the day at 8,719 -- down 224 points from Thursday's close.

The broader-based TOPIX index ended at 751 -- down 15 points.

Stock prices also ended lower in China and other parts of Asia. Market players say investors are growing concerned over a possible global market decline.

Titanic Battle or Insider Trading? The S&P Downgrade and the Bilderbergers: All Part of the Plan?

What just happened in the stock market?

Last week, the Dow Jones Industrial Average rose or fell by at least 400 points for four straight days, a stock market first.

The worst drop was on Monday, 8-8-11, when the Dow plunged 624 points. Monday was the first day of trading after US Treasury bonds were downgraded from AAA to AA+ by Standard and Poor’s.

But the roller coaster actually began on Tuesday, 8-2-11, the day after the last-minute deal to raise the U.S. debt ceiling -- a deal that was supposed to avoid the downgrade that happened anyway five days later.  The Dow changed directions for eight consecutive trading sessions after that, another first. 

The volatility was unprecedented, leaving analysts at a loss to explain it. High frequency program trading no doubt added to the wild swings, but why the daily reversals?  Why didn’t the market head down and just keep going, as it did in September 2008?

The plunge on 8-8-11 was the worst since 2008 and the sixth largest stock market crash ever. According to Der Spiegel, one of the most widely read periodicals in Europe:

Many economists have been pointing out that last week's panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.

Then as now, banks stopped lending each other money. Then as now, banks' cash deposits at the central bank doubled within days.

But on Tuesday, August 9, the market gained more points from its low than it lost on Monday. Why? A tug of war seemed to be going on between two titanic forces, one bent on crashing the market, the other on propping it up.

The Dubious S&P Downgrade

Many commentators questioned the validity of the downgrade that threatened to be another Lehman Brothers. Dean Baker, co-director of the Center for Economic and Policy Research, said in a statement:

"The Treasury Department revealed that S&P’s decision was initially based on a $2 trillion error in accounting. However, even after this enormous error was corrected, S&P went ahead with the downgrade. This suggests that S&P had made the decision to downgrade independent of the evidence.  [Emphasis added.]

Paul Krugman, writing in the New York Times, was also skeptical, stating:

[E]verything I’ve heard about S&P’s demands suggests that it’s talking nonsense about the US fiscal situation. The agency has suggested that the downgrade depended on the size of agreed deficit reduction over the next decade, with $4 trillion apparently the magic number. Yet US solvency depends hardly at all on what happens in the near or even medium term: an extra trillion in debt adds only a fraction of a percent of GDP to future interest costs . . . .

In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.

In an illuminating expose posted on Firedoglake on August 5, Jane Hamsher concluded:

It’s becoming more and more obvious that Standard and Poor’s has a political agenda riding on the notion that the US is at risk of default on its debt based on some arbitrary limit to the debt-to-GDP ratio. There is no sound basis for that limit, or for S&P’s insistence on at least a $4 trillion down payment on debt reduction, any more than there is for the crackpot notion that a non-crazy US can be forced to default on its debt. . . .

It’s time the media and Congress started asking Standard and Poors what their political agenda is and whom it serves.

Who Drove the S&P Agenda?

Jason Schwarz shed light on this question in an article on Seeking Alpha titled “The Rise of Financial Terrorism”. He wrote:

[A]fter the market close on Friday August 5th, we received word that S&P CEO Deven Sharma had taken control of the ratings agency and personally led the push for a U.S. downgrade. There is a lot of evidence that he has deliberately tried to trash the U.S. economy. Even after discovering that the S&P debt calculations were off by $2 trillion, Sharma made the decision to go ahead with the unethical downgrade. This is a guy who was a key contributor at the 2009 Bilderberg Summit that organized 120 of the world's richest men and women to push for an end to the dollar as the global reserve currency.

[T]hrough his writings on “competitive strategy” S&P CEO Sharma considers the United States the PROBLEM in today’s world, operating with what he implies is an unfair and reckless advantage. The brutal reality is that for "globalization" to succeed the United States must be torn asunder . . .

Also named by Schwarz as a suspect in the market manipulations was Michel Barnier, head of European Regulation.  Barnier triggered an alarming 513-point drop in the Dow on August 4, when he blocked the plan of Hans Hoogervorst, newly appointed Chairman of the International Accounting Standards Board, to save Europe by adopting a new rule called IFRS 9. The rule would have eliminated mark-to-market accounting of sovereign debt from European bank balance sheets. Schwarz writes:

We all should be experts on the dangers of mark-to-market accounting after observing the U.S. banking crisis of 2008/2009 and the Great Depression in the 1930s. Mark-to-market was repealed at 8:45 a.m on April 2, 2009, which finally put a stop to the short term liquidity crisis and at the same time ushered in a stock market recovery. Banks no longer had to raise capital as long term stability was brought back to the system. The exact same scenario would have happened in 2011 Europe under Hoogervorst's plan. Without the threat of failure by those banks who hold high amounts of euro sovereign debt, investors would be free to move on from the European crisis and the stock market could resume its fundamental course.

Schwarz notes that Barnier, like Sharma, was a confirmed attendee at past Bilderberger conferences. What, then, is the agenda of the Bilderbergers?

The One World Company

Daniel Estulin, noted expert on the Bilderbergers, describes that secretive globalist group as “a medium of bringing together financial institutions which are the world’s most powerful and most predatory financial interests.” Writing in June 2011, he said:

Bilderberg isn’t a secret society. . . . It’s a meeting of people who represent a certain ideology. . . . Not OWG [One World Government] or NWO [New World Order] as too many people mistakenly believe. Rather, the ideology is of a ONE WORLD COMPANY LIMITED.

It seems the Bilderbergers are less interested in governing the world than in owning the world. The “world company” was a term first used at a Bilderberger meeting in Canada in 1968 by George Ball, U.S. Undersecretary of State for Economic Affairs and a managing director of banking giants Lehman Brothers and Kuhn Loeb. The world company was to be a new form of colonialism, in which global assets would be acquired by economic rather than military coercion. The company would extend across national boundaries, aggressively engaging in mergers and acquisitions until the assets of the world were subsumed under one privately-owned corporation, with nation-states subservient to a private international central banking system. 

Estulin continues:

The idea behind each and every Bilderberg meeting is to create what they themselves call THE ARISTOCRACY OF PURPOSE between European and North American elites on the best way to manage the planet. In other words, the creation of a global network of giant cartels, more powerful than any nation on Earth, destined to control the necessities of life of the rest of humanity.

. . . This explains what George Ball . . . said back in 1968, at a Bilderberg meeting in Canada: “Where does one find a legitimate base for the power of corporate management to make decisions that can profoundly affect the economic life of nations to whose governments they have only limited responsibility?”

That base of power was found in the private global banking system. Estulin goes on:

The problem with today’s system is that the world is run by monetary systems, not by national credit systems. . . . [Y]ou don’t want a monetary system to run the world. You want sovereign nation-states to have their own credit systems, which is the system of their currency. . . . [T]he possibility of productive, non-inflationary credit creation by the state, which is firmly stated in the US Constitution, was excluded by Maastricht [the Treaty of the European Union] as a method of determining economic and financial policy.

The world company acquires assets by preventing governments from issuing their own currencies and credit. Money is created instead by banks as loans at interest. The debts inexorably grow, since more is always owed back than was created in the original loans.  (For more on this, see here.) If currencies are not allowed to expand to meet increased costs and growth, the inevitable result is a wave of bankruptcies, foreclosures, and sales of assets at firesale prices. Sales to whom?  To the “world company.”

Battle of the Titans

If that was the plan behind the market assaults on August 4 and August 8, however, it evidently failed. What turned the market around, according to Der Spiegel, was the European Central Bank, which saved the day by embarking on a program of buying Spanish and Italian bonds. Sidestepping the Maastricht Treaty, the ECB said it would engage in the equivalent of “quantitative easing,” purchasing bonds with money created with accounting entries on its books.  It had done this earlier with Greek and Irish sovereign debt but had resisted doing it with Spanish and Italian bonds, which were much larger obligations. On Tuesday, August 16, the ECB announced that it was engaging in a record $32 billion bond-buying spree in an attempt to appease the markets and save the Eurozone from collapse.

Federal Reserve Chairman Ben Bernanke was also expected to come through with another round of quantitative easing, but his speech on August 9 made no mention of QE3. As blogger Jesse Livermore summarized the market’s response:

. . [T]he markets sold off rather rapidly as no announcement was made about  QE3. . . . It wasn’t until . . . the last 75 min of market activity [that] the DJIA gained 639 pts to close at a day high of 11,242. That begs the question, where did that injection of capital come from? The President’s Working Group on Financial Markets? Or did the “policy tools” to promote price stability by any chance include the next round of Quantitative Easing unannounced?

Was that QE3 Incognito, Ben?

Titanic Battle or Insider Trading?

That leaves the question, why the suspicious downgrade on August 5, AFTER the government had made major concessions just to avoid default, and despite the embarrassing revelation that S&P’s figures were off by $2 trillion? Suspicious bloggers have pointed out that Lehman Brothers was brought down by a massive bear raid on 9-11-08, echoing the disaster of 9-11-01; that the S&P downgrade hit the market on 8-8-11; and that the S&P fell exactly 6.66% and the Dow fell exactly 5.55% on that date.  In Illuminati lore, these are power numbers, of the sort chosen for power moves.

But we don’t need to turn to numerology to find a motive for proceeding with the downgrade. On August 12, MSN.Money reported that it “wasn't much of a surprise”:

Wall Street had heard a rumor early on that the downgrade was coming. News sites reported the rumor all day.

Unless it was all a huge coincidence, it's likely that someone in the know leaked the information. The questions are who and whether the leak led to early insider trading.

The Daily Mail had the story of someone placing an $850 million bet in the futures market on the prospects of a US debt downgrade:

The latest bet was made on July 21 on trades of 5,370 ten-year Treasury futures and 3,100 Treasury bond futures, reported ETF Daily News.

Now the investor’s gamble seems to have paid off after Standard and Poor’s issued a credit rating downgrade from AAA to AA+ last Friday.

Whoever it is stands to earn a 1,000 per cent return on their money, with the expectation that interest rates will be going up after the downgrade.

The Securities Exchange Commission announced on August 8 that it is investigating the downgrade. According to the Financial Times, the move is part of a preliminary examination into potential insider trading.

Whatever can be said about the first two weeks of August, their market action was unprecedented, unnatural, and bears close observation.

Ellen Brown is president of the Public Banking Institute and the author of eleven books. She developed her research skills as an attorney practicing civil litigation in Los Angeles.  In Web of Debt, she turns those skills to an analysis of the Federal Reserve and “the money trust.” Her websites are http://WebofDebt.com  and http://PublicBankingInstitute.org.

Austerity Is the Wrong Idea

Stocks on Wall Street dropped sharply on Thursday, with investors spooked, again, about the euro-zone debt crisis and the sputtering United States economy.

Yet, even at this hour, leaders on both sides of the Atlantic seem determined to handcuff fiscal policies — the main tools that can increase jobs, consumer demand and economic growth — with an unquestioning devotion to rigid austerity.
Europe’s post-2008 economic problems have differed from America’s in many important ways. Washington has mercifully never had to cope with the problem of a dollar torn apart by the separate taxing and spending policies of 17 sovereign governments.
But as the crisis moves toward its fourth year, there are disturbing common threads.
One is the chilling specter of sovereign default, something that never should have come up in the United States but did for a while because of the reckless brinkmanship of House Republicans. A more real threat of default now haunts European bond markets, as chronically underfinanced bailout plans with punitive terms have made it impossible for the debtor countries to grow fast enough to pay down their debts.
Another grim parallel is the refusal by leaders to take politically tough but economically necessary stands.
On Tuesday, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France again ruled out the two steps most needed to stem the panic in the financial markets: issuing common European bonds and committing more money for Europe’s depleted bailout fund. Instead, they proposed more meetings and called on all European nations to enshrine an ill-advised “golden rule” of balanced budgets in their constitutions. Markets are rightly unimpressed.
Excessive indebtedness is a real, long-term problem. But Europe’s broad downward trajectory can only be turned around if governments — both those of lenders and debtors — spend more in the near term to put people back to work and get consumers back to spending.
Instead, panicked by market volatility and urged on by Chancellor Merkel, Europe’s leaders have made a bad situation worse by prescribing austerity everywhere they look. The results are painfully clear. Growth is grinding to a halt across Europe.
That is true even in Germany, as its export markets falter and domestic demand fails to take up the slack. It is now growing at an anemic 0.1 percent and the euro zone at only 0.2 percent.
Meanwhile, debt market panic has spread from smaller economies like Greece, Ireland and Portugal to the larger economies of Spain, Italy and even France. Only emergency lending by the European Central Bank now staves off renewed fears of default, and no one knows how much longer the bank can continue without help from European bonds and a better financed bailout fund.
As the crisis quickens, more enlightened voices struggle to be heard. Christine Lagarde, the new managing director of the International Monetary Fund, is calling for balancing long-term debt reduction with “short-term support for growth and jobs.” The financier George Soros this week renewed his pleas for more growth-friendly policies, as has Gordon Brown, the former British prime minister.
Elections are approaching in Spain, France, Germany and other European countries over the coming months. The campaign will soon gear up here. Voters on both sides of the Atlantic need to demand more from their leaders than continued austerity on autopilot.

A version of this editorial appeared in print on August 19, 2011, on page A22 of the New York edition with the headline: The Wrong Idea: An insistence on austerity is threatening economies in Europe and here.

Economic Sleepwalking - Why This Recession Is Different

Casey Research
Guest post from economist Terry Coxen.
The rebound from the recent recession is the slowest economic comeback in living memory – so slow that some doubt whether it is happening at all. The recession bottomed (the economy stopped shrinking) in June 2009, so the recovery is now two years old.
The sleepwalking during the last 24 months is all the more remarkable, given that the economy has been treated with the biggest dose of monetary and fiscal stimulants ever administered in U.S. history. Why the continued weak pulse?
Each recession has its own story – how long it lasts, how deep it gets, industries worst hit, particular bubbles burst. But in every recession, the heart of the problem is the same, namely, an imbalance in the market for cash. Every recession begins when the aggregate amount of cash that people want to hold (given their wealth and the other things they want to own) is more than the amount of cash actually in existence. That imbalance – the demand for cash exceeding the supply – depresses the entire economy because the flip side of the market for cash is the market for everything else. All markets and all industries are hit, and most of them contract because most people are trying to sell more than they buy... which is the only way for anyone to increase his cash holdings and which is impossible for everyone to do at the same time.
In the period from the end of the Civil War to the end of World War II, most recessions began when the government, by plan or by blunder, contracted the supply of cash, so that it fell below the public’s demand for cash. Since World War II, every recession has begun when the government, again by plan or by blunder, allowed the growth in the supply of cash to lag behind the growth in the demand.
The early stages of a typical pre-WWII recession would push some commercial banks into insolvency, which would shrink the supply of cash even further, since insolvency meant that some part of the deposits held by bank customers were lost. As the recession proceeded, an increase in the demand for cash by worried investors, worried business people and worried workers would make the cash shortage even more severe.
Every recession between the Civil War and World War II ended on its own. In no case was a recession brought to an end by the actions of an alert government agency or with the advice of learned economists. Recessions were cured, automatically, by falling prices. Falling prices were the cure because they increased the real value (purchasing power) of whatever amount of cash the public was holding. Prices kept falling until the real value of the existing supply of cash grew to a level that exceeded what the public wanted to hold. Then, as individuals and businesses began to spend the excess, the economy would begin to recover.
Until the Great Depression of the 1930s, the average length of a recession was 21 months. The misery that began in October 1929 lasted five times that long – 105 months. It was the severest recession ever, with unemployment reaching one-third of the workforce, because the shortage of cash that brought it on was the severest ever: the M1 money supply (hand-to-hand currency plus checking deposits) shrank by one-third. But a different factor made it the most prolonged of recessions. Aiming at a symptom of recession rather than at the cause, the government pursued an array of policies to prevent prices from falling, which had the perverse effect of preventing the economy from recovering. The government’s would-be medicine was, in fact, poison.
Even though the government’s first active attempt to end a recession produced a disaster, it did establish a presumption that the government shouldn’t just stand by when the economy turns down. It should do something, and the duty to do something has been assigned to the Federal Reserve.
Since the end of World War II, the Federal Reserve has acted in fire department fashion to cure each recession as soon as it was identified. Relying on a fall in prices to restore prosperity wasn’t an option the Fed wanted to consider. The Fed has attached a variety of labels to its recession-fighting steps, such as “lowering interests,” “easing credit conditions” or, more recently, “quantitative easing.” But they’ve all amounted to the same thing – increasing the public’s supply of cash to a point where it exceeds the public’s demand for cash.
As of the end of June, we are 42 months from the December 2007 start of the last recession. The table below shows the total growth in the M1 money supply during that period and also during the 42 months following each of the preceding three recessions. The most recent downturn has clearly been met with the most aggressive additions to the supply of cash. The July 1990 recession comes close in that regard, but in that case the new cash produced the intended effect; the economy revived. Why is it that, this time around, the new money seems to be accomplishing so little?
The answer has at least four parts.
1. Nearly all recessions are exacerbated to some degree by an increase in the public’s demand to hold cash. Recessions produce worry and uncertainty, and cash is the most versatile provision for the unknown and hence is the best anti-anxiety drug. The collapse, in 2008 and 2009, of financial institutions that the public had taken for granted as part of an unshakeable firmament is still a fresh memory. The public wants to hold more cash now than it did going into the last recession because it is still worried. So some part of the 40% increase in M1 has been absorbed by that increase in the demand to hold money.
2. Expected real estate deflation. In the housing market, the U.S. government has repeated the 180-degree wrong-way error of the Great Depression – trying to keep prices from falling. Tax credits for first-time homebuyers, payments to lenders in exchange for rewriting existing mortgages and the inventorying of foreclosed houses by government-dependent banks have prevented house prices from reaching a market-clearing level. The expectation that prices have further to fall is a reason to hold off on buying, and the flip side of delaying a purchase is holding more cash.
3. Unsettled loan portfolios. The echo of vulnerable real estate prices is doubt about bank loan portfolios. As real estate prices decline, losses on mortgages can only increase. Will the banks need to be rescued again? If so, will a deficit-ridden government show up in time? More uncertainty means more demand to hold cash.
4. Uncertainty about tax rates and rules. Much of today’s tax rules will expire at the end of 2012. No one knows what the rules will be after that. Uncertainty about tax rules is a reason for businesses to postpone investing, and a reason to put off investing is a reason to hold cash.
We don’t know how much each of those four factors has added to the demand for money, and, as investors, we don’t need to know. The critical point is that each of the factors adds a quantity to the demand for cash, something finite. So it is a certainty that their total effect can be overcome by yet more increases in the supply of money.
And more increases in the supply of money are what we are going to get until unemployment rates come down. Don’t be distracted by speculation over whether there will be a QE3. QE is just a slogan. It’s the numbers that matter, and the numbers on the money supply will keep growing. The Federal Reserve’s fear that the economy might slip back into recession will keep the numbers growing. The Fed’s need to protect the capital markets from the effect of the Treasury’s trillion-dollar deficits will keep the numbers growing.

Aliens may destroy humanity to protect other civilisations, say scientists

Rising greenhouse emissions could tip off aliens that we are a rapidly expanding threat, warns a report

When they see what a mess we've made of our planet, extraterrestrials may be forced to take drastic action. Photograph: PR

Ian Sample, science correspondent

The Guardian, Thu 18 Aug 2011 19.04 BST

It may not rank as the most compelling reason to curb greenhouse gases, but reducing our emissions might just save humanity from a pre-emptive alien attack, scientists claim.

Watching from afar, extraterrestrial beings might view changes in Earth's atmosphere as symptomatic of a civilisation growing out of control – and take drastic action to keep us from becoming a more serious threat, the researchers explain.

This highly speculative scenario is one of several described by a Nasa-affiliated scientist and colleagues at Pennsylvania State University that, while considered unlikely, they say could play out were humans and alien life to make contact at some point in the future.

Shawn Domagal-Goldman of Nasa's Planetary Science Division and his colleagues compiled a list of plausible outcomes that could unfold in the aftermath of a close encounter, to help humanity "prepare for actual contact".

In their report, Would Contact with Extraterrestrials Benefit or Harm Humanity? A Scenario Analysis, the researchers divide alien contacts into three broad categories: beneficial, neutral or harmful.

Beneficial encounters ranged from the mere detection of extraterrestrial intelligence (ETI), for example through the interception of alien broadcasts, to contact with cooperative organisms that help us advance our knowledge and solve global problems such as hunger, poverty and disease.

Another beneficial outcome the authors entertain sees humanity triumph over a more powerful alien aggressor, or even being saved by a second group of ETs. "In these scenarios, humanity benefits not only from the major moral victory of having defeated a daunting rival, but also from the opportunity to reverse-engineer ETI technology," the authors write.

Other kinds of close encounter may be less rewarding and leave much of human society feeling indifferent towards alien life. The extraterrestrials may be too different from us to communicate with usefully. They might invite humanity to join the "Galactic Club" only for the entry requirements to be too bureaucratic and tedious for humans to bother with. They could even become a nuisance, like the stranded, prawn-like creatures that are kept in a refugee camp in the 2009 South African movie, District 9, the report explains.

The most unappealing outcomes would arise if extraterrestrials caused harm to humanity, even if by accident. While aliens may arrive to eat, enslave or attack us, the report adds that people might also suffer from being physically crushed or by contracting diseases carried by the visitors. In especially unfortunate incidents, humanity could be wiped out when a more advanced civilisation accidentally unleashes an unfriendly artificial intelligence, or performs a catastrophic physics experiment that renders a portion of the galaxy uninhabitable.

To bolster humanity's chances of survival, the researchers call for caution in sending signals into space, and in particular warn against broadcasting information about our biological make-up, which could be used to manufacture weapons that target humans. Instead, any contact with ETs should be limited to mathematical discourse "until we have a better idea of the type of ETI we are dealing with."

The authors warn that extraterrestrials may be wary of civilisations that expand very rapidly, as these may be prone to destroy other life as they grow, just as humans have pushed species to extinction on Earth. In the most extreme scenario, aliens might choose to destroy humanity to protect other civilisations.

"A preemptive strike would be particularly likely in the early phases of our expansion because a civilisation may become increasingly difficult to destroy as it continues to expand. Humanity may just now be entering the period in which its rapid civilisational expansion could be detected by an ETI because our expansion is changing the composition of the Earth's atmosphere, via greenhouse gas emissions," the report states.

"Green" aliens might object to the environmental damage humans have caused on Earth and wipe us out to save the planet. "These scenarios give us reason to limit our growth and reduce our impact on global ecosystems. It would be particularly important for us to limit our emissions of greenhouse gases, since atmospheric composition can be observed from other planets," the authors write.

Even if we never make contact with extraterrestrials, the report argues that considering the potential scenarios may help to plot the future path of human civilisation, avoid collapse and achieve long-term survival.

• This article was amended on 19 August 2011. The subhead said the report was "for Nasa". This has been corrected.

Stock market continues downward slide

The Stockholm stock market continued to fall on Friday, with the OMXS-index dropping nearly 4 percent within 30 minutes of opening and finishing the week down nearly 11 percent.

• Stockholm stock exchange plummets (18 Aug 11)
• Stockholm stock market in record fall (9 Aug 11)
• 'Sweden will be affected by the crisis': experts (8 Aug 11)

An index of banking stocks was off 3.3 percent in early trading, with SEB and Nordea experiencing the biggest drops. The manufacturing index continued its free-fall, dropping 4.4 percent.

The market had recovered slightly throughout the day 10.30am, with the OMXS closing down 1.9 percent for the day to 277.7, reaching its lowest level since the autumn of 2009.

Exchanges across Europe continued to fall on Friday, in part due to concerns about a possible double-dip recession in the United States.

"The fear of a new recession in the United States is reached dimensions which were nearly unthinkable just a few weeks ago," Close Brothers analyst Rabeya Khan told the Reuters news agency.

During a Friday afternoon press conference, Sweden's finance minister Anders Borg acknowledged the stock market's wild ride was stressful, but that markets were functioning normally.

"The stress level is high, but we nevertheless feel that things are more calm than previously. We've had contact with the authorities and with the exchange, and the exchange is of the opinion that the markets are indeed working," he said.

According to Borg, it's still too early to say how the Swedish economy will be affected by the stock market swings rocking exchanges across the globe, other than that growth will be lower than expected.

"There's a risk that it could develop into something more serious," he said.

"I feel that things in Sweden are relatively stable compared to 2008, but there is a risk that the liquidity problems in southern Europe and Europe's financial system could hit Sweden."

Following Thursday's precipitous fall of more than 6 percent, Swedish investors need time to reflect, according to SEB chief economist Robert Bergqvist, who welcomed a Friday with few statistic reports set to be released.

“People are in something of state of shock after what happened yesterday. I've worked on these issues for 25 years and have never confronted a problem of this complexity before,” he told the TT news agency.

Those with small savings margins or who need money in the short term should probably reduce their shareholdings, he advised.

Bergqvist believes that many investors are going to use the coming days to sit down in meetings and discuss the future and the make up of their portfolios.

“What is the likely economic, financial, and political situation going to be? Clients are very uncertain now and don't know how the situation should be dealt with,” he said.

Bergqvist described the situation as serious, with the risk of recession combined with the fact that many countries have little room to implement measures to defend against the effects of an economic downturn creating a particularly worrisome mix.

Interest rates are already hovering around zero, many countries have weak public finances, as well as budget deficits.

“On top of that there are a growing number of people who are beginning to question the future of the euro,” he said.

The fact that most traditionally available economic tools have already been used also adds to the uncertainty.

“We have to try new avenues now,” said Bergqvist.

Even if the current stock market slide tapers off, Bergqvist projects a rocky road ahead.

The turbulence is simply confirmation that stocks can be a risky investment.

“It's important to think about when you need to use your money,” he said.

The smaller the margins, the more important it is for investors to reduce the amount of shares in their portfolios, he said.

Bergqvist emphasised as well the importance of taking a long-term view.

“As things look now and in the coming years, one should probably invest with a 5 to 10, perhaps 15-year perspective,” he said.

Reports: Bank of America to cut 10,000 jobs

Bank of America Corp. is cutting 3,500 employees this quarter and working on restructuring plans that will ax several thousand more jobs, The Wall Street Journal and The New York Times reported citing people familiar with the situation.

The reports Friday said that the job cuts at the biggest U.S. bank by assets might exceed 10,000 or about 3.5 percent of its current work force.
The retrenchments are part of CEO Brian Moynihan's efforts to engineer a recovery at BoA, which was hit hard by the bursting of the housing bubble. Its share price has fallen nearly 50 percent so far this year.
"I know it is tough to have to manage through reductions," Moynihan wrote in a memo to the company's senior executives late Thursday, according to the reports. "But we owe it to our customers and our shareholders to remain competitive, efficient and manage our expenses carefully."
The effect on Georgia employees was uncertain, but Bank of America is the third largest bank by deposits in metro Atlanta.
“The company regularly assesses the efficiency of its businesses and at times makes adjustments to meet the opportunities in the marketplace,” Bank of America spokeswoman Christina Beyer Toth said in a statement to The Atlanta Journal-Constitution.
The pending job cuts this quarter are on top of 2,500 cuts made since the beginning of the year, she said.
Many other banks and financial institutions are also cutting staff. They are under pressure to improve returns to investors amid a weak U.S. economy and new restrictions on lucrative trading and banking activities that were blamed for contributing to the 2008 financial crisis.
WSJ said the initial 3,500 job cuts are spread across BoA's business including investment banking and trading.
-- AJC business write J. Scott Trubey contributed to this article.

THE DEBT CEILING FOR DUMMIES...by Common Sense...

Let's say you come home from work and find there has been a sewer backup in your home, and your home is flooded with sewage up to the ceilings.

What would you do…raise the ceilings or pump all the shit out?

The "Elite" 12 Unconstitutional "Super Congress" have already been Bought and Sold have gotten 64.5 Million from Wall Street and Special Interest Groups -

Well the new "Elite" 12  Unconstitutional  "Super CON gress" have already been bought and sold by Wall Street and Special Interest groups, to the tune of 64.5 Million in donations to them over the last decade!

Of course what ever they figure out in debt cutting, it will be against the people and not the banks or corporations that run them and control them.

What a complete farce!  Yet, people are not standing up to this unconstitutional selection of a "Super CONgress".

I have asked people to Stand Up for the Constitution!

I have in fact been called "UnAmerican" on youtube at the video of my flag being flown upside down and told I should leave this country, besides other nasty comments/emails sent to me.

As I see it, I am very American, because I am willing to fight for the country and the constitution and put myself in the firing line by standing up for what is right.  I stand up in a peaceful way and make my voice known.  I do that here on the blog and I even still call my elected officials.  It may not make a difference, but at least I am not sitting back and just letting everything happen without trying to doing something.  If more stood up in a peaceful way, then more will catch that wave and it builds to being power of the people.

Portion from link:

In total, the twelve members appointed to the Joint Select Committee on Deficit Reduction got nearly $64.5 million from special interests groups over the past decade, with legal firms donating about $31.5 million and Wall Street firms donating about $11.2 million. 

Of that $11.2 million, Goldman Sachs, Citigroup, Bank of America and JPMorgan Chase donated approximately $2 million combined.

The members appointed to the committee are Sens. Pat Toomey (R-PA), Jon Kyl (R-AZ), Rob Portman (R-OH), Patty Murray (D-WA), John Kerry (D-MA), and Max Baucus (D-MT) and Reps. Jeb Hensarling (R-TX), Fred Upton (R-MI), Dave Camp (R-MI), Chris Van Hollen (D-MD), Xavier Becerra (D-CA), and Jim Clyburn (D-SC).

Financial/Commodity charts/graphs 8/19/11 - Big Winners and Losers - Gold and Silver at Top

No words are necessary for what these charts show, where the smart money is and where the highest percentage of increase has been. (please note - charts are from 6:30am est on 8/19/11 - they may have changed for the day, by the time you are seeing them)

All charts and graphs from FINVIZ.com

One Day chart -8/19/11 morning

 One Month Chart

 6 month chart
 One Year Chart

Here are the  day graphs.  My question would be to everyone.... From looking at the above charts and the graphs below, which is the obvious place anyone should invest their money?

You can see as of this moment - DOW futures are down 152, 3 hours before opening today.

Real Sh*t: Felonious Munk Presents "Stop It B! OBAMA PAY YOUR F*ckin BILL"

Pentagon to cut pensions for veterans

(RT)   With the Pentagon looking for new ways to cut back on costs, a report released this week presents a plan to save $250 billion over the next two decades. All they have to do is take away retirement plans from veterans.
Defense Secretary Leon Panetta said Tuesday that any large cuts in defense spending would “terribly weaken” the national security of the US. “This is not about the Defense Department or the State Department,” Panetta told reporters. “This is about the United States of America.”
That being said, the DoD doesn’t plan on curbing the $115 billion it will spend on rust-proofing their fleets during the next five years. Sure the Pentagon announced this week that they would be investigating the Defense Advanced Research Projects Agency, DARPA, to make sure they aren’t abusing the government funding that makes up their multi-million dollar contract. And yes, last week also saw the Falcon Hypersonic Technology Vehicle-2 unmanned aircraft lose contact with military operators after the Pentagon has put $300 million into the project. Those operations will continue.
Benefits, however, will not.
Under current military procedure, US vets stand to receive a retirement income of half of their salary after completing 20 years of service in the armed forces. A 24-page presentation outlined this week, however, proposes something drastically different. Under the new deal, the “Modernizing the Military Retirement System” would put in place a 401k-style plan that would offer government contributions once vets reach regular retirement age.
While the new initiative would open benefits up to those who serve less than 20 years — and currently out in the cold if they part ways with the Pentagon before that — vets with lengthy tenures with the DoD stand to receive substantially less.
“If you want to maintain the core mission which is to defend the nation and have the strategic capabilities we need, we can’t have all their money tied up in retirement programs,” says former Congressional Budget Office Director Douglas Holtz-Eakin, reports the Daily Mail.
Holtz-Eakin says the new plan could save the US a fortune over the next 20 years as the Pentagon is aiming to cut around $400 billion in spending. In the meantime, however, some are worried that the new plan might discourage Americans from enlisting.
“My main concern is it might change the whole outlook on people wanting to join the service,” veteran Danny Seeman tells WBOC 16.
Panetta, meanwhile, says, “We need to have a responsible conversation about how we are going to prepare ourselves for the future.”
Wednesday also saw the competition of the fiftieth center fuselage for the F-35 Joint Strike Fighter manufactured by the Northrop Grumman Corporation for the Pentagon. That would all be fine and dandy if all 20 of the aircraft weren’t currently grounded.
Let’s just hope they aren’t gathering any rust while sitting around. That’s a bill that’s high enough as it is.
http://rt.com/usa/news/pentagon-cut-retirement-pension/

Asian stocks slump on recession fears

Asian markets down after a sell off in the US and Europe, sparking new concerns about the global economy.

Stocks tumbled sharply on Thursday creating a panic among investors in Asia [Reuters]

Asian stock markets have caught a global selling fever after new warnings of world recession coupled with fears that rapid-fire growth in China is set to slow down.

Investors in Tokyo, Seoul and Sydney picked up on the mounting anxiety evident in the United States and Europe, where fresh carnage ripped across the markets on Friday.

"The bears returned aggressively overnight as very disappointing US economic data and fears over the stability of European banks had traders reaching for the sell button," Ben Potter, a IG Markets analyst, said in Australia.

"It looks like we're set for a very ugly end to the week as fear and panic-driven trade once again dominate the market," he said.

"We could have the added pressure of traders looking to close their positions ahead of the weekend given the high levels of uncertainty."
Japan's Nikkei index ended the morning session down 2.15 percent on Friday. The headline index at the Tokyo Stock Exchange lost 192.09 points to 8,751.67 by the lunch break.

Australia's benchmark S&P/ASX 200 was down 2.55 per cent at 4,142.60. Hong Kong dived 2.71 per cent to 19,473.38 while Singapore's headline share index fell 2.55 per cent to 2,752.94 in opening trades.

In Seoul, the benchmark KOSPI was down a hefty 3.87 percent at 1,788.59 with South Korean exporters such as Samsung Electronics and Hyundai Motor hit hard.

'Dangerously close'

The worldwide selloff came after Wall Street investment bank Morgan Stanley warned that the US and eurozone economies were "dangerously close" to a double-dip recession.

Stocks were further punished by a fresh round of gloomy economic data from the United States such as jobless claims, and growing doubts about the ability of European banks to withstand the 17-nation eurozone's debt crisis.

The Dow Jones Industrial Average was down 3.7 per cent at the closing bell, while the broader S&P 500 slumped 4.5 per cent and the tech-heavy Nasdaq Composite plummeted 5.2 per cent.

Losses were even worse in Europe on Thursday, as London stocks closed down 4.5 per cent, Paris fell 5.5 per cent and Frankfurt dropped 5.8 per cent.

Oil prices slumped as traders fretted that an economic downturn could erode global energy demand. Early in Asia, West Texas Intermediate crude for delivery in September was down $1.05 from its New York close at $81.33 a barrel.

Gold and US Treasury bonds - both safe havens in times of trouble - broke record ground with bullion reaching $1,837.50 per ounce on the Hong Kong spot market from a previous high of $1,826.10 in New York.

A report in The Wall Street Journal that the US Federal Reserve was worried about the liquidity of major European banks contributed to the selloffs in European markets.

French lenders came under especially intense pressure, with Societe Generale losing more than 12 per cent.

"The concern is that the escalating European sovereign debt crisis - which is now engulfing larger countries -- and the potential fallout for the banking sector and financial markets, could provide a killer blow," said Nick Kounis, an economist at ABN Amro in Europe.

The tumult played out on the currency markets with the euro at $1.4321 and 109.75 Japanese yen, from $1.4337 and 109.70 yen late in New York.

The yen was at 76.64 to the dollar in early Japanese trade, from 76.52 overnight in New York.

"Concerns about a slowdown in the US and global economies, the European debt problems and the stronger yen are all going to weigh on the market," Hiroichi Nishi, general manager at Tokyo's SMBC Nikko Securities, told Dow Jones Newswires.

The concerns are not confined to the developed world. At Deutsche Bank, economists focused on the impact of slower Chinese growth on the rest of the world.

They foresaw a "soft landing" for China this year and next, but concluded that "global stock markets will likely be negatively impacted by a Chinese slowdown".

They said the world's second-biggest economy would grow 8.9 per cent this year, down from 10.3 per cent in 2010, and by 8.3 per cent in 2012, "mostly due to the effect of monetary tightening".