Bank of Japan injects Y2.5 tril into markets as Lehman Japan also files for bankruptcy

Tuesday 16th September, 12:59 PM JST

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Xennon at 07:11 PM JST - 16th September

I have a short position. Kaching!

Sweet Nessie. I have been following it all day. KACHING x2!
ReikiZen at 07:27 PM JST - 16th September

I always love how everyone all of a sudden becomes experts in the Stock Market. It is always easy to blame the CEO for everything. It is much more complicated then simply being greedy as everyone so loosely throws out there. Not saying they aren't partly to blame but the fact that there are other factors involved which contributed to this. The continued poor performance in the housing industry is likely one culprit.

Holdings in the Insurance Industry and the continued bare market which no one would admit to hasn't helped either. Investment firms like Merrill Lynch of which I used to have stock in got in over their head. This in part may be why they decided on the merger as were in similar shape as Lehman Brothers. They likely panicked and didn't want to take the chance of not having a buyer if the bottom fell out.

During the housing boom loans were being given out like water with no accountability. People that got loans in many cases should never had in the first place. When the market turned south the banks were getting back more foreclosures then they could handle. Mortgage lenders were scrambling for creative ways to keep people in their homes but the sub-prime market was already teetering on the brink.

Now here is where things get complicated. As the war in Iraq continues to suck the US economy dry. A debt which is reaching galactic heights, and a dollar which is about as worthless as the paper it's printed on. The US is looking more like a starving lion on the savanna then the economic powerhouse it once was and likely never will be again. The rest of the world has loaned the US a pair of crutches to bolster the worthless dollar while we prepare for the eventual meltdown which is slowly coming to pass.

China and Japan currently hold over $1.7 trillion in US currency and US-based assets and can hardly afford to have the ground cut out from below the dollar. The US debt increases some 1.93 billion per day and is currently at 9,689,987,709,740.14 and counting ouch! In the last fiscal secession figures indicate that foreign investment is drying up and the world is no longer eager to purchase our lavish debt. The only thing the Federal Reserve can do is raise interest rates to attract foreign capital or let the dollar fall in value.

The problem, of course, is that if the Fed raises rates, the real estate market will collapse even faster which will strangle consumer spending and shrivel GDP. In other words, we are at the brink of two separate but related crises; an economic crisis and a currency crisis. That means that the unsuspecting American people are likely to be ground between the two mill-wheels of hyperinflation and shrinking growth. In real terms, the economy is already in recession.

The growth numbers are regularly massaged by the Commerce Department to put a smiley face on an under-performing economy. Industrial output continues to flag while millions of good paying factory jobs are being air-mailed to China where labor is a mere fraction of the cost in the USA. At the same time, foreign investment will move to more promising markets in Asia and Europe causing a steep rise in interest rates. This is bound to be a stunning blow to the banks which are low on reserves ($44 billion approx) but have generated $4.5 trillion in shaky mortgage debt in the last 6 years.

What makes this worse is that Lehman Brothers has assets in access of 600 billion. So it likely will take years to sort this out and no bank will be able to bail them out. This is just the tip of the iceberg though as AIG problems if they go south well likely send the US economy into hell! Therefore making US a third world country almost overnight lol. AIG assets are so large and widespread that likely no one in God's green earth will be able to stop the earthquake that will likely ensue. Is it any wonder why the foreign central banks are so skittish about dumping the dollar?

No one really relishes the idea of a quick slide into a global recession followed by years of agonizing recovery. Maybe this whole 2012 thing was right after all. If that's the case then good thing I am learning Japanese as I may need it in the future as the USA sells it's soul to the underworld lol. In closing this makes me wonder if having a few more centuries of experience would have been any different or would we be any more wise? Hard to say but one thing is for sure we really should have payed more attention in history class as it is coming back to bite us in the ass!
JoeBigs at 08:46 PM JST - 16th September

Slowly but surely Bush doctrine beings to show its worth. As more and more US Companies begin to fold the full scale of this Administration shows its show self.

What took hundreds of years to produce a single Administration and it`s doctrine destroys.

Can this Country keep pace with the rest of the World with another Bush in the White House?

No, I say it is time for a change, vote out these leeches and get some new blood in there.

Bush Cheney no more/ Obama 08!
Samuraiiki at 08:56 PM JST - 16th September

Another one bites the dust! Lost of posts are so right. Greed takes away what little money poor Joe could make. The way economies are and goverment operate is on the same principle: give to the rich more and to the one who is in low wages less. My belief is, some money needs to be flowed into the poor because the poor will always have a need to spend the little they have. Money goes up from the poor to the rich. So, as long as there is money put back in the poor's hands, there will always something to flow back up. if you expect rain to fall, some must evaporate from the ground. Otherwise there will be nothing to fall back down. On another note: banks will collapse like dominoes. And, if the Japanese spread rumors like they always do, they could do some heavy damage to themselves.
yabits at 09:40 PM JST - 16th September

Hard to say but one thing is for sure we really should payed more attention in history class as it is coming back to bite us in the ass!

Excellent post, ReikiZen!

Santayana's saying about those who forget history has never been more true. We have been here before.
jaybeeb at 10:29 PM JST - 16th September

Well done ReikiZen. I couldn't agree more.
helloklitty at 10:55 PM JST - 16th September

this goes all the way back to the dot.com bubble bursting. the govt. intervened just like they are intervening again. we didn't take our lumps back then, so we're taking them twofold now. the u.s. has to realize it's becoming a socialist country. this is why the bankers took all these stupid risks - they know they'll be bailed out. if we were truly capitalist, bankers would have been a lot more careful about managing risk and we wouldn't be in this mess

finally, no bailout for lehman bros. - that's the way it should be
usaexpat at 11:54 PM JST - 16th September

People need to relax, the markets are so jittery and banks and investment houses are failing as shareholders go into an all out panic. It's self fulfilling profecy and the media hype just keeps driving the panic.
motytrah at 04:56 AM JST - 17th September

ReikiZen, you make a lot of good points, but they don't support the initial argument that we shouldn't blame the CEOs.

There are plenty of large banks that are doing fine out there despite the mortgage crisis in the US. I think the long and short of it is that the CEOs decided the risk/exposure they were willing to take. Institutions that followed traditional/conservative standards will weather this period just fine. In fact some are doing quite well stepping in for the companies that have fallen. Those that choose to risk it should pay a price, and the CEOs shouldn't be rewarded for their mistakes.

Ultimately the CEO choose the direction for the company and sealed their fate.

You're absolutely right about history repeating. Even worse, it's not like people weren't warning wallstreet about it. Warren Buffett has been warning people the problems in the housing/lending system since 2003.
rjdsr at 05:38 AM JST - 17th September

No one really relishes the idea of a quick slide into a global recession followed by years of agonizing recovery.

I do. It means mad profit.

http://www.youtube.com/watch?v=JaKkuJVy2YA
MPNiea at 12:38 PM JST - 17th September

The Democrats should have taken President Bush's advice in 2003 when he fought for the establishment of a committee to regulate financial institutes like Freddie Mac, Fannie Mae, and Lehman Bros.

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&partner=permalink&exprod=permalink

Of course, Democrat presidential nominees for the past 12 years have been in their pockets. It is not a surprise that they blocked all efforts to cease any proposals and bills to regulate these institutes:

http://www.liveleak.com/view?i=efa_1221617258

Have fun looking over that.
jaybeeb at 11:31 PM JST - 18th September

helloklitty, fascist might be a more accurate description.

'Fascism should rightly be called Corporatism, as it is the merger of corporate and government power.' -Benito Mussolini

motytrah, the blame rests equally on those people who bought into the delusion. I have no pity for greedy people - be that the CEO or the McMansion owner.

MPNiea, smoke and mirrors my friend.
rjdsr at 03:48 AM JST - 20th September

"The Democrats should have taken President Bush's advice"

Absolutely! Bush has spent 8 years trying to undo the democRAT damage, but what they did in the 90s was too great. If the democRATs are allowed to come back to power things will only get worse. We need to focus on Republican values: Jesus, bombing Iran, stopping abortion.

This is Palin. This is the cure for America. Join us or die.
jaybeeb at 09:34 PM JST - 20th September

Could we please cut the crap with this ridiculous US election commentary. It's totally irrelevant who gets elected.
Sarge at 10:37 PM JST - 20th September

Now is a good time to buy.