Goldman Sachs Admits Misleading Investors With Risky Mortgages, Gets Fines $5.1 Billion Dollars

And nobody goes to prison……ever. A fine of $5.1 billion is a lot of money, the crimes must have been so egregious and the shareholders pay for the sins of the executives.-Lou

 

banksters1-300x228

Goldman Sachs admits misleading investors with risky mortgages

New York Post 

More than 10 years after it spotted cracks in the housing market, Goldman Sachs will pay $5.1 billion for its role in the financial crisis.

The settlement announced Monday with the Justice Department resolves allegations that the bank misled investors about risky mortgage bonds it sold as supposedly safe investments.

In addition to the DOJ, the agreement resolves claims brought by New York Attorney General Eric Schneiderman and other states. New York will get $670 million, with most going to consumer relief such as mortgage assistance and principal forgiveness for underwater loans.

“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.

CEO Lloyd Blankfein’s Goldman is the last of the big US banks to settle with the government over its mortgage misdeeds. Bank of America paid a record $17 billion in 2014, while JPMorgan Chase paid $13 billion the previous year.

Goldman’s settlement comes just days after Wells Fargo paid $1.2 billion to settle mortgage claims, and two months after Morgan Stanley paid $3.2 billion to end a similar probe.

Goldman bought loans from mortgage underwriters such as subprime giant Countrywide Financial and repackaged them as supposedly safe securities — even though it knew many of the underlying loans were lousy, according to a statement of fact released along with the settlement.

“If they only knew,” Goldman’s head of due diligence wrote in a 2006 e-mail.

When the bank’s Mortgage Capital Committee, which is supposed to approve the loans, examined one 2006 package of mortgages, it was taken aback by how defective it was.

“How do we know that we caught everything?” the committee asked, according to the settlement.

More…

Is Deutsche Bank The Next Lehman?

The financial crisis of 2016 will must likely start with the failure of Deutsche Bank, German’s largest bank and the fourth largest in Europe. The stock is plunging in an eerily similar pattern as Lehman Brothers in it’s last days. The failure of a systemic too big to fail bank such as DB will set off a cascade of bank failures, first in Europe and, shortly thereafter, in the U.S. Put your seat belts on, the rest of 2016 is going to be one helluva ride.-Lou

db lehman

 

 

DEAR RNC: AN EVERYDAY AMERICAN WRITES A LETTER TO EXPLAIN THE TRUMP PHENOMENON TO THE WASHINGTON ELITE We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party

I read this letter on my radio show. A listener asked me to post it on the blog. It says all you need to know about the rise of Trump.-Lou

trump

DEAR RNC: AN EVERYDAY AMERICAN WRITES A LETTER TO EXPLAIN THE TRUMP PHENOMENON TO THE WASHINGTON ELITE

We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party

This letter was sent to 100% FED Up! by an anonymous author:

It doesn’t matter who you support for President in 2016. This letter will make you want to stand up and cheer for the 80 year old American who expresses what most of us are feeling right now. Enjoy…

Dear Representative,

From the time I was able to vote I voted Republican. I am 80 years old, and have a great deal of respect and influence with hundreds of senior ball players who also network with thousands of others around the country.

I received your questionnaire and request for money and strongly agree with every question, as I have since Obama was elected. Unfortunately the one question that was missing is “What have the Republicans done for the American people?” We gave you a majority in the House and Senate, yet you never listened to us. Now you want our money.

You should be more concerned about our votes, not our money. You are the establishment, which means all you want is to save your jobs and line your pockets… Well guess what? “It’s not going to happen” You shake in your boots when I tell you we’re giving our support to TRUMP and he hasn’t asked for a dime.

You might think we are fools because you feel Trump is on a self destruction course, but you need to look beyond Washington and listen to the masses. Nobody has achieved what he has, especially in the liberal state of New York.

You clearly don’t understand why the Trump movement is so strong, so I’d like to share with you an analogy to help explain the Trump phenomenon. By the way, it’s not just the Republicans who feel ignored and disrespected, there are plenty of Democrats and Independents who also feel let down by the Washington elite. You seem to have forgotten about “We The People” and who hired you to represent us.

So here it is, the best analogy I could come up with. Here is the reason so many Americans have boarded the Trump Train, and why you’re pleas to come back to the party who deserted us, is falling on deaf ears:

You’ve been on vacation for two weeks, you come home, and your basement is infested with raccoons. Hundreds of rabid, messy, mean raccoons have overtaken your basement. You want them gone immediately…You call the city and four different exterminators, but nobody could handle the job. There is this one guy however, who guarantees you he will get rid of them, so you hire him. You don’t care if the guy smells, you don’t care if the guy swears, you don’t care how many times he’s been married, you don’t care if he was friends with liberals, you don’t care if he has plumber’s crack…you simply want those raccoons gone! You want your problem fixed! He’s the guy. He’s the best. Period. Here’s why we want Trump: Yes he’s a bit of an ass, yes he’s an egomaniac, but we don’t care. The country is a mess because politicians have become too self-serving. The Republican Party is two-faced & gutless. Illegal aliens have been allowed to invade our nation. We want it all fixed! We don’t care that Trump is crude, we don’t care that he insults people, we don’t care that he had been friendly with Hillary, we don’t care that he has changed positions, we don’t care that he’s been married three times, we don’t care that he fights with Megan Kelly and Rosie O’Donnell, we don’t care that he doesn’t know the name of some Muslim terrorist.

This country is weak, bankrupt, our enemies are making fun of us, we are being invaded by illegal aliens and bringing tens of thousands of Muslim refugees to America, while leaving Christians behind to be persecuted. We are becoming a nation of victims where every Tom, Ricardo and Hasid is part of a special group with special rights, to the point where we don’t even recognize the country we were born and raised in; “AND WE JUST WANT IT FIXED” and Trump is the only guy who seems to understand what the people want.

We’re sick of politicians. We’re sick of the Democratic Party and the Republican Party. We just want this thing fixed. Trump may not be a saint, but he isn’t beholden to lobbyist money and he doesn’t have political correctness restraining him. All we know is that he has been very successful, he’s an excellent negotiator, he has built a lot of things, and he’s also not a politician. He’s definitely not a cowardly politician. When he says he’ll fix it, we believe him because he is too much of an egotist to be proven wrong or looked at and called a liar.

Oh yeah…I forgot…we don’t care if the guy has bad hair either.

We just want those raccoons gone.

Out of your house.

NOW

The Gold Market Is On Fire

If you are inclined to buy gold or silver you should do it now while you can still get in at a decent price.-Lou

The Last Time Gold ETF Flows Were This Strong, The Fed Was Starting QE

From: ZeroHedge

The cracks are starting to appear in the ‘paper’ gold market.

BlackRock’s rather shocking decisision to halt ETF creation due to gold demand (i.e. being unable to source enough physical gold to meet mandated requirements given the inflows) follows the largest gold ETF inflows since Feb 2009 (just as The Fed started QE1 and unleashed trillions of freshly digitized exuberance into the markets). 

As BloombergBriefs reports, investor flows into the two largest gold exchange-traded funds topped $5 billion for February. 

State Street’s SPDR Gold Shares ETF attracted $4.186 billion for the month and BlackRock’s iShares Gold Trust fund raked in $887 million. 

The last time flows were higher the S&P 500 had fallen more than 18 percent for the year and the U.S. Federal Reserve was just three months into its first quantitative easing program to stimulate demand and shore up the financial sector. That was February 2009.

In fact, transparent gold holdings across all instruments has been soaring since the start of 2016.

Source: ShareLynx.com

Given these extremes in demand, and clear signals of discontent with the monetary and fiscal authorities, Casey Research’s Justin Spitttler had some interesting perspectives on what could happen next…

If you’re buying gold right now…the government could be tracking you.

If you’re buying gold, you’re likely not doing it to make money. You’re buying it to make sure you don’t wake up poor one day.

Gold has been used as money for thousands of years because it is easily divisible, easily transportable, has intrinsic value, is durable, and has consistent form around the world. And, as Doug Casey reminds us, it’s a good form of money because governments can’t print it on a whim. You can’t “Bernanke your way” to wealth with gold.

When today’s dramatic central banking experiment blows up, gold will hold its value…unlike paper currencies such as the dollar.

That’s exactly why the government will try to take it from you.

The last time the government confiscated gold was during the Great Depression. In 1933, President Roosevelt outlawed owning most forms of gold. He claimed that people “hoarding” gold were making the Great Depression worse. The penalty for not turning your gold in to the government was a $10,000 fine and 10 years in jail.

Of course, Roosevelt gave his closest supporters notice before issuing the ban. They had time to move their gold to another country. Most folks weren’t that lucky.

This time around, the confiscation will be digital.

Most people own gold through a fund like Sprott Physical Gold Trust (PHYS) or Central Fund of Canada (CEF). The former will give you physical gold in exchange for your shares, once a month, if you own enough shares. The latter won’t give you the physical gold.

Because this gold is owned through a brokerage account, it will be easy for the government to confiscate.

What about physical gold? If you bought it from a dealer and paid with a wire transfer, the banking regulators have plenty of documentation. They’ll likely let you keep the gold. But it will be illegal to trade. If you don’t obey, you’ll be subject to a 99% tax on its value.

But there’s one way to buy gold so the government can’t track you. I’ve been doing it for years. You can do it, too. It’s buying at a locally owned jewelry store. These stores get a few common gold coins in every week. If you know what you’re looking for, it’s a great way to buy gold with cash.

However, the window of opportunity is closing quickly. In fact, I went to buy gold today…and saw this new sign.

It says, “CASH transactions are limited to $6,000 within a 48 hour period.”

$6,000 seems like an arbitrary number. And 48 hours seems even more contrived. This is a sign of the times. Governments are cracking down on cash. They want to know every detail of your financial life. They want to know what you buy and what you sell.

Paper cash is hard to track. So, little by little, governments are getting rid of it. Notice the $500 bill featuring President McKinley to the left of the sign. Years ago, $500 bought you a brand new car. Today, it barely buys a steak dinner for a family of five.

Cash is on its way out of existence. The government stopped issuing $500 bills in 1969. Last week, Harvard professor Larry Summers wrote an article titled “It’s time to kill the $100 bill.” The New York Times published an article arguing the same thing. Their reasoning is, big bills make it easier for criminals to commit crimes. If you’re not a criminal, you shouldn’t have a problem with the government knowing everything you buy and sell.

The $6,000 limit will soon be $1,000. The local jewelry shop is the last place you can buy gold without the government tracking you. Take advantage of it while you can.

Deutsche Bank: It’s time to buy gold

It certainly is time.-Lou

Deutsche Bank: It’s time to buy gold

Gold is still expensive, but rising economic risks and market turmoil mean investors should buy it for insurance, Deutsche Bank said Friday.

The recovery since the global and European financial crises had put theprice of gold under some pressure. The yellow metal, which some analysts view as a safe haven or as a protection against rising inflation, typically underperforms during periods when the economy is growing or inflation is low. However, in a note issued Friday, the German Bank said economic signs are pointing in gold’s favor.

“There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China’s capital outflows,” Deutsche Bank added.”Buying some gold as ‘insurance’ is warranted.”

However, even though gold has fallen from levels over $1,900 an ounce in 2011 to around $1,200 an ounce currently, Deutsche Bank said it still looks expensive, ranking as the most expensive commodity relative to its 15-year trading history.

“A bit like insurance, which is often a grudge purchase for many, some investors may balk at the current levels,” it said. “We would, however, argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets.”

More…

The Subprime Auto Loan Meltdown Is Here

Will they ever learn?-Lou

 

The Subprime Auto Loan Meltdown Is Here

 

Michael Snyder

The Economic Collapse Blog

Uh oh – here we go again.  Do you remember the subprime mortgage meltdown during the last financial crisis?  Well, now a similar thing is happening with auto loans.  The auto industry has been doing better than many other areas of the economy in recent years, but this “mini-boom” was fueled in large part by customers with subprime credit.  According to Equifax, an astounding 23.5 percent of all new auto loans were made to subprime borrowers in 2015.  At this point, there is a total of somewhere around $200 billion in subprime auto loans floating around out there, and many of these loans have been “repackaged” and sold to investors.  I know – all of this sounds a little too close for comfort to what happened with subprime mortgages the last time around.  We never seem to learn from our mistakes, and a lot of investors are going to end up paying the price.

Everything would be fine if the number of subprime borrowers not making their payments was extremely low.  And that was true for a while, but now delinquency rates and default rates are rising to levels that we haven’t seen since the last recession.  The following comes from Time Magazine

People, especially those with shaky credit, are having a tougher time than usual making their car payments.

According to Bloomberg, almost 5% of subprime car loans that were bundled into securities and sold to investors are delinquent, and the default rate is even higher than that. (Depending on who’s counting, delinquency is up to three or four months behind in payments; default is what happens after that). At just over 12% in January, the default rate jumped one entire percentage point in just a month. Both delinquency and default rates are now the highest they’ve been since 2010, when the ripple effects of the recession still weighed heavily on many Americans’ finances.

The chart below was posted by David Stockman, and it shows how the delinquency rate for subprime borrowers has hit the highest level since 2009.  In fact, we are not too far away from totally smashing through the previous highs that were set during the last crisis…

Subprime Auto Loans

It is quite foolish to try to sell expensive cars to people with bad credit.  This is especially true now that the economy is slowing down significantly in many areas.  But people are greedy and they are going to do what they are going to do.

The most disturbing thing to me is that many of these loans are being “repackaged” and sold off to investors as “solid investments”.  The following description of what has been happening comes from Wolf Richter

The business of “repackaging” these loans, including subprime and deep-subprime loans, into asset backed securities has also been booming. These ABS are structured with different tranches, so that the highest tranches – the last ones to absorb any losses – can be stamped with high credit ratings and offloaded to bond mutual funds designed for retail investors.

Deep-subprime borrowers are high-risk. Typically they have credit scores below 550. To make it worth everyone’s while, they get stuffed into loans often with interest rates above 20%. To make payments even remotely possible at these rates, terms are often stretched to 84 months. Borrowers are typically upside down in their vehicle: the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit are rolled into the loan. When the lender repossesses the vehicle, losses add up in a hurry.

It almost makes you want to tear your hair out.

This is exactly the kind of thing that caused so much chaos with subprime mortgages.

When will we ever learn?

Meanwhile, we continue to get even more numbers that indicate that a substantial economic slowdown has already begun

More…

Monopoly Is Going Cashless. Could We Be Next?

It’s all about control. A cashless society is easy to surveil. It also prevents a run on the insolvent banks.-Lou

 

US Global Investors

Monopoly Is Going Cashless. Could We Be Next?

February 22, 2016

Monopoly is going cashless could we be next

 

 

Nearly everyone can recall playing Monopoly as a child, and for many, the game served as their first exposure to handling different denominations of cash. It was exhilarating to have someone land on your Park Place property, complete with hotel, and in turn receive a fistful of $50s and $100s.

A new generation of players might never get the chance to experience this, however, as Hasbro Gaming just released an “Ultimate Banking” version of the popular board game that nixes the funny money in favor of play credit cards and an electronic scanner.

You could argue it’s just a game, but Monopoly has always had a reputation for being a reflection of capitalism as it operates in the “real” world (which is why it was banned in communist states such as the Soviet Union). The cashless version of the game is no exception, as it comes at a time when calls to limit—or in some cases eliminate—the use of cash are intensifying. And to be clear, “cash” here means cash in your pocket, not cash in the bank.

Just last week, former treasury secretary Larry Summers published an op-end in the Washington Post arguing it’s time to “kill the $100 bill,” the reason being that it’s preferred by those involved in money-laundering, corruption and other illegal activity. (One million dollars denominated in $100 bills weighs 2.2 pounds, he points out, whereas the same amount in $20 bills weighs a much more cumbersome 50 pounds.) The European Union, he argues, should also consider getting rid of the 500-euro note, a position that’s echoed by European anti-fraud officials.

Bye-Bye Benjamin?

Having had the opportunity to hear Secretary Summers speak when I visited Harvard recently, I respect his opinion and believe his intentions are good. But ultimately the argument to eliminate the $100 bill is based on the presupposition that anyone using such a note is a drug trafficker or money launderer. This seems to go against one of the main tents of common law, namely, that we’re innocent until proven guilty.

The risks far outweigh the benefits when you consider where this anti-cash sentiment is leading us—a cashless society. As I discussed back in December regarding Sweden’s own trend toward a cashless economy, every transaction could be monitored, not to mention taxed and charged a fee. Accounts could be frozen, which, in a cashless world, would leave you with nothing.

I’ve experienced the inconvenience that sometimes comes with electronic transactions, as I’m sure many of you have. Occasionally my credit card couldn’t be read for one reason or another, and if you’re not carrying cash, what do you do? When I’m traveling, domestically or abroad, I always carry cash with me, and $100 bills are much more convenient than a pound of $20s.

Capital controls are nothing new, but they would be much easier to impose. In Colombia, a tax is levied on every transaction, whether it is a direct deposit from your employer, transfer of funds between accounts or a purchase. Since 2003, Venezuela’s government has significantly regulated the amount of money citizens can take with them on trips abroad, in effect blocking access to foreign travel. Currently the limit is $2,000, but for travelers headed to the U.S., it drops to $700. This, along with a labyrinthine exchange rate (there are three), has only created a black market currency exchange. And since credit cards in Venezuela are issued by state-run banks, there’s no stopping the government from restricting payment on any goods or services, or from any vendor, it wishes.

Colombia and Venezuela are extreme cases, and there’s no reason to expect the same would ever happen in the U.S. At the same time, scrapping the $100 bill would further debase Americans’ economic liberty.

More…

Lines Around The Block To Buy Gold In London; Banks Placing “Unusually Large Orders For Physical”

From ZeroHedge

Lines Around The Block To Buy Gold In London; Banks Placing “Unusually Large Orders For Physical”

And as Mike Krieger of Liberty Blitzkrieg blog details, physical demand is soaring…

First, let’s look at the improved fundamentals. Gold bugs will exasperatingly proclaim that fundamentals have been great for the past four years yet the price plunged anyway, so who cares about fundamentals? To this I would respond with two observations. First, large institutional investors and sovereign wealth funds have been anticipating a rate hike cycle for a very long time now. They didn’t know when, but they expected it. The fact that the gold bugs never believed this is irrelevant; what matters is that big money believed it, and it was perceived to be very gold negative. In their minds, this anticipated rate hike cycle would confirm that things were getting back to normal, and if things are normal you don’t need to own gold, right?

 

The problem is that this assumption is quickly being called into question. Sure the Fed hiked rates once, but it is starting to look more and more like a policy error. Meanwhile, other major central banks around the world are going in the opposite direction, toward negative rates. I am a huge believer in market psychology, and the psychology dominating the minds of most institutional investors over the past few years has been that things were slowly getting back to normal. This has weighed on institutional demand for gold in a big way, and been a meaningful factor in the bear market (manipulation aside). If this psychology shifts, the shift back into gold could be very meaningful.

 

While that backdrop is interesting in its own right, what may make the move into gold that much more explosive is the lack of alternative investments…

What a difference a couple of weeks can make. The Telegraph is reporting the following:

BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis.

 

Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014.

 

BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning.

 

“The bullion market has been building with interest since the end of last year but this morning things have gone bananas,” said Mr Halliday-Stein. “Some London banks are placing unusually large orders for physical gold.”

 

London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500.

 

“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block,” said Michael Cooper of ATS Bullion, a family run firm that trades online and also from an outlet in the West End.

But that’s just part of the story. As reported by the World Gold Council, the buying really started to pick up in the fourth quarter, courtesy of the Chinese and central banks. Reutersnotes:

Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said on Thursday.

 

Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency. But stock market turmoil and a slowing economy knocked consumer sentiment and Chinese demand for gold for jewelry fell 3 percent from a year earlier, WGC said.

 

Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013, the report showed.

 

Central bank buying accelerated sharply in the second half of last year and jumped 25 percent in the fourth quarter, from a year earlier, as the need to diversify was reinforced by falling oil prices and reduced confidence in the global economy, WGC said.

 

Chinese demand for gold totaled 985 tonnes last year, followed by India on 849 tonnes. They accounted for nearly 45 percent of total global demand, with consumer demand up 2 percent and 1 percent respectively in those countries.

Think about the lack of gold buying from the U.S. relative to its global wealth and it becomes quite easy to see where the fuel for the next bull market will come from.

More…

Gold surges to one-year high on fears of financial uncertainty

I can’t recall gold up $50/ounce in one day. The gig is up, the great financial crisis of 2016 is here.-Lou

To match feature GOLD-FIXING/

Gold surges to one-year high on fears of financial uncertainty

By Clara Denina

LONDON (Reuters) – Gold surged nearly 4 percent on Thursday to its highest in a year as fears about financial instability, a lower dollar and U.S. Treasury yields persuaded investors to seek refuge in the precious metal.

Traders said financial instability fears were fuelled by European bank shares slumping to multi-year lows, with concerns mounting over banks’ profitability in a low-growth and low-interest rate environment.

Spot gold jumped as much as 3.6 percent to $1,240.90 an ounce, its highest since February 2015, and was up 3 percent at $1,233.70 at 1254 GMT. It is on track for its biggest daily rise since Dec. 1, 2014.

“We have a good explanation for gold’s rally; it is to do with worries about the U.S. economy and the rest of the world,” Macquarie analyst Matthew Turner said.

“Investors are concerned that central banks’ solution (is) negative interest rates or at least not raising rates – and that is gold friendly. The key risk to gold is that the U.S. economy manages to put in a good performance, like it did last year.”

Cautious comments from the head of the U.S. Federal Reserve were taken to mean no near-term interest rate hikes. A slower pace of rate rises keeps down the opportunity cost of holding gold.

Longer-term U.S. debt rallied as investors wagered that the Fed would either be unable to tighten at even a gradual pace, or that if it does increase rates that would only hasten the arrival of recession and deflation.

The benchmark 10-year U.S. Treasury yield fell to lows last seen at the end of 2012 when the Fed was busily printing money. Because gold does not pay interest, the fall in returns from U.S. bonds is seen as positive for the metal. [MKTS/GLOB]

Gold option volatility surged to the highest in more than a year as investors have placed new bullish bets that prices will extend their recent rally.

Gold-backed exchange-traded funds (ETFs) have recorded net inflows since the start of the year, signalling renewed investor interest.

“Investors are returning to gold as a core diversifier and safe haven investment,” James Butterfill, head of research at ETF Securities, said in a note. “Given the increasingly challenging investment and economic environment, we expect this trend to continue.”

Silver rose 1.9 percent to $15.60 an ounce, its highest since November 2015.

More…

Check out this chart of the gold ETF GLD:

The Financial Crisis Of 2016 Has Started

 It is here, the great financial crisis of 2016.-Lou

 

 

2008_stock_market_crash

 

Wow, so far 2016 has been one wild year for financial markets.

As I (and many) have been warning for months, the financial markets are in big trouble and a major decline could happen at any time.  Well it looks like the time is now.

The Dow swings hundreds of points (mostly down) every trading day of the year, a sign of stress in the market. European (and US) banks stocks are in free fall, never a good sign. Bond yields are crashing, a sign that big money is seeking safety.

Yesterday the Dow was down almost 400 points before a magical (intervention) last hour rally paired losses in half. Overnight the Japanese market crashed almost 6% and bond yields dropped further into negative territory.

Technical levels were broken through like a hot knife through butter and portend worse action ahead.

I would not be surprised if we saw a bit of a short term rebound as stocks are significantly oversold short term but that should be short lived.

Commodities continue their deflationary plunge with oil briefly breaking $30 bbl.  Copper, Iron Ore and many other commodities are plunging as world demand shrinks in the face of a dramatic worldwide economic slowdown

Treasury bond yields plunged as investors sought the perceived safety of U.S. debt. There is no way the Fed will lower interest rates any time soon in the face of plunging world markets.

What is causing the dramatic selloff in global stock markets and commodities?

World economic growth is slowing , mainly in China and other emerging market countries. Over 20 global stock markets are already in bear markets. The strong U.S. dollar makes repayment of debts denominated in dollars more costly to foreign countries. There is major stress going on with the banks.

Since the end of the 2008 financial crisis, investors have come to believe that central banks will always come to the rescue every time the markets stumble. That confidence is now being shaken.

China’s surprise devaluation of their currency has roiled world financial markets as other countries have or are expected to do the same to remain competitive resulting in a currency war.

The bright spot in markets this week? Gold and silver had one of the biggest short term rallies in years as money seeks safety in real assets as opposed to inflated paper ones. Look for continued strength in precious metals as markets continue to get roiled.

Here are some UGLY charts showing he technical damage:

DOW: 16,000 is the next level of support

S&P 500: No real support until 1850 (another 6% lower)

NASDAQ: Support at 4,400 Tech stocks are in a major bear market