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Bennet Sedacca Jun 02, 2008 2:15 pm

“Our understanding of the best practice in monetary policy evolved during Alan Greenspan's tenure at the Federal Reserve, and it will continue to evolve in the future.”
- Federal Reserve Chairman Ben Bernanke


About ten days ago, I was interviewed on Fox Business News as a part of a Minyanville daily Fox News ritual. The first question I was asked was "What inning of the credit crisis do you think we are in?" I have to confess that the answer I gave was one that I heard one morning on the way to the office. A British economist on Bloomberg Radio stated that "We have heard the National Anthem but we haven’t had the Seventh Inning Stretch." I have to admit that I couldn’t have said it better myself.

On a recent business trip to New York City and Greenwich, I had the pleasure of speaking with some of the brightest professionals in our industry. My biggest take away from the trip and meetings was that the over-40 crowd is concentrating mostly on the macro-economic or big picture. At Atlantic Advisors, that is where have always begun and let our big picture beliefs guide our asset allocation decisions and let other, more cyclical indicators such as investor sentiment, valuations, cyclicality and short interest influence actual portfolio positioning.

Another important takeaway was that the older and more experienced investors were the more concerned they were. After all, if you haven’t lived through a credit crisis, it's hard to fully appreciate what that unwinding of a credit crisis looks like. When we consider that the build-up of credit and derivatives during this past cycle is so unprecedented, the more difficult the unwind is likely to be.

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US and European debt markets flash new warning signals

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 6:40am BST 29/05/2008

The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.

The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.

Credit default swaps (CDS) on Lehman debt have risen from around 130 in late April to 247, while Merrill debt has spiked to 196. Most analysts had thought the coast was clear for such broker dealers after the US Federal Reserve invoked an emergency clause in March to let them borrow directly from its lending window.

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By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 12:01am BST 15/05/2008

The OECD's early warning signal is flashing clear signs of economic weakness across the world, with mounting evidence that China, India, and Brazil may soon succumb to the downturn.

A crowded street in Delhi: OECD warning as stagflation goes global
Rush hour: a crowded street in Delhi. There are fears that
India could soon succumb to the downturn

The closely-watched gauge -- known as the Composite Leading Indicators (CLI) -- has picked up a sharp deterioration in the eurozone in March, notably in Italy and France where the advance signals are falling even faster than in Britain. The measure tends to anticipate the industrial cycle by about six months.

While growth continues to power ahead in most emerging markets, rampant inflation is starting to damage business confidence. "The latest data point to a potential downturn in Brazil, China, and India," said the OECD, the club of rich nations.

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Ellen Brown

May 13, 2008

The mother of all insider trades was pulled off in 1815, when London financier Nathan Rothschild led British investors to believe that the Duke of Wellington had lost to Napoleon at the Battle of Waterloo. In a matter of hours, British government bond prices plummeted. Rothschild, who had advance information, then swiftly bought up the entire market in government bonds, acquiring a dominant holding in England’s debt for pennies on the pound. Over the course of the nineteenth century, N. M. Rothschild would become the biggest bank in the world, and the five brothers would come to control most of the foreign-loan business of Europe. “Let me issue and control a nation’s money,” Rothschild boasted in 1838, “and I care not who writes its laws.”

In the United States a century later, John Pierpont Morgan again used rumor and innuendo to create a panic that would change the course of history. The panic of 1907 was triggered by rumors that two major banks were about to become insolvent. Later evidence pointed to the House of Morgan as the source of the rumors. The public, believing the rumors, proceeded to make them come true by staging a run on the banks. Morgan then nobly stepped in to avert the panic by importing $100 million in gold from his European sources. The public thus became convinced that the country needed a central banking system to stop future panics, overcoming strong congressional opposition to any bill allowing the nation’s money to be issued by a private central bank controlled by Wall Street; and the Federal Reserve Act was passed in 1913. Morgan created the conditions for the Act’s passage, but it was Paul Warburg who pulled it off. An immigrant from Germany, Warburg was a partner of Kuhn, Loeb, the Rothschilds’ main American banking operation since the Civil War. Elisha Garrison, an agent of Brown Brothers bankers, wrote in his 1931 book Roosevelt, Wilson and the Federal Reserve Law that “Paul Warburg is the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.” Morgan, too, is now widely believed to have been Rothschild’s agent in the United States.

Robert Owens, a co-author of the Federal Reserve Act, later testified before Congress that the banking industry had conspired to create a series of financial panics in order to rouse the people to demand “reforms” that served the interests of the financiers. A century later, JPMorgan Chase & Co. (now one of the two largest banks in the United States) may have pulled this ruse off again, again changing the course of history. “Remember Friday March 14, 2008,” wrote Martin Wolf in The Financial Times; “it was the day the dream of global free-market capitalism died.” The Rumors that Sank Bear Stearns

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