It's Global

by Larry Levin

In case you had thought that the current credit problem was only affecting the US and Europe , think again. It is affecting almost every major country on Earth. The belief was that the easy money would last forever. Housing prices were supposed to increase at 3 times the rate of inflation - forever, etc. Then reality struck like a lightning bolt. The easy money is gone. The financial alchemists have been run out of town on a rail; and now we see the problem is global.

1) US problems are well known - and growing.

2) The U.K. economy shrank in the 2nd quarter - the 1st time in 16-years. Prime Minister Gordon Brown and Bank of England Governor Mervyn King admitted for the first time last week that Britain is heading for a recession.

3) The Russian market, measured by the RSX, is down 78%.

4) The Chinese market, measured by the FXI, is down 70%.

5) The country of Iceland ran itself like a hedge fund: it is bankrupt.

6) Argentina may steal pensions to pay sovereign debt.

7) The Brazilian market, measured by the EWZ, is down 70% in just 4 ?-months!

8) Germany: Finance Minister Peer Steinbrueck told the Bild am Sonntag weekly - The danger of a collapse is far from over. Any all clear (talk) would be wrong. We are still dealing with a very dangerous situation.

9) Ukraine asks the IMF for emergency funding.

10) The Bank of Korea monetary policy board called an unscheduled meeting Monday, possibly to discuss an interest rate cut after the stock market lost a fifth if its value last week.

11) The Bank of Israel may lower the benchmark lending rate for a second time this month.

12) Taken from the US playbook, Kuwait 's Central Bank stepped in Sunday to prop up one of the country's biggest banks and said it was considering guaranteeing deposits in domestic banks. Is the contagion spreading to the Middle East too?

13) The Saudi government will inject the equivalent of $2.67 billion into the government-run Saudi Credit Bank to provide no-fee loans to low-income citizens.

14) Australia 's housing problem could be worse than that of the US 's. Its market, measured by the EWA, is down nearly 2/3.

Yes, it's still safe to say that when the US sneezes the rest of the world catches a cold. These days, however, (what with the credit bubble and all) it's probably safer to say that the rest of the world gets walking pneumonia.


Previous Day's Trading Room Results:

Trade Date: 10/24/08

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 8:55am at 873.75 = +4.50 (1 lot)

2) Engf sell @ 9:20am at 864.75 = +1.00 (1 lot)

3) VA sell @ 1:30pm at 872.50 = -1.75 (1 lot)

4) Algorithm positions (3)...combined total...+3.00

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades.



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