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Mr. Market Melting Down

The User's Profile Chris Martenson May 20, 2010
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Here we are, about an hour from the market open in the US, and European markets are down hard, while US stock futures point to a miserable open.

I’m opening this thread to follow the day’s activities.

As I write this, S&P futures are down -23.50 and Dow futures are down -156.

Gold is down a further -$15 to $1179/oz, and oil is down a full -$2.17 to $67.70.

Sometimes, history rhymes, and sometimes it does more than that.  This is almost exactly a repeat of what happened in Fall 2008, right down to the last detail, including a widening TED spread.  I warned of this recently in the currency swap thread, and I am feeling confirmed that there is a generalized loss of liquidity somewhere, probably in the European banking system.

Something is broken.  We don’t yet know what, but it doesn’t really matter what it is.  We are in the midst of another credit crisis.  You’d better buckle up.

I remain convinced that the central banks will not let this situation stand and will deliver as much liquidity as necessary to eventually turn it around.  With US retail statistics pointing to a nascent recovery, and the Fed’s ‘Taylor Rule’ calling for a negative interest rate (which is not possible under current rules), the Fed will be able to rationalize further liquidity injections.  If/when they do, this will ignite the next upleg in gold.

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Top Comment

Thanks Doc!  I was just fresh out of nails and hair as I posted on another thread.
A couple of other threads pointed out the massive...
Anonymous Author by farmer-brown-2
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