Global Tinfoil Mid-Week Update

Hello landless peasant serfs! Our apologies for the recent delays in the news as we have been busy stockpiling Bibles!


Idaho, bastion of American freedom and origin of the word 'ain't'.

1) We contacted the Idaho National Guard, and according to them, previous reports regarding federalization are incorrect. This began with a rumor out of Texas and has been denied by the Idaho National Guard. So this rumor must be treated as unconfirmed.

2) Pakistan, Argentina, Iceland and possibly others are on the verge of sovereign default.



-Pakistan seeks IMF loan


Pakistan shortly after a previous infusion of IMF 'help'

The International Monetary Fund says Pakistan has asked it to help deal with its looming balance of payments crisis.

Talks on plans to strengthen Pakistan's economic stability would begin in the next few days, an IMF statement said.

http://news.bbc.co.uk/2/hi/south_asia/7684742.stm

-Iceland stock market loses 90% of value; shortages of food and clothing spread


Iceland , the home of beautiful women, failed banks, and uh, ice.



Icelandic peasant serfs stockpile food in preparation for next month's Bjork concert

Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports

Oct. 13 (Bloomberg) -- After a four-year spending spree, Icelanders are flooding the supermarkets one last time, stocking up on food as the collapse of the banking system threatens to cut the island off from imports.

Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency, the 22-year-old manager said, standing in a walk-in fridge filled with meat products, among the few goods on sale produced locally.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aVFtDRGwcc50&refer=home

-Argentina sovereign bonds trade at 30c on the dollar.



If you look close, you can actually see the Argentinian peso falling


Flashback to the previous Argentian crisis, from like two weeks ago or whatever

Argentina Default Looms, Pension Fund Seized

Argentina defaulted on its bonds in 2001, offering investors 30 cents on the dollar in 2005. Some investors refused and are still haggling over it. Seems like they should have taken the 30 cents and run. Here we are again, with Argentine bonds trading at 30 cents on the dollar. Only this time, that 30 cents is before default.

http://globaleconomicanalysis.blogspot.com/2008/10/argentina-default-looms-pension-fund.html

3) Sovereign CDS debt spreads are widening


Putin nods in approval at European credit woes



Europe now glows in the dark due to financial toxic waste

CDS report: European credit derivatives at record wides

Meanwhile, European sovereign credit default swaps, a form of protection against default on government bonds, were also trading wide amid concerns over the high levels of debt governments will have to issue as they recapitalise the banking system.
The so-called peripheral nations of Greece, Italy, Portugal and Ireland are facing the greatest pressures along with Spain, where property prices have crashed.

Greek CDS prices over five years are trading around a record 95bp, while Italy and Ireland are trading around 80bp and Portugal and Spain around 70bp. These are twice the level such CDS were at before the collapse of Lehman, which imploded on September 15.

http://ftalphaville.ft.com/blog/2008/10/21/17269/cds-report-european-credit-derivatives-at-record-wides/

According to Global Tinfoil's research division, rising CDS spreads on sovereign debt does not bode well for planet earth at the present time.





4) The implications (or lack thereof) of the Lehman controlled demolition are unclear. An immediate equity meltdown did not occur, but as mentioned earlier, sovereign CDS spreads have skyrocketed.

Global Tinfoil has asked the secretive CDS industry for comment, and has been told the grass is green and the sun is shining...


CDS industry sources have provided this exclusive photograph of the debt markets

According to Fixed Income Clearing Corporation /IDSA, the Lehman CSD transactions have been settled without any issues. We must take these assertions with a grain, possibly a pound, of salt.

[This is] what we'd expect the ISDA to say, of course. They're looking out for their livelihood, amid a deepened public mistrust of derivative securities and the potential threat they pose to the financial system.

It's still not clear to me that we won't hear about some hedge fund or other market player being unable to make good on a Lehman swap payment. But if a huge calamity was brewing, you'd figure we'd know by now.

http://latimesblogs.latimes.com/money_co/2008/10/sellers-and-buy.html

The full implications of the Lehman event will only be clear with time. Obviously the equity meltdown we expected did not materialize, most likely because the major players in these trades had been marked to market or covered losses with borrowed reserves. This event may, however, have a continuing impact on bank and hedge fund balance sheets. Regardless of the specific intent or consequence of the Lehman failure, it is becoming undeniable we now have absolute contagion in the financial system, which will almost invariably result in global depression.





And now for the weather: The planet's f*cked, it's getting worse, have a nice week-end!!