Dow Plunges 697 Points On the Open

The Dow Jones Industrial Average plunged almost 700 points on the market open in some of the most extreme volatilty yet seen. Prices have since rallied back to even, and a little bit of green, due no doubt to wild swings.

President Bush will be speaking this morning most likely to serve up a few more meaningless platitudes.

Intraday swings mean little if we judge by what has happened so far this week.

It will be all about the last hour of trading.

Canada Rated World's Soundest Banking System

In our recollection Canada's banking system was also fairly sound during the Great Depression.

Canada rated world's soundest bank system
By Rob Taylor
Thu Oct 9, 2008 2:41pm EDT

CANBERRA (Reuters) - Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.

But Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.

The United States, where some of Wall Street's biggest financial names have collapsed in recent weeks, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.

The United States was on Thursday considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.

The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).

Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).

UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).

The ranking index was released as central banks in Europe, the United States, China, Canada, Sweden and Switzerland slashed interest rates in a bid to end to panic selling on markets and restore trust in the shaken banking system.

The Netherlands (6.7), Belgium (6.6), New Zealand (6.6), Malta (6.6) rounded out the WEF's banking top 10 with Ireland, whose government unilaterally pledged last week to guarantee personal and corporate deposits at its six major banks.

Also scoring well were Chile (6.5, 18th) and Spain, South Africa, Norway, Hong Kong and Finland all ending up in the top 20.

At the bottom of the list was Algeria in 134th place, with its banks scoring 3.9 to be just below Libya (4.0), Lesotho (4.1), the Kyrgyz Republic (4.1) and both Argentina and East Timor (4.2).

World Economic Forum Global Competitiveness Report

RANKINGS

1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta
11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain

The Progress of the Dollar Rally in Context and the Stock Market Crash

This is a simple update of the chart which was posted on this blog on 8 September Dollar Musings and the Potential for a Significant Stock Market Decline.

We will take a minute to note this detail from that September 8 blog entry:

We think that there is a heightened chance of a significant stock market decline that will start in the next thirty days. As we have previously said we are watching for a 'failed rally' hall mark in our model, We are almost there.

A likely target for clarification will be around the week of this month's option expiration on 20 September.

The clarification was a market decline that started on 19 September and has shaved around thirty percent off the major US stock market indices.

The dollar did drop back into the 70's and then has rallied sharply back up to resistance around 82.

All of our charting indicates that the dollar will not significantly top the 61.8 fibo level of 84.37 if it does surmount the resistance at 82.

If it does, then we need to reconsider this as something other than a bear market rally.

Charts - 9 October 2007 - Jeudi Noir

"Those that wish to be wealthy beyond their labor fall into temptation and a tangled web, and many errors and lusts,
foolish and hurtful, that sink them and their kinsmen into ruin and destruction." 1 Timothy 6

This cascading waterfall decline has been remarkably quiet and orderly, with few rallies and significant drops into the closing hour each day.

Few realize that one year ago the US equity markets hit their all time highs. They are now down from thirty to forty percent.

This last leg since September 19 has taken from 25 to 30 percent off the major indices and may be remembered as 'the crash' depending on where we form a bottom and how the bounce occurs.

What we are doing is unwinding the reflation that Greenspan created after the Crash of 2000-2003. The efforts to stop the decline are not working because they selective bailouts of the wealthy and a few select banks.

The economy will not recover until broader efforts are undertaken to provide jobs and wage growth to the people, rather than rebuilding the artifice of crony capitalism and the politics of privilege.

The impact of this financial destruction will be felt for the next several years. The worst is yet to come.