The third and dangerous leg of the financial meltdown has started – banks and investments banks face mega losses from mortgage bubble
Sam Adelton
Oct. 16, 2007

The major banks and financial institutions are getting battered overnight as investors realize the mortgage default led meltdown has started its vicious third leg down.

Wachovia, JP Morgan Chase and Bank of America are posting first decline in profits as close to $4 Billion in losses are being written off.

Citigroup's 57% drop in profit shows how unprepared the bank was for the credit-markets bust . What is more serious is the fact this is just the start of a mega Tsunami in the financial world.

When previous Federal Reserve Chairman Alan Greenspan said last week the ‘major credit storm is over’, the meltdown genie was laughing. Asia, Europe, Aussie and New Zealand markets are all getting clobbered as the mortgage fall out spreads across the world.

The sharp rise in oil and gold prices (simultaneously) shows the currencies are losing their values in the middle of the meltdown.

The housing market has another ten years of bear market. Common people are holding three or four investment properties on an average and are paying mortgages from loans from their 401(K) and IRA savings. Sooner or later the housing price across the nation will drop by close to 40 to 50% very sharply.

The third and dangerous leg of the financial meltdown has started – banks and investments banks face mega losses from mortgage bubble
Sam Adelton
The sharp rise in oil and gold prices (simultaneously) shows the currencies are losing their values in the middle of the meltdown.
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Merrill's $5 Billion hit to third-quarter earnings is just the start and not the end of financial meltdown from mortgage-securities business
Sam Adelton
This is just the ‘harmonic tremor’ before the actual volcano. The subprime mess may be over. But the actual mess is in traditional mortgages.
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Overall data this week will show US economy is not headed for recession – dollar and yen will rise, stocks and bond move sideways
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A great opportunity to go long on US Treasuries
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But if you look at the job reports, there is not much to cheer about. The August revision is seasonal. The September unemployment went up 0.1%.
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Dollar is ready to take on Euro while Yen is ready to be the surprise come back currency as carry traders push the currency up
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US Dollar and Japanese Ten have bottomed out. It is just the question of time when they make all time new highs. Can you believe 60 Yen to US Dollar and 0.80 Euro to 1 US Dollar? That is exactly what will happen by the end of 2011.
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