RED ALERT: FX Dislocation In Process

**phillychoppin** · February 17th, 2009, 12:01 AM

I don't know how many of you are following the economy recently but if you do, this article might be of interest:

From Karl Denninger at http://market-ticker.denninger.net/

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I do not know what is going on here, and I don't think I want to.

Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading.

It originated at approximately 7:15 CT this evening and originated out of Asia somewhere. All of the primary currency crosses got hit at once - Euro, Pound, Yen - all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling.

At the same time the US futures markets got nailed as well, down some six handles on the /ES in a near-vertical drop. While this sounds "not that big" to move these markets in a coordinated fashion like this is a trillion-dollar enterprise - this is not some small company that went bankrupt, or even a large company.

There is no news coverage at the present time identifying the source of this but it is not small and contrary to some reports it is not "automatic selling"; this is forced liquidation.

Folks, if this translates into Eastern Europe where there are severe instabilities already brewing literally everything in the financial world could come apart "all at once."

The worse news is that if this happens Bernanke will have killed us (in the US) by extending those swap lines all over the planet during the last six months. These will become utterly uncollectable and they are massive, in the many hundreds of billions of dollars.

To those who are reading this, I hope if you're in the markets you are prepared for extreme levels of violence. You must expect that the authorities will try to arrest the destruction if they are able, but you must also be prepared for the possibility that we have reached a "critical mass" point beyond which "duck and cover" is the only winning strategy.

Unfortunately.

I hope I'm wrong; this is going to be a long night.

**Kaos** · February 17th, 2009, 12:15 AM

Scary - we'll see what weight it has.

**phillychoppin** · February 17th, 2009, 12:23 AM

Originally Posted by Kaos

Scary - we'll see what weight it has.

It sure is....the dollar is already up almost 180 basis points and gold is +$17. This kind of instability is not good news.

**Kaos** · February 17th, 2009, 12:30 AM

Originally Posted by phillychoppin

It sure is....the dollar is already up almost 180 basis points and gold is +$17. This kind of instability is not good news.

where are you tracking those stats?

**phillychoppin** · February 17th, 2009, 12:31 AM

Originally Posted by Kaos

where are you tracking those stats?

http://www.ino.com/

**Captain Tuttle** · February 17th, 2009, 09:16 AM

Can someone translate this into English for those of us not in the know? And, post your interpretation of what this means in real terms? Thanks.

**ALS** · February 17th, 2009, 01:05 PM

Well they didn't get much bang for their investment. The dollar only moved
.0234 cents against the Euro at $1.2568 and .0075 cents against the Pound at $1.4224. The Yen is up .5050 against the dollar at 92.24 yen per dollar.

If I saw a 10 cent or more move on the Euro or Pound then I would be looking for something big coming down the road.