Jackson Jambalaya

Kingfish note: Karl Denninger, The Market Ticker guy, will be on the KIM Waaaaaaade Show tomorrow on 1180-AM, WJNT. If you have any questions you want to ask him, feel free to call the show or email them to me. Should be a very good discussion as his predictions this year have so far proven to be correct.

The Market Ticker warns of "potential economic seizure ahead" (It was written Thursday):
"The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.
Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.
It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.
We have "pumped liquidity" and even bailed out firms with taxpayer money, and yet the markets have not unfrozen.
They remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!
The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.
It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year...." http://market-ticker.denninger.net/

"Gee, how does this affect me?" you ask. Denninger warns:
"Please understand - the TRUCKER who has a full load of food headed for your grocer REQUIRES commercial credit in order to fill his truck with diesel.
The local GAS STATION owner REQUIRES commercial credit to fill his underground storage tank.
The local CAR DEALER REQUIRES commercial credit to have cars - and parts - in his dealership. No credit, no car - and no car repairs.
The manufacturer over in China REQUIRES commercial credit (letters of credit from the buyer's bank) to be able to ship those goods to America, where you can buy them. If the bank over there won't take the LOC from the bank over here, suddenly you have no tires, DVDs and other similar products to buy....." (See post from Friday on the freezing up of shipping due to the lack of letters of credit, http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html)