Taoyuan Nights

This is one of the most exciting days of finance I’ve had this decade!

113 ETF funds collapsed.

The Russian stockmarket is down 17% and trading was halted.

Markets all across Asia were down 5-7% even from the start.

The Shanghai stockmarket is now down 66% since October last year.

HBOS (biggest home loans bank in the UK) dropped by 40% at one point. Huge UK and US banks have been downgraded to near-junk status or have collapsed in the last two days - or been forced into buyouts/mergers. Washington mutual, bradford and bingely, HBOS…

In the UK, all the online stockbrokers stopped working; lots of internet banking accounts stopped working ( I think it is because people are panicking and trying to withdraw money).

The Dow Jones index dropped 500 points; Standards and poor (S&P) had it’s biggest drop since 1989, even worse than 9/11!

The FTSE just closed at a 3 year low.

If you know what PER is, consider the UK’s biggest home loan lender (2/5 of the whole country) is on a PER of 1.3 just now, a fraction of their book value. Most of the other big banks are down an amazing amount.

International banks almost completely stopped lending or trusting each other all day. LIBOR rates had the highest jump ever in history I believe.

Prices on companies worth 10’s of billions of dollars were jumping and dropping by 10%, 20% easily on markets all over the world.

Oil dropped to under $90/barrel. Everyone was going crazy each time it went UP by ONE dollar in a day. Now it drops 5 dollars DOWN in just hours, and the news ignores it! You can hardly find it in the media!

Even the friends I have who are professional traders for large banks had no idea what would be happening next.

It’s so exciting!

Tomorrow might see the world’s biggest bankruptcy ever if AIG cannot persuade Warren Buffett (the world’s richest man) to hand them lots of cash. Apparently Lehman Brothers also tried the ‘oh, please, go on!’ line with Warren and he politely declined.

These are amazing times! If you are interested in finance, now is the time to learn about it! We have front row seats to enjoy a wonderful performance!

What makes me laugh most, though, is this: All of these huge 10%-40% drops in multi-billion pound companies - and indeed - 20% drops in ENTIRE ECONOMIES - were taking place in MINUTES! And yet people tell me their houses can never go down in value; and they laugh when I talk of big drops occurring within a year to house prices.

As though their houses are somehow more diversified and better value than a large bank with sources of income from many businesses, all over the world. As though their little pile of bricks and mud is ‘better’ than an entire G10 country. Insane.