BLUE-CHIP stocks are tumbling, the US Government is in crisis talks over home loans, and armed police are standing guard out the front of US IndyMac branches amid a run on the bank.
For those who like to try to pick the bottom of a market, signs are this might be a good time to jump.
Just look at some of the comments that came out of this week's Congressional hearings, at which Treasury Secretary Henry Paulson had to face the music over his plan to bail out Fannie May and Freddie Mac with taxpayer money.
"I fear we're sitting on a financial powder keg," murmured Republican senator Richard Shelby.
"When I picked up my newspaper yesterday, I thought I woke up in France," grumbled senator Jim Bunning. "But no, it turns out socialism is alive and well in America."
While mums and dads queue outside IndyMac Bank branches across the US, Wall Street has decided it's the season to go bear hunting.
On the Securities and Exchange Commission's hit list are investors that go by the amusing title of "naked short-sellers".
Short-sellers borrow stock and sell it - betting that the share price will drop. If right, they can buy back shares at the lower price, repay who they borrowed from, and make a profit on the difference. Naked short-sellers do exactly the same thing, except that they don't actually bother about owning the shares.
In a sign that market armageddon is nigh, SEC chairman Christopher Cox announced plans to go bear hunting - the SEC will curtail short-selling in major financial company shares.
That list of 19 companies includes Fannie Mae, Freddie Mac, Bank of America, Citigroup, Lehman Bros and Credit Suisse.
The SEC has already charged two short-sellers for market manipulation this year - for spreading false rumours about financial institutions in the hope that their share price will fall. The latest move ensures more will come.
Miner debt call
ANOTHER week, another Opes Prime-related courtroom drama.
Listed mining explorer Admiralty Resources has been hit with a demand to pay back $10.39 million that it borrowed on June 4, 2007, from Hawkswood Investments.
The demand has come from Salvatore Algeri and Chris Campbell of Deloitte, the receivers of both Hawkswood and Opes Prime.
Hawkswood is the investment company owned by Opes Prime directors Lauri Emini, Anthony Blumberg and Julian Smith.
According to court documents, the loan was ostensibly working capital to help Admiralty expand its mining venture at Cia Minera Santa Barbera in Chile.
According to an affidavit filed by Admiralty boss Phillip Thomas, and another by Blumberg, the loan was extended on June 4 last year so that Admiralty did not have to pay until it either received its first income from the mine, or by September 30 this year.
According to his affidavit, Blumberg stated that he executed that loan agreement by Hawkswood to Admiralty - a listed company that he was also a shareholder and director of. But Hawkswood's receivers say that Opes Prime going belly-up changed that and hit Admiralty with a demand for the money in June.
They say the debt was payable at June 5. If the receivers are right, it will leave a rather large hole in the books of Admiralty. Continued…
