Stock Market Crash Expected In 2008 To Be Worse Than 1929

[nChrist]

One of the first things I thought about when reading this was predatory and fraudulent lending practices that appears to be one of the major causes in starting this. Greed and deceit is definitely involved. The BIG GUY lenders have definitely taken advantage of and HURT the LITTLE GUY borrowers. It's easier than many people think to become victims of BIG GUY PREDATORY LENDERS. Some like to blame the little guys and say that they should have read the contracts more closely or investigated the lender. Part of this is true, but everyone would need a lawyer to discover all the tricks hidden in the contracts by PREDATORY LENDERS. If you think that it couldn't happen to you, you would probably be wrong.

SO, if there is a big crash, where would you begin to place the blame? Might you start with:  GREED, FRAUD, DECEIT, AND PREDATORY LENDING PRACTICES? I can state with some degree of certainty that the BIG GUYS caused this, NOT THE LITTLE GUYS.

[Soldier4Christ]

I agree completely. It was the cause of the Big Depression and they haven't learned from their mistakes or I should say they don't want to learn from their mistakes as it will be the Big Guys that will usually make it through a depression at the expense of the Little Guys.

[Soldier4Christ]

Wall Street tumbles for a second day
Investors remain nervous about the state of the economy

Wall Street tumbled again Wednesday in another rocky market opening, with investors uneasy about the health of the economy and corporate earnings after disappointing reports from big names like Apple Inc. and Motorola Inc. Bond prices rose sharply as investors sought the safety of government-backed debt.

Wall Street also fell in tandem with markets in Europe, which pulled back after European Central Bank President Jean-Claude Trichet indicated that the ECB would not follow the Federal Reserve’s lead and cut interest rates, according to Dow Jones Newswires. The Fed’s decision Tuesday to cut its federal funds rate by 0.75 basis points to 3.5 percent eventually helped calm U.S. markets, but it was already clear that investors had doubts about the potency of the Fed action. Rate cuts typically take months to work their way into the economy.

Meanwhile, a disappointing forecast from Apple showed how fragile investor sentiment is.
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The maker of the iPod issued a forecast for its fiscal second quarter that said sales would likely grow by 29 percent. The figure would represent faster growth than in earlier years but fell short of what Wall Street had expected.

Apple’s expectations appeared to confirm worries about consumer spending. As consumers account for more than two-thirds of the economy, investors are keen on learning whether retailers and other companies will have a harder time prying open wallets.

Shares of Apple fell $17.26, or 11 percent, to $138.38.

The Dow Jones industrial average was lately down 115.67 points, or 0.97 percent, having lost over 200 points in the early going. The broader Standard & Poor’s 500-stock index was down 13.42 points, or 1.02 percent, while the Nasdaq composite index dropped 32.22 points, or 1.41 percent.

The decline in stock prices, while substantial, still appeared less than the heavy pressure to sell by the opening bell Tuesday. The Dow fell by as much as 465 points in the first minutes of trading Tuesday, but ended the day down 128.11 points, or just over 1 percent.

Bond prices rose sharply, the beneficiary of investors’ search for safer places for their money. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.32 percent from 3.41 percent late Tuesday. The dollar was mixed against other major currencies.

In afternoon trading in Europe, stocks dropped sharply. Britain’s FTSE 100 fell 3.44 percent, Germany’s DAX index fell 4.76 percent, and France’s CAC-40 fell 4.02 percent.

Light, sweet crude oil fell $1.05 to $88.14 per barrel in premarket electronic trading on the New York Mercantile Exchange.

In other corporate news, Motorola fell $1.98, or 16.1 percent, to $10.34 after reporting its earnings fell sharply in the fourth quarter and the maker of mobile phones warned that the recovery in its struggling handset unit will take longer than expected.

United Technologies Corp., one of the 30 stocks that comprise the Dow industrials, said its fourth-quarter earnings rose 23 percent as sales increased across each of its businesses. The results from the parent of names like Sikorsky and Otis topped Wall Street’s forecast, according to Thomson Financial. The stock fell 70 cents to $66.50.

Delta Air Lines Inc., the nation’s No. 3 carrier, reported it was hampered by high fuel prices in the fourth quarter but was able to post a narrower loss on a solid increase in sales. Delta slid 44 cents, or 3 percent, to $14.41.

While investors worldwide remain concerned about the health of the U.S. economy, the Fed’s rate cut and Wall Street’s ability to come off its lows Tuesday helped drive a rebound in Asian trading Wednesday.

Japan’s Nikkei stock average closed up 2.04 percent after falling 5.7 percent Tuesday. Similarly, Hong Kong’s Hang Seng index surged 10.72 percent, showing its biggest gain in 10 years after falling 13.7 percent in the previous two sessions.

[Soldier4Christ]

Wall Street surges on wild ride 
Major indexes at times were down over 2%

Dow closes up 290 after whiplash session

It started with another stomach-turning drop at the open, and a loss of more than 300 points by midday. Then stocks changed course, raced higher and closed with a dramatic gain of nearly 300.

This wasn’t just volatility. This was Wall Street whiplash.

Amid tumbling housing prices, an ongoing credit crisis and growing fears of a recession, turbulence has become a hallmark of Wall Street in recent weeks. And after five straight days of pullbacks, analysts saw some positive signs in Wednesday’s trading.
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Investors certainly found a reason to buy, perhaps encouraged by the Federal Reserve’s unprecedented 0.75-point interest rate cut a day earlier and a widely held bet on another half-point cut next week.

By day’s end, the Dow had swung 631.86 points from its low point to its high — the largest single-day turnaround in more than five years.

“You might say this is a belated reaction to what the Fed did this week, compounded by hopes for the Fed to do more next week,” said Peter Cardillo, chief market economist at Avalon Partners.

The Dow had plunged more than 465 points just after the opening bell Tuesday as the market digested news of the rate cut. But stocks rallied to finish down just 128, then tacked on a 2.5-percent gain on Wednesday.

The Dow Jones industrial average finished the day up 298.98 at 12,270.17. It had been down 323.29 at its low point.

The swing from negative to positive territory of 631.86 points was the largest point move since July 24, 2002, according to Dow Jones Indexes. The largest intraday point swing, a metric that Dow started calculating in 1995, was a 721-point swing on April 14, 2000.

“Volatility is certainly the norm now and not the exception,” said Art Hogan, chief market strategist at Jefferies & Co.

He noted that all but two trading days this year had seen triple-digit swings in the Dow, three of them 300 points.

On Wednesday, traders who bet on the Fed’s target fed funds rate were pricing in a 100 percent chance of a 0.50-percentage-point cut by the central bank when it meets next Tuesday and Wednesday.

Rate cuts are designed to stimulate borrowing and, in turn, business activity and the overall economy. They also will eventually boost profit margins for banks and other lenders, which have been working to lower costs and raise cash levels through layoffs and stock sales after having lost billions of dollars to bad mortgages and mortgage-related investments. Those companies — including Citigroup Inc., Washington Mutual Inc. and Merrill Lynch — were the big winners Wednesday.

“What has happened is the Fed is flooding the system with liquidity and eventually we should see some traction in the economy. And stocks tend to respond first,” said Steve Goldman, chief market strategist at Weeden & Co.

Still, analysts were mindful that in recent months Wall Street has been known to soar one day and succumb the next, and that there are still many economic unknowns for the market to weather. And, given that stocks are so badly beaten down, bargain hunting played a part in Wednesday’s turnaround.

Before Wednesday’s session, the Dow had fallen nearly 10 percent since the start of the year, and it was down more than 15 percent since its record close of 14,164.53 on Oct. 9.

Broader stock indicators also surged Wednesday. The Standard & Poor’s 500 index rose 28.10, or 2.14 percent, to 1,338.60, while the Nasdaq composite index rose 24.14, or 1.05 percent, to 2,316.41.

Advancing issues outpaced decliners by nearly 3 to 1 on the New York Stock Exchange. Consolidated volume came to a heavy 7.33 billion shares, up from 6.33 billion Tuesday.

Bond prices turned lower as stocks rebounded. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell in earlier trading but then recovered to 3.55 percent, up from 3.41 percent late Tuesday.

At its lowest point Tuesday, the Dow was 17.9 percent below its October closing high, meaning that the stock market has come perilously close to the 20 percent threshold that defines a bear market.

Investors may go into the market to be sure they don’t miss out on a rally — or the gains may be knocked down again.

Wall Street faces several months of uncertainty, with the bulk of fourth-quarter earnings reports still to come and economic reports likely to be disappointing. When it’s more clear companies and consumers are spending freely, investors might relax.

However, with consumers burdened by debt and cutting back spending, it’s impossible to predict when that relief will come.

The dollar was mixed against other major currencies Wednesday, while gold prices fell.

Battered small-cap companies — which rely heavily on borrowing to grow their businesses — got a lift Wednesday. The Russell 2000 index of smaller companies rose 21.86, or 3.26 percent, to 693.43.

Before the turnaround in U.S. stocks, European stocks closed sharply lower on economic worries and escalating uncertainty about the European Central Bank’s willingness to lower rates. Britain’s FTSE 100 closed down 2.28 percent, Germany’s DAX index fell 4.88 percent, and France’s CAC-40 fell 4.25 percent.

In earlier Asian trading, Japan’s Nikkei stock average closed up 2.04 percent after falling 5.7 percent Tuesday. Similarly, Hong Kong’s Hang Seng index surged 10.72 percent — its biggest gain in 10 years — after falling 13.7 percent in the previous two sessions.

[Barbara]

Hi Pastor Roger,

This is my first post. Just wanted to quote some 'interesting' statements from some important people on this subject:

"A global economy requires a global currency."
Paul Volker, former Chair of the US Federal Reserve

Robert Mundell, 'the father of the Euro', and one of the world's most respected economists, views crisis as the starting point for change. In a May, 2007 lecture, Mundell related, 'International monetary reform usually becomes possible only in response to a felt need and the threat of a global crisis.'  This Nobel prize winner also pointed his finger to the possible trigger event, saying that 'the global crisis would have to involve the dollar' and that a world currency should be viewed as 'a contingency' to a global dollar disaster.

Sounds very much like things are heading in that direction.

Thank you for your posts.

God Bless

[Soldier4Christ]

Hello Barbara, Welcome to Christians Unite forums. Thank you for that information. Yes, I don't think it is very long in the coming either.

[nChrist]

Hello Barbara,

WELCOME!

We're glad to have you with us.

Love In Christ,
Tom

Thanks be unto God for His unspeakable GIFT, Jesus Christ, our Lord and Saviour Forever!

[Barbara]

Thank you for the warm welcome, Pastor Roger and blackeyedpeas - I'm glad to be here. There's some very interesting information here and I appreciate your sharing it!!

God Bless

[Soldier4Christ]

Wall Street ends wild week as Soros eyes recession 
Billionaire investor wants to see power shift from U.S. to China, developing world

In a wild week on Wall Street that saw an emergency .75 percentage point rate cut by the Federal Reserve, a global stock sell-off and four days of triple digit moves on the Dow Jones Industrial Average, the market ended down another 171 points, to close at 12, 207.

Meanwhile, billionaire investor George Soros, a strong supporter of MoveOn.org and leftist political candidates, threw cold water on the World Economic Forum in Davos, Switzerland, by warning a recession in the U.S. and UK will be hard to avoid.

In a separate interview with the BBC, Soros told reporters he viewed with enthusiasm the prospect that a coming recession could seriously weaken the U.S.

"I'm not looking for a worldwide recession," Soros said. "I'm looking for a significant shift of power and influence away from the United States in particular and a shift in favor of the developing world, particularly China."

At the end of last week, the Dow reflected a precipitous loss of nearly 2,000 points from the all-time market high of 14,165 recorded Oct. 9, just four months ago.

Investors today apparently were not cheered by yesterday's bi-partisan congressional agreement to support the Bush administration $150 billion economic stimulus package. The plan would send tax rebates to 117 million families in an effort to boost consumer spending.

Gold surged once again, setting a new record as benchmark gold futures for February for delivery on the New York Mercantile Exchange's COMEX metal division hit an all-time high of $924.30 an ounce.

Gold ended the day with February futures contracts closing at $914 an ounce on the COMEX, up $ 8.20 on the day.

Yesterday, the dollar struggled, registering slight gains against the euro, ending at 75.99 on the U.S. Dollar Index, up only slightly from the all-time low of 74.48 registered on the index in December.

Much of the debate at the World Economic Forum centered on the question of "decoupling," whether the world economy could disengage from a recession in the U.S. to stay healthy, or whether the ailing American economy would inevitably throw the world into a tailspin.

With annual retail consumption in the U.S. estimated at over $9 trillion, compared to slightly more than $1 trillion in China and India combined, most attendees felt a consequence of the increasing economic globalism could easily be a worldwide recession unless Bush administration stimulus efforts were enough to jumpstart the U.S. economy.

Soros, speaking to reporters in Davos, accused Federal Reserve Chairman Ben Bernanke of acting in a "panicky way," cutting rates as much as .75 percentage points this week, according to the Financial Times.

Still, Wall Street investors at market close today strongly encouraged the Fed to cut rates another .25 percentage points at next week's scheduled meeting of the Federal Open Markets Committee.

[Soldier4Christ]

Gold prices soar as mines go dark in South Africa 
'National electricity emergency': Industry shut down, workers could be trapped underground

The price of gold hit a record high Friday as production ground to a halt in South Africa on the back of a spiralling electricity crisis the government has labelled a national emergency.
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The three main companies operating in a country with a long record as the world's biggest gold producer announced they had suspended production because of unreliable energy supplies.

The world's biggest diamond producer, De Beers, also announced suspension of its operations due to the same problem.

The companies said in separate statements they had been notified by state energy utility Eskom that it could not guarantee supplies to their mines, adding they did not know when operations would resume.

Announcements by Gold Fields, Harmony and AngloGold Ashanti propelled the price of the yellow metal to a record high 923.73 dollars, and that of platinum to 1,701 dollars per ounce.

On the London Bullion Exchange, an ounce of gold was traded at 921.25 dollars in the morning.

Tens of thousands of miners in South Africa were Friday told not to bother reporting for shifts in a move the mining companies said would cost hundreds of millions of dollars in production.

A spokeswoman for Harmony, which operates 22 gold mines and employs 43,000 miners, estimated that around 300 kilogrammes (10,600 ounces) of production would be lost after the morning and afternoon shifts were cancelled.

"That's around 600 million rand (85 million dollars / 60 million euros) in today's market," spokeswoman Amelia Soares told AFP.

Ian Cockerill, chief executive of Gold Fields, which produces about 200 kilogrammes a day, said the situation would "have a serious effect on the South African operations and will negatively affect our gold production."

While mines were earlier plagued by short-term power cuts, Soares said this was the first time they had to cease production for a day.

De Beers' spokesman Tom Tweedy said they have reduced power consumption to a "survival load" which has ceased production from its mines.

Tweedy said they only use "sufficient power to avoid risk to employees and property, and to maintain ... the safe underground working conditions".

"Therefore essential ventilation, pumping and lighting and all safety related services will continue while regular operations will cease," he added.

Large parts of Africa's economic powerhouse have been intermittently plunged into darkness in recent weeks as Eskom imposes planned blackouts to conserve dwindling electricity supplies.

The commercial capital Johannesburg has been hardest hit, and analysts have warned of foreign investors taking flight as everything from factory production to traffic regulation has been affected.

Warning of price hikes and quotas to steady supply ahead of the 2010 football World Cup, Public Enterprises Minister Alec Erwin told journalists demand had to be cut.

"It is the view of cabinet that the unprecedented unplanned power outages must now be treated as a national electricity emergency," he said. This had been caused by poor planning and a sudden shortage of coal.

Erwin said the government would introduce incentives and penalties to encourage consumers to switch to gas and solar energy, as well as energy savings measures.

"It is a reality that there will be further significant increases in electricity prices," the minister said. Approval has already been given for an above-inflation tariff hike of 14.2 percent.

Erwin said there was "no question of stopping" large foreign investment projects and said the 2010 football World Cup should not be adversely affected.

"There is no threat to the successful holding of the event as plans to ensure electricity security in that period are well advanced."

Meanwhile, plans to build new power stations and recommission others would be fast-tracked where possible.

[Soldier4Christ]

U.S. Treasury accused
of depressing gold price
Group charges feds trying to 'conceal
the mismanagement of the U.S. dollar'

The Wall Street Journal has agreed to publish a full-page ad in which the Gold Anti-Trust Action Committee charges the U.S. government surreptitiously utilizes gold reserves to engage in international swaps and other market manipulations.

"Anybody Seen Our Gold?" is the title of the ad, which alleges U.S. gold reserves held at depositories such as Fort Knox and West Point may have been seriously depleted. GATA asserts U.S. gold reserves are being shipped overseas to settle complex transactions utilized by the Federal Reserve and the U.S. Treasury to suppress the price of the precious metal.

"The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world's reserve currency," the ad copy reads in a pre-publication version GATA provided to WND.

The U.S. Treasury denies the claim, insisting the stock is accounted for regularly.

GATA's chairman, William J. Murphy III, told WND his group was willing to pay the Wall Street Journal's cost of $264,000 to run the ad "to get the message out that the U.S. enters world markets without public disclosure to prop up the dollar and depress the price of gold."

GATA cites as evidence the Federal Reserve Open Market Committee reports dating back to Jan. 31, 1995, showing the U.S. Treasury Department's Exchange Stabilization Fund had undertaken gold swaps.

GATA, a non-profit 501 headquartered in Manchester, Conn., further asserts the federal government strategy to manipulate the price of gold has begun to fail.

"Gold's recent rise toward $900 per ounce shows that the price suppression scheme is faltering," the GATA ad reads. "When it is widely understood how central banks have been suppressing gold, its price may rise to $3,000 or $5,000 an ounce or more."

"The gold reserves of the United States have not been independently audited for half a century," the ad charges.

The U.S. Treasury disagrees.

"While the entire gold stock is not physically re-counted in any one year, over a period of years, by our continuous sampling process, the entire stock has been counted, and is effectively re-inventoried," Rich Delmar, counsel to Treasury's inspector general, told WND in an e-mail.

Delmar explained that the annual Office of Inspector General audits of mint facilities involves a physical inspection of certain vaults, which are subject to a 100-percent bar count and assaying. At the end of the inspection, each vault is sealed.

"During each visit, all previously sealed vaults are checked to ensure that the seals have not been compromised or tampered with," he wrote. "This process is the basis for the conclusion that there has been a complete physical inventory."

Delmar said the OIG's work consists of more than reviewing documents.

"Our auditors physically observe the inventory work done at the mint facilities, and we are responsible for the assay sampling process," he said.

WND asked the Treasury if there is a comprehensive listing and accounting of any encumbrances or other restrictions on the gold in the U.S. Mint that may affect ownership.

"This is not within OIG's purview," Delmar responded. "You may want to ask the mint directly."

'Dodging the question'

Murphy called the response "ridiculous."

"The mint does not make complex gold transactions with other countries," he said. "That is the role for the U.S. Treasury. The mint just houses the gold. The Treasury is dodging the question."

GATA has filed a Freedom of Information Request asking the Fed and Treasury to disclose information on encumbrances and swapping or leasing of U.S. gold.

"The Fed and Treasury have not even acknowledged receiving our FOIA request," Murphy said. "It's idiotic to tell you that the mint would have that knowledge."

Murphy asked, "Is the gold in the mint truly U.S. gold reserves or is it just 'custodial gold' held for some other country? That's why we need to know what encumbrances there are on the gold as well as whether any U.S. gold has been shipped overseas to fulfill swap obligations."

The 2006 annual report published on the website of the U.S. Mint lists KPMG as outside auditor.

The KPMG signed audit report in the 2006 Annual Report of the U.S. Mint takes full responsibility for auditing the balance sheets and includes a statement of the custodial activity of U.S. gold reserves.

According to the balance sheets, custodial gold and silver reserves make up 90 percent of the U.S. Mint's total assets.

Still, there is no specific statement in the U.S. Mint's annual report or the KPMG audit report describing any KPMG involvement in a physical inspection of the gold reserves.

KPMG's role as independent auditor for the U.S. Mint is also confirmed in the 2006 audit report prepared by the Office of Inspector General of the Treasury.

Dan Ginsburg, a KPMG spokesman, declined to provide any detail to WND concerning his company's audit procedures for the U.S. Mint, citing client confidentiality.

Greater force

Craig R. Smith, founder of Swiss America Trading Corp., told WND he accepts the GATA arguments because "there has to be a force greater than normal market conditions that has repressed the price of gold."

Smith noted any number of financial crises since the late 1980s that "should have propelled gold way beyond the 1980 high of $850," including the savings and loan debacle and the birth of the Resolution Trust Corporation, as well as the on-going devaluation of the U.S. dollar against virtually all major foreign currencies.

"Gold has been playing catch-up with current world economic conditions," Smith told WND in an e-mail, "and future movements should easily prove gold to be a great value at $900 an ounce. That price will look cheap going forward as the world starts to turn its back on debt-laden currencies and returns to money with a real value."

But the U.S. Treasury, in a statement on its website, denies the Exchange Stabilization Fund has been used to manipulate gold prices.

"The ESF does not engage in any transactions in the market for any metal such as gold, either in spot markets or in any of its derivative forms," the Treasury statement declares. "We would like to emphasize that the Treasury Department does not seek to manipulate the price of gold or any other metal by intervening in or otherwise interfering with the market."

Yvanka Wallner, advertising sales representative for the Wall Street Journal in New York City, confirmed to WND the GATA ad has been approved by the Journal's lawyers and is being prepared to be run next week.

Swiss America, a WND advertiser, specializes in investment-quality numismatic gold coins.

Gold yesterday closed at an all-time high of $911 an ounce, up $28, on a weaker dollar and higher oil prices.

[nChrist]

In a separate interview with the BBC, Soros told reporters he viewed with enthusiasm the prospect that a coming recession could seriously weaken the U.S.

"I'm not looking for a worldwide recession," Soros said. "I'm looking for a significant shift of power and influence away from the United States in particular and a shift in favor of the developing world, particularly China."

WOW! - AND, this is the far-left's STAR - Patriot Boy for Communist China! Soros and friends could care less what happens to their own country. UM? - What is their own country?

[Barbara]

Things are sounding pretty bad, and I also, believe there's a lot of manipulation. The economy is going from bad to worse. We've just moved to Florida and the foreclosures and stagnation in the housing market is shocking. Also, the way everything seems to be happening 'in concert' is very disturbing.

This from Bill Koenig:

"Although a recession in the developed world is now more or less inevitable, China, India and some of the oil producing countries are in a very strong countertrend. So, the current financial trend is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.

The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.

This current fiscal crisis is enormous and deep. No one knows how deep or enormous the fiscal crisis is, but to see President Bush and the Houses leadership act as fast and as cooperatively as they did on the stimulus speaks volumes about the seriousness of the situation."

And this:

"In conference calls to investors last week, banks from JP Morgan, Chase and Co. to PNC Finanacial Services Group, Inc., said they have been exercising more caution with commercial real estate, construction, and other loans.

San Francisco based Wells Fargo & Co. said it is reducing the maximum amount that some small businesses can borrow from a unit that specializes in unsecured loans and credit lines that average less than $20,000. Seattle based Washington Mutual, Inc., which reported a fourth quarter loss of $1.87 billion largely because of mortgage woes, said it was getting tougher on commercial borrowers. (Wall Street Journal)

Seems to be interrelated with the gold/silver/diamond crisis. Looks like we should be getting ready to tighten our belts, and more important, to draw as close as possible to the Word of God, Jesus Christ!

[Soldier4Christ]

The housing is not the only problem. Food prices have increased by 45% in the last year and has even put a strain on the food pantries for the poor that need them even more so now than before. Gas prices have gone up about 50% putting a financial strain on those that need the gas just to get to work at minimum wage jobs.

Looks like we should be getting ready to tighten our belts, and more important, to draw as close as possible to the Word of God, Jesus Christ!

Yes, we all may need to tighten the belts on spending and return to innovative ways to manage on just the necessities.

It has always been time to draw nearer to God but it is important for those who haven't done so to do so now and for us that are in Christ to do His work in helping others all we can.

[Shammu]

Massive ($7.14 BIL) Fraud uncovered, One guy caused this weeks market crash

By EMMA VANDORE, Associated Press Writer Thu Jan 24, 1:19 PM ET

PARIS - French bank Societe Generale said Thursday it has uncovered a 4.9 billion euro ($7.14 billion) fraud — one of history's biggest — by a single futures trader whose scheme of fictitious transactions was discovered as stock markets began to stumble in recent days.

CEO Daniel Bouton said the trader's motivations were "irrational," netting the trader no personal financial gains. Still, the bank is seeking to have him prosecuted in court.

A person familiar with the case named the trader as Jerome Kerviel. Bank officials said the trader was a Frenchman in his 30s who probably acted alone. The person spoke on condition of anonymity because of the sensitivity of the case.

The bombshell destabilized a major bank already exposed to the subprime crisis. France's second-largest bank by market value said it would be forced to seek euro5.5 billion (US$8.02 billion) in new capital.

Societe Generale filed a complaint Thursday with a court in Nanterre, west of Paris, accusing the trader of fraudulent falsification of banking records, use of such records and computer fraud, the bank said in a statement.

The Paris prosecutor opened a preliminary investigation Thursday based on a complaint filed by a small shareholder concerned about losses incurred because of the fraud, a judicial official said. The Bank of France, the country's central bank, said it was immediately informed of the fraud and was investigating.

Societe Generale's shares, which have lost nearly half their value over the past six months, were suspended in Paris on Thursday morning, then dropped 5.5 percent to 74.77 euros ($108.97) when they resumed trading.

The bank said it detected the fraud — comparable to a full year of its profits in stable times — at its French markets division the weekend of Jan. 19-20.

Once uncovered, Bouton said the bank alerted market regulators and moved immediately to close the trader's positions, incurring heavy losses amid sharp declines on world markets.

"This is a bad time for banks and the industry in general. But detecting the fraud over the weekend was problematic because world stock markets on Monday and Tuesday fell hugely around the world. When the positions had to be unwound, the bank did that in a terrible market of falling equities," said Janine Dow, senior director at Fitch Ratings financial institution group in Paris

"In hindsight, it was this guy's superior knowledge of the control system of every aspect of trading at the bank that allowed him to build up fraudulent positions and hide them," she said.

The bank said the trader had misled investors in 2007 and 2008 through a "scheme of elaborate fictitious transactions." The trader, who was not named, used his knowledge of the group's security systems to conceal his fraudulent positions, the statement said.

The man admitted to the fraud, the bank said, and was being dismissed. Four or five of his supervisors were to leave the group. Bouton offered to resign but the board rejected that.

The trader had worked for the bank since 2000 and earned a salary and bonus of less than euro100,000 (US$145,700), executives said.

"I'm convinced he acted alone," said Jean-Pierre Mustier, chief executive of the bank's corporate and investment banking, who interviewed the trader when the fraud was uncovered.

The trader was responsible for basic futures hedging on European equity market indexes, the company said. That means he made bets on how the markets would perform at a future date.

Until last year, the trader had been betting that markets would fall, but then changed his position at the start of this year to bet they would rise, said Kinner Lakhani, an analyst at ABN Amro in London who specializes in Societe Generale shares, citing the bank's management.

He said there had been "daily rumors" this week that something was afoot at Societe Generale. "The market was sniffing something," he said.

Because the trader previously had worked in trading accounting offices, "he would have known how the risk management worked," Lakhani added. In a conference call with analysts on Thursday, bank officials "talked about this guy bypassing systems and setting up false counter-trades."

Societe Generale said the trader was involved in "plain vanilla" forms of hedging. Futures trading began with selling commodities like sugar or oil to be delivered at a future date, but has expanded enormously to many kinds of extremely complex financial instruments.

The fraud appeared to be the largest ever by a single trader. If confirmed, it would far outstrip the Nick Leeson trading scandal in 1995 that forced the collapse of British bank Barings. Leeson, the bank's Singapore general manager of futures trading, lost 860 million pounds — then worth US$1.38 billion — on Asian futures markets, wiping out the bank's cash reserves. The company had been in business for more than 230 years.

The fraud was not as big as the 1991 scandal that led to the demise of the Bank of Credit and Commerce International. Claims by depositors and creditors there exceeded US$10 billion at the time. International bank regulators seized BCCI, which had headquarters in Luxembourg, London and the Cayman Islands, acting on auditors' reports that described huge losses from illegal loans to corporate insiders and from trading transactions.

Axel Pierron, senior analyst at Celent, an international financial research and consulting firm, was stunned that 13 years after the Barings collapse, something similar has happened.

"The situation reveals that banks, despite the implementation of sophisticated risk management solutions, are still under the threat that an employee with a good understanding of the risk management processes can getting round them to hide his losses," he said.

At Societe Generale, the announcement came on the back of 2.05 billion euros ($2.99 billion) in write-downs linked to subprime-related difficulties and the crisis in financial markets.

The bank is now planning a capital hike in the "following weeks" by selling shares in a rights offer underwritten by JPMorgan Chase & Co. and Morgan Stanley.

The write-down and losses will lead the company to post a net profit of 600 million euros to 800 million euros ($874 million to $1.16 billion) for all of 2007, the Paris-based bank said. Full-year results will be announced Feb. 21. In 2006, net profit was euro5.2 billion.

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