Bits Bucket For September 18, 2008
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Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Looks like Russia is having it’s share of difficulty…
Financial crisis to boost prices on food 30 percent up…The current financial crisis will strike a significant blow on Russia, the former vice prime minister of the Russian government, Boris Nemtsov said in an interview with Novy Region news agency. The prices on basic foodstuffs may rise 30 percent, whereas small banks will go bankrupt, and many Russians will thus have to forget about consumer loans.
September has become a black month for Russia, Nemtsov said. The politician advised all Russians should purchase foreign currency, particularly US dollars, to rescue their savings. The crisis may bring only one piece of good news for the country: the prices on residential real estate may drop, he added.
http://english.pravda.ru/russia/economics/18-09-2008/106392-financial_crisis-0
thats a positive for the USD
They closed the stock IIRC on Monday, to resume on Friday.
That’s a telling statement.
Leigh
er…stock market.
hmm … how many paper dollars would be available for ordinary citizens in the Russian black market in such a situation? I guess the supply runs out within a few days, at a very unfavorable exchange rate …
Didn’t this happen to Russia in the 80’s, where the USD was considered gold?
There is no black market for currency in Russia. Money changers are everywhere and exchange rubles for dollars and euros in both directions with a low spread.
The ruble is worth 25% more against the dollar than it was 5 years ago BTW.
Er…not to be argumentative -
Mother Rushia is said to encourage Comrades to purchase dollars.
Link below.
Dang, it’s crazy know matter how you spell it.
Jeesh - NYC’b…where are you?
Jack slap - me don’t drink - Gimme a shot of JD.
Oy Vey,
Leigh
Good news = residential real estate dropping in price?
Maybe I’m missing something, but are we in Bizarro World yet?
Leave it to Pravda to report the reality in this day and age, for our bubble cheerleaders in the MSM certainly refrain from doing so here:
“The crisis may bring only one piece of good news for the country: the prices on residential real estate may drop, he added.”
sure, such news would be considered so bad in my country that no newspaper dare print it. Economists still predict higher home prices here thanks to again lower interest rates (thank you ECB) and strongly increasing wages.
Is it 1932 yet?
That’s what many Democrats are hoping! In the wake of this week’s market turmoil, you see smiles on the faces of three groups of people: short sellers, vulture buyers, and Democratic strategists. Wall Street has laid an egg, as Variety famously quipped in 1929, and that means that happy days will soon be here again. You can almost feel the quivering anticipation in the recent column of my friend E.J.
Dionne:
http://www.theweek.com/article/index/88951/3/3/Obamas_Hesitation_Blues
Aug 2008 John “I’m a deregulator” McCain said “we need less government interference”.
Sep 2008, John “I’m a gladiator” McCain said “the economy is fundamentally sound.”
The truth is he’ll say whatever is policially expedient irrespective of the truth. The GOP and their minions deceptively suggest all is well and their borrow and spend mantra works. McCain economic chief Philbert Gramm said “americans are a bunch of whiners and the recession is imaginary”. But economic truth has never been the GOP’s strong hand. Any truth at all to their ideology?
Exy,
Please repeat after me ‘Neither party gives a Sh!t about me”.
As my good friends deceased father (The one who was the first anglo to serve on the BOD for a MAJOR JA PAN Co) used to say “Some day you’ll be a republican”. I was a staunch democrat at the time. We had quite a few good verbal exchanges.
He was right, I have since re-registered as a R-pub.
But only so I could vote for Ron P.
Over my many years, it’s not the years really but more so the mileage, I have come to despise both parties.
The end result is the same but the methods are slightly different. One will give you a ‘reach around’. The other wont.
Everybody needs to take a step back and reflect.
Mike
Bravo, Mike!
We The People need to get rid of all these bums and run things ourselves. The government as currently constituted is there to serve special interests and lobbyists, not us.
Edward Demming?
Lordalmightymustbeturningoverinthegrave.
Just a guess.
Leigh
I implore all American citizens to vote for a third party, or at the VERY LEAST, vote out ALL INCUMBENTS. I will vote for the opposite party for the first time in years, simply to try and oust my current reps.
It MUST be done.
The new guys aren’t going to be much better, but they will think twice before ignoring the interests of the common man in favor of special interests. If we show then we’re not afraid to do this, then they will know that we can and will toss them out on their a$$ if they don’t do their job.
If we all do it, it will work.
Both parties are in the grip of entrenched powers and interest groups and lobbyists.
That’s why term limits are needed. There’s at least some hope that the lobbyists will require some time to tighten their grip. In that time before the lobbyists get their grip, congress critters might actually act in the best interests of the country.
And there will be less market to sell one’s soul to the highest bidder, if you have to leave after 6 years, no if’s and’s or but’s.
Right now, we have the cream of the crop of the feckless and venal in our politicians, living permanently on Capitol Hill, permanently in the thrall of entrenched power groups.
Can we also - pretty please - revoke their lifetime pensions?
Ah, also pitch forks for the lifers.
Dang, I’ll get back to you with a list!
Leigh
as opposed to turning this country into a socialist?
“I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers” John McCain 03/25/08
Let the chips fall where they may.
I frankly don’t think that most Republicans would have had the stomach to “let the chips fall where they may” with AIG, FNM, or FRE.
It’s nice to say to let the chips fall, etc., but the reality is, when your money/livlihood TODAY is at risk, you will gladly pass the buck to someone else down the line. Republicans/Democrats alike.
Most Republicans that I know think that the stimulus package was stupid, but that the bailouts of AIG, etc. were absolutely necessary to keep the system intact that they benefit from.
So, since it’s not politically possible to ever “let the chips fall”, the only viable solution to minimize government handouts (and potentially need to increase their involvement) is to:
1. Completely deregulate small financial institutions–if they have problems, they can go BK without damaging the system.
2. Place greater and greater regulation upon financial institutions as they get larger, and larger, making it less likely that they will fail, and thus receive the government bailout to keep the system functioning.
Fr and FME were slush funds for the Dems. H. Raines stole 100mil and Gorelik took 75. Raines is Obama’s financial geru and Gorelik was on the 9-11 commision as the Dem. Both helping Hussein! Dodd and Hillary had their hands in them too. 46 lobbying firms.
The “Republicans are the party that wrecked America” in the last 8 years.
“They can run away from President Bush, but they can’t run away from the Republican Party. The Republicans will be regarded from now on as “the party that wrecked America.” Over the weeks ahead, as carnage in the economy and the financial markets ramps up, it will become increasingly clear.”
Ex-Republican
Stick a fork in Obama, he’s done. He’s allowed McCain’s campaign to define him, he’s constantly on the defensive, he refuses to go for the jugular. Plus his own party is in such disarray, they’ll snatch defeat from the jaws of victory. At this point, whenever Obama speaks, he sounds strained.
I’m no fan of McCain, either, BTW. But the Dems just can’t seem to learn from history. They completely blew it strategically with their “Impeachment is off the table” BS. They just got cynical and figured that people would be so sick of Bush and Republican antics that just about anyone they nominated would get elected. They figured wrong. No party who controls Congress and fails to impeach a President who desperately deserves it EVER gets their candidate elected in the next election. Call it karma, but it’s a beyotch.
Stick a fork in Obama, he’s done. He’s allowed McCain’s campaign to define him, he’s constantly on the defensive, he refuses to go for the jugular.
I disagree. Lil’ Johnny Maverick looks increasingly desperate, out-of-touch, dyspeptic, doddering and clueless. I hardly recognize the circa 1999 version of the man in the current incarnation. The bounce from his ill-advised choice of a running mate has evaporated as the public learns more about her, her propensity for lying, and her preferred methods of exerting executive power. His party, meanwhile, owns the majority of blame for the current financial crisis with everyone but the hopelessly delusional. The meltdown is not good timing for the Party Of Business.
They completely blew it strategically with their “Impeachment is off the table” BS.
You are absolutely right about this, IMO. The strategic component is bad enough, but far more important is the appalling lack of cojones and the abandonment of their public duty in the face of rampant malfeasance. Shameful.
Got to disagree with you, Slim. That may be the way it looks in the MSM, but I don’t think that’s how it’s going to turn out. But then I don’t really like talking politics on this forum.
“Stick a fork in Obama, he’s done”.
More than likely, he’s a light weight and away from a TelePrompter he’s lost. I have a feeling that once he finally debates the old white guy he’ll come across like the wind bag Lurch Kerry.
B.O. made a mistake by picking comb over Joe, I’ll bet if he had a do over he’d pick some one else.
Thank the Lord this election crap will be over fairly soon. I may switch from Ron Paul to Barr, only because Barr’s on the ballot.
How fitting…
Frum came up with the “Axis of Evil” for our dear leader, and he can’t even figure out that the “Axis of See No Evil” (’ssshrubery, Paulson & Bernanke) is responsible for what’s what.
I stopped reading as soon as I realized it was written by extremist fringe group propagandist Dave Frum.
Speaking of The Shrubby Commander Guy and his minions, looks like Press Secretary Dana Perino came very close to foreclosure this week:
President Bush’s chief spokeswoman tells the Sleuth she has now paid her delinquent property tax bill in full and, therefore, she expects to avoid a scheduled sale this week of her Capitol Hill house.
Perino’s home in Southeast Washington was slated to be “sold at public auction to the highest bidder” on Wednesday, according to the District of Columbia’s Office of Tax and Revenue (OTR).
Perino blames the near-miss on her mortgage company.
I’d pitch in $39.95 for pay-per-view to see Dana & Condi get it on in their birthday suits, mud wrestling.
Alad,
Save your money. Just watch da teebee.
Dana the Speaking Head vs Condi the other speaking head.
(Both run into the rink with fabulous glitter and no substance).
Yeah! THE CROUD CHEERS!
MUD, mud, mud.
Get her, no get her get her get her get her.
All the hair pulled out of the head, bald muddled er…ladies in less than panties appear! Muddied.
Dang, ref calls a tye (not a typo).
Now go home and explain to your man.
Honey, wwhere were you?
Baby, didn’t you see the B!tch fight? I bought tickets for both of us, but you declined. BTW, you SAID I could go!
Dang, thanks for the visual.
Now where are we - oh yay, Condi vs Dana-
Twist!
Leigh
PS. Luv ya Alad - ya make me giggle
Sorry, the Republican Party–the champions of deregulation–own this disaster. Spin it any way you want, but the majority of Americans know that the GOP’s mantra has long been “Unleash the market.” But I waste my breath, the system is–in a way you laissez-faire types should really appreciate–correcting itself. In the last six months, the US has effectively nationalized banking (Bear Stearns), housing(FMs), and insurance (AIG). The Invisible Hand has slit its own wrist…
There is not one thin near worthless dimes difference in the two present day parties. They have both long been heading this large parcel of real estate in the same direction. ‘They’ love to hurl insults at each other, I’m guessing because they are to simple minded to do much else. Either way the out come will be nearly the same, and overall the citizenry is the loser. While they gain more and more power and control, but that’s OK I guess because apparently the majority are looking to be ‘taken’ care of, from cradle to grave.
Well said Wimibiz. It’s interesting that most think one party (the one they belong to) is ‘right’ and the other hopelessly inept and wrong. What if they’re both off? Or some good and some bad to both?
There is not one thin near worthless dimes difference in the two present day parties.
Once upon a time that was my mantra, too.
The past eight years sure proved me wrong.
“There is not one thin near worthless dimes difference in the two present day parties.”
Your actions do not align with this statement. Nearly all of your posts appear to castigate democrats and excuse republicans.
“Nearly all of your posts appear to castigate democrats and excuse republicans”.
Sorry, that would be wrong, I don’t excuse any of them. Although I have little use for the extreme left, a broken record, and always pissed off. Hate to be them.
Wrong? You just proved my assertion. Thank you. Proof reading is always helpful.
This is a great article:
http://counterpunch.org/lindorff09182008.html
Some excerpts:
With the government now having spent over $800 billion in less than a year shoring up tottering financial companies that had become little more than casinos (and rigged ones at that), America is looking increasingly like China, a country where the state has been gradually getting out of the business of directly owning companies.
So much for the free market, which now only applies to small businesses. In America, as in China, individuals are left to sink or swim, and private property is only private as long as the government, or some well-connected developer, doesn’t want it.
As we saw at the two national party conventions last month, the US is also learning and applying the crowd-control techniques of the Chinese government to the US where the default tactic wherever public protest is planned is now to have police adopt a paramilitary approach that features aggressive use of tear gas, concussion bombs, assault rifles, house raids and preventive detention.
In the US, while nearly all media organizations are privately owned, by controlling the licensing of all electronic media, and thus having the final say on any and all acquisition strategies, the government has over the last 20 years or so, degraded the media to the status of compliant servant.
And, the kicker:
Fascism has perhaps been best defined as a system in which the government and corporations merge, and in which militarism becomes a dominant value. I have long argued that this is an apt description of modern China. It is increasingly also an apt description of modern America.
RE: As we saw at the two national party conventions last month, the US is also learning and applying the crowd-control techniques of the Chinese government to the US where the default tactic wherever public protest is planned is now to have police adopt a paramilitary approach that features aggressive use of tear gas, concussion bombs, assault rifles, house raids and preventive detention.
Yeah, J6P has definitely been OD’ing on too much shit beer and networkk television to the extent he’s oblivious to the evolution of his local cop department from a cadre of respected local officers with social and economic ties to the communities they serve, to the arrogant, self-serving, Nazi inspired, gunned up, paramilitary thugs that constitute today’s law enforcement types.
We haven’t had laissez-faire capitalism since before 1913.
If we did, we wouldn’t be in this mess.
Those allegedly laissez-faire motherscratchers on Wall Street sound different this week. Scared.
The InvisiHand is only fun when the market goes up, eh, “Masters Of The Universe”?
Enjoy those bloated McMansions in Greenwich.
EY-
So many meanings, so little time
Investopedia Commentary
People who support a laissez faire system are against minimum wages, duties, and any other trade restrictions.
Laissez faire is French for “leave alone.”
The MOU, not so much - get their sticky fingers in - most anything!
Leigh
er…ET (blush)
Editor took day off
Just 8 years ago, the country was worshipping at the altar of the CEO.
Now, the only person worshipping the CEO is himself.
Fickle public.
Democrats aren’t hoping for 1932, they’re hoping that our gov’t be restored to a reality based world, instead of the ravings of a Harvard C-student MBA cheerleader and his merry band of industry lobbyist cronies running the joint. Lookie, we got ourselves a CEO president for 8 years, just in time for a bailout.
I don’t believe you can graduate with an MBA from Harvard with less than a B. Add in the number MBAs at Lehman/Morgan Stanley/etc and you get the real worth of that degree.
Maybe there’s something to that…
At one time, the “best” at firms on Wall Street (at least of my peers age-wise) didn’t go back and get MBAs after a couple years of work.
They didn’t have time, nor need, for the degree.
And just think of the golden parachute he’s gonna get…
wmbz - you’re going to love this one.
I can’t take anymore aspirin, lest my blood stop flowing to me heart and brain.
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aVPBaUbYV_qQ
Democratic Congress May Adjourn, Leave Crisis to Fed, Treasury
By Kristin Jensen
Sept. 18 (Bloomberg) — The Democratic-controlled Congress, acknowledging that it isn’t equipped to lead the way to a solution for the financial crisis and can’t agree on a path to follow, is likely to just get out of the way.
Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments — Sept. 26 for the House of Representatives, a week later for the Senate. While they haven’t ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help.
One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment. (Cont’d)
This article has a few more tidits, IMO.
Also worth mentioning, the Prez waited THREE days before making an incomprehensible statement about the market conditions (pharaphrased).
Jeesh - maybe I can join NYC’b for a slap of Jack.
Leigh
One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment.
I’d more than likely want to leave the scene of the crime myself. The D.C. cesspool all claim it was not their ‘fault’ it was the other guys. I seriously doubt Reid has ever had a clue, what to do, about much of anything any way. He is a much bigger help on vacation.
Agree.
They are all leaving the scene of the crime!
Our congress and senate abandoned US -baybee-vacation.
Dang, perhaps I need a belt of Jack.
Yeah, Hank and Ben will do the job whilst our government rest.
Lawd bless the children.
Leigh
RE: That’s what many Democrats are hoping! In the wake of this week’s market turmoil, you see smiles on the faces of three groups of people: short sellers, vulture buyers, and Democratic strategists.
Democratic strategist’s???
Huh?
Looks more like rats bailing from the ship to me…
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aVPBaUbYV_qQ
Kind of funny: The last congressman quoted said the last thing we need is a quick fix rammed through by a congress that isn’t well versed in the problem and solution.
Imagine what would happen if they actually did start to study?
Then we might really get more regulation. They might shift from trying to buffer this crash and instead (at least) stop the next one.
Instability is a Goldbugs best friend, and you ain’t seen nothing yet…
A tiny percentage of Americans own Ne Plus Ultra, compared to players elsewhere in the world, in a world that increasingly wants nothing to do with any Dollar-denominated anything.
Uh, AIG, for one, sure cuold use some of those dollar thingies.
cuold - could
It’s late - word on the street is AIG have/had AU ~
Hmmmm,
Leigh
That’s weird… the news just broke this morning the Fed had to swap $110 billion to ECB in-exchange for Euros due to oversea demands for the dollar and ECB running out of dollars.
Oh not to mention the near zero-yield short-term US Treasury bills investor couldn’t get enough of yesterday.
yes, ECB can’t get enough of US dollars, trying to prop up the EU banks and the stock market. They are spending hundreds of billions per day now and the only (probably also the planned) result is that the euro is plunging just as fast as the US dollar.
Against what?
against gold, which to me is more honest money then these two kinds of toilet paper …
How do you explain all the money that has been flowing into US treasuries? I don’t ask this with any sarcasm, it’s something I find puzzling.
Don’t ask for explanations from him. Gold is a religion. Rational arguments need not apply.
What you’ve all been missing, is this is the VERY FIRST financial meltdown involving my good friend HAL, whom we entrusted the family jewels with, and allowed to co-mingle assets willy-nilly, always in search of some hidden angle that our computers in our craniums couldn’t figure out, but HAL could.
It wont be long before the powers that be blame HAL, because they are very quickly running out of traditional excuses…
Just what do you think you’re doing Dave…….I’m afraid I can’t let you do that Dave……Stop Dave……I’m afraid….Dave
Pussy Galore,
What a pity so many of my countrymen opted for God to save them from the maelstrom about to hit, when they were only off by a single letter, from salvation…
alad, to be honest your anti-religion tirades are quite tiresome, and offensive as well.
Religion is quite simply blind faith, and blind faith is what got us into this financial mess, and they are joined at the hip in our current leadership, the results of which are cascading currently.
the crazy part is you think the USA is the most religious country in the world when it is perhaps one of the least. Maybe Holland is less religious, but I am not even sure about that.
I see you’ve bought into the whole media driven “republican = religious; democrat = atheist” media drivel as well. It’s a shame - I thought you were more open-minded than that.
Not to mention blaming “this administration” for the housing bubble. Merely coincidental timing IMO. Alan Greenspan, the primary person to blame in most people’s view (including your own I would hope, unless you truly are blind), was appointed in 1987, and subsequently re-appointed by both Pubs and Dems. Well, him and his cohorts in the various investment houses and banks, who are for the most part party-agnostic, are to blame.
last comment directed at aladinsane.
I’m a man of reason, not unreasonable is it?
Your blind dumping of religion, especially Christianity, along with lumping of religion with financial messes is about as unreasonable as someone can get.
The righties know nothing about Christianity but are quite familiar with religiosity.
if you are truly reasonable, why never a cross word against islamic terrorists?
I was listening to the radio this morning to a guy called Rob Black. Probably one of the lesser known, but more intelligent economists I actively listen to. Anyhow, he brought up a valid point,which was that the calamity on Wall Street could be traced back to the deregulation of the financial system, which started in earnest with Jimmy Carter.
What I get out of it is that too much regulation is bad. Too little is bad. In the middle is about the only place financials work before they swing too far in one direction. If you regulate too much, then the market freezes up and nobody can get credit. If you go the other direction and deregulate the hell out of the finance system, then you get Joe Shmoe working as a night janitor at $8 an hour buying 700k homes in San Jose.
So for now- deregulation in the mortgage world is over.Time to start again and see how long it lasts before people find ways to weasel their way into another get-rich scheme before everyone cries for deregulation again…
My last word on the subject (it’s something we could go through for pages and pages) -
In my view a large factor - perhaps the single biggest factor - contributing to our current economic problems is that we’ve strayed too far away from our religious, in particular Christian roots. And that does include pseudo-religious people, including many self-professed Christians, and yes I think to some extent GWB, who pay lip service to Christianity, but do not practice it fully in truth.
True Christianity teaches prudence in financial matters, and that greed is a sin - one of the worst. The founders of our country - who would be quite shocked at the level of government meddling in our financial system, and the level of greed of the U.S. people - were for the most part deeply religious.
“If you go the other direction and deregulate the hell out of the finance system, then you get Joe Shmoe working as a night janitor at $8 an hour buying 700k homes in San Jose.”
No, because in a truly deregulated system:
- There would be no tax deduction for mortgage interest, artificially promoting homes as an investment.
- There would not be a central entity (supposedly non-government, even though it has a president-appointed chair) artificially driving interest rates to the floor, thus artificially promoting homes as an investment.
Thus Joe Shmoe would not have bought that 700k house, because he’d know he would actually have to pay for it with his own money.
A more important point, regardless of the deregulation under Carter, is the fact that the current administration had an opportunity to take a stand 4 or 5 years ago when it was evident what was developing, but chose to sit back and do nothing. Quit the partisan BS and call a spade a spade.
I think if you go dig into the bible in between the miracles and other blind faith stuff there are a set of good rules.
One of those rules forbids credit; which would have prevented all this mess.
Personally I feel hope about God. But when I pray the little voice in my head, maybe God maybe my subconsious mind leaking through…. your choice, says go out and work hard and it will be fine.
Anyhow. Go on bashing each other.
“if you are truly reasonable, why never a cross word against islamic terrorists?”
I regret that we didn’t call Saudi Arabia to task, when 15 out of 19 hijackers on 9/11 came from that theocracy.
Is that reasonable enough for you?
Religious principal is every bit as much to do with conscious decision making and spirituality. It is entirely possible to be “spiritual” and yet not be particularly religious. Spirituality is what is now missing from the country. Whats also going on is that the total destruction of the middle class has created a huge financial void.
I for one think religion has no business in politics. I am a religious person by the way, but since there’s lots of other religions here, find it unfair to have one singularly represented.
Anyhow, agreed- conversations like these can go for pages. That’s my 2 cents.
Alad, that is the most reasonable thing I have heard from you lately. Keep it up.
I regret that we didn’t call Saudi Arabia to task, when 15 out of 19 hijackers on 9/11 came from that theocracy.
Is that reasonable enough for you?
Add in that we flew Bin Ladin’s relatives out of the US the day after 9/11 instead of interrogating them tells you exactly who was calling the shots.
now we are getting somewhere…
Aladinsane worships at the altar of Rand.
Adopting someone else’s belief system wholesale is unreasonable. Whether that belief system is called a religion or not, when it becomes a substitute for your own rational judgment, it is dangerous.
I’ve never gotten a straight answer from a social conservative as to why they tend to get in line with the GOP. Most of these people claim to be Christian yet they offer no response when confronted with the fact that social justice, i.e., The Beatitudes/Sermon on the Mount was precisely about social justice. I know scripture well enough to say that the “social conservative” platform has little to do with any known religion.
the crazy part is you think the USA is the most religious country in the world when it is perhaps one of the least.
The US has by far the highest rate of church attendance (as opposed to nominal religious affiliation) of any Western country. Now that’s not what I call religious - nor was it what Jesus called religious - but that’s what most people would call it, particularly the churchgoers.
BTW the highest rate of church attendance in Europe is in Northern Ireland.
Northern Ireland, the country of forever war (until recently). coincidence?
No, Exeter. If you think the Beatitudes and Sermon on the Mount are really just a reiteration of the Rainbow Coalition’s social platform, you are missing out on very much. I love the snarkiness of this blog, and the Attitude exhibited by very many commentators, but snarkiness and Attitude (particularly outside of highly factual and well defined areas such as the housing bubble and decline of the economy) become their own intellectual prisons.
Other than that, can’t we all jes git along?
R. King
“A more important point, regardless of the deregulation under Carter, is the fact that the current administration had an opportunity to take a stand 4 or 5 years ago when it was evident what was developing, but chose to sit back and do nothing. Quit the partisan BS and call a spade a spade.”
Spot-on. How the F**k can these guys act “surprised” when they stood there and looked the other way when critical lending traditions like the SAVED DOWN PAYMENT got thrown out the window YEARS AGO? That ALONE should have been enough to have red-flagged those jerks to take some action to stop this whole mess.
Why did they look the other way? Answer: Their banking, finance/Wall Street buddies (how many of these a**holes are Dems?) were raking in the profits, that’s why they looked the other way. Greed, arrogance and stupidity has resulted in middle-class taxpayers getting the ultimate JT treatment.
DOC
US very religious. I learned it at church.
http://www.ur.umich.edu/0304/Nov24_03/15.shtml
Blind Faith
Had to Cry Today
Because people don’t know any better. This is everyone’s fallback position.
Try it, Leigh, for verily, it is much fun, and as we read in the scriptures:
‘Verily, it is suitable to make stuff up, save it be stupid stuff, or else a recipe…
Verily, I do make up recipe(s)!
And they taste good too!
My grams takes a pinch of this and a swoop of that.
And poof - a good meal.
That’s a home - not a house, verily says me and my grams and all my family and friends.
Weeeeeeeeeeee Oly!
Leigh
‘Gold is a religion. Rational arguments need not apply.’
Oh, religionnnnnnnn. Just a buncha errant silliness, whether it’s a worshipping a shiny heavy metal or obeying the bossy nit-picking stone post-its of a grouchy old guy with a beard. An INVISIBLE old guy with a beard, even.
Now, worshipping trees! THAT makes sense! All the sense in the world. Much prettier than gold, and you can actually see them!
Trees are not nearly as bossy, either. Another big plus.
This religion discussion reminds me of something I wondered about when I was a wee lass. Does God have wings? Angels have wings. Or does He just teleport? I’d have wings, if I was Him. Just for the style of the thing. But they’d have large badges on them, saying ‘I’m God’.
Billions of deserving people have earned their way to heaven, although we have not 1 iota of proof that any were able to get a return on their investment…
You don’t and can’t earn your way to heaven, lad. That’s what you don’t get.
Heaven is a figment of your imagination.
“Billions of deserving people have earned their way to heaven, although we have not 1 iota of proof that any were able to get a return on their investment…”
Do you have any proof - or even evidence - otherwise?
I believe in life before death, not the other way around.
‘I believe in life before death, not the other way around.’
Amen.
(Hahahahaha! Get it? Hahaha! I’m funny today!)
LOL
“I believe in life before death…
For surely, nature is the spiritual bonds that speaks no words, yet her sounds call to the soul like no other.
Leigh
‘For surely, nature is the spiritual bonds that speaks no words, yet her sounds call to the soul like no other.’
Testify, sistah Leigh.
I think I made that up - a Leigh original if you will.
But, me reads so many tomes it may be subconsciously lifted?
Leigh
I’ve always said if Harry Houdini can’t make it back, none of us will.
Mike
‘I think I made that up - a Leigh original if you will.
But, me reads so many tomes it may be subconsciously lifted?’
Cheater! Actually, I like it even more now.
I often quote the Bible, for instance. Thank you, crazy zealot parents, for making me memorize the Bible because it often comes in handy, especially when arguing with fundamentalist loonies who don’t have as good a memory. Boy, does THAT make them super mad, and an angry opponent is a losing opponent, which makes it even funner as well as more winningy.
But I also very much enjoy just making verses up and quoting it with my solemn and pious face on. I usually say, ‘That’s Cosmopolitans II, chapter IV, verse i’ with the air of one talking to a lamentably iggerant person who hasn’t studied their scripture properly.
Try it, Leigh, for verily, it is much fun, and as we read in the scriptures:
‘Verily, it is suitable to make stuff up, save it be stupid stuff, or else a recipe, but lo, otherwise, if it be comical and cause perturbations to the stiff-necked and pompous, then such an act is acceptable before the Heavens.’
(Cosmopolitans II, chapter IV, verse i.)
Look. Religion is a two edged sword that cuts both ways. No one is ever going to “win” the arguement.
For me, all I must do is take a breath, look to the night sky (or trees OlyGal), and and peek at my children sleeping at night… That’s all the “proof” I need that there is a God. Without one there would be a whole lot of, well, nothing. This computer before me would not exist, you certainly could not be reading this.
People are driven to extremes these days. Science and religion actually work well together if both would bend a bit and let truth guide them.
(Boy I hope this post gets me to heaven.) HA!
“When his aunt Louisa asked him in his last weeks if he had made his peace with God, Thoreau responded quite simply: “I did not know we had ever quarreled.”
I’m from a family of 8…I was the second youngest…I built my own tree-house…it was quiet, I miss it. ;-(
Hwy, Honey,
Do your big old hippieheart a favor.
http://www.treehouseworkshop.com/
If you can figure out a way to get a federal bailout on the “mortgage,” let me know?
Ah… the beauty of flawed logic. That one is a classic.
ARGUMENT FROM BEAUTY, a.k.a. DESIGN/TELEOLOGICAL ARGUMENT (II)
(1) Isn’t that baby/sunset/flower/tree beautiful?
(2) Only God could have made them so beautiful.
(3) Therefore, God exists.
Can’t say so much for babies (forgive me jeebus).
Stars, trees, crickets…
Ah, fishing pole.
Ma says heaven is on earth, oh, and she cooks good too!
Don’t know much about gawd, but sure do love - well - much of It!
FFPKK: Don’t ask for explanations from him. Gold is a religion. Rational arguments need not apply.
That’s not my particular denomination, but as religions go, gold isn’t such a bad one. One thing’s for sure - there’s no tithing involved (unless you consider capital losses a form of tithing).
More than 50 billion has been pulled out of Russia alone. Im sure that some of that has been converted to dollars. Still too much of this week left for bad stuff to happen; Im sure everyone is praying for Friday to come, or are they. I believe the Russian markets remain basically closed for business of any volume.
I wonder where our friend P’cola Popper is. If you’re out there P’cola we’d love a report. Especially if you’re still outside Moscow.
Wow CarrieAnn,
Now that you bring up P’cola I do miss P’cola postings.
what i was wondering is the $ figure in yesterdays stampede out of the US markets yesterday? it has to be in the billions as well?
As people move money from “regular” money market funds, like the one that just “broke the buck,” into “treasury only” money market funds, I assume the treasury only mm funds must buy more treasuries.
Yesterday I believe the yield on the 3 month treasury was .02%. It is the ultimate flight to safety/quality and that gave Gold a big boost and it is likely to continue - though I haven’t bought my sleeve of 10 Krugerrands yet. Even 1 NOW account fund broke the buck and is in some jeopardy - folks are scared. The fed funds target rate is/was 2.0% but European Banks were paying close to 6.0% to get dollars so I think this overnight move is purely a liquidity move to close that spread. Banks are hording their $$$.
Banks are hording $$$ and households are holding gold. Now is a terrible time to buy gold, but might not be a bad time to sell, as everyone wants to buy some now, and even financial planners are advising their clients to do so (remember: “Buy when everyone is selling, sell when everyone is buying”).
Americans love the forbidden fruit, be it Coors beer in the 1970’s (it wasn’t allowed to be sold east of the Rockies, making it the cat’s meow as a result), or Cuban Cigars in the 1990’s-2000’s.
Physical inventories of precious metal are dwindling all over the world, and the big wholesale players in the bullion biz need to keep bank accounts in the hundreds of millions of Dollars, in a world where stability is shrinking daily.
The idea of doing traditional buying and selling for the dozen or so Bullion Brahmins will soon be of no importance, and they’ll just pull in their horns and sit back by the fire, like i’m doing.
But the difference is that gold is a hedge against the dollar itself. That’s no true of other things like stocks, real estate, etc. for which the mantra “buy when everyone else is selling…” applies.
If we go into hyper-inflation - the only thing - the only thing that will protect you is PMs, in particular gold, because it’s the only currency which is universally-accepted the world over. Other non-U.S. currencies may help, but how do you know which one to pick that may not also go into hyper-inflation?
The (very true) statement was made in yesterday’s bits bucket - that gold is not an investment. It is insurance. The cliche “Buy when everyone else is selling… etc.” applies to investments, not insurance.
When every other local commercial is one from some skanky jeweler in town “Wanting to buy your gold- even if its damaged!” then that to me makes alarm bells go off in my head.
Secondly, I brought this up yesterday, but I think its worth mentioning again. Back in the old days before the great depression, families generally kept raw diamonds as emergency currency for much the same reason that people today buy gold… for the possible worst case scenario that the dollar becomes worthless. The only problem with that was that since everyone had a few diamonds laying around,when the depression hit, the market was instantly flooded with diamonds, which ultimately lost most of their value, and subsequently became semi-precious versus precious.
It took a very clever manipulation of the supply as well as an ingenious marketing campaign from Debeers before diamonds gained their value back long after the depression was over.
Just something to think about…
Diamonds aren’t fungible and value is based upon expert analysis, a bad comparison compared to #79.
The funny thing is, with the way things are going, RE may become the best place to put your money (I say ducking for cover).
If gold is only insurance, and not an investment, what happens when someone buys gold at $1000 per ounce, and it drops to $500? Do you just consider that the premium paid on the policy? And it wasn’t just one ounce they purchased…
“Diamonds aren’t fungible and value is based upon expert analysis, a bad comparison compared to #79.”
What he said.
(We agree on that
)
To expand - you can’t walk up to Bob on the street ask for change for your 1 ct diamond, since Bob won’t have much of a clue how much your diamond is worth. You can however ask for change for a double eagle and get it no problem*.
*Well at least you could back in the days of the gold standard, and may again at some point soon. It’s not that hard today - it’s easy to find the spot price of gold on the web - no so much for diamonds.
Either way,
If you’re one of those people who goes: ” Oh no!, the market is crashing! I’m gonna’ take out all my money and buy gold!” then no offense- you’re a fool. There’s a lot of people panicking right now. Panicking is a self-fulfilling prophecy. If everyone panics, we land in a depression, and at that point gold isn’t going to be worth that much.
Back in the old days before the great depression, families generally kept raw diamonds as emergency currency for much the same reason that people today buy gold
What? Since when? Do you have a source?
I read the “little house on the prairie” books and Laura never mentioned a secret stash of diamonds that Pa kept for emergencies.
The only instance that comes to mind is Czar Nicholas II’s family having diamonds sewn into their clothes in 1917, so many in fact that it was hard to kill them, but in the end bullets prevailed.
“Either way,
If you’re one of those people who goes: ” Oh no!, the market is crashing! I’m gonna’ take out all my money and buy gold!” then no offense- you’re a fool. There’s a lot of people panicking right now. Panicking is a self-fulfilling prophecy. If everyone panics, we land in a depression, and at that point gold isn’t going to be worth that much.”
Lemme guess: trader, broker, gubment aparatchik, pundit?
I hear that a number of folks stayed behind in the WTCs after the planes hit figuring that “everything’s going to be fine, there’s no need to panic”. Sucks to be them.
Hopefully, most of us saw this coming and have prepared. The panicky rabble are just arriving late to the party. But a panicky public can’t *create* a depression any more than it can a tsunami. It does makes for good finger-pointing later, though.
The “there’s no need to panic” crowd are the dogmatic tools who will go down with the ship before admitting their error.
This is gonna be huge and the fat lady hasn’t even put on her makeup yet.
No point in trying to throw a life ring Gadfly. There’s quite a few posters here who just want to bash PM’s for some reason.
As said so many times here..Go buy a couple thousand worth.(If you can find it that is ) It’s called diversification.. Word to the wise…I don’t think any of the PM believers are telling anyone to cash out all their dollars ,and put it all in PM’s. Having all Fed paper is equally foolish.
Frank,
This occured during the first Great Depression…everyone fled to T-Bonds/Bills. The yield in the middle of the GP1 was something like 0.23% (Thats not a typo).
Remember, the Feds when they issue T-B’s they are saying they will pay back with interest not matter what.
On the dark side of that promise is this includes sending Treasury Dept agents back by military personnel going door to door down mainstreet to confiscate whatever wealth they can find.
Why bother with that? What if the wealth they find consists of T-bills? They may as well just default.
LVG,
“Why bother with that? What if the wealth they find consists of T-bills? They may as well just default”.
I understand your point, I was just aiming more for the confiscation of any gold or silver held by Main Street…real wealth.
That’s true - the last time the US was in a Depression and a Democrat was in the White House they confiscated real wealth from people by force - stole the gold right out of their hands.
Now with Biden equating high taxes with patriotism, you have to wonder at what point a new Democrat administration would send out the wealth confiscation squads again - to “enforce patriotic attitudes”.
Scary!
I bough a bunch of T-bills a few weeks ago. A lot of my money is tied up in a 401K account. It’s not like I can pull it out or anything. What am I supposed to do with my hard earned $$? Buy financial stocks, commodities, WTF?
T-bills was the only “safe” play available. I am sure millions of other 401k/IRA investors are in the same situation.
I think that was a good move. At least you can sleep at night and ride this out. Obviously many others agreed with you and did the same. My wife and I were talking last night as she is very worried about the current situation and our savings at a local bank. Eventually it came down to the fact that if our local bank failed (they have zero sub-prime exposure and are not publically traded) AND the Gov’t guarantee was not available for any reason, that in that climate I would rather have guns and ammo than $$$ or Gold.
My advice would be to spread things around in traditionally-safe investments. Some municipal bonds (or bond funds), some low-growth/low-risk mutual funds, and a good chunk in the guaranteed funds. While you may end up losing 10-20% or so during this downturn, you’re still better off than not contributing - assuming you’re getting some company match, since 100% match minus 20% loss is still 60% gain (if you do the math right). I wouldn’t contribute anything at all beyond what the company matches (I never have, and never will), since then it just becomes a regular investment but with the downside of being very inflexible. It’s tax-deferred sure, but IMO that’s a weak benefit compared with the inflexibility that goes with it.
Totally agree Packman. The truth is that less sexy investments often perform better over the long run than trying to hide/protect/move/short the market continually. Unless you have the time to move your money every minute of the day, the best answer for most people is precisely what you said. Totally boring stuff like. Broad-based investing in mutual funds, bonds, etc etc.
I’ve never gotten a company match. Correction, $50 in 10 years.
“How do you explain all the money that has been flowing into US treasuries?”
Ultra conservative short-term lenders don’t trust their borrowers (Lehman, AIG, et al) anymore. They are afraid they could lose 30, 40, 50, 60 pct or more of their clients’ money. So, until tomorrow or the day after, they buy short term treasuries. It’s the only way to preserve capital and avoid a run on their funds.
Alad - the omnious October?
With all the rumors flying about mergers, financials, pharma, techs…
Peeking about for opportunies!
Leigh
“…the omnious October?”
Just to let everyone know…Linus says that there is still plenty of room in the pumpkin patch…however, you may want to bring your own popcorn to watch the the rising of the “Great Pumpkin”
you may want to bring your own popcorn to watch the the rising of the “Great Pumpkin”
Nothing like a good return to traditional values!
Got Popcorn?
Neil
Maybe next year’s October?
This is unraveling rather quickly Combo.
My eyes are open.
Leigh
Seems to always be Sept/Oct when these things happen: 1929, 1987, 2001. Fridays are usually the worst.
The hunt for red October…
Leigh:
Holloween cometh early…
October will see the steepest part of the decline curve (nearly vertical!).
Since the Treasury can, for the moment, borrow at practically zero percent interest, shouldn’t they issue more bonds than they really need? Let them play bank. Accept deposits (sell bonds) at low interest and lend the money at higher interest.
Server eating post - second attempt.
http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm
Release Date: September 18, 2008
For release at 3:00 a.m. EDT
Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures.
Federal Reserve Actions
The Federal Open Market Committee has authorized a $180 billion expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks. (Cont’t)
$$$ everwhere!
Leigh
some news stories in EU say that the ECB is spending over 400 billion today to prop up the markets (part of that is probably shortterm loans). It stopped the big stockmarket slide for a day (mostly), but the most obvious effect is another surge in gold - or in reality another plunge in the value of dollar and euro currency.
Since the new fiscal year starts on October first, I would assume that the banks need to declare their level three assets on their balance sheets at market value. Wonder what that will be? Remember a quote? When fascism comes it will be wrapped in a flag carrying a bible? These current “leaders” are couched in the dictums of Strauss, and Keynes, see how well that worked out? This disaster hasn’t even begun to be resolved, there is still something like 500 trillion in derivatives to be resolved and that is going to leave a mark.
Rat’s butt - flag and bible (bubble).
I vote pixie dust!
Now see here, ya can burn a flag or paper for a sec or two, but pixie dust?
Well she just warms the insides’
Hurruph!
Leigh
In place by Oct 3 ought oh eight.
I guess we might as well get used to India designing the next F-22 fighter…with Pakistan/Russia/Tibet & China looming just to the north…they’ll need to come up with something to protect all that gold they have been buying lately. I don’t think they can count on Bangledesh /Nepal or Sri lanka for much protection.
Indians have been accumulating gold since time immemorial, and since time immemorial foreign attackers/colonizers have been plundering the same gold. I am surprised they (we) continue to place more faith in gold than in guns.
Why not have both? And lots of food stuffs too!
Heat to holster. Looking about.
Leigh
Trading on the Russian stock market remained suspended for a third day after the worst plunge in share prices since the 1998 financial crisis.
“It’s a complete crisis of confidence,” said James Fenkner of Red Star Asset Management, a fund that invests in Russia.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/18/cnrussia118.xml
Saw that the Treasury is going to start selling Fed bonds:
http://www.washingtontimes.com/news/2008/sep/17/treasury-announces-debt-auctions-fed/
Is this just another way for the Fed to sell bonds or is it a further attempt to legitimize bond sales? I’m confused by this action.
It means the “Reserve” in “Federal Reserve” is a farce.
Memo from John Mack (CEO of Morgan Stanley) to his employees:
BWAHAHAHHAHAHHAHAHHAHAHHAHAHHAHHHHHHHHHHHHHHHHHHH!!!
Seeking to avoid the kind of fate that led Lehman and Bear Stearns to collapse, John J. Mack, Morgan Stanley’s chief executive, made an unsuccessful effort on Tuesday evening to persuade Citigroup’s chief executive, Vikram S. Pandit, to enter into a combination, according to people briefed on the talks.
“We need a merger partner or we’re not going to make it,” Mr. Mack told Mr. Pandit, according to two people briefed on the talks.
Leigh
http://www.nytimes.com/2008/09/18/business/18wall.html?_r=1&oref=slogin
Boy, these banker men sure do like talking to the government at times like these. Could these even be the same characters who drag out one-liners from the Gipper every four years?
“…You should know that the Management Committee and I are taking every step possible to stop this irresponsible action in the market.”
Prognosis:
Wall Street has “diarrhea”
Actions & Solutions:
Dr. Bernanke will produce more “paper”
Nurse Paulson will be in charge of “triage”
Sir Greenspent will remain on call
Chief Surgon Shrub the “Decider” will provide “bedside manners”
“….someone get Dr. McSame on the line…we need someone with “experience”…
Where the hel! Is nurse McDame…off moose hunting again? ”
What’s the difference between Rush Limpbaughs & Ann Coulter?
Lipstick! (fyi…she…doesn’t wear any)
Seeking to avoid the kind of fate that led Lehman and Bear Stearns to collapse, John J. Mack, Morgan Stanley’s chief executive, made an unsuccessful effort on Tuesday evening to persuade Citigroup’s chief executive, Vikram S. Pandit, to enter into a combination, according to people briefed on the talks.
“We need a merger partner or we’re not going to make it,” Mr. Mack told Mr. Pandit, according to two people briefed on the talks.
NYTimes Snip
Leigh
Leigh
Why would Citi merge when they can pick up the MS assets on the cheap later?
After all, Citi will get bailed but not MS.
Vikram Pandit is no fool. He and his crew worked for 20+ years at an elite institution called Morgan Stanley.
Irony. It seems to rain down from the skies these days.
NYTimes
Editors’ Note
An earlier version of this article cited two sources who were said to have been briefed on a conversation in which John J. Mack, chief executive of Morgan Stanley, had told Vikrim S. Pandit, Citigroup’s chief executive, that “we need a merger partner or we’re not going to make it.” On Thursday, Morgan Stanley vigorously denied that Mr. Mack had made the comment, as did Citigroup, which had declined to comment on Wednesday.
(cont’d)
Ruh Roh
Leigh
There used to be 5 not-so-little indians and now we are down to just 1.
Yeah, Hank’s crew. Sigh.
When I read Mack had supposedly said “or we are not going to make it”, I had my suspicion a CEO of a Wall St. bank would be saying something like that KNOWING that all shorts are gunning for such banks at this moment. I mean do you really have to be told this will only drive more selling of your stock?
This would be a good example of “oh I heard that someone heard from someone in the know that Mack said my god they weren’t gonna make it”.
Can it be that far fetched some short-seller guy was spoon feeding this info to NY Times?
See “correction” above.
I’m not in the habit of posting rumors.
Leigh
The President is going to speak at 10:15 am. Far from calming things, I think this will merely alert Joe Sixpack how bad the crisis is.
This is even worse than I believed it will be, and there is so much more to come.
The only good news is that this is happening during my children’s formative teenage years. I remember a line from “All in the Family” in which dingbat Edith, responding to how she was coping with the 1970s economy, said she was “lucky to have grown up during the Great Depression.” In that sense, I was lucky to grow up in the 1970s, and my kids will be lucky to have grown up in the aftermath of the Bush-era national orgy.
My prediction, the president is going to scare the daylights out of people.
He’s going to say:
- the economy is strong
- the banking system is safe
- Americans should go out and spend
- there is very little risk to the treasury/govt with the bailouts
- Hank P and Ben B are doing a bang up job and have complete control of the situation
’ssshrubery said much ado about nothing and CNN had the stock ticker go from 134 points down to 109 points, following his every word.
Luckily the teleprompter ran out of puppet string or the damage could have been much worse…
http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm
Release Date: September 18, 2008
For release at 3:00 a.m. EDT
Today, the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are announcing coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures. (Cont’d)
Mega $$ swaping. Didn’t want to waste the bandwidth, just pop open the link.
Leigh
When I think of the 70’s…I think of Nixon & helicopters on the Embassy rooftops of Saigon…is Vietnam still a communist country? I wonder what those North commie gooks think of McSame becoming the “Decider”?
James Taylor singing: “Let it fall down, let it fall down…let it all fall down.”
This would be the perfect time for Bush to consider a long vacation in Crawford. This is similar to his Katrina response, which was late and lame. I can see another “Brownie, you’re doing a heck of a job” moment coming.
The only good thing is that there is no time for Congress to set up RTC Redux.
By the time they get back, this goose is gonna be cleaned, cooked, eaten and the carcass disposed.
“Senate Banking Committee Chairman Christopher Dodd said the Fed also has the power to buy and dispose of bad debt stemming from the subprime-mortgage crisis.
“The Fed has the authority to move in this area,” Dodd told reporters in Washington. ”
Sounds like Dodd doesn’t think Congress needs to authorize anything new. From bloomberg.com today.
Know how to do long division?
Know how many zeroes (*) there are in the total worth of the housing market?
I suggest you do a barebones background check whether this is even remotely possible.
(*) Not referring to the zeroes in Congress.
The point of my post is that Sen. Dodd seems to think the Fed already has the power to do the impossible & that Congress need not be consulted about whether or not to try.
I never thought i’d so enjoy the spectacle of a high wire act @ the circus…
S.P.Q.A.
a CNBC reporter says the government may be planning to solve the current financial turmoil using a method similar to the 1980s savings and loan crisis.
CNBC’s Gasparino reports his Wall Street sources say that Treasury Secretary Paulson is talking about a Resolution Trust Corporation-type solution to the current crisis. The RTC was created during the savings and loan crisis of the 80s.
it looks like they dont need congress to go ahead with this game plan.
“This is even worse than I believed it will be.”
What do you mean?
How about,
“This is even worse than I believed it would be.”
Ie. the time-concentrated damage to the financial system of the gradual unwinding of the housing and consumer debt bubbles.
Let me guess what he said (without having read a transcript):
“The economy is fundamentally strong”.
Between Bush and McCain both parroting this line almost daily, I sometimes forget which is which.
How much more money can the Fed and other central banks come up with?? Is there an endless supply just tacked on to deficits? Whatever they did it must have worked. When I went to bed the Hong Kong market was down 7% and this morning it close about even. All the other Asian markets seemed to behave about the same way.
“The Federal Reserve, working with central banks in Europe, Canada and Asia, pumped as much as $180 billion into money markets on Thursday to combat a seizing up of lending between banks that is intensifying global financial crisis.”
http://news.yahoo.com/s/ap/20080918/ap_on_bi_ge/financial_meltdown
Wow, a fella takes a little trip for a couple of weeks…and this is what happens?!?!?!
We heard about the GSEs upon our arrival in Japan, and I promptly promised Marge not to pick up another newspaper for the rest of the trip. No way did I think so much more would follow so quickly. The flood of news I read last night was truly amazing.
The signs of lingering deflation are still evident in Japan. As with my first trip we saw more, ate more, and bought more with appreciably less money than planned. We made it to a lot of small towns - which like their counterparts in the U.S. - are struggling. Local real estate offices have plenty of dwellings to rent and for sale. Construction in the capital appears somewhat healthy - I counted 21 active cranes outside our hotel window alone and on our walks their was plenty of demolition going on to larger 60s era mid rises. In the outer areas, however, the toll of globalization is just as evident as what I witnessed while mapping the Upper Midwest.
One prefecture - in the Kyoto area - is even offering direct financial incentives to anyone willing to take over maintenance and live in abandoned houses. People have up and left these houses for work elsewhere and they’re piling up and causing problems as they decay. Nice craftmanship too - not crapshacks at all - nice wood construction.
On the bright side, I see my commodity shorts hit my targets whilst I was away. With headlines like this, perhaps it might be a good idea to get lost in the countryside again for a few more weeks?
Watch out for those those old, nice wood houses in Japan. Think bare wires with glass insulators inside the walls. Think lousy insulation. Think bug infested tatami (there’s a reason it gets changed so often). Now recall the massive fires of the Hanshin earthquake (gas leaks and wooden buildings).
The Japanese like new structures and do not build for 100 years.
This will be our opinion of the McMansion in a few years …. US building codes will prevent some of the above. But, shoddy construction and other shortcuts are certain to bring about equivalent faults.
That said, the houses are nice to look at and charming for a few nights. And, getting lost in the Japanese countryside is fun …. go to the Japan Sea side for a look at a really different Japan.
which is a shame cause the older ones have character unlike their poor copies of western style housing
We did get to ride the line to Kinosaki-Onsen from Kyoto, but my grand plans to ride the coast as far as Niigata fell through and will have to wait until the next trip. The west coast lines are where they operate the more interesting (read: older) rolling stock so it’s on my priority list for sure. The trouble is I’d also like to make it to Hokkaido too - there’s just never seems to be enough time.
edge:
I always appreciate a bright eyes on the ground description of a given place, and you’ve painted an interesting picture, thanks~
Thanks, alad. The fates of small towns across the globe is startling and sobering. Whether it’s Canada trying to entice Ukranians to re-settle the prairie provinces or Japan giving away rural houses - the signs are there.
Granted, the U.S. doesn’t have (yet) to deal with declining national population as does Japan - but still many of our small towns are suffering the same fate. What immigration that does come goes straight to the large metro areas.
It’s all very unsettling - almost as if the foundation has been eroded away and balance needs to be restored. One thing is for certain though - turning a few small towns into retreats for the urban elite is not going to restore that balance.
Hey, welcome back.
The signs of lingering deflation are still evident in Japan.
That’s a sobering thought, but it corroborates what I’ve heard from people with close friends and family in Japan.
It’s not all gloomy forecasts for Japan, though. Japanese households have been saving and chipping away at their consumer debt, while our fellow citizens here have not — the consumer debt to GDP ratio in Japan is about 63%; that ratio is around 100% in the US and Britain. Germany, not surprisingly, is the other G7 country where consumer debt has declined.
Thanks, ET. I think during the entire trip I only saw about three non-cash transactions take place and they all occurred exactly where one would expect.
Those VISA commercials, in which cash paying customers bring everything to a comical halt, don’t apply in Japan. Even in the busiest train station food stalls everyone paid with cash and things ran quite smoothly indeed.
Thanks for the post and welcome back.
Leigh
Thanks, Leigh! I’d rather spend my dough/time traveling than paying some big bad banker man blood money for an overpriced house any ol’ day!
Bush to speak at 10:15. Just when you thought it couldn’t get any worse…
http://www.forbes.com/markets/emergingmarkets/2008/09/17/treasuries-yields-panic-markets-bonds-cz_do_0917markets29.html
“For a brief moment on Wednesday, bond investors paid the U.S. Treasury to hold their money. The yield on short-term Treasury bills dipped below zero Wednesday afternoon, and was a mere 1.4 basis points, or 0.014%, in late New York trading.”
This headline & the implication drawn are misleading. The negative interest rates are based on third-party transfers of Treasury paper. When a party really, really has to have Treasury paper, they will pay any price, even over & above the face value of the paper, this looks like a negative interest rate.
I am not aware that the Treasury has ever sold paper with a negative interest rate — near zero, but not negative on its face.
I mentioned here a while back that Charlotte was going to get creamed as it was nothing but BofA, Wachovia, etc but the press said that Charlotte was one of the cities that would do quite well thank you very much. Screw the press as I think I was right again (courtesy of what I’ve learned here):
http://www.bloomberg.com/apps/news?pid=20601109&sid=ayBYai7vv7uc&refer=home
Let’s try this again:
Saw that the Treasury is going to start selling Fed bonds:
http://www.washingtontimes.com/news/2008/sep/17/treasury-announces-debt-auctions-fed/
Is this just another way for the Fed to sell bonds or is it a further attempt to legitimize bond sales? I’m confused by this action.
Well for some reason I turned on the Today show this morning to see how the rest of the proles were reacting to the situation, and low and behold I see good ol’ Babs Corcoran. Lol. She tried to pull a Cramer but failed. Looked like she was gonna cry whilst wailing, “The government needs to hand out mortgages at 4 7/8% and that will solve all the problems.” And Lauer just stared at her and replied, “That’s not gonna happen.” I have new found respect for that guy.
Babs and monkeyman Jimbo, a perfect crybaby match.
You respect someone for stating the obvious?
Wow, talk about low standards.
LOL. You should see how I act after a few beers! Where did I put those goggles….
Well, at least that ends (hopefully) with a “happy” outcome.
LOL
I respect some one for stating the obvious. Often, the obvious is forgotten. Often, the obvious implies that some poor slob is going to have to do a whole bunch of difficult work to fix things. Finally, the obvious is often only obvious when some one has carefully analyzed the situation and presented the data in a meaningful way. This is not so easy.
I am tired of people trying to avoid the obvious.
That’s a step up from the status quo at least.
How many politicos and money men have been telling us the truth over the last 5-6 years? I find it both memorable and noteworthy.
You can bet that Greenspin will be spending so much time rewriting history that he’ll have a stroke or something.
Hopefully he will leave this world with damage control unfinished. Plus if he does have a stroke he would be the perfect scapegoat for everyone else.
I bet the only reason no one is calling him on this mess is he knows enough to hurt alot of people, so they are force to protect eachother…for now
Cue quote person (Alad) with:
[And I inaccurately paraphrase]: During times of deceit, it is a[n] heroic act to state the truth. [Attribution?]
I’ll go you one better than Babs…
Clueless Kudlow on MSNBC said that subprime lending to po’ folks got us into this mess and Morning Cup O’ Liberal Joe accused him of trying to tag the low-income earners with the blame and started over-talking him.
Then Kuddie says it was “liberals’ guilt” that encouraged them to lend to the proles. I’ll give him a few hundred basis points for that one, but still, man, where you been for the last five years?
Then they start playing the music really loud, signaling to Kuddie that it’s time to skedaddle but the guy ignores it and keeps railing onward. Finally, Joe’s like, “It’s time to go, it’s time to go,” and the blonde bimbo gets up and walks over to Kudlow and tries to get him to stand up and leave.
I half-expected Kudlow to say, “Aw, come on! Just one more drink!”
Liberals are every idiot’s favorite bogeymen.
I immediately dismiss any political argument that includes the term “liberals”.
Name-calling is lazy-thinking, and I don’t like to waste my time dealing with idiots.
The same corollary goes for “repuklicans”, “McSame”, “Obamanation”, etc.
Thank you.
Lib-er-al (adj)
“Free from bigotry. Open-minded. Not limited to…authoritarian attitudes, views, or dogma….”
-American Heritage Dictionary. Fourth Edition.
One thing I have learned on the internets is that liberals and unions are to blame for everything.
One thing I have learned is Bush is to blame for everything.
I’m thoroughly enjoying my new button which reads: “I think, therefore I’m liberal”
A threesome meltdown of Babs, Crudlow, Monkeyman would be a fascinating trainwreck to behold. A cryer, a whiner, and a yeller all bellowing at once. I could probably sell the recording as an avant garde audio experience.
I give Krudlow a little slack considering all those 8-balls he’s gone through in the past. But can someone explain to me how Dennis Kneale ever got on television? I’ve seen chipmunks with more brain power than this guy! There should be a disclaimer that CNBC is for entertainment purposes only.
I like the way Battlestar Gattapaglia keeps telling Kuddlicious that he’s ridiculously off-base with his shotgun analyses. “You’re wrong, Larry,” is becoming his favorite catchphrase.
If Kud’s supposed to be some sort of subversive instigator in these conversations he’s doing a horrible job. In order to do something like that correctly you actually have to know what you’re talking about.
And who’s telling Maria Bartiromo that people care what she has to say? The undersexed boiler room traders just want her to wear low-cut dresses and walk around in high heels on the trading floor.
“IS YOUR MONEY SAFE?” Not in the hands of these baloney-heads.
Avant garde audio experience!
LOL
Poor Pierre Schaeffer. So it has come to this?
HA! Thanks for the education. It’s always nice to know that a comment can be semi-insulting unintentionally.
“A cryer, a whiner, and a yeller all bellowing at once.”
Cramas$ = Old “Yeller”..gets killed by…a bear. Sad, very sad.
I know…bears jokes are not funny…
How are you Allena?
We will be at the bottom after Cramer goes off the air.
S&P 815 — about the low after the tech crash, 2002-ish.
Cramer, the ultimate contrary indicator.
I like Kudlow. He’s extremely transparent. Last night he was pleading for emergency rate cuts. The night before he was praising the fed for not cutting rates. While the markets fell 20+ pct, he encouraged viewers to stay long. Last night he asked viewers, “Is your money safe?”
“That’s not gonna happen.”
Well, Duh. We should give mortgages at -4.875%, then we can all leverage up and buy even more houses.
Really, my plan is the only one that can stop this strrange decline in house prices that is threatening the free worlds debt binge.
Every special interest group is cheer-leading for the remedy that
pads their pockets the most . That is where the powers just have to turn off all the chatter and do what is best for the Country without regard to crying of the losers ,who were gamblers fr most part .
It has always been a issue of how the losses were going to be taken
and any absurd attempt to prop up housing prices after a gambling mania is just a waste ,but the REIC would love that .
I think in part these bailouts stalled the Companies selling off assets
or merging and taking their medicine thinking they would be bailed out . The de-leveraging could of been done in a more orderly fashion instead of this panic stuff had bail-outs not been on the option table .
The thing that got to me all this time (for at least 2 years),was
the market has been functioning like the lack of knowledge about
financial firms exposure was not relevant. Oh well .
Leading indicators fall as building permits drop
By ELLEN SIMON – 15 minutes ago
NEW YORK (AP) — A private business group’s measure of the economy’s health dropped for the second consecutive month in August as building permits dropped and unemployment claims rose.
I happened to catch a bit of Charlie Rose’s interview with Barney Frank last night. I was sort of watching and listening out of the corner of my eye and ear, but even the little bits I caught totally floored me. First of all, let me say I have no liking for Barney Frank. In my book, he’s your typical bloated politician and not very bright. But even he was sort of dumbfounded by what happened with AIG and at a loss for words. The following points stood out:
1) Paulson and Bernanke came to him and the other Congresscritters involved and just told them what they were going to do and how. Not so much as a “By your leave” or any form of discussion. Just, “here’s what’s going down”. (My conclusion: forget Congress now and forever, unless something is done. They’ve been de-balled and are being bypassed. It’s their own fault, but who needs a rubber stamp politburo in the US. They cost too much.) Frank was flabbergasted, but hey, he and his equally useless associates created this climate, instead of asserting themselves on behalf of the people.
2) Frank asked Bernanke and Paulson WHY they were doing the AIG deal. The answer was that they were getting calls from European finance ministers to do something. Frank wondered aloud WHY the US Central Bank had to come up with the money and the European Central Bankers weren’t kicking in a dime.
3) Finally, Frank asks Bernanke (who, by the way, Frank kept asserting to Charlie Rose was an honorable and smart man. Methinks Frank was protesting too much.) if he has 85 billion to do the deal. Bernanke laughs and says “I’ve got 800 billion”. WTF?
There you have it. Expect this to go on until the 800 billion is spent, or things settle out, whichever comes first. Weimar Republic, here we come!
Expect this to go on until the 800 billion is spent
Or further. Crunch all you want, we’ll make more.
800 billion? the ECB can spend that before the weekend …
Paulson and Bernanke came to him and the other Congresscritters involved and just told them what they were going to do and how.
When it gets to the point where a decision needs to be made (whether you agree with the particular decisions or not), it’s best not to pretend A.) that G-Dub can offer any insight or value at all, and B.) that Congress isn’t a slow-moving behemoth largely populated by ninnies. As you note, Congress had many chances over the past couple of years to legislate in the financial arena, and they failed.
You make a good point. But I think AIG should have been let collapse. I don’t buy it would have been financial armageddon.
I’d beg to differ (in a nice way). I’d be willing to bet if AIG went t.u. that their would be zero insuance for crudit default swipes. Any bank exposed would have to attend its own funeral. It may still happen, I’m guessing it will, but at least it make take a couple of months (Feb 2009?- after x-mas is a failure) instead of a couple of weeks.
Since Congress has been overrun by lobbyists, who often write the bills that affect the lobbyist’s pet industry, our gov’t has basically become a sideshow. Since so much of our Constitution has been trashed for the past 8 years, why can’t we just make Lobbyists illegal, define them as “enemy combantants”? In the late 60s there were something like 5,000 lobbyists, (the name was coined during the Grant administration, since good ‘ol US liked to get tanked in the lobby of his hotel as the minions came through asking for favors), now there’s something like 80,000 lobbyists. Let’s just throw the bums out and be done with them! If Paulsen and Bernanke can override congressional oversight for “the good of the country” then certainly eliminating the Lobbyist sinecure would be a good thing.
And just where would Congressmen get the 10’s of millions they want to crush any opposition during election time?
Lawmakers Left On the Sidelines …
The frenetic pace of the financial crisis has forced the Treasury Department and Federal Reserve to make rapid-fire decisions in recent days, leaving Capitol Hill lawmakers effectively impotent — and frustrated.
Lawmakers on both sides of the aisle expressed concern yesterday that they have had no control over when and how federal money has been used to curb the panic on Wall Street.
OK, so why don’t they all come out today and say this is an illegal use of taxpayer funds and look to undo the treasury move and take a different action.
If its illegal then why aren’t they screaming at Bush today?
Its because they don’t know what they are doing and they are giving aproval with out getting themselves commited.
I don’t know if this is a good political move or not. Seems like everyone tries this. Deniability.
One of Barney Frank’s other points was that, some years ago, Congress tried to get Greenspan to regulate the issuance and packaging of mortgages as investments. Greenspan refused, saying it was impossible. Frank pointed out that, this spring, Bernanke imposed exactly the regulations Congress proposed years ago. He argued that if Greenspan had been able to see and willing to regulate the problem, we would not be in the mess we are now.
Oh, also, anyone catch Zandi on C-Span this AM? What a joke.
I’ve got >100K at Well’s Fargo. Should I be concerned?
Well’s = Wells
Here’s the deal…
It doesn’t matter how solid any bank looks, they are all going to be babies thrown out with the bathwater, when push meets shove and we get a case of bad bank-run-dire-rrhea.
Hey that means Wamu is as good as Wells Fargo or US Bancorp thne. And I get 5% yield to boot. Yipee.
If you have any money in any bank, you should be “concerned”.
If you have more than the FDIC limit (which can be more than 100k depending on various categories the accounts fall into), I personally would be “very concerned.”
If you aren’t concerned, consider that giving money to people who make their living by keeping a small amount on hand in petty cash and giving the rest away to deadbeats is pretty much the definition of “banking” these days.
Yes. Spread it to more than one bank.
You should be really concerned. This is the mother of all crises and the clock is ticking.
You should be concerned no matter where it’s at if you’re over the limit.
Ditto. I remember 6+ months ago there was a big thread about pulling $ out of banks so the bums can’t leverage it any more. Looks like the choice has been made, not by the little guy, either… Just wait till the little guys run for the hills. There will be no choice but to print.
One thing gets me though & I’d like someone’s take:
Inflation vs. defation camps
Like Gemany in 30’s people would burn money because it was “worthless” and firewood was more expensive than the paper money was prited on… Well, if that is the case, then our (American) debts could be paid off quickly as funds become available as debt is tied to a specific # ( I owe x # $’s on a car- for example $10K) if the $100 bill became a $10,000 bill would it not be too easy to retire the debt? Isn’t the peoples’ debt the LAST card these b-strdz have to ensure future profits (minus defaults)? I’d think that money would become harder and harder to get and prices would deflate for everything but food, ammo, silver, etc. Is this going to be both inflationary and deflationary?
I’ve got 109K in my very low yield savings at Wells Fargo. 9K just seemed like too little to worry about to go hunting around for another bank account somewhere. However, I’m being lazy and probably stupid. I guess I’ll just take out the 9K and stuff my matress with it.
Just hook it up to one of the internet banks like ING or HSBC. At least you can spread around the risk and the rates are probably better too.
If you lose the 9K, think of all the pleasure you can have bitching at cocktail parties till doomsday: Yeah, I lost 9k old-bucks back in aught 8 when the last bank of the wild west went under.
*Clink*
Me thinks some may be standing, er, bank or few that is.
In my book Frank is the worst type of politician, one who takes credit for something that worked out when he did nothing to make that happen and passes the buck when something bad, that he could have prevented, happens on his watch while he was asleep at the wheel doing nada.
I despise Frank, too. What he thinks or doesn’t think means little to me. My point was that he was giving a little insight as to what was going on behind the scenes. Bernanke and Paulson are calling the shots, at the behest of foreign central bankers, supposedly. Frank was blindsided and sandbagged by these guys. That “I got 800 billion” totally floored him. He was all bug-eyed and sweaty about it and in his dimwitted way, I think he was trying to get the word out and warn people. Too late, Barney. You and your fellow Congressional associates have been made obsolete and I’m tired of paying for you when you can’t do a dang thing.
Let’s hope he doesn’t write and publicize a letter about it.
Agreed - your post was informative. I saw Frank interviewed on CNBC yesterday an its pretty clear he is outside the loop but afraid to blame anyone for anything. Same tone to that interview, but I wish someone would ask him what he and his buddies were doing to avoid/stop this rather then letting him off the hook with the usual party line cr** and blame game. Glad he will hold some useless hearings at some point…. I am sure that will clear up and solve everything.
yeah, the same old song and dance. he will send an answer to that hardball question after they exit the building and the camaras are turned off!
I like listening to Barney Fwank
Privatize praise, socialize blame.
lol. well said. When sh!t goes downhill, they all duck and try to blend into the crowd of lawmakers.
“type of politician”? Can you name the politicians that do not do those things?
Apologies if this has been posted before.
Last week On the Money with Carmen Ulrich had a special housing edition. One of the callers had worked for Freddie Mac, but had been laid off. Prior to being laid off, she had purchased a home for $720k and had a mortgage of $648k. The mortgage was a 10 yr I/O. Also there was a car payment of 400/mo and a student loan payment of 600/mo with 21000 in cash savings. While at Freddie, she made 157k/yr (131k salary, 26k bonus) and was also divorced with one kid. I believe the house was only worth about 600k now (forgot to jot this one down). Good thing to know someone pulling down such a big salary and bonus working for Freddie had such a good understanding of housing, affordability and mortgages!
Well, you know that employees should always eat the company’s dog food.
Only problem is this time it really was dog food.
Isn’t that loan too big for Fannie/Freddie, pre-increase?
Sounds like she should walk!
Haven’t seen this in the headlines yet, but it looks like the Bank of Scotland is having serious trouble…
http://news.scotsman.com/latestnews/-Darkest-day-for-Scottish.4503252.jp
This morning’s latest shotgun Tbill auctions: $100 billion in 7-day, 45-day, and 59-day auctions occurred at 1100 EDT. Yesterday’s was $40 billion. These were in addition to previously scheduled auctions. See treasurydirect.gov
Massive reflation efforts fail to reanimate financial zombies. The dead do not walk…say again, the dead do not walk. Send trillion more fiatscos. Over.
in Europe the financial injections are far bigger …
*U.S. TREASURY ANNOUNCES $100 BLN ADDITIONAL BILL AUCTIONS
trying to reanimate the electrocuted financial system. Good luck.
At some point the shock puts you over the TDS limit and you just have to start over.
Just pour more in dammit! Damn the total alkalinity! Super-clorinate now! We have to reach the break point before the market opens!
(Sorry: Swimming pool humor is never in order.)
MarketWatch
Freddie Mac: 30-year fixed-rate mortgage average drops
By Wallace Witkowski
Last update: 10:12 a.m. EDT Sept. 18, 2008
SAN FRANCISCO (MarketWatch) — Freddie Mac (FRE:Freddie Mac
FRE 0.35, +0.08, +28.4%) said Thursday the 30-year fixed-rate mortgage average dropped from last week to its lowest point since February. The average rate was 5.78% with an average 0.6 point for the week ending Sept. 18, compared with 5.93% last week. Last year at this time, the average rate was 6.34%. “Interest rates for 30-year fixed-rate mortgages fell for the 5th consecutive week, amounting to a total decline of about 0.75 percentage points,” said Frank Nothaft, Freddie Mac chief economist, in a statement. “As a result, mortgage applications surged nearly 58 percent since August 15th, largely led by a 122 percent gain in applications for refinancing, according to the Mortgage Bankers Association.”
Hmmmm,
Leigh
Lock in a rate today, because your lender could be gone tomorrow!
A realtor called my wife and I yesterday. After speaking to a mortgage broker that told her we are in a once in a lifetime position. Mortgage rates are going down AND prices are going down! “This has never happened before!”
I know! Isn’t it exciting! Call again in 6 months, thanks.
To funny
2 FUNY!
REVIEW & OUTLOOK
SEPTEMBER 18, 2008
The Fed and AIG
…Perhaps Secretary Hank Paulson was right that AIG had to be rescued to avoid a broader financial collapse. We aren’t privy to what he and the New York Fed were hearing about AIG’s credit default swaps or its insurance “wraps” for the commercial paper market; maybe unraveling those would have smashed the corporate debt market or caused a run on money-market accounts. So maybe he had no choice but to rescue the part of AIG that was a hedge fund wrapped around the world’s largest insurer.
But it’s precisely this opacity that is the problem for market psychology: These serial nationalizations are being done out of Mr. Paulson’s hip pocket, based on his judgment of what constitutes a systemic risk (Bear Stearns, Fannie Mae, AIG) and what doesn’t (Lehman). There’s no transparency, and when Treasury decides to act it swoops in with a no-bid transaction that dictates terms to the target company. At the very least a Treasury Secretary should try to justify the nature of such risk when he puts $85 billion in taxpayer cash on the line.
All the more so if the takeovers inspire even more market fear. Three month T-bill prices plunged at one point yesterday nearly to 0%, which means investors are willing to accept essentially no return to get a safe harbor. Gold’s leap of more than 11% is also a flight to safety.
The danger is that we will get these financial melodramas every week, if not more frequently. Each one only frightens the public more and extends the panic. The two surviving big investment banks, Morgan Stanley and Goldman, continue to operate with enormous leverage yet profess to have enough capital to survive. That’s also what Lehman and AIG thought. Markets are also punishing Washington Mutual, the big savings bank, and Wachovia, the regional bank, with others to follow if housing prices keep falling.
Sooner rather than later, the Fed is going to run out of money to pull off these government takeovers. Its balance sheet was designed to finance open-market operations, plus serve as the occasional lender of last resort for regulated banks. Its assets have long been mainly Treasuries or currency.
And really, doesn’t Paulson & crew have a lot of inside info on these companies now? What’s to stop him from spinning of the real assets of these companies, at a bargain basement price, to … himself?
So Paulson, Bernanke, Bush swoop in, confiscate the property of private citizens (shareholders), and potentially set themselves and friends up to make off with the loot.
Welcome to Banana Republican America.
Jon
former Republican
Um, this is always the danger when you sell your company.
If you don’t want that to happen, don’t unload the piece of gosa in the first place.
See “Cash McCall,” James Garner, Natalie Woods, 1960, if you ever get the chance. A slight romance wrapped around a financial shenanigans story. It was fun for a non-business guy. Don’t know what the real business types would think about the movie. If it bores you, you can play the “call out each massive conflict of interest as it appears” game
- there is likely about 1 per page of the script.
Couldn’t we just save some money by buying that “John Cumuda will tell you how to transform your debt into wealth!” system for AIG, Bear, Lehman, Fannie et al?
(Ugh - I hear those damn commercials six times a day on my radio, it seems. God bless the folks at NPR, at least - where I get a little bit of respite from them.)
Current sage advice:
Keep accounts under $100k
Buy T-Bills
The former is based upon faith in the FDIC and the later is based upon faith in the Fed.
If either one fails it is far better to own guns and ammo than dollars and gold.
“The enemy of the conventional wisdom is not ideas but the march of events.”
John Kenneth Galbraith
Buying gold requires faith in the police. Buying gold in a depostory requires faith in the depository.
We of little faith.
The way things are going, overpriced houses begins to look like a safe haven. Only down 40%, and you can live in it!
Gold is a tough taskmaster.
Burying it in your backyard is spectacularly stupid and safe deposit boxes might not be any better of a place…
Lessee, then: don’t keep it at home, don’t keep in the backyard, don’t keep it in a safe-deposit box…
So the good place to keep it is…. Ummm…
??
The only thing I can think of is to bury it in somewhere easy for you to locate on public lands / national forest.
And then hope no one saw you bury it. Or maybe disguise it as a cat-hole, cause no one will dig there if they think you were just using the “facilities”.
So the good place to keep it is…. Ummm…
A friend suggested keeping it in an old paint can in the garage.
I could be wrong, but I believe aladinsane has advocated having physical gold stored overseas and leaving the US to “reacquire” it, something I wasn’t willing to do or even consider. I have had a dream where I have the winning LOTTO ticket for $10m (I don’t even play the lottery) but have the ticket stolen ticket before I can cash it in. I guess running the gauntlet to redeem my gold for food during a chaotic time wouldn’t be much different
Illegal to put gold in the form of money in a safety deposit box, plus with the physical purchase you need a safe place to store it without incurring any expense.
Does that apply only to American Eagles or to any gold coins, regardless of national origin?
On Hogan’s Hero’s they painted the gold bars black and used them as bricks.
Anyone else notice that they disappeared the next episode and the wood stairs were back? ;);)
Gold requires a good hiding place, police have nothing to do with it because they do not prevent crime they attempt to bring justice after the crime has been committed.
one of my consultants told me she has 2 gold bars (about the size of a snickers bar) that her grandparents gave her. they hid them inside their vacuum cleaner during the great depression.
They had a vacuum cleaner? Wow, all we had in Kansas…was a homemade broom.
good you have discounted housing as a purchase option, in Europe we don’t have that. In my country homeprices could easily fall 75-80% from current values (after a more than 1000% price runup), maybe even more if we get a real depression.
Well at least the Dem-wits are packing it in…
Democratic Congress May Adjourn, Leave Crisis to Fed, Treasury
By Kristin Jensen
More Photos/Details
Sept. 18 (Bloomberg) — The Democratic-controlled Congress, acknowledging that it isn’t equipped to lead the way to a solution for the financial crisis and can’t agree on a path to follow, is likely to just get out of the way.
Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments — Sept. 26 for the House of Representatives, a week later for the Senate. While they haven’t ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help.
One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment.
“When you rush to judgment, you usually make mistakes,” said Sherwood Boehlert, a former Republican congressman from New York. “This is something you can’t go on forever without addressing, but Congress in a short span of time is best served by going home.”
I would like one good reason to vote for McCain Palin. Even if I make >200K/yr, I would rather pay higher taxes than watch them run the country I love into the ground. All I see is:
500B Iraq war
500+B in bailouts
Decreased revenues by cutting taxes on wealthy and corporations
Destruction of infrastructure and social safety net
They don’t care a lick about the deficit, so I don’t define them as “conservative” at all. I see no departure from the last 8 years at all.
Obama is not perfect, but at least he is new blood and shares some of my priorities. Just getting out of Iraq will save us a huge amount of money alone.
“I would like one good reason to vote for McCain Palin”.
I can’t give you one, bad part of this deal is B.O. is no better.
As of this morning Wachovia’s market cap exceeds Morgan Stanley.
Who exactly is being taken over by whom?
Maybe they will by each other in a 100% stock swap. Capitalize the goodwill and both end up with more assets.
Hoz,
You talked about the arb on Treasuries vs GSE debt yesterday; how do you contain your risk in the event the spread widens? You mentioned limiting to 4:1 leverage, but even that could do major damage if you have to unwind at the wrong time.
Are you limiting it to a given percentage of your liquidity? If the market moves against you, will you stand pat, or increase your stake to make up the losses in the other direction?
I’d really like to understand better how you handle this…
I stuck with the 6 month spread. So even should it widen by 100% in actual dollar terms, the 100K bond goes up 18/32 while the GSE is down 8/32. (If for some reason the 6 month Treasury bill goes to negative interest rates, I will be a naked short and put the moneys into a money market account. lol) So my exposure in reality is ~$1000 per spread and I put up $25K in JGBs as collateral per spread. My anticipated profit over the next three weeks is $550/spread. I am not greedy, just looking at a minor increase return.
The amount I could have put down per spread was less than $500. The only risk to the spread is US Government default. (In the Banana Republic anything can happen.) It is a small position, I did not do it 600X.
I do not worry that the government will default in the next few weeks. As long as the mopes in Asia and elsewhere continue to buy Treasuries, I am fine. The Treasury will be buying GSE debt.
what are JGBs?
Japanese Government Bonds.
And if the US government defaults….not likely but a terrifying prospect, the dollar is devalued by 1000% or 5000% I have no idea.
only risk to the spread is US Government default.
What happens then?
Putnam Fund closes after investors pull cash
Putnam Investments has suddenly closed a $15 billion money-market fund after institutional investors quickly pulled out cash.
The fund had required a minimum $10 million initial investment.
Putnam says the closure is not linked to the credit quality of the fund’s holdings, but is a reaction to “marketwide liquidity issues.” Putnam says investors pulled out money en masse Wednesday, even though the fund has maintained a safety benchmark of holding at $1 in assets for each dollar invested.
http://biz.yahoo.com/ap/080918/putnam_fund_liquidates.html?.v=1
I love the smell of SKF gap down in the morning!
I’m too big a wuss to short it on a gap up.
The Gold Window 1975-2008
r.i.p.
it’s funny how many different stories are floating around to explain the sudden surge of yesterday (and now another one on top of it …). Together with the huge disconnect with goldstock performance it is an interesting puzzle.
Auction-rate probes to include individuals
Adams, whose firm is the largest sponsor and investment advisor of closed-end funds in the United States, also said the funds should be allowed by the Federal Reserve to pledge their variable-rate demand preferred shares as collateral at the discount window.
http://www.reuters.com/article/ousiv/idUSN1852413420080918?pageNumber=3&virtualBrandChannel=0
why not!?!!?? when they opened that door to wall street, its almost impossible for them to slam it shut on this sludge. it keeps comming thru the cracks and the floor boards.
Kraft replaces AIG as a DJI component:
http://www.marketwatch.com/news/story/financials-crater-kraft-foods-becomes/story.aspx?guid={65823FCD-3B11-4F7F-AFCD-37D6536D0F9B}&siteid=yhoof
Old standby: Insurance
New standby: Velveeta
Todays Wash Post main section. MACYS has several all page ads. One third of its first page simply states:
GET IT BEFORE IT GOES
BUYBYE
Financials were helped by word that the Financial Services Authority, the United Kingdom’s independent financial regulator, has issued a temporary ban on short selling financial companies. Dow Jones reported the FSA will not allow the creation or increase of net short positions in publicly quoted financial companies from the 2300 GMT. The provisions will last until January 16.
link:
http://finance.yahoo.com/marketupdate/overview?u
What’s next? A buy only market? Short sellers must deposit 10 liters of their blood before initiating a position? You can only sell stock on every other Thursday during months that begin with the letter R?
The boys are getting spanked and they can’t handle it. If it weren’t so pathetic I would be laughing even harder.
Today, suddenly, of all the stocks on my trading account watchlist, I’ve only found 3 that can be shorted at all, and even then only intraday.
Following a ruling from the the United Kingdom’s FSA that will put a temporary halt to selling short financial stocks, New York Attorney General is announcing a wide ranging probe into short selling. According to Dow Jones, the office wants to freeze short selling of financial stocks.
In the 1930s the US to fight the financial contagion separated banks from investment houses. All in an attempt to bring stability.
In 2008, the US is combining banks and investment houses to fight the financial contagion. All in an attempt to bring stability.
Oh well. Live and learn or don’t live long. Financial stability is an oxymoron kinda like Norwegian Intelligence. (Sorry Lars)
‘…Financial stability is an oxymoron kinda like…” lol
1. An Irish cook book
2. Encyclopedia of Italian war hero’s
Anyone else come from a Irish/Italian family…Spaghetti w/baked potato’s…yummy.
HWy, that’s the first post of yours that I get.
It was short and sweet.
They did this kind of thing at Boeing about putting all the electronics manufacturing in its own group to raise efficiency or breaking it up to raise efficiency or putting it into its own group to raise efficiency or…
I sold my 7 shares of incentive stock in protest. (I don’t think they noticed though.)
The 7 deadly sins
Sin One: Allowing Mortgage Lending to Become a Casino. Until 1969, Fannie Mae was part of the government. Mortgage lenders were tightly regulated. Homeownership rates soared throughout the postwar era, from about 44 percent on the eve of World War II to 64 percent by the mid-1960s. Nobody in the mortgage business got filthy rich, and hardly anyone lost money. Fannie’s job was to buy mortgages from banks and thrift institutions, to replenish their money to make mortgages, and along the way to set standards. Fannie financed its operations by selling bonds. In the late 1970s, private Wall Street firms started emulating Fannie. They packaged mortgages, and converted them into bonds. Over time, their standards deteriorated, because they could make more money creating riskier products. In order to avoid losing market share, Fannie emulated some of the same abuses. Government did not step in to regulate the affair — which was a time bomb waiting for the creation of the sub-prime mortgage business.
Sin Two: Allowing Unregulated Bond Rating Agencies to Decide What was Safe. Sub-prime is only the best known of a widespread fad known as “securitization.” The idea is to turn loans into bonds. Bonds are given ratings by private companies that have official government recognition, such as Moody’s and Standard and Poors, but no government regulation. These rating agencies have become thoroughly corrupted by conflicts of interest. Without the collusion of the bond-rating agencies, sub-prime lending never would have gotten off the ground,. Had regulators looked inside this black box, they would have shut it down. They might have needed new legislation, but they never asked for it. And public-minded regulators might have done a lot under existing law, since banks (which are regulated) were heavily implicated in the financing of sub-prime.
Sin Three: Failing to Police Sub-prime. The core idea of bank regulation is that government inspectors periodically examine the quality of bank assets. If too large a portion of a bank’s loan portfolio is behind in its interest payments, the bank is made to raise more capital as a cushion against losses. Problems are nipped in the bud. But complex securities require more sophisticated regulation than simple loans. Regulators basically waived the rule on adequate capital for the new wave of mortgage lenders who created sub-prime. Many mortgage companies were not banks. They made loans only to sell them off to the Wall Street sinners of Deadly Sin No. 1 (see above). So there was no loan portfolio to examine, and no real capital. The Democratic Congress anticipated this problem in 1994, when it passed the Homeownership Opportunity and Equity Protection Act. This prescient law required the Federal Reserve to regulate the loan-origination standards of mortgage companies that were not otherwise government-regulated. But Alan Greenspan, a free-market zealot, never implemented the law. And when Republicans took over Congress in 1995, they never called him on the carpet.
Sin three = very important to remember. There were a lot of people who saw this coming and tried to do something about it, even in Congress.
Please email this series to Barney Frank
I am thinking of changing my blog handle to Professor Bull, as the government is on the verge of outlawing negative statements that drive down the stock prices of otherwise financially-sound companies.
Buy stocks now, or get priced out forever! The stock market always goes up, in the long run!!! Eta pravda, tavarish!
September 18, 2008
Suspending Short Selling Entirely?
There are two compelling arguments against suspending short selling completely, even if it is for only a brief period. The first is that a free market allows investors to make money by betting that stocks will go down. Why should the bulls be allowed to make all of the profits unchecked by those willing to take the other side of the gamble?
The second argument is that a hiatus on short selling could cost shorts billions of dollars as investors see stocks rise after putting good money into the proposition that they will fall.
The government has not had a problem with ending or temporarily amending a number of rules in the hope that it can save the financial system.
Sin Four: Failure to Stop Excess Leverage. The financial economy is crashing today because so much speculation was done with borrowed money. A typical leverage ratio of a hedge fund or private equity company is 30 to one. That means $30 of debt for $1 of actual capital. If you make one serious miscalculation, you are out of business. And in the case of sub-prime mortgage companies, the leverage ratio was infinite, because they had no capital. The game was entirely based on creating debt. As long as times were good, financial firms could keep borrowing to finance their deals. But once investors looked down, they panicked. Some parts of the system are unregulated, such as hedge funds and private-equity companies. But they all ultimately get a lot of their funding from banks. And regulators do retain the power to look closely at banks’ books (see Sin No.3 above). Had they used that power to police the kind of highly risky stuff banks were underwriting, they could have shut it down.
Sin Five: Failure to Police Conflicts of Interest. Remember the accounting scandals of the 1990s? In those scandals, accounting firms were paid once to audit corporate books and then again to help clients cook the books and still pass muster with the audit. That was a sheer conflict of interest. Though accountants were (loosely) regulated, Congress did not crack down until cooked books caused the stock market to crash. A second conflict of interest was the corruption of stock analysts, who were telling customers to buy dubious stocks because their bosses were profiting from underwriting the same stocks. In the aftermath of the dot-com bust, Congress narrowly cracked down on these two abuses with the Sarbanes-Oxley Act but simply ignored others — such as the role of bond-rating agencies and the habit of basing executive bonuses on stock prices that could easily be manipulated by the same executives.
Sin Six: Failing to Regulate Hedge Funds and Private Equity. When Roosevelt’s New Deal acted to rein in the abuses in financial markets, it regulated the major players — commercial banks, investment banks, stock brokers, holding companies, and stock exchanges. But two of the biggest purveyors of risk today — hedge funds and private-equity firms — simply did not exist. Today, private-equity firms and hedge funds do most of the things banks and investment banks do. They basically create credit by making markets in exotic securities. They buy and sell firms. They speculate in financial markets with borrowed money, taking much bigger risks than regulated banks. According to House Banking Committee Chair Barney Frank, more than half the credit created in recent years has been created by essentially unregulated institutions. The people in charge of the government — conservative Republicans — took the view that these new-wave financial players offered transactions between consenting adults who needed no special consumer protection. But they were oblivious to the risks to the larger system.
Sin Seven: Repeal of the Glass-Steagall Act. This action, in 1999, was one of two major cases when a cornerstone of New Deal regulation was explicitly repealed. (The other was the repeal of the Public Utility Holding Company Act, and if your utility rates are sky-high, you can thank Congress for that, too.) Glass-Steagall provided that if you wanted to speculate as an investment bank, good luck to you. But commercial banks were part of the banking system. They created credit. They were regulated, supervised, usually enjoyed FDIC insurance, and had access to advances from the Fed in emergencies. So commercial banks and investment banks were two different creatures that should stay out of each other’s knitting.
From the American Prospect
Reform One: If it Quacks Like a Bank, Regulate it Like a Bank. Barack Obama said it well in his historic speech on the financial emergency last March 27 in New York. “We need to regulate financial institutions for what they do, not what they are.” Increasingly, different kinds of financial firms do the same kinds of things, and they are all capable of infusing toxic products into the nation’s financial bloodstream. That’s why Treasury Secretary Hank Paulson has had to extend the government’s financial safety net to all kinds of large financial firms like A.I.G. that have no technical right to the aid and no regulation to keep them from taking outlandish risks. Going forward, all financial firms that buy and sell products in money markets need the same regulation and examination. That will be the essence of the 2009 version of the Glass-Steagall Act.
Reform Two: Limit Leverage. At the very heart of the financial meltdown was extreme speculation with esoteric financial securities, using astronomical rates of leverage. Commercial banks are limited to something like 10 to one, or less, depending on their conditions. These leverage limits need to be extended to all financial players, as part of the same 2009 banking reform.
Reform Three: Police Conflicts of Interest. The conflicts of interest at the core of bond-raising agencies are only one of the conflicts that have been permitted to pervade financial markets. Bond-rating agencies should probably become public institutions. Other conflicts of interest should be made explicitly illegal. Yes, financial markets keep “innovating.” But some innovations are good, and some are abusive subterfuges. And if regulators who actually believe in regulation are empowered to examine all financial institutions, they can issue cease-and-desist orders when they encounter dangerous conflicts.
We’re talking about a Roosevelt-scale counterrevolution here. But nothing less will prevent the financial collapse from cascading into Great Depression II. And the public should never again forget that this needless collapse was brought to us by free-market extremists.
“We’re talking about a Roosevelt-scale counterrevolution here. But nothing less will prevent the financial collapse from cascading into Great Depression II.”
All the reforms you discuss would merely postpone Great Depression III if Great Depression II happens. The horse is out of the barn door I’m afraid, and probably got there by late 2005.
What it’s about now is crisis management.
Freak out -
“We need to regulate financial institutions for what they do, not what they are.” (B.O.)
HOW
HOW
HOW
Why is that question so hard to answer?
HOW?
Grrr…
Leigh
(Not aimed at any poster - just politicos).
There is a massive propaganda effort underway from the world’s financial centers to blame the current panic on short sellers and financial market naysayers. It is financiers’ excessive use of leverage used to fund stupid gambles which explains why stock markets are dropping and companies are folding. The shorts are trying to hold up a mirror to Wall Street decision makers. Instead of looking at themselves in the mirror, highly compensated banking industry executives are casting blame on others whose foresight proved far more accurate.
No matter what you say, or how eloquently you form and argument, there will always be people that think short selling is a form of theft. The fact that short-sellers are a minority in the market makes them an even easier and juicier target for those looking for scapegoats.
Investment bankers should have no problem going to work on a farm considering all the shoveling of bull**** they’ve done over the years.
Still lagging, though, are investment banks and brokers. The industry group is down 4.6%. That is still quite an improvement from the 20% loss the group was showing at its session low.
Particular to the group, the giant California pension fund CALPERS is no longer lending out shares of Goldman Sachs (GS 106.45, -8.05) and Morgan Stanley (MS 17.25, -4.50), according to The Wall Street Journal
talk about a crack down!
I’ll tell you what I believe. Without shorts in the market, you have nothing left but the potential for outright laddering of stocks blessed by the authorities.
Don’t even tell me we’re better than Karachi!
NY Common Retirement Fund stops lending 19 stocks
add these guys to the growing list of pension funds trying to hold-up the investment banks.
If I were to short Dell, for example, doesn’t that mean that my broker sells x shares of Dell that he owns and then puts the money, say $1,000, into my account? At some point I need to give him back x number of shares of Dell that he gave me the money for, right? If it so happens that he paid $1,000 for x shares of Dell and I am now able to buy them for $800 I win to the tune of $200, correct? If I have to pay $1,200 for those shares I lose.
If I’m even in the ballpark, which is quite possibly not the case I don’t see how this could be theft. It seems that everyone involved has some skin in the game.
Broker doesn’t sell anything. Just has to come up with securities that are able to be lent out. Short selling can magnify the intensity of a sell off, but at the same time the shorts can make a market when there is no willing buyer to go long at a price point if short is wanting to cover and return the borrowed stock.
A stock that deserves to go to zero, is going there with or without short sales. That’s why this whole charade that short sellers are “evil” is garbage.
I think I’ve got it. I borrow the Dell shares from a broker, then I sell them. Then at some point down the road (and hopefully for less money than I was able to sell them for initially) I buy the shares to return to the broker.
Actually, you can buy more plasma TVs if you go bankrupt first before buying the shares…
see my post above, its already a done deal in the UK.
RE: Naked short selling
I am not a fan of it nor opposed to it. I borrow stock to short from firms that have it in their mutual funds and pay a fraction of a percent to them to borrow the stock. (Improves the mutual funds performance, lol)
The naked short sellers and conventional short sellers did not put one of these crappy banks in their positions.
But this letter from the SEC makes me mad.
“Markets are the best tool a free society has to price and allocate assets across a complex economy, but as is well known from experience, sometimes the wisdom of crowds is supplanted by crowd behavior. We need well-functioning markets to help us draw the line between reasonable miscalculation and error or something worse involving the failure of due diligence, self-dealing, and conflicts of interest. It is thus vitally important that the market mechanism continue to inspire investor confidence…”{
Mr. John Chanos shorted Enron and where was the SEC? The SEC signed off on Enron’s financial statements.
China does not allow short selling at all and the Shanghai is down 60%. The only way to hedge my China positions is shorting a US ETF when possible. “…the wisdom of crowds is supplanted by crowd behavior…”, then why Mr. SEC do you let them buy stocks? People are stupid, but government is stupider. Pretty soon it will be illegal to sell a long stock at a lower price than the last sale. A well functioning market only goes up?
This is so third world.
If I remember correctly (naked?) short selling of financial stocks is also forbidden from today in the UK (until January). Seems authorities have a lot of confidence in this kind of measures, or at least they propose to in order to pass the blame if something goes wrong. If you read the stories about the big WallStreet tycoons it seems that many of them worry about competitors shorting their stock …
But nobody worries about all the huge leverage that still exists in the mortgage markets (at least in Europe, 10x income loans with no money down still no problem, at rates below actual inflation).
I do think that “naked” short selling does need to be stopped. But wasn’t that activity *wink wink* already illegal?
I have more respect for carnival geeks than these tools.
illegal but highly appreciated by the powers that be when it comes to goldstocks (sold short by JPM and GS). I really hope these crooks get wiped from the earth real soon now.
Naked short selling has never been illegal.
It was originally allowed by market makers and the specialist to maintain orderly markets. Under Basel II, anyone registered was allowed to be a naked short.
A current example of why naked shorting works:
Morgan Stanley debt (bonds) is trading at 20%. If I owned Morgan debt I might wish to buy insurance against that debt. The insurance is called a CDS (credit default swap). The current price for the CDS to insure $10MM MS debt for 5 yrs is $1.25MM up front +600BPS/yr.
So I call up a broker and buy a CDS. VOZ sells me the CDS and now has to hedge himself.
To hedge, Voz shorts MS stock (app 400,000 shares per each CDS sold). Why, short the stock?
MS earnings are going to be down for the next few years no matter what. If the company does survive and pays the bills, the stock will go up a point maybe 2 points, if at all. It won’t go up 600%. The CDS is cash in the account, app 4.3MM (after 5 yrs not counting interest received) this gives protection on the stock upside of 100% increase. (The stock market historically returns 5.3%/yr)
If the company fails the CDS seller is obligated to pay the $10MM plus current interest on the default. The CDS seller gets the bond. In BKs most bonds are worth 60% after everything, but the stock is worthless.
Low risk in the event of failure low risk in the event of survival.
The bonds trade in $10MM increments. Ergo, an awful lot of stock is needed to hedge.
cash received CDS 4.3MM
Cash received short sale of stock 5MM
liquidation of debt 6MM
debt obligation 10MM
Net profit 5.3MM
Haircut (margin) ~$200K
Figures improve depending on the quality of the assets underlying the bonds. In many cases 100% has been recovered.
Yes, you are correct. It is not illegal for market making activities among other exceptions. Love that specialist system!
I dont like being on the other side of hoz’s trade.
I prefer to apply the hoz rule of:
“buy what hoz buys, sell what hoz sells”
Sounds like a circle jerk to me. Due diligence by the insurer would tell them if they should even insure it, or actually charge the proper amount for the risk. Once you have the option to cover your risk or even make money on your risk, it is not risk at all. No wonder they loaned to every tom dick and harry.
The rub of the green.
“Due diligence by the insurer would tell them if they should even insure it”
Due diligence was relegated to the ratings companies’ AAA …Few ever did a value at risk model. aka How much can I lose.
The swaps are expanding because of the increased risk. Thus the opportunity to make money not available from previous underpricing risk.
Is there any way to relocate the U.S. stock market (including short bets) to its proper location, on the Las Vegas strip?
Have you seen intrade.com?
LOL. I don’t understand betting. But what I do suspect is that bookies do a better job at making sure they don’t lose money in the end no matter what than the banks seem to be doing. And if they ever did lose money, the perpetrators of the fiasco might at least be forced into hiding…
We are watching history, some with glee and some with trepidation, but in the end that old chinese adage “Be careful what you wish for, you might get it” applies.
We are watching a financial fission reaction the depths of which no one knows. The only certainty is that before it’s over there will be lots of pain affecting every family in the US. It is truly a time to reforge family relationships and have a plot of land on which to plant a garden. A clear head, common sense and preservation of capital will always prevail over hiding and hoarding PM’s.
Nicely said, sir.
My 11 year old son has some money parked in a WaMu savings account last night, and I was trying to explain to him the risk of losing money saved in a bank. With tongue firmly in cheek, I suggested he think about withdrawing his savings and keeping the cash parked under his mattress
. (I would have also suggested he consider buying gold coins, but it is too expensive for the time being…)
(Sorry, I can’t remember if you are a gold bug or anti-gold
)
Sell him shares in Our Home Super Prime Gold Coins ETF so he can get some at a fractional price.
Then if it goes up and you can;t shave enough off for him, you can also explain to him about naked shorting (at least until he threatens to tell Mom on you.)
———————–
Hot Off the Press…
***** Growth in Mortgage Debt Collapsing (From 15.5% to 0.8%) ****
There was only a $20B growth in 2008q2 compared to $250-310B per quarter during the heydays. I expect a negative number for 2008q3 or 2008q4.
Peak Debt™ for the US Household Debt Is here!!
Jas
only in the US, in Europe mortgage rates are declining strongly and lending is still (almost) as crazy as ever, so I’m sure debt levels are surging again :(((
Link?
Wall Street execs who are eager to blame the shorts for their sinking share prices really need to examine their own track records.
This greed was beyond irresponsible
By John Gapper
Published: September 17 2008 19:09 | Last updated: September 17 2008 19:09
well, it looks like they have found the villian! its the short sellers people! and the markets rally! i do think you should change your name to prof. bull, when they have made it so its almost impossible to lose? just keep buying, and dont look behind the curtain!!!!
Central banks in coordinated effort to boost liquidity
Fed provides additional $180 billion for short-term dollar auctions
By William L. Watts, MarketWatch
Last update: 12:39 p.m. EDT Sept. 18, 2008
LONDON (MarketWatch) — Overnight borrowing costs fell Thursday after the world’s biggest central banks announced they would pump billions of dollars into the financial system to soothe distressed money markets.
well, they sure soothed the gold market … good that the news isn’t mentioning what happens there.
FUNDWATCH
Money funds see record $90 billion one-day drop
Putnam closes fund; Columbia, Dreyfus act to save $1 a share net asset value
By Sam Mamudi, MarketWatch
Last update: 1:51 p.m. EDT Sept. 18, 2008
NEW YORK (MarketWatch) — Money market funds saw nearly $90 billion of net investor cash pulled out on Wednesday, among the largest single-day drops in history.
Figures from iMoneyNet show that assets dropped to $3.35 trillion from $3.44 trillion, a fall of $89.2 billion.
Is this situation highly unusual, or does it just sound highly unusual?
Some U.S. long muni bond ylds top LIBOR by 14 pct
Thu Sep 18, 2008 11:20am EDT
NEW YORK, Sept 18 (Reuters) - Some long-term U.S. municipal bonds now yield 14 percent more than a widely used benchmark, the London interbank offered rate, as the market on Thursday struggled to cope with hundreds of millions of dollars of sales, a muni analyst and two fund managers said.
The yield on a 25-year tax-free bond with a top-notch credit rating is even higher than in February, when such yields topped Libor by 10 percent during one of the $2.6 trillion muni market’s worst-ever monthly performances.
“The market is in complete disarray,” one of the money managers said.
Vice-principle Cheney (smirking) …removes big wooden paddle off the wall hook…
“Well now boys, seems you all need a lesson you can remember…stand up…bend over” WHACK! WHACK! WHACK! WHACK! WHACK!
“…In Washington, military analysts Anthony Cordesman of the Center for Strategic and International Studies issued a report concluding that the war is “probably being lost at the political and strategic level.”
“The situation in Afghanistan has been deteriorating for nearly half a decade, and is now reaching a crisis level,” Cordesman wrote.
“…Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, told Congress last week that he had commissioned a study of Afghan strategy to incorporate the complexities presented by rising unrest and insurgent activity in Pakistan. Mullen also publicly questioned whether the United States is winning in Afghanistan.”
Gates: US reviewing its Afghanistan war strategy:
http://news.yahoo.com/s/ap/20080918/ap_on_go_ca_st_pe/eu_gates_nato_afghanistan
Read this months Vanity Fair, article on Afghanistan.
Just a microcosm of the, what did someone say once…
“clusterfark” of war.
Thanks DD, I’ll check it out!
Thank the lord it’s not the Balkans. What? Kosavo, shut up, that’s Clinton’s war.
The PPT Cruiser just drove up to Wall Street.
Any insights into the 300pt gain?
Plans to establish new entity similar to the RTC.
http://biz.yahoo.com/ap/080918/wall_street.html
RTC II plan discussion. I posted a link but I doubt it will show up. Glitch in the program.
Moral Hazard RIP. We hardly knew ya.
Was there ever Moral Hazard?
The stock market surges near session highs as a CNBC reporter says the government may be planning to solve the current financial turmoil using a method similar to the 1980s savings and loan crisis.
Wall Street is going to bleed Main Street to death before all these various govt-sponsored market CPR efforts are exhausted.
i agree, i think i am going into the barter business! i cannot afford the price tag that will be attached to their solution.
What is the cost to US if they do a resolution mortgage trust?
Will we be yanked again?
A rumor is floating that Wall Street has found a sucker to buy all the bad paper…..you guessed it, the tax payer.
Paulson is working on a plan to trade the banks et all good cash for stinking CDS paper, and then have the taxpayer figure out what to do with it. Just great.
If this plan does not make every firm that ‘donates’ bad paper a slave to the taxpayer, I quit.
How the heck can they pull off RTC 2? RTC was some pretty straightforward stuff they were dealing with in terms of assets. Now if the guys that created, sold and dealt in these new convoluted assets can’t even figure them out how can Treasury value them and then liquidate them properly?
I can’t believe anyone is dumb enough to believe an RTC type bailout will work with these assets. I’d love to see how they work out the DIV on these things. Me? I’d just set up a bunch of garbage cans with arbitrary numbers on them, throw the paper up in the air and whatever can it lands in gets that value.
They won’t work with these assets and these asset are declining in value every day as foreclosures become more damaged and prices are still declining . What about CDO’s that have contractual different forms of pay-outs .
RE: If this plan does not make every firm that ‘donates’ bad paper a slave to the taxpayer, I quit.
You can join me on the boat to New Zealand.
the nasdaq sunk like a rock int the last 5 minutes? what gives?
it must have been a glitch, to much volume?
I’ve never seen stock prices bounce around so much like they did the last few minutes. I bailed with a few bucks earlier in the day. Waaaayyyy too volatile for me.
I think it’s the mother of all short squeezes. If I were short, which I’m not since I’m just a disgusted observer for months now, I’d be getting the heck out ASAP!
So what’s next boyz? You gonna trade amongst yourselves playing chutes and ladders? I think you’re looking for a downdraft of epic proportions unless you keep throwing dough at this thing.
What an epic waste. RTC 2? Dummies.
Yeah, this all was due to short sellers and the housing market….
Looks like they brought a tractor trailer! What a bounce: almost 400 points in about 45 minutes. Fantastic!
Amazing. Worse part is that the Ameritrade website seems to be down and I have no easy way to play the momentum…bummer and very frustrating. Totally freakin’ amazing….
yes, seems that they are concentrating all their big naked short selling guns on the large goldstocks; totally out of this world what is happening today.
CNBC said Treasury Secretary Henry Paulson is considering creation of an entity like the Resolution Trust Corp. that was formed after the failure of savings and loan banks in the 1980s.
Again I say ,the Wall Street cheerleaders are trying to get a different twist on the RTC in having the gov. actually buy this bad paper . I think all companies of the USA should demand that the government take any bad paper off their books and buy it at a high price knowing its going down in value . This situation gets more and more absurd every day .
Why don’t all the gamblers just get together and hire a agency to
auction off their junk . This is not a government function to do what they are calling for . Every time Wall Street feels a little pain they stomp their feet and Paulson and BB come running .
This all looks very well thought out to me: Dangle the scepter of a return to the 1930s economy over the global financial system for a few months, then seize the opportunity to dump Wall Street’s bad gambling debt onto someone else’s plate, under cover of a claim that there was no better choice. And this in the immediate aftermath of the govt taking over the world’s largest mortgage finance companies and the world’s largest insurance company.
The puzzling part to me is still who is the bagholder of last resort. I guess it is up to our kids to pay for these endless and unlimited bailout measures, as this generation has saved precious little in recent years.
Yegads!
Stocks surge on report of entity for bad debt
By Tim Paradis
ASSOCIATED PRESS
12:49 p.m. September 18, 2008
NEW YORK – Wall Street had a stunning late-session turnaround Thursday, shooting higher and hurtling the Dow Jones industrials up more than 400 points after a report that the federal government may create an entity that will take over banks’ bad debt.
The report on CNBC said Treasury Secretary Henry Paulson is considering the formation of an entity like the Resolution Trust Corp. that was set up after the failure of savings and loan banks in the 1980s.
Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.
If there’s an RTC-like entity, “it’s going to take a lot of the bad debt off the balance sheets of these companies,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again. But Fullman noted, “the devil’s in the details.”
“Bear markets are very sensitive to news. And on a scale of 1 to 10, this one is a 13,” he said.
Knuckle-headed analysts are serving up the usual nonsensical behavioral finance explanations for why the stock market rallied. How about that flood of liquidity from every central bank in the developed world? Could the man behind the curtain possibly have something to do with a miraculously quick return to DJIA = 11K?
MARKET SNAPSHOT
U.S. stock indexes ride fear-driven roller coaster
American International Group losing blue-chip status to Kraft Foods
By Kate Gibson, MarketWatch
Last update: 3:31 p.m. EDT Sept. 18, 2008
NEW YORK (MarketWatch) — U.S. stocks on Thursday battled back from another bout of sharp declines as investors considered whether the infusion of tens of billions of dollars into the financial system by central banks around the globe would ease the flow of credit.
“The fearless forecast is it will be volatile. Nobody believes it when it is a rally, but the boat is getting really crowded on the negative side, and it doesn’t take much tinder to set it off when you have so many crowded on one side,” said Bill Stone chief investment strategist, PNC Wealth Management.
Not to mention nonsense about why it was falling:
http://www.cnbc.com/id/26778065
Let’s be clear on what a (traditional) short seller does: Borrows stock from a broker, sells it, then waits for the price to drop at which point he buys it back and returns the borrowed shares. If a company has a profitable operation and a sound balance sheet, a short sale of such a company’s stock will have little effect besides losing money for the trader who executes it. If the balance sheet is riddled with toxic mortgage debt of indeterminate and ever-declining value, it is another story entirely.
its true that the shorts are natural buyers.
I just fell out of my chair…
the servers are crashing with a rush to the entrance.
my question is, will there be a rush to the exits tomarrow?
voz,
Would you please clarify your statement “its true that the shorts are natural buyers” and “the servers are crashing with a rush to the entrance.”
Thank you.
“its true”= I think this is true.
“the shorts”= the game players that have “sold” equities they do not own (put options) with the plan of buying them back at a cheaper price.
“natural buyers”= game players with interest that may intend to purchase actual shares of common equities, and its especially true for the short sellers, who by definition must “cover” to close a position in order to realize gains.
“the servers are crashing” = unbelievable massive volumes of not only shares trading, but bouncing people off of trading platforms and informational websites. I will not mention them by tradename.
“a rush to the entrance”= short covering rally.
or, in this instance, “cover” to stop losses.
tight stops people…..reign in the VIX.
voz,
Thank you. Appreciate the translation
bens computer does not like me posting from multiple computers.
perhaps the comment will show itself.
I sit on a sofa, warm and worn in and cozy and I have my GB Packers throw on the side should I get cold.
Ah.
And a warm cup of chickery.
Life is good.
Leigh
Oh God forbid that the stock market corrects to the level that it should be at when you consider the real net worth of companies with losses to take
and a recession that can’t be stopped .
Yeah, but don’t you know that without Investment Banks, the entire world ends? It’s true! Cramer just wrote,
” I think that it makes sense that we are doing just that. I am feeling that there was some sort of coordinated move in the futures pit by major firms coupled with the possibility of the one thing that really matters: a trust to buy the junk and get it off the books of the banks where it is dramatically undervalued, and into the Fed, where it can sit until it comes back to be what it is truly worth, which is much more. Coordinated mortgage intervention, coordinated stock buying, what’s not to like? ”
See, all we have to do is just sit on this JUNK for a while and *poof* it all becomes good! It only works if the FED sits on it though since they have a magical ass.
Things have been real slow at work lately, so I kinda feel bad for spouting off here today. Bile tastes real nasty.
The problem is you can’t hold real estate as if it is paper,(waiting for it to increase in value ), because it
goes down hill if it isn’t taken care of in a timely manner . So the option of the government just holding on to vacant foreclosed on property isn’t very viable . If the defaulting borrower is still occupying
the property ,that borrowers will just stay there not paying their bill until they are kicked out and trash it maybe . So either way it’s a loser in this market for the government to buy the high risk or sure to default paper or
currently defaulting paper or already defaulted paper of the stupid
loans the stupid lenders made .
the government will hold the empty property and eventually give it to the people who deserve it………
I’m thinking about a million Iraq refugees when we quit the war, or maybe retiring Government workers, Government informants with new identities, single parents on welfare, martians from space ….
“See, all we have to do is just sit on this JUNK for a while and *poof* it all becomes good! It only works if the FED sits on it though since they have a magical ass.”
My vote for QUOTE OF THE YEAR!
I got a idea . The government ,Paulson , should go into talks about a RTC and than stay in those talks for 2 years ,while the market clears itself. All the governments has to do is say they are in talks about the matter but never resolve it . Hows that for a solution . The government shouldn’t be responding to short term market swings anyway .
Black Friday tomorrow…
Not only will the DJIA tank after the bogus RTC subterfuge ruse is shown to be just another back of the envelope last minute do anything hail mary pass to an imaginary receiver, but Sheila is going to have to throw us some more read meat in the guise of a failed bank or 2~
But are there going to be any stocks we can short tomorrow?? Today wasn’t an encouraging sign.
This is no market for people that barely know what they are doing, to be playing in…
I think you read a little too much in to that, so I won’t take it personally.
How long have you been shorting stocks?
A few months, a year perhaps?
Blano, i have a question for you– do you have an email i can use?
Exactly twice in the last several months. And nothing lately. Spend most of my time watching, reading, learning.
My point earlier was only that today it seemed there wasn’t as many one could short if they wanted, at least where I go through. Just thought it was a heckuva coincidence with all the stories attacking short selling today.
Sure Bronco……….
blano8102@yahoo.com
Disclaimer: I am not an expert, lol.
You are going about it the right way by learning all you can, just soak it in and that’s your reward.
Unfortunately, you’ll never again see a market the likes of this one in which to profit from, but that’s life…
Thanks. Yeah, if that’s the case then you’re right, that’s life, but this things not anywhere near done yet, is it???
I wouldn’t touch this stock market with a 10 foot pole or 6 foot lithuanian…
Well don’t have to think about shorting now, now that the SEC is temporarily banning it. Pathetic.
Is the 6foot Lithanian cute?
Lad?
@Blano (or anyone else who wouldn’t mind educating a neophyte)
When you short a stock who decides when the shares get returned? Is that all laid out contractually when the shares are borrowed?
Sam,
See my email addy above. Feel free to drop me a line.
No, my guess is that this salvation plan will buy the markets about 7 more weeks. . .
“Not only will the DJIA tank after the bogus RTC subterfuge ruse is shown to be just another back of the envelope last minute do anything hail mary pass to an imaginary receiver…”
I hope you’re right. And please tell me this won’t do anything to stop house price declines.
My understanding is for a lot of these banks/brokerages, it’s not a liquidity issue, it’s a solvency issue. Much bigger problem.
Just cause they can’t pay their bills, you would suggest insolvency?
Never, AIG was driven down by short sellers (Ignore the fact that the treasury has spent $28b in the last 3 days and there is no cap on any future spending on AIG or others.)
Short sellers forced these great banks to buy bad paper.
Sorry about this long post, but it’s news from Hillary about how they plan to save the financial world and every FB on the planet. Of course, they also plan to screw every financially responsible citizen by doing so. I am amazed that they think that markets and home prices must always go up and if they don’t then it’s bad for the economy. Disturbing to say the least. The following is from comrade Clinton:
Dear Mr. bizarroworld:
Today, I called for swift and strong action to stem the growing credit crisis on Wall Street. I offered a series of bold, specific proposals, including creating a new version of the Home Owners’ Loan Corporation (HOLC) to restore confidence in the market, curbing the most damaging and manipulative trading practices, providing relief to homeowners facing foreclosure, and reasserting competent federal oversight.
I am deeply concerned about the effects of the market crisis on New Yorkers, including the many homeowners fighting foreclosure and the tens of thousands whose livelihoods depend on Wall Street. In response, I outlined a series of proposals to address the crisis:
* Create a new entity to buy up and quarantine toxic mortgage securities that are dragging down the markets which would allow the markets to stabilize. Last spring, I was among the first to call for a new entity modeled after the successful Depression-era Home Owners’ Loan Corporation (HOLC) or the Resolution Trust Corporation (RTC) created after the Savings and Loan crisis.
* Place a temporary moratorium on the most abusive stock transactions, many of which involve the “short-selling” of stocks. Yesterday, I wrote to the Securities and Exchange Commission urging such a moratorium, saying it would provide breathing room for the markets to recover, for investors to make accurate assessments of companies and for regulators to assess what trading practices should be permanently banned.
* Convene an emergency economic summit to show the American people their government is working together. Bringing together leaders in the administration and Congress with lenders, consumer advocates, non profits, financial institutions, and all stakeholders will allow a coordinated response to the crisis.
* Aggressively pursue and encourage mortgage modifications. I have introduced legislation to remove barriers to mortgage modification and to encourage lenders to voluntarily work with borrowers to keep them current on payments and in their homes.
* Restore competent federal oversight of the increasingly complicated financial markets. The rapid evolution of the securities and banking industry overwhelmed the current regulatory framework, resulting in a “shadow banking system” that operates outside of oversight and without accountability.
* Require transparency and accountability on executive pay. I have proposed the Corporate Executive Compensation Accountability and Transparency Act to impose new transparency rules on executive pay, end the accounting techniques that hide compensation, and provide shareholders a say in executive compensation packages.
* Ensure the accountability of financial institutions borrowing money from the Federal Reserve’s new lending facilities. Taxpayers deserve to know that the companies they are bailing out are on the road to recovery and are not throwing more good money after bad.
Speaking on the Senate floor, I urged the administration and the Congress to move quickly to adopt these proposals and prevent the crisis from worsening.
To read my floor remarks or watch the video, please go to http://clinton.senate.gov/news/statements/details.cfm?id=303208&&.
what about the part were my salary always goes up so I can keep up with inflation caused by the government printing too much money
Oh yeah, and let’s do it before we go on vacation.
Cramer just called a bottom in the housing market for next June and is talking to Pulte’s top dog, who just said the bottom is “approaching.” Sheesh.
Omigod……..the Pulte guy just said “they’re not making any more land.”
Oh isn’t that cute! How often are you going to be able to see that! It’s like seeing a siberian white tiger in the wild. He’s playing all his classic hits…
Just drove from Indio to Palm Springs and was even in Desert Hot Springs recently.. I see LOTS of land.
Just a shortage of water coming.
In fact in DHS alone(deserthotsprings,ca) there are over 260 finished new homes that are for sale,brand new, and that does not count all the empty lots, the foreclosures and the 4 sales.
The 260 brand new homes are in one tiny section of the entire area of DHS. Drove by Escena today, between Gene Autry Dr/ Vista Chino area and those empty lots for 450 homes are like a dust bowl. And that was just the few areas I had to drive by to attend jury duty.
I just drove across Iowa, Nebraska and Colorado via I-80. Plenty o’ land there too…
Somebody oughta slap him.
if by bottom approaching he means hard landing…
he’s spot on.
Continuing the analogy, a lot of aircraft crashes seem to happen soon after the pilots turn off an annoying faulty warning siren.
Pick up your pitchforks! Our work is Not Yet Done. Onto those evil bloggers next!
September 18, 2008
On September 16, 2008, the Federal Reserve announced that it would extend credit to the American International Group (AIG) under the authority of section 13(3) of the Federal Reserve Act. This secured lending will assist AIG in meeting its obligations as they come due and facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy. The Board’s H.4.1 statistical release, “Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks” will report this lending in “Other credit extensions” in table 1 and in “Other loans” in table 3, table 4, and table 5.
Other credit extensions 6,000 + 6,000 + 6,000 28,000
So far 28 B spent not bad in a few days. lol
In hard times, tent cities rise across the country
Since foreclosure mess, homeless advocates report rise in encampments
http://www.msnbc.msn.com/id/26776283/
RE: RTC II talk
I don’t see why the stock market is so happy about this…to me, it sounds like the US Government is contemplating pushing the “master reset” button to totally and finally flush the sh*t from the system. This is NOT good for the stock market in the short term, although it would be good for the stock market and the world economy in the long term (3-5 years out).
When I hear “RTC-II”, I imagine a bailout ala AIG - take the bad assets, save the homeowners that can be saved, take a severe and final markdown on paper covering those that can’t (Option-ARMs in Cali, for instance), and take several thousand pounds of flesh from the firms that are ‘donating’ the bad paper, in the form of majority ownership, loans at loan shark rates, and selling of assets to the remaining “sound” banks. Sell the houses you end up with at fire sale prices to re-prime the pump and get the markets functioning again.
If that’s how it plays out, it will be good for the stock market IN THE LONG TERM…but not for the short term, as many of these stocks will go to zero.
Anyone else see it that way, or am I way off base on this?
Regarding your take ,I think you talking of more of a clearing house sort of action ,but I think they are actually talking about this RTC buying this bad paper at a higher value than it would actually go for ,and than it’s the governments problem on how it gets rid of it and
at what loss it takes to get rid of it .
WSJ - “A big question still to be answered is how the government will value the assets it takes onto its books. One possible avenue could be some sort of auction facility, so that the government would not have to be involved in negotiating asset values with companies. Financial companies would likely take big losses.”
Obviously I hope that the Feds take the “Financial companies take big losses” avenue. We will know in coming days…
I would like to know what happened to the Housing Bill that Congress and the Senate worked on for so many months that was suppose to be the big savior for homeowners and lenders . Weren’t the lenders suppose to re-work their loans and keep FB’s in their property and stop the foreclosures ?
Try #2, see if this gets through the filters…
RTC II to me means take bad assets, mark down, and liquidate, in exchange for AIG style equity stakes and loan shark loans to the companies in question. Good for the long term, but bad for the stocks in question in the short term (see AIG). AKA “The Great Reset”. Thoughts?
redundant systems are important.
I apply that to computers, trading platforms, banks, communication lines, transportation….you know, the important stuff…
I have posted just a few comments today and its been very, very filtered…
RTC2 and inlflation are still plan A.
things that cant happen, will.
Sounds great to me….as long as they reset bloated housing values also.
Not gonna happen.
The desperation these days is palpable. I wonder if the old adage about the ‘bigger the intervention, the bigger the eventual failure’ will hold true. Every day I find new ways to be more disgusted by our leaders and the sheep they lead.
What bothers me too is I haven’t discussed these financial earthquakes with anybody outside the HBB so far. Not one person I know has brought it up.
RE: What bothers me too is I haven’t discussed these financial earthquakes with anybody outside the HBB so far. Not one person I know has brought it up.
Your not alone in this observation.
Most of my friend’s are in health care or education.
This financial apocalypse isn’t even on their radar.
What no bread? Why can’t they eat cake?
I got 2 “hey you were right” ’s this week.
One was a coworker of my husband’s. It seems he’s been going into work and discussing most of the blog points I was talking about w/him w/his co-worker. I didn’t realize I was a link in an information chain. Cool.
The other one was a family member that still doesn’t really get it. When I tell her she needs to protect her assets she just blinks and changes the subject. At least she noticed what’s going on on Wall Street. I hope she’s not relying on her broker to make sure everything’s covered.
http://online.wsj.com/article/SB122178234612954617.html?mod=testMod
(SEC to ban short selling!)
I know! Let’s pass a law to make it illegal to sell stocks!
Buy stocks now, or get priced out forever.
If there’s ever been a sell signal…
worked out great back in 1929….
Just got a call from a hyper realtor in Glendora, California. He told me that California turns around from a downturn statistically 6 months before the rest of the nation. He also said that Claremont, California bottomed out three months ago. So I better get off the fence right away.
well you know they don’t ring a bell at market bottoms
Ladies and gentlemen …
The mother of all short squeezes :
http://www.cnbc.com/id/26781646
“SEC Chairman Christopher Cox briefed Congress late Thursday of the agency’s plans to take the extraordinary step of interfering with the market’s regular functioning.”
Bingo — this is extraordinary (and possibly illegal) market interference, and the stock market’s ability to function properly may suffer for it going forward, due to the added problem of institutional risk on top of all the other risks the market is trying to sort out.
But oh to have bought stocks early in the day today! I wonder how many wise guys on the Street had advanced notice of this measure?
I stayed out of the stock market because I called it rigged,especially with the government interventions lately ,plus I can’t afford any risk because of my age .
Apparently in 2004 the SEC let up the rule on Investments Banks on their leverage requirements that allowed them to leverage these huge amounts to 30 to 1 (unlike regular banks that can only leverage 10 to 1) . So the Investment Banks and Hedge Funds didn’t have the regulations that Conventional Banks had,yet they were these lenders providing these toxic creative loan products with no regard to risk .
Combined that with rating agencies in conflict of interest with these Investment Banks or funds ,so this junk was rated AAA and you got a disaster that was the creation of Wall Street . The regular conventional lenders started duplicating this high risk loan product as well ,and of course selling it off and getting on the bandwagon of higher profits .
Apparently regular bank quality control went by the wayside ,or the defaults had not started piling in yet to call a halt to unsound lending practice by the regulators .
I’m just saying that some stupid mistakes with leting up on some sound regulations was at fault for some of this mess ,but who had the politicians in their pocket ?
Ever notice how Greenspan, Congress and Senate and other politicians are all trying to take the heat off themselves for this
crisis?
Black is white ,white is black ,gamblers get bail out ,innocent people pay ,criminals aren’t prosecuted ,spare no expense to sweep this under the carpet ,don’t let the public know what is
really happening ,even convince them all government actions are for their benefit .
“I stayed out of the stock market because I called it rigged,especially with the government interventions lately ,plus I can’t afford any risk because of my age .”
I can’t afford any risk because I’m an atheist.
hard to play a game if the losers change the rules in the middle of it
I think the 401K investor is going to leave the stock market after they make nothing over the last 10 years and find thier social security trust fund has just been spent. I see it at work many are switching to fixed income funds. A little late maybe ? Who knows.
It was bad enough that all these people thought they were going to fund retirement by buying a piece of junk piece of real estate ,
but to now find that their stock holdings have not performed or averaged that well in 5 years must be scary for these people that only have so many years to save for retirement .
“I think the 401K investor is going to leave the stock market after they make nothing over the last 10 years and find thier social security trust fund has just been spent.”
+1
CPST put in a teardrop low on a dilutive offering announcement.
just another 2 cents.
The Finest Foreclosures
How sad to lose your mansion.
http://online.wsj.com/article/SB122177752165254337.html
Hang Seng’s up almost 8% as I type…
if you are short this monster, and you cant cover your margin call…
bone cracking satiation will not be contained.
EU markets surged 6-9% at the opening today. But after the first rush hour things seem to be getting back to normal, with 4-5% gains - just enough to get back to levels of wednesday morning.
non estata culpamia
Well, unfashionably squat, and bald as can be
he’ll always keep spreads flat, he’ll never buy a treasury
But hes no bull, just watch the way he sells
Hes a twentieth century short, hes a twentieth century short
No tears, no fears, great years, no stocks
Hes a twentieth century short, oh yeah
Hes the seller of junk, and hes not afraid to ask
Should I sell to this punk, he’s not behind a mask
He wont waste time, on any ordinary call
cause hes a twentieth century short, hes a twentieth century short
Got the world locked up, drinking with cohorts
Hes a twentieth century short, oh yeah
Twentieth century short, oh yeah
Twentieth century short.
Alas it is the 21st century and shorting is not to be allowed in Third World Countries.
The cool thing is, we may only be 2/5 of the way through this mess, if the prime, alt-a, and option-arm resets are any where near what the 2007 Zelman/Credit Suisse graph indicates (not to mention prime seconds and underwater helocs). Remember in 2005 when we said that this could get REALLY UGLY? If the feds are contemplating doing Armageddon financing only 2/5 of the way through this, whoa Nelly…