I tried to sell some stock at TD Ameritrade and the system is down. Anyone else experience this? One way to keep a bear market rally going. Just don't take any sell orders.
"Those banks have been nationalized, overtly or not overtly, which is something that hasn't happened before in the history of developed countries," Volcker said. "How to wean them from government support? That is the challenge of the future."
I am sure they covered that in their weekedend meetings? LOL!! What a mess
BBC point out on the way to work that the UK is actually investing more in their banking sector than the US is in ours... did we spend the rest of that 700b on letterhead and advertising or something?
Unit - Ive spoken with them about this repeatedly. You have to be an APEX customer with them, and then on days like this, be ready to run your streamer and make your trades by phone. It's annoying, but Id probably be more annoyed to have to move my acct at this point.
JP, well capitalized conservative banks don't have to dilute their shareholders and hand over their dividends to the treasury.
Wow. What great a reward for running a conservative business.
Let's face it: Well-run institutions are being penalized enormously. And we all suffer, because those are run by folks who would be restoring long-term confidence + growth. Instead, we let the current batch of idiots go out and make more stupid bets.
Unless we think they're significantly smarter today than yesterday and will suddenly allocate their capital for great business returns.
Windowdog: I just reread what I wrote; please don't confuse my generic anger with anger at you. I just need to step away from the keyboard for a while.
In the best case, this postpones day of reckoning to Q1/2009; just like in Mar 08 they postponed the day of reckoning to last week.
Fundamentals don't get solved by any of this:
Foreclosures still climbing, shadow inventory still high. HOUSE PRICES STILL UNAFFORDABLE BY INCOME LEVEL
MBS, CDS will continue to drop as home prices keep dropping, even into areas like NYC, NJ, PA that was relatively calm (compared to CA, FL).
Consumers still tapped out. Home ATM is gone, jobs are going, and no credit still.
USA Debt mountain/pyramid on the whole still shrinking -- which means negative money growth.
Money already lost by people from home-loss crowd, pensions, cashed-out-401K are still lost. This is a huge drain on the boomer's ability to spend. Now they've become net liabilities to social networks.
How did the recent actions address any of the above????
What it did address, however, is:
A. Foolish/reckless banks are made viable and can continue to operate.
B. Any counter party risk via derivatives is now Govt Guaranteed (Risk Free money?).
C. Such a massive and coordinated injection is tilting the equation towards massive hyperinflation, which will hurt retiring population/retirees.
Dah Johnny - read BBs chit chat in the WSJ yesterday. His main focus was restoring confidence, and the way to do that, IMO, was to get a nice big bounce in the market. And as I said repeatedly the past few days...now what? This is also why CR wont update his forecast until he gets his expected move in the TED, and those other charts he put up. Well, I think he might have sort of thought they'd have already moved a bit more today. Ya know?
"Those banks have been nationalized, overtly or not overtly, which is something that hasn't happened before in the history of developed countries," Volcker said.
Is Sweden not considered a country or just not considered developed?
Do you think Ben Bernanke and Paulson AKA Moses and Aaron can part the red sea of insolvency and lead us through on dry land to the promised land? Nope, me either.
10 year treasury yields up above 4% and they should only continue to rise as all of this new government debt goes on the marketplace and has to find buyers.
Get ready for much higher mortgage rates and a much worse housing bubble.
Is that TED spread report accurate? CNN says LIBOR is at 2.18%, down from above 5% on Friday. Looks like the credit freeze is in fact thawing unless I'm missing something. Of course, we've bought that at the price of higher mortgage rates in the near term and inflation in the long term.
as I understand it, two things raise credit spreads (such as TED)
they are
1.) risk
2.) Higher rates
so my guess is we will see the actual risk spreads come in, but the actual spreads will stay the same as (nominal) rates rise pricing in significant future expected inflatio
"Altair - check out 3 month LIBOR - thats the relvenat measure for businesses and mortgages. Its only dropped a small amount. Still elevated."
You are correct- according to WSJ:
The three-month dollar London interbank offered rate, a benchmark that is meant to reflect banks' borrowing costs, fell to 4.7525% Monday from 4.81875% Friday. The three-month Sterling rate fell to 5.60% from 5.8125% Friday.
It's a suckers rally to be sure. But if the rally keeps America's answer to Idi Amin out of the White House, it'll be $5 trillion well spent. Good thing these are conservative Republicans running things, other wise I'd swear I was looking at a communist takeover of the economy.
Paulson on equity stakes: '"We regret having to take these actions," Paulson said. "They are not what we want to do, but what we have to do to save the economy.
PS - I'm just protecting my Wall St buddies because I'm outta here soon suckers !
Altair writes:
10 year treasury yields up above 4% and they should only continue to rise as all of this new government debt goes on the marketplace and has to find buyers.
Get ready for much higher mortgage rates and a much worse housing bubble.
Altair | 10.14.08 - 10:03 am |
NO! higher mortgage rates directly reduces what people can afford to pay. That makes home prices fall, rather steeply too.
With Asian Crisis, Mexican Crisis, Russian Crisis we were able to get through because of a huge monolithic anchor and engine of "growth"--the USA. There's no one to help pull us out of the quagmire.
Good thing these are conservative Republicans running things, other wise I'd swear I was looking at a communist takeover of the economy.
On the plus side, perhaps the republican party will rethink it's whole mission after it gets wiped out in nov. For every action, there is a reaction. I just hope they don't go the idi amin route.
I'm numb. It can't say whether I'm scared out of my mind or totally depressed.
Moral hazard is rampant. There is no risk pricing left in the system. Zero, zilch, nada.
We are still individually responsible for our retirement planning but how can you plan when you have no friggin' idea whether a decent discount rate for future cash flows is 2% or 10%?
What stops them now from nationalzing every friggin' sector one after the other as each one collapses? Maybe they will, maybe they won't.
Nationalization spells inflation (unless government is efficient) so you don't want to hold bonds. But, longer termstock markets make no sense in a nationalized economy!
Basically we are left to manage our funds on a day-to-day trading basis. That is not investing but pure speculating. Plus most of us have day jobs which take away from our investment planning!
The whole thing will collapse but what if the band-aids manage to hold the whole thing together for another 20 years... just in time for my own retirement?
Well my real time tickers for the ultrashorts just shorted out. Can't get the skinny even with refresh. Have a feeling something is up. Or maybe really down.
i think it is about time for Moody's and other rating agencies to start looking at the sovereign credit rating of a few countries that are now of questionable solvency with this debaucle.
with what tax rate could the US possibly pay this off? and in how many generations? any tax increase is virtually impossible.
And here I thought the Involuntary Capital Injection would hold the patient over at least until Wednesday. I have not gotten back into the ultrashorts yet!
Basically we are left to manage our funds on a day-to-day trading basis. That is not investing but pure speculating. Plus most of us have day jobs which take away from our investment planning!
this is what has been keeping me up at night for the last month.
i dont want to have to daytrade my retirement accounts in and out of bubbles every five years.
This is what a global meltdown looks like. Have thrown everything at this beast and still the plunge is looking worse than the '29 event. Without palliatives, plunge protection, and even quasi-illegal intervention can't stem the selling tide for more than a few hours or session.
Gem writes:
When Volker says "considerable recession" is that Volkerspeak for The Greater Depression?
Volker does not mince words. He has always had the strength and fortitude to say and do what he thought was right for the long run of the US economy, so I suspect he means really a considerable recession.... and he was the last Fed Chair to have engineered such a thing (when he correctly raised rates to stem inflation).
If Volker were the Fed chief for the last 2 decades, we would probably have smaller and fewer homes, smaller deficits (of all kinds), lower inflation, fewer Asian toys in our homes, a stronger USD, and a much more boring 2008.
History I hope one day will look favorably on Volker and Carter.
700 billion today is the same 700 billion before the market crashed for a week. now 1/3rd of it is going to 9 banks that are STILL upside down in CDOs and CDSs. it's enough to keep them in business until after the election- possibly enough to finance the upcoming Christmas. we're still on the hook for a trillion dollars on this bailout. success on wall street will not trickle down this time.
It is bogus...unfortunately there are trillions of dollars of loans priced off it.
The profit spigot gets turned on and off at will. They have approached the point where it will be turned up permanently. All rates going up...count on it.
This event is political, not economic. The PPT couldn't kick the can anymore so the Republicans decided to go all in--$3 trillion to pump up the markets. I'm guessing they will have peaked too soon.
We are just socializing the losses. Gains, which were stolen, are privatized.
"In the best case, this postpones day of reckoning to Q1/2009; just like in Mar 08 they postponed the day of reckoning to last week.
Fundamentals don't get solved by any of this:
Foreclosures still climbing, shadow inventory still high. HOUSE PRICES STILL UNAFFORDABLE BY INCOME LEVEL
MBS, CDS will continue to drop as home prices keep dropping, even into areas like NYC, NJ, PA that was relatively calm (compared to CA, FL).
Consumers still tapped out. Home ATM is gone, jobs are going, and no credit still.
USA Debt mountain/pyramid on the whole still shrinking -- which means negative money growth.
Money already lost by people from home-loss crowd, pensions, cashed-out-401K are still lost. This is a huge drain on the boomer's ability to spend. Now they've become net liabilities to social networks.
How did the recent actions address any of the above????
What it did address, however, is:
A. Foolish/reckless banks are made viable and can continue to operate.
B. Any counter party risk via derivatives is now Govt Guaranteed (Risk Free money?).
C. Such a massive and coordinated injection is tilting the equation towards massive hyperinflation, which will hurt retiring population/retirees.
I was looking at a communist takeover of the economy.
Except that in communism wealth is redistributed from the rich to the poor. The correct term for this form of government is oligarchy or crony-capitalism. And if you think this is a sudden transformation you are naive at best.
"Funny that last week Haines told Burnett she was relentless, referring to her continuing optimistic spin."
My respect for Haines is going up. Yesterday he had on a guy touting stocks being a bargain due to forward earnings being underpriced. Mark asked the guy what his earning estimates were for the next 3 months. The guy balked, said "we don't calculate exact estimates, just the trend", then Haines called BS on his claim of stock values based on earnings!
I think that they're scared to hell to think that Christmas won't come if they can't free up liquidity for merchants and buyers. Isn't Christmas the source of something like 25% of all consumer spending, which makes up 2/3rds of our economy? So Christmas is around 16-17% of our whole economy...
I know one thing is for sure, my boys aren't getting as much as they did last year. $100-200 tops each, and made in the USA where possible.
DK....my x-mas gifts to my family wont be made in the USA (made is Switzerland) - but they are finanicially and ecologically friendly.
Sigg water bottles
1) Lightweight aluminum with a BPA, leech-free coating so your water is safe.
2) Lasts a very long time
3) Use tap water instead of bottled water - save up to hundreds of dollars a year.
4) Use fewer platic bottles = better for the environment (USA trashed 30 million (yes million) plastic water bottles per DAY)
"Hmmm. Does anyone actually move out of public housing?"
Yes. My father was raised in a housing project. When he moved out, at the ripe old age of 17 to enlist in the Air Force, he always looked back. And, so did his children and his grandchild. I remember taking Sunday drives as a kid, he always made a point of passing by that place he grew up in. It still stands, slowly crumbling yet inhabitated, mostly by Haitian refugees.
Forget it, I am not buying squat....My children have had their fill no more! and it sits on a shelf in a Museum like display never picked up never used I am done///$100 to $200 if I am in a good mood.
"Except that in communism wealth is redistributed from the rich to the poor."
In communism poverty is redistributed so that almost everyone is poor. I remember a journalist in Arkhangelsk gazing venomously at my micro-recorder and screaming that he would never be able to afford such a thing, that he'd always been poor and would always be poor.
haha, i love the plug for the Swiss water bottles. i bet that Switzerland imports much less percentage-wise from China than the US does. i also bet that it's exceeding difficult to immigrate to Switzerland than it is to the USA. i also bet that Switzerland doesn't outsource jobs like they are in the USA. say it ain't so.
Dimon wants the job for the Secret Service protection (he'll need it) AND to broker the same deal Paulson got. No taxes on recent earnings. Tax parachute and USA trained bodyguards. Priceless
"What do you guys make in the USA these days? I buy Florida oranges but has been a long time since I have seen a "Made in the USA" sticker on anything."
Beer & cigarettes. That's what we make and that is what everyone is getting for Christmas.
Paulson on equity stakes: '"We regret having to take these actions," Paulson said. "They are not what we want to do, but what we have to do to save the economy.
~~~~~~~~~~~~~~~~~
Paulson on equity stakes:"We regret...these actions...are not...to save the economy."
Oh Sheila... "whatever it takes"... I am not sure this fervor is what markets want to hear.
If she had a passionate tryst with Neel, they could have super intense babies swearing by old gods and new to use every cent of taxpayer money to prevent recessions from happening in 2040-2090. By Shiva and by Jesus, by Kali and Mary, we will not leave one dime to taxpayer pockets until the business cycle is abolished.
See, this is the kind of day I warned about last week. The 200 plus futures pop the night before, start out with a jump, then turn to crap. Yesterday was the one exception. This is why I sit and watch, and hold the waterbottle for the first string. Coach wont let me play.
Dr. Doom: US Bailout Plan Will Probably Fail Dr. Doom: US Bailout Plan Will Probably Fail - CNBC
The proposed $250 billion infusion into financials is meaningless -- merely a drop of water on a hot stove, Faber, popularly known as Dr. Doom says. These measures do not address the fundamental problem.
"Bubbleheads on bubbletube are talking about a new bull market here."
To state the obvious just for the satisfaction of having stated it: This market is now a casino game and all action is speculative betting on future moves, not investment in stocks expected to produce income or profit.
Because of this, I will predict again: the crash of 2008 has not yet happened, but it will.
What goes up must come down
spinning wheel got to go round
Talking about your troubles it's a crying sin
Ride a painted pony
Let the spinning wheel spin
You got no money, and you, you got no home
Spinning wheel all alone
Talking about your troubles and you, you never learn
Ride a painted pony
let the spinning wheel tur
With all the sucker punches this admininstration has given traders with unannounced and quasi-illegal monster moves, no wonder we're twitchy! No longer nimble, we've a radioactive celerity with our money. Paulson has conditioned the markets to only nano-second confidence. He's turned the most devotional market devotees into hardcore atheists. Get ready for 1000 point up/down days.
By the end of the week Ben will announce an "unfu@ckinglimited" liquidity infusion.
P.S. In math that's called infinite to the infinite power. Never know what you are going to end up with. Good luck Ben! LOL
There is a great Star Trek episode from the late 1960s entitled Specter of the Gun. Kirk, Spock, McCoy, Scotty and Chekhov are compelled to fight Wyatt Earp and his gang in a showdown at the O.K. Corral. Curious aliens have, of course, orchestrated the battle: some kind of a moral psychodrama. Anyway, in this episode Mr. Spock develops a knock-out gas from ingredients found in Doc Holidays office. The protagonists logically figure that if they can render the Earp Gang unconscious, then they wont have to fight them at the O.K. Corral. (And as we know, the Earps defeat the Clantons at the gunfight at the O.K. Corral. And as Mr. Spock so aptly points out, history cannot be changed.)
All are certain that the gas will work; but just to be sure, Scotty volunteers to be the test subject for the agent. Spock, for one, is spellbound, when the potion fails to work. Fascinating he quips. Spock goes on to explain the enormity of this paradox. The potion he explains, must work. By all laws we know, it simply cannot fail. And yet it has failed. Spock goes on to theorize that a massive manipulation of the crews brain patterns must be occurring. He also explains that this knowledge, if used correctly, can save the crew from certain demise at the O.K Corral.
Back to 2008. At some point, the massive manipulation of our brains, orchestrated by Spanky Paulson and all of his uber-wealthy cronies, will end. Reality will intrude. The global economy MUST crash because there are simply too many dollars "worth" of worthless assets gathering dust in the safes and hard drives and account ledgers of the world's financial instutions. Tens of Trillions of dollars worth! And no amount of mass hypnosis (in the form of 'pundits optimism'), or empty words (in the form of government guarantees on EVERYTHING), or spin can change reality. Get that? Reality cannot be changed.
"But you beer is watered down rats piss and Marlboro's give you cancer....."
Kick start the party with boilermakers. We also make Viagra, that will be on the shopping list also. I wonder if Mellisa Lee could be enticed over for a weekend?
I've been watching the SSE index as I have Chinese bluechips as part of my IRA portfolio and am very confused. We are seeing massive rallies 11% in the US and 14% in Japan yet the Shanghai Index was down by over 2% this morning when the market closed. What gives? Do they know something we don't know?
Fed and Treasury policy mandates every member of PPT must have daily 3 fresh undergarments as recent events have proven to rugged for single daily change.
Fed and Treasury policy mandates every member of PPT must have daily 3 fresh undergarments as recent events have proven to rugged for single daily change.
I read that Paulson and Bernanke have been wearing "Depends"
Instead of giving banks 250 billion, they could have helped 2.5 million people stay in their homes by refinancing at more realistic market values and nationalizing the sale profits.
But in terms of difficulty, 2.5 million homes vs. 9 banks is a pretty easy choice. I'm sure that there are plenty of loan agents out of work to get it done.
it's easy...you just do it. Find some ETF's (plenty of Ultrashort products available-QID x2 Tech short for example) or a sector you know fairly well and just short it.
I can vouch for AC - but the pain was worth it. The key is, there is learning the methods of shorting, and there is learning when to short, and then there is learning, who is out there trying to give you a wedgie. You need to know all three. Learning just the first puts you in AC's predicament.
and I do agree with AC.....it's not an easy thing to do psychologically speaking. You must be aware of what you are doing. Took me a few year's to be comfortable with it.
IMO china must be exploring it's nuclear debt option. Wouldn't you be at this point?
Yes, but I think the problem at this point is that the US and China have become conjoined twins. They're essentially sharing organs and any attempts to separate the two could be catastrophic for both nations.
China particularly has to be worried that a severe recession could cause so much internal unrest that it could threaten the government.
Is there any safe way off this debt mountain? With the massive market interventions, it sure seems that the Feds just want us to go back to our spending ways.
Anecdotal evidence anyone?
Here are two:
Highly paid partner at leading consulting firm: Concerned about his job, slowing down discretionary personal spending on food/clothes/trips/etc.
Highly paid executive at leading tech firm: Canceling vacation and car purchase, hearing of peers doing the same. Waiting to see how things turn out.
MS writes:
"How can one learn to short the market?"
MS - Please don't take this the wrong way, but this is not a trading environment where you want to try to learn something new. You will with probability greater than 0.5 probably just lose money, and possibly more than you thought you could...
If you are remotely unsure about how to execute a particular strategy right now, stay in cash and sit on your hands... or get a paper trading account someplace (open an Interactive Brokers account and create a paper trading account) and spend a few weeks getting used to how things work.
This is not the time for anyone to get creative. Stick with what you know. If you don't see any opportunities to make money with what you already know, focus on keeping what you already have from being lost.
have to agree....China's internal recession is a bigger factor than our own. Not too many people understand that IMO. They are already pissed at us for the "investments" they made last year. CIC has got to be boiling over BX methinks...and that doesn't even scratch the surface....massive inflation, market off by over 60%, they are a great example of growing to fast with OPM....ours namely.
I'd like Laura Tyson as Sec of Treasury - chair of council of economic advisors under Clinton, does not carry the baggage that Robert Rubin does.
She's one of the pigs. I read something a few weeks ago about her vetting the bailout for Dems in congress. The article went on to explain who she works for now, how much money she makes and how her firm would make out with the bailout
Robert Rubin was a co-conspirator with greenspan in engineering the strong dollar policy which fueled already filthy habits of spend and spend. he then went on to lead C into the ground. Further he was a merger arb guy at GS, i.e. the filthies of the lot on WS. Sad that people would look to anyone who was associated with either party / adminsitration over the past 2 decades.
Credit Crunch Cosmetic Beauty Consultations With Wendy Lewis From Your Own PC
NEW YORK, October 14 /PRNewswire/ --
International beauty expert and leading image enhancement consultant Wendy Lewis (http://www.wlbeauty.com) dubbed The Knife Coach(R) by the media, understands that beauty is on a "need-to-do" budget in today's economy. To bridge the gap between her phone consultations and more personal meetings, Wendy Lewis has introduced another valuable beauty service -- live Webcam consultations -- which clients can conveniently conduct from their home or office anywhere in the world.
Advice seekers unable to travel to New York, London, Paris or Palm Beach where Lewis holds appointments, can dial her directly through Skype(TM), a free Internet-based phone service and talk "face to face" with Wendy -- live -- via the Webcam feature. Clients will receive personalized counseling to answer all their questions and address their concerns in real-time. Webcam consultation fees are US$300.00 per hour for U.S.-based clients, or the equivalent in British Pounds or Euros for clients from abroad, a savings of US$100 over her highly coveted in-person sessions.
Told you so. Crack-up boom is over, baby. Keynesian-fed financial Armageddon is ready to go off. Keynes is dead. Krugman will be the last Keynesian to get a "Nobel" prize (actually, the prize is given out by "Sweden's Central Bank", didn't you know that, cutie?). Long live Ludwig Von Mises and the Austrian School of Economics!!!
Does anyone know anything about Soveriegn Bank? My mortgage was with them, and I liked the fact that they didn't sell their loans. Maybe that backfired on them, as they are getting bought out by a Spanish bank. Wonder if my future statements will be in english? Still payable in USD? Or euros?...
They will not be weaned from the government, now. What has been done cannot now be undone. Banking losses will now disappear into the black hole of government balance sheets worldwide. Indeed, you will now see lending to zombie enterprises (altogether now, say GM, Ford, and Chrysler!) so that they can employ born and bred dopes.
"DK writes:
Instead of giving banks 250 billion, they could have helped 2.5 million people stay in their homes by refinancing at more realistic market values and nationalizing the sale profits."
Or they could just bulldoze all homes that are foreclosured...
I have a friend who is trying to learn in this environment and I do not envy him at all.
I must caveat what I said in the previous thread...the mechanics of shorting is easy...not the actual comfort factor. That takes time and as Peter-san has pointed out, this is not the time to begin a wholesale restructuring of what you have used in the past.
There are alot of pissed off people who sold on Friday morning...my mother in-law is one of them.
McCain Unveils New Economic Stimulus Proposal: Tax Cut For Millionaires
On Monday, Barack Obama announced a new economic rescue plan Monday geared toward middle-class voters. McCain didnt announce anything, which caused some head scratching.
And now, on Tuesday, McCain is unveiling his new proposals, going back to the well of tax cuts for the rich. McCain is planning to announce a two-year cut the capital gains tax on stock profits in half, from 15 percent now on stocks held a year or longer to 7.5 percent a $10 billion proposal.
Old John McDepends really means it when he says My Friends.
The same way my dumbass did. Go with your gut, buy short and ultra short ETF's. Execute the trades. Watch the ticker and be consumed by mood swings, anxiety attacks, glee and utter despair.
that is why I noted that Tyson does not carry the baggage that Rubin carries.
Anonymous,
Tyson's principal employer is the University of California at Berkeley, where she is a Professor. Yes, she is or has been on the board at MS, but that is less of a conflict than you'll find with just about anyone else, and her politics are much more labor friendly than just about anyone else likely to be a candidate for Sec of Treasury.
tell anyone upset about selling on Friday to wait a few days, or a few weeks. My hunch is that by then they will feel more comfortable with their action, maybe even be happy about it.
Sandy Weil was on tv this morning saying since we can borrow at 1% right now and are getting 5% from our 'preferred' bs stake, the taxpayers are already making money. ha.
This is the best way for a beginner. Your losses are limited to your investment. And you can just forget about them for awhile without losing everything.
You were pretty gung-ho on the Friday rally, and I said there wouldn't be a turning point for a bear market rally until the second last week of Oct, allowing the rally to begin in the last week of Oct.
Before we get until that target we have earnings reports, economic reports (particularly consumer and manufacturer surveys -- which are still worse than expected so far), options expiry, and some possibly confusing government interventions (Dimon of JPM was angry that the injection was forced according to a friend of Yves' at Naked Capitalism, general idea being it devalues the saving up for rainy days JPM did).
Come the last week of October there will be a respite from negative economic surveys, earnings reports will have given some idea and certainty of companies, the Fed will do the next 25bp cut, the CP market will loosen up even if the gov't has to lead by example in buying, would be easily within the 90day avoid end of year rollover window, house price declines will stabilize due to the season, we face fewer foreclosures heading into winter as it is illegal in some jurisdictions to evict then. There are other reasons behind my thinking but that is a good overview of my perspective.
Things will then take a turn for the worse heading into the spring. New surveys and earnings will rattle some people. For others it will be auto-plant closures (they typically shut down the plants twice a year for maintenance and upgrades, matter of minimizing cost), and accelerating business bankruptcies (weak consumer, expensive financing. first time for that combination in 20 years.) The key will be the credit markets, and its key is housing prices. If the credit markets can be solved, there is still a hard recession to face, as we have learned through many blog postings -- housing (+consumer) led recessions are the roughest.
I could see the next President approving a make-work public-works spree, and even though it would directly help employ laid off construction workers, I am skeptical that the economic response will be quick or effective.
another input for shorting (and this goes for anything else FTM). You must have an entry and exit strategy that is independent from the daily market "wash". IF you have an entry point PLEASE have an exit strategy on both sides of the entry. You are not always going to pick winners and you will have loser's...count on it. making sure the losers don't become BIG loser's is the point of having an exit on both sides of the entry.
There are two ways down. First is to pay it off over years and years as it saps the work of future years and limits new investments and technologies. Second is to promote inflation (wages and prices) so that the debt melts away and new wealth can be invested in productive enterprises.
Which method do you think the world will choose? So: protect yourself.
This is the best way for a beginner. Your losses are limited to your investment. And you can just forget about them for awhile without losing everything.
Perhaps not. These funds have as their principal assets a swap with an unnamed counter-party (usually an equity swap).
If the counter-party turns out to be solvent, great - but if you bought an ultra short fund, the further it goes up in expected value, the more likely the other side of that swap is insolvent and unable to pay up.
So, as with anything else, the answer to "how low can it go?" is zero.
Can the banks still fail? Will fail? Just wondering if there is still another shoe to rdop on some of these big banks? Is this band-aid not strong enough? JPM down 5% today.
I really don't see the point of McCain's capital gains tax cuts on stocks right now, since I assume most have lost money if they've held their positions for at least a year. It's a do-nothing proposal IMO.
I can just see C saying that they intend use a portion of their $25 billion to set up an IT center in Hyderabad and the rest as severance for the 15,000 employees the intend to fire.
Evil Henry writes:
"I could see the next President approving a make-work public-works spree, and even though it would directly help employ laid off construction workers, I am skeptical that the economic response will be quick or effective."
I agree with your general assessment that the recession/depression will be worsening as we go throught the winter and into spring. But on fiscal interventions, I do think an Obama administration would have a properly bifurcated vision: both short term relief and long term infrastructure investing. There is lots of attention to the latter in Obama circles. Lots.
Didn't Citibank just strike a huge deal with an Indian outsourcing company? And we are giving them 25 billion? Why aren't the presidential candidates talking about THAT?!
Reserve Misses Target for Distributing $20 Billion to Investors
By Christopher Condon
Oct. 14 (Bloomberg) -- Reserve Management Corp. said it failed to meet its target of returning $20 billion to investors in its frozen Reserve Primary Fund yesterday because it couldn't calculate their holdings.
``The process of determining accurately the number of shares each investor held in the Primary Fund has proven extremely complex and could not be completed in the originally anticipated time frame,'' the New York-based company said in a statement posted on its Web site. Ming Lee Hatch, a Reserve Management spokeswoman, didn't immediately return a phone call seeking comment. Reserve Misses Target for $20 Billion Distribution (Update1) - Bloomberg.com
FFDIC writes:
Weaning the banks from the dole will be trivial from weaning the government from controlling the banks.
jon | 10.14.08 - 11:21 am | #
Not if McCain is elected and Phil Gramm is in his administration.
. . .
Indeed. If Gramm is Sec of Treasury, then the problem will be the opposite, i.e., how to wean the govt away from being controlled by the banks, which is the problem we already face with Paulson/Bush.
Banks controlled by the govt! I wish. Paulson won't even take any voting rights with his equity. Voting rights! A competent government would demand colonoscopy rights over the banks right now! Ask the Swedes how to do it right.
Or they could just bulldoze all homes that are foreclosured..."
But they're worth something...
DK
They may be worth something, but their effect is to cause the price of houses to continue to fall and cause the value of their financing instruments to fall. So, if you get rid of oversupply, you get rid of the rippling drag...
This, big time. The government never gives up a power once it has it.
I so wish that were true. If it were, we'd still have Glass-Steagal and the failure of a single bank wouldn't threaten to bring the entire banking system to a complete halt. But, unfortunately, the government did give up that power, and any important financial institution can blackmail the government into almost unlimited assistance.
From the credit desk, we see the guarantee programs as a transformative event that has financials as the new sovereigns, and the sovereigns as the new monolines," said Brett Williams, credit analyst with BNP Paribas.
"Our argument is simply that as credit risks are transferred from the banks to the sovereigns, so too should the spread risk premia," Williams added.
Credit spreads have ballooned since September amid fears the financial crisis will spread to Asia, especially in countries such as South Korea, Indonesia and India that are seen having weaker current account positions and where the bank sector may need financial assistance.
Analysts said corporates would be ignored in the initial stage of the rally and these credits would attract buying only if the recovery was a sustained one.
"I dont think we are out of the woods yet. At this point I would sink my teeth into sovereigns and banks which would be supported by the government. I would not look at corporates," said a Singapore-based credit analyst
It didn't work in the 30s to revive the economy, and it is even less likely to do so today. The pool of real savings in the US is in a dilapidated state, and government borrowing will simply crowd out even more private investment leaving people even poorer than they would be had you done nothing. In addition, it is impossible to build any public work in this country that isn't vastly overbudget and behind schedule. You will end up spending 2 trillion dollars for a dozen bridges and a hundred miles of commuter rail, and you won't get them finished before Obama dies of old age.
What does Volcker mean by the phrase "the real economy"? It almost sounds like he is saying that the parts that are already in serious trouble are not part of the real economy. This is a very exciting idea, because it suggests an obvious solution: we split the economy.
In the future, we will have a real economy and a fake economy. The real economy will provide food, clothing, and shelter (add what you want to this list). The fake economy will do whatever it's doing now - judging by what parts are in failure, Volcker would probably include the creation and manipulation of SIVs, CDOs, CDSs, and the rest of that stuff.
The fake economy will have its own currency. I'm imagining something like the Second Life currency - in fact, come to think of it, Second Life, World of Warcraft, and so on are pretty good models. People can, if they want, have a fake-economy job, where they construct and trade elaborate investment securities all day, making trillions of fakedollars for their fakecompanies, and earning fakebonuses of millions of fakedollars for themselves.
However, to prevent the fake economy from damaging the real economy, the two currencies will not be interchangable. You can't use your fakedollars to buy food or pay the rent; you have to get a real job that earns real currency for that.
In this way, we keep everyone happy. The people who need the rush of those billion-dollar deals can spend their time (or most of it; after all, they still have to pay their rent) in fakeeconomy jobs. If some of them screw up and bring down the fake economy, it won't matter to the real economy.
How does cutting long term capital gains tax for stocks do anything for most of America invested in 401k's, pensions, roth, etc? Oh it doesn't. Who is advising this guy. I am very afraid of Obama but McCain may not be competent to lead. What a country.
I've thought about buying gold, but I'm concerned by the possibility that the government might confiscate it in some future crisis or set a price cap. How realistic are these threats?
Just wondering if there is still another shoe to rdop on some of these big banks.
Quarterly reports. Now that banks won't be able to leverage profits by going 40:1. Plus credit card usage is considerably down as shown by BAC's report while delinquencies are up. You can buy up all the hoopajoops you want, but it's difficult to buy up a new revenue model.
w writes:
How does cutting long term capital gains tax for stocks do anything for most of America invested in 401k's, pensions, roth, etc? Oh it doesn't. Who is advising this guy. I am very afraid of Obama but McCain may not be competent to lead. What a country.
Who is advising this guy? People who have disdain for J6P's and rely on their ignorance to get elected
What fair econ said. We are in this horror show because banks cannot self-control / self-regulate. Never could, never will.
Time to throw momma Ayn from the train.
Best we can do is a fair market, with idiot behavior punished and transparency/solid business practices rewarded via regulatory referees. Real ones, with teeth.
I am praying the Dems win in November so a little "tough love" can be provided. I agree Volcker would be magnificent as either Fed Chair or Sec. Treasury. He might for one term, obviously his brain hasn't suffered any deficits. If anyone could put the fear of God into the new breed bankers and Wall St. he's the man.
I think O is pushing for the 3 month moratorium on foreclosures so the Congress can ram through bankruptcy reform allowing the judges to do cramdowns and I think they will raise interest rates to get the last of the housing bubble prices through the system.
"I've thought about buying gold, but I'm concerned by the possibility that the government might confiscate it in some future crisis or set a price cap. How realistic are these threats?"
price cap possibly....outright confiscation? Does'nt stand a chance..the logistics boggle the mind with that.
The real problem now is physical delivery...buying today you are looking at 3-4 months for actual delivery....and spot pricing? not gonna happen. Silver getting to be the same way.
MsIndy writes:
Do you think McCain is trying to help those who sold during the past month?
No he's not. If you sold during this past month you have losses. McCain wants to continue Bush economic policies of supply/side economics. Give tax breaks/cuts to the wealthiest and they will create jobs for us morons
Young people may not be familiar with what someone like Volcker means by that. It means the "people economy" or political economy. Good and services providing by and to people for real money. It's an interesting concept that would be nice to return to.
I caution against paper trading.....you get a false sense of security when there is no money on the line IMO. Start with 10 shares of so...
Ok, that is what I will do when I think there is an opportunity. I will report on my outcome, good or bad. And I will look into options. Thanks to all again!
In Poland, in 1500, compulsory labour was insignificant; statutes of 1519-20 fixed it at one day a week or 52 days a year. By 1550 it was fixed to three and by 1600, East European serfs had to devote six days a week to compulsory labour. Their daily extractions of wealth and comfort came to depend entirely on the good will and pleasure of their lord.
Yes, we may pretend to our freemen status. But we see the historical precedent.
BTW Put options are another possibility however that's a whole different ball 'o' wax. Stick with something that doesn't have an artificial time limit like options do for starters.
No he's not. If you sold during this past month you have losses. McCain wants to continue Bush economic policies of supply/side economics. Give tax breaks/cuts to the wealthiest and they will create jobs for us morons
Igor | 10.14.08 - 11:40 am | #
Not necessarily--many have had gains but liquidated.
They do, but not enough to cover everything. They also lay title to gold in the hands of other custodians, or so I read last week. And therein lies the rub.
I say that as someone who holds some GLD. But plans to get out in the near-medium term even as I hold on to physical gold.
Elvis writes:"they could just bulldoze all homes that are foreclosured...their effect is to cause the price of houses to continue to fall and cause the value of their financing instruments to fall."
Elvis, not to be mean, but I think that your statement shows a severe lack of understanding of what is happening:
Bulldozing the collateral backing the base instruments would crash the "value" of the instruments (and any bets made on them). You would instantly and completely change asset-backed debt into debt that will never be paid back (even worse than unsecured debt). If you want to see panic in the entire financial system as these "assets" get written to zero, you could hardly do better than destroying the collateral backing them.
Foreclosures aren't the reason house prices are coming down. The housing downturn started before foreclosures reached even the long-term averages. In fact, it was falling house prices that started the foreclosure boom. The lack of exotic financing and/or higher wages/inflation is what is causing house prices to fall towards the long term (sustainable) averages.
Anyone who thinks Volcker really gets listened to in an Obama administration is pretty naive. Volcker is only there to convince the socially liberal Reps to vote Obama.
Rubin is the kind of guy Obama will look to in his admin, not Volcker.
Obama will do for America what he did for the Southside of Chicago. Nothing.
He will have to pander to the constituencies that elected him which means the public sector unions, the Black Caucus and those who live off of government spending.
The 'real' economy will get to pay for it all till it peters out under the burden.
Banks can self-regulate -- the problem is that they self-regulate at the desk level where going for broke is encouraged. The executive level of the banks see no reason to limit those excesses because they have the short term bonuses and the long term puts the government implicitly (and now explicitly) provides. If all banks move in the same direction, there is no risk the government put cannot be exercised.
Pretty much what I just described is the social structure of a mob in a riot . . .
Just did some quick research on gold confiscation or price caps. They look to be big enough threats to make gold undesirable as a "bunker" financial asset.
I'm starting to think about buying foreign currency to protect against the impending dollar collapse. But what currency? How about the Canadian dollar? I can drive up to a bank account there, plus Canada's economic future looks bright with their oil reserves.
I often see comments here, either saying overtly or implying as a "given", that the US exports a few useless objects or services. And there's a common conception among some here that US manufacturing has vanished or become insignificant.
At the link below is BEA's breakout of exports by category by quarter. Scroll down to sec. C "Trade in goods by principal end-use category."
It didn't work in the 30s to revive the economy, and it is even less likely to do so today. The pool of real savings in the US is in a dilapidated state, and government borrowing will simply crowd out even more private investment leaving people even poorer than they would be had you done nothing. In addition, it is impossible to build any public work in this country that isn't vastly overbudget and behind schedule. You will end up spending 2 trillion dollars for a dozen bridges and a hundred miles of commuter rail, and you won't get them finished before Obama dies of old age.
Totally agree.
are there any good academic stuidies that look at infrastructure readiness / development and GDP correlations. off the top, I keep thinking of high speed train (and well kept highways) in France and the morbid GDP etc.. Infrastructue (unless toll) do not generate tangible returns (unless privatized). so if that is the route, why not bid it out to infrastructure funds and let them price the value and capture the rents. The money raise could be better directed to r&d and potentially cash flo9wing enterprises that provuide prospects for growth. not sure how a road ensures anything other than a worsening budget deficit.
We are all under the userer's thumb; as today the stability of the past has been replaced with justified fears that all our stored wealth and future endeavours will be devalued by the arbitrary powers to debase the currency and the capricious whims of our leaders to spend further debt. Cereal growers, shepherds, and carpenters have had their livelihoods demolished as indebtedness has replaced production. Moneylenders and gilded pawnshops have subordinated a free and prosperous society to debt slavery and economic bondage.
Yeah but what does Volcker know.
FNORD
TED Spread at 4.45... That's a pretty nominal decrease.
Parting the Red Ink Sea: the quick get through, the slow die.
Ian writes:
Anonymous | 10.14.08 - 9:35 am
Short treasuries
Can you short treasuries?
my question is how do the banks not blessed with unlimited government balance sheet .. how do they compete?
Just a mild depression, nothing more.
Nationalized,huh. I thought that meant old owners are wiped out.
Oh really?
We had a "huge" rally yesterday and everyone know that the market is naturally efficient;)
I guess the recession in now over and there's nothing to worry about according to the market again today.
anonymous writes:
my question is how do the banks not blessed with unlimited government balance sheet .. how do they compete?
Well obviously well-capitalized conservative banks are run by fools, so we need to punish them by doling out lots of money to their competitors.
Welll... somebody bought Nasdaq at 9.31.
Right after it had bounced 450 points in about two trading days.
Dat dem animal spirits rite there.
preferred yield = ?
any possible dilution of taxpayer shares?
principal guaranteed as long as there is no bankruptcy?
when do we get our money back?
why do we have no clue about this 250 billion!
What no more 'illusion of prosperity' for America like the Fed and Treasury are trying to paint ?
What, like we haven't already considered it? What planet are most people living on? Sebastianus?
CR or anyone - any word on the cancellation of dividends of the Big 9?
The greatest heist in the history of the world.
But, but, but ... the market is up and the world has been saved. ... Move along and buy your cheetos, ranch homes, and dvds, Mr. Consumer.
I tried to sell some stock at TD Ameritrade and the system is down. Anyone else experience this? One way to keep a bear market rally going. Just don't take any sell orders.
"Those banks have been nationalized, overtly or not overtly, which is something that hasn't happened before in the history of developed countries," Volcker said. "How to wean them from government support? That is the challenge of the future."
I am sure they covered that in their weekedend meetings? LOL!! What a mess
Boondoggle or boon doggle may refer to:
Boondoggle (project), a term for a scheme that wastes time and money
unit...yes, TDA goes down most days when there is superduper volume. Surprisingly, yesterday it did not.
I tried to sell some stock at TD Ameritrade and the system is down.
Everyone trying to run through the parting of the waters at once.
Is the short selling ban for plebeians still in effect?
Gee, thanks Paul, and I was thinking my 401k was getting too big for it's own good. Nice of you to put it back in its place.
Pepsi is down big...
Breaking News: Pepsi to get govt preferred money (non dilutive), howver the thousands fired will get nothing.
Wow...Volcker is really going out on a limb here.
The TSE (Canada) is up 1,400 points today (14%) - how ridiculous.
CR: Are you saying that the "thaw" will be coming in the credit markets as the reslts of this 250B infusion?
JP, well capitalized conservative banks don't have to dilute their shareholders and hand over their dividends to the treasury.
BBC point out on the way to work that the UK is actually investing more in their banking sector than the US is in ours... did we spend the rest of that 700b on letterhead and advertising or something?
Ameritrade back up but price on the shares I was trying to sell down .40!
Cost of trade... over $400. Think I'd better move my account.
Can I haz my 10% rally repeat? I was sleeping yesterday. Please Volker, dont hurt us!
Unit - Ive spoken with them about this repeatedly. You have to be an APEX customer with them, and then on days like this, be ready to run your streamer and make your trades by phone. It's annoying, but Id probably be more annoyed to have to move my acct at this point.
interesting....
a lot of the stuff i watch popped 10+% at the open, and now are all negative
it appears as though not everyone is clueless
Can you short treasuries?
Anonymous | 10.14.08 - 9:46 am
Sell calls or buy puts on Treasury futures contracts. Or actually sell the Treasury short itself.
JP, well capitalized conservative banks don't have to dilute their shareholders and hand over their dividends to the treasury.
Wow. What great a reward for running a conservative business.
Let's face it: Well-run institutions are being penalized enormously. And we all suffer, because those are run by folks who would be restoring long-term confidence + growth. Instead, we let the current batch of idiots go out and make more stupid bets.
Unless we think they're significantly smarter today than yesterday and will suddenly allocate their capital for great business returns.
Nasdaq down 60 points from open... we might learn something about the nature of 11% depression era rallies today.
Lessons of 1932 retaught.
Vix down all of 3%
while VXN up 3%, credit spreads and TED really negligible. Boy this kitchen sink thing really shakes up the credit markets, what?
Anonymous writes:
Can you short treasuries?
A lot of people on MarketTicker are buying Puts on TLT in order to short treasuries.
TBT is, I believe, a double inverse of the 20 yr. Treasury bond
FOR THE TRUTH SHALL SET YOU FREE...
I wonder if the Dow will go Red today?
Windowdog: I just reread what I wrote; please don't confuse my generic anger with anger at you. I just need to step away from the keyboard for a while.
I've got news for the "well run" institutions....in a couple of years 9% cost of capital is gonna be CHEAP!
In the best case, this postpones day of reckoning to Q1/2009; just like in Mar 08 they postponed the day of reckoning to last week.
Fundamentals don't get solved by any of this:
How did the recent actions address any of the above????
What it did address, however, is:
A. Foolish/reckless banks are made viable and can continue to operate.
B. Any counter party risk via derivatives is now Govt Guaranteed (Risk Free money?).
C. Such a massive and coordinated injection is tilting the equation towards massive hyperinflation, which will hurt retiring population/retirees.
I don't see how we'll get growth from this.
Dah Johnny - read BBs chit chat in the WSJ yesterday. His main focus was restoring confidence, and the way to do that, IMO, was to get a nice big bounce in the market. And as I said repeatedly the past few days...now what? This is also why CR wont update his forecast until he gets his expected move in the TED, and those other charts he put up. Well, I think he might have sort of thought they'd have already moved a bit more today. Ya know?
"Those banks have been nationalized, overtly or not overtly, which is something that hasn't happened before in the history of developed countries," Volcker said.
Is Sweden not considered a country or just not considered developed?
Do you think Ben Bernanke and Paulson AKA Moses and Aaron can part the red sea of insolvency and lead us through on dry land to the promised land? Nope, me either.
"How to wean them from government support? That is the challenge of the future."
Hmmm. Does anyone actually move out of public housing? I doubt most could. Once you create a dependency culture, it becomes self-perpetuating.
Check out Finland Volcker, you ignoramus!!
10 year treasury yields up above 4% and they should only continue to rise as all of this new government debt goes on the marketplace and has to find buyers.
Get ready for much higher mortgage rates and a much worse housing bubble.
Wanna bet today we end in red?
Wanna bet we end the month still in the red?
This is looking like a short lived rally without conviction.
The root causes are still unaddressed. The disease/infection rages on in the patient.
Is Sweden not considered a country or just not considered developed?
It's considered formerly developed.
Get ready for much higher mortgage rates and a much worse housing bubble.
Altair | 10.14.08 - 10:03 am | #
Aren't these two things mutually exclusive?
And we kicked out the banking executives from biggest banks so fast they could not clean out their tables back in 1991.
I warmly recommend the same.
Wanna bet today we end in red?
we might be red within the hour!
If we get a big down day today I am not sure where that leaves us.
This could get interesting real fast....I was at least hoping for a month of relative calm after all this busywork.
Other than the financials, it lloks like yesterday's rally running out of steam Y/N? Will we see a down day at the close ?
Is that TED spread report accurate? CNN says LIBOR is at 2.18%, down from above 5% on Friday. Looks like the credit freeze is in fact thawing unless I'm missing something. Of course, we've bought that at the price of higher mortgage rates in the near term and inflation in the long term.
Credit eases, government bond prices sink - Oct. 14, 2008
JP, no problem, by internet standards that was a love note.
I just want to point out that there are indeed benefits to not needing government money. Slim as they are.
somebody remind the Nasdaq that the bottom has arrived.
OPERATION STATUS
FULDA TO CENTRAL COMMAND
FANS IN CHUNNEL BLOWING
NERVE GAS CLOUD BACK TOWARDS
UK. BARRICADE CLEARING NOW
PROCEEDING AT MAXIMUM RATE.
39 KILOMETERS.
FULDA.
"Get ready for much higher mortgage rates and a much worse housing bubble.
Aren't these two things mutually exclusive?"
Obviously I meant a much worse bursting of the housing bubble- no need to nitpick.
Anonymous writes:
Can you short treasuries?
Also the Rydex Juno Fund and the Rising Rates Opportunity Profund.
Nasdaq in the red...must not be negative! Clearly, the street has figured out this bailout helps banks and banks only.
here is my question
as I understand it, two things raise credit spreads (such as TED)
they are
1.) risk
2.) Higher rates
so my guess is we will see the actual risk spreads come in, but the actual spreads will stay the same as (nominal) rates rise pricing in significant future expected inflatio
What real economy. This dog is dependent on government spending on a massive scale.
Altair - check out 3 month LIBOR - thats the relvenat measure for businesses and mortgages. Its only dropped a small amount. Still elevated.
AIG TOES - you are the best. Too funny keep up the good work.
"Altair - check out 3 month LIBOR - thats the relvenat measure for businesses and mortgages. Its only dropped a small amount. Still elevated."
You are correct- according to WSJ:
The three-month dollar London interbank offered rate, a benchmark that is meant to reflect banks' borrowing costs, fell to 4.7525% Monday from 4.81875% Friday. The three-month Sterling rate fell to 5.60% from 5.8125% Friday.
It's a suckers rally to be sure. But if the rally keeps America's answer to Idi Amin out of the White House, it'll be $5 trillion well spent. Good thing these are conservative Republicans running things, other wise I'd swear I was looking at a communist takeover of the economy.
crispy&cole writes:
Nasdaq in the red...must not be negative! Clearly, the street has figured out this bailout helps banks and banks only.
Hell, it only helps friends of hank, not even the shareholders, unless you count stocks in the living dead as helping.
agreed on aigs toes
as pissed as i am, i always chuckle when i read his dispatches
Paulson on equity stakes: '"We regret having to take these actions," Paulson said. "They are not what we want to do, but what we have to do to save the economy.
PS - I'm just protecting my Wall St buddies because I'm outta here soon suckers !
When Volker says "considerable recession" is that Volkerspeak for The Greater Depression?
Altair writes:
10 year treasury yields up above 4% and they should only continue to rise as all of this new government debt goes on the marketplace and has to find buyers.
Get ready for much higher mortgage rates and a much worse housing bubble.
Altair | 10.14.08 - 10:03 am |
NO! higher mortgage rates directly reduces what people can afford to pay. That makes home prices fall, rather steeply too.
With Asian Crisis, Mexican Crisis, Russian Crisis we were able to get through because of a huge monolithic anchor and engine of "growth"--the USA. There's no one to help pull us out of the quagmire.
mb - I think he meant housing bubble bust.
can we at ~least~ get a gravestone doji today?
please?
Good thing these are conservative Republicans running things, other wise I'd swear I was looking at a communist takeover of the economy.
On the plus side, perhaps the republican party will rethink it's whole mission after it gets wiped out in nov. For every action, there is a reaction. I just hope they don't go the idi amin route.
3 mos libor
Page not found
Obviously I meant a much worse bursting of the housing bubble- no need to nitpick.
Altair | 10.14.08 - 10:07 am | #
got it - just trying to understand.
AIG TOES - you are the best. Too funny keep up the good work.
Ian | 10.14.08 - 10:09 am
WTF!!!! I FEEL USED.
I thought we decided the other day that the LIBOR is bogus?
I'm numb. It can't say whether I'm scared out of my mind or totally depressed.
Moral hazard is rampant. There is no risk pricing left in the system. Zero, zilch, nada.
We are still individually responsible for our retirement planning but how can you plan when you have no friggin' idea whether a decent discount rate for future cash flows is 2% or 10%?
What stops them now from nationalzing every friggin' sector one after the other as each one collapses? Maybe they will, maybe they won't.
Nationalization spells inflation (unless government is efficient) so you don't want to hold bonds. But, longer termstock markets make no sense in a nationalized economy!
Basically we are left to manage our funds on a day-to-day trading basis. That is not investing but pure speculating. Plus most of us have day jobs which take away from our investment planning!
The whole thing will collapse but what if the band-aids manage to hold the whole thing together for another 20 years... just in time for my own retirement?
Well my real time tickers for the ultrashorts just shorted out. Can't get the skinny even with refresh. Have a feeling something is up. Or maybe really down.
somebody remind the Nasdaq that the bottom has arrived.
Darth Paulson | 10.14.08 - 10:07 am | #
Het NASDAQ! The bottom is here a-hole! Stop going down!
There.
i think it is about time for Moody's and other rating agencies to start looking at the sovereign credit rating of a few countries that are now of questionable solvency with this debaucle.
with what tax rate could the US possibly pay this off? and in how many generations? any tax increase is virtually impossible.
yahoo finance ticker is stuck
And here I thought the Involuntary Capital Injection would hold the patient over at least until Wednesday. I have not gotten back into the ultrashorts yet!
Bubbleheads on bubbletube are talking about a new bull market here. I guess the socialism of the banking sector is now the new BULLISH!
LMAO!
Basically we are left to manage our funds on a day-to-day trading basis. That is not investing but pure speculating. Plus most of us have day jobs which take away from our investment planning!
this is what has been keeping me up at night for the last month.
i dont want to have to daytrade my retirement accounts in and out of bubbles every five years.
This is what a global meltdown looks like. Have thrown everything at this beast and still the plunge is looking worse than the '29 event. Without palliatives, plunge protection, and even quasi-illegal intervention can't stem the selling tide for more than a few hours or session.
Gem writes:
When Volker says "considerable recession" is that Volkerspeak for The Greater Depression?
Volker does not mince words. He has always had the strength and fortitude to say and do what he thought was right for the long run of the US economy, so I suspect he means really a considerable recession.... and he was the last Fed Chair to have engineered such a thing (when he correctly raised rates to stem inflation).
If Volker were the Fed chief for the last 2 decades, we would probably have smaller and fewer homes, smaller deficits (of all kinds), lower inflation, fewer Asian toys in our homes, a stronger USD, and a much more boring 2008.
History I hope one day will look favorably on Volker and Carter.
http://finance.yahoo.com/echarts?s=%5EIXIC#chart1:symbol=^ixic;range=1d;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Its really Erin Burnett I am worried about when this rally dies and we go negative again.
What will she be able to think of now to put a positive spin on things? Truly tragic.
Yahoo! Finance - Business Finance, Stock Market, Quotes, News
echarts...ource=undefined
AIG's toes | 10.14.08 - 10:20 am | #
hmmm.... I'd call that a cliff
has trading been halted?
700 billion today is the same 700 billion before the market crashed for a week. now 1/3rd of it is going to 9 banks that are STILL upside down in CDOs and CDSs. it's enough to keep them in business until after the election- possibly enough to finance the upcoming Christmas. we're still on the hook for a trillion dollars on this bailout. success on wall street will not trickle down this time.
Did I read my Reuters morning deal summary correctly - Obama considering Dimon for Treasury Sec and Dimon actually wants the job? WTF?
DK - since when did success on Wall St ever trickle down?
Volatility here we come
Indy-
It is bogus...unfortunately there are trillions of dollars of loans priced off it.
The profit spigot gets turned on and off at will. They have approached the point where it will be turned up permanently. All rates going up...count on it.
Ciao
MS
Bubbleheads on bubbletube are talking about a new bull market here.
We now live in a welfare state for thieves and con artists.
This event is political, not economic. The PPT couldn't kick the can anymore so the Republicans decided to go all in--$3 trillion to pump up the markets. I'm guessing they will have peaked too soon.
Well those were well timed financial upgrades...just as it was getting into double digits Citi decided to upgrade all of it's new friends.
Ciao
MS
Iwasawa: The TSE (Canada) is up 1,400 points today (14%) - how ridiculous.
It's federal election day up here
Did Wall Street get nuked? How come nothing is updating?
PPT at work
Geoff- you make a good point.
Is it me, or does the European bailout response seem like 3-5x bigger than the US's?
When the government says, "your money is safe", one has to question why they would think otherwise.
Worried in Pa @10:02 - I completely agree
We are just socializing the losses. Gains, which were stolen, are privatized.
"In the best case, this postpones day of reckoning to Q1/2009; just like in Mar 08 they postponed the day of reckoning to last week.
Fundamentals don't get solved by any of this:
How did the recent actions address any of the above????
What it did address, however, is:
A. Foolish/reckless banks are made viable and can continue to operate.
B. Any counter party risk via derivatives is now Govt Guaranteed (Risk Free money?).
C. Such a massive and coordinated injection is tilting the equation towards massive hyperinflation, which will hurt retiring population/retirees.
I don't see how we'll get growth from this."
PPT kicked out of bed ... bad hangovers.
I was looking at a communist takeover of the economy.
Except that in communism wealth is redistributed from the rich to the poor. The correct term for this form of government is oligarchy or crony-capitalism. And if you think this is a sudden transformation you are naive at best.
Funny that last week Haines told Burnett she was relentless, referring to her continuing optimistic spin. Douche.
History I hope one day will look favorably on Volker and Carter.
Peter-san | 10.14.08 - 10:20 am | #
--
I'd guarantee it for Volcker.
I'm not old enough to know what real, sustainable growth looks like, but I've heard its wonderful.
AIG's toes...your reports are essential.
THe Jas man will be happy...he listed all his puts on Nasdaq the other day.
Rally here in Europe is totally ridicoulos. Nothing has changed in fundamentals NOTHING!! And we're expect profit warnings for QIII.
CR-
An update is long over due and I hope you admit that you were way too optimistic.
I told you so!
JT
"Funny that last week Haines told Burnett she was relentless, referring to her continuing optimistic spin."
My respect for Haines is going up. Yesterday he had on a guy touting stocks being a bargain due to forward earnings being underpriced. Mark asked the guy what his earning estimates were for the next 3 months. The guy balked, said "we don't calculate exact estimates, just the trend", then Haines called BS on his claim of stock values based on earnings!
Volker had balls when he was fed chief, he obviously still has them, and he definitely is the most qualified to be our next Fed Chief.
I sincerely hope he is
1) Offered the job.
2) Accepts
stealthwii- all very logical and insightful.
I think that they're scared to hell to think that Christmas won't come if they can't free up liquidity for merchants and buyers. Isn't Christmas the source of something like 25% of all consumer spending, which makes up 2/3rds of our economy? So Christmas is around 16-17% of our whole economy...
I know one thing is for sure, my boys aren't getting as much as they did last year. $100-200 tops each, and made in the USA where possible.
It looks like the steam is running out of the DOW.
So what IS the TED spread today? Someone uptopic was doubting the figure quoted?
TED is at 4.28, down 0.29.
DK....my x-mas gifts to my family wont be made in the USA (made is Switzerland) - but they are finanicially and ecologically friendly.
Sigg water bottles
1) Lightweight aluminum with a BPA, leech-free coating so your water is safe.
2) Lasts a very long time
3) Use tap water instead of bottled water - save up to hundreds of dollars a year.
4) Use fewer platic bottles = better for the environment (USA trashed 30 million (yes million) plastic water bottles per DAY)
SIGG USA - Eco-Friendly, Reusable Swiss Water Bottles! (there are many other websites that sell these bottles as well - Wegmans, REI, Dicks, etc)
.TEDSP:IND
TED Spread
10:34 Currency: N.A.
Value4.27\tChange-0.300 \t% Change-6.570 \tHigh4.57\tLow4.26\tOpen4.57
"Hmmm. Does anyone actually move out of public housing?"
Yes. My father was raised in a housing project. When he moved out, at the ripe old age of 17 to enlist in the Air Force, he always looked back. And, so did his children and his grandchild. I remember taking Sunday drives as a kid, he always made a point of passing by that place he grew up in. It still stands, slowly crumbling yet inhabitated, mostly by Haitian refugees.
After the DJIA down 777 for the 700 Bil. , now we have SPX reaching (and finding some resistance at) 1040
Christmas huh!!!
Forget it, I am not buying squat....My children have had their fill no more! and it sits on a shelf in a Museum like display never picked up never used I am done///$100 to $200 if I am in a good mood.
Socialism is NOT enough. PPT now NEEDS to start buying SPX futures with both hands. The last straw to sustain a rally.
Now that we have gotten used to +/- 800 point days these 100 point moves seem so boring.
"Except that in communism wealth is redistributed from the rich to the poor."
In communism poverty is redistributed so that almost everyone is poor. I remember a journalist in Arkhangelsk gazing venomously at my micro-recorder and screaming that he would never be able to afford such a thing, that he'd always been poor and would always be poor.
And made in the USA where possible.
What do you guys make in the USA these days? I buy Florida oranges but has been a long time since I have seen a "Made in the USA" sticker on anything.
haha, i love the plug for the Swiss water bottles. i bet that Switzerland imports much less percentage-wise from China than the US does. i also bet that it's exceeding difficult to immigrate to Switzerland than it is to the USA. i also bet that Switzerland doesn't outsource jobs like they are in the USA. say it ain't so.
I bought two Icelandic wool sweaters at the Nordicstore for Xmas gifts. Nice looking sweaters and those poor folks need our funny money.
Dimon wants the job for the Secret Service protection (he'll need it) AND to broker the same deal Paulson got. No taxes on recent earnings. Tax parachute and USA trained bodyguards. Priceless
"What do you guys make in the USA these days? I buy Florida oranges but has been a long time since I have seen a "Made in the USA" sticker on anything."
Beer & cigarettes. That's what we make and that is what everyone is getting for Christmas.
It looks like the answer to everything is print, print, and pump more money.
If this was what we were going to do to solve the economic crisis perhaps we should have started a bit sooner.
"made in the USA"
nothing like some christmas porn!
We should start a poll for the people's choice for the next Sec. of Treas.
I think Rubin is out.
Reich is out.
Old used stuff is "Made in the USA". That counts too...(shrugs shoulders).
Paulson on equity stakes: '"We regret having to take these actions," Paulson said. "They are not what we want to do, but what we have to do to save the economy.
~~~~~~~~~~~~~~~~~
Paulson on equity stakes:"We regret...these actions...are not...to save the economy."
Speed - can I come to your house for the holidays? I'll bring the chips. I think they are made here.
LMAO
And they're still paying dividends...!
Anybody else see the straight line rise between 09:30-10:25? What's that about?
bearly-
count on that happening fairly soon.
Pull up the time and sales and watch buys at .10-.15 over the ask.
mine can hardly keep up when it happens.
Ciao
MS
Rubin has too much baggage. Reich has a beard. Both out.
Beer & cigarettes
But you beer is watered down rats piss and Marlboro's give you cancer.....
Oh Sheila... "whatever it takes"... I am not sure this fervor is what markets want to hear.
If she had a passionate tryst with Neel, they could have super intense babies swearing by old gods and new to use every cent of taxpayer money to prevent recessions from happening in 2040-2090. By Shiva and by Jesus, by Kali and Mary, we will not leave one dime to taxpayer pockets until the business cycle is abolished.
We make the best armaments and munitions in the world. Everybody wants to buy them but we are selective in who we sell to.
Also pharmaceuticals and biologics.
Canadian - at least our piss doesnt come from a skunk. Hehe.
Wintermute writes:
We should start a poll for the people's choice for the next Sec. of Treas.
My money is on Tim Geithner.
Wouldn't be my choice, but that's where I'd bet
I'm still waiting on the Swiss debate...
S&P turns red
All major indexes negative now.
and in case no one is watching, we just went red across the board.
Oh Sheila... Dow was up 100 when you started your passionate little spiel.
Why don't you dial it down a notch or six the next time?
Can I Haz a Rally?
Canadian -- c'mon -- you really want to live forever? in a world run by these morons?
We're now negative across the board
See, this is the kind of day I warned about last week. The 200 plus futures pop the night before, start out with a jump, then turn to crap. Yesterday was the one exception. This is why I sit and watch, and hold the waterbottle for the first string. Coach wont let me play.
Yurop still all green but declining
Dr. Doom: US Bailout Plan Will Probably Fail
Dr. Doom: US Bailout Plan Will Probably Fail - CNBC
The proposed $250 billion infusion into financials is meaningless -- merely a drop of water on a hot stove, Faber, popularly known as Dr. Doom says. These measures do not address the fundamental problem.
Marc Faber for you all.
"Bubbleheads on bubbletube are talking about a new bull market here."
To state the obvious just for the satisfaction of having stated it: This market is now a casino game and all action is speculative betting on future moves, not investment in stocks expected to produce income or profit.
Because of this, I will predict again: the crash of 2008 has not yet happened, but it will.
"U.S. government bonds should be rated as a junk bond," quips Faber.
What goes up must come down
spinning wheel got to go round
Talking about your troubles it's a crying sin
Ride a painted pony
Let the spinning wheel spin
You got no money, and you, you got no home
Spinning wheel all alone
Talking about your troubles and you, you never learn
Ride a painted pony
let the spinning wheel tur
Dow is red. Time the feed the beast some more. Anyone have an extra trillion to spare?
With all the sucker punches this admininstration has given traders with unannounced and quasi-illegal monster moves, no wonder we're twitchy! No longer nimble, we've a radioactive celerity with our money. Paulson has conditioned the markets to only nano-second confidence. He's turned the most devotional market devotees into hardcore atheists. Get ready for 1000 point up/down days.
Last bull out is a rotten egg.
I am counting on a new rally later in the day so I can get into some ultrashort positions for the economic announcements on wed, thu, and fri.
I do thank these guys for allowing me to take free money on the BAC 25 calls...
Thanks Hank...
Ciao
MS
By the end of the week Ben will announce an "unfu@ckinglimited" liquidity infusion.
P.S. In math that's called infinite to the infinite power. Never know what you are going to end up with. Good luck Ben! LOL
There Is No God Higher Than Truth
Does anyone watch Star Trek?
There is a great Star Trek episode from the late 1960s entitled Specter of the Gun. Kirk, Spock, McCoy, Scotty and Chekhov are compelled to fight Wyatt Earp and his gang in a showdown at the O.K. Corral. Curious aliens have, of course, orchestrated the battle: some kind of a moral psychodrama. Anyway, in this episode Mr. Spock develops a knock-out gas from ingredients found in Doc Holidays office. The protagonists logically figure that if they can render the Earp Gang unconscious, then they wont have to fight them at the O.K. Corral. (And as we know, the Earps defeat the Clantons at the gunfight at the O.K. Corral. And as Mr. Spock so aptly points out, history cannot be changed.)
All are certain that the gas will work; but just to be sure, Scotty volunteers to be the test subject for the agent. Spock, for one, is spellbound, when the potion fails to work. Fascinating he quips. Spock goes on to explain the enormity of this paradox. The potion he explains, must work. By all laws we know, it simply cannot fail. And yet it has failed. Spock goes on to theorize that a massive manipulation of the crews brain patterns must be occurring. He also explains that this knowledge, if used correctly, can save the crew from certain demise at the O.K Corral.
Back to 2008. At some point, the massive manipulation of our brains, orchestrated by Spanky Paulson and all of his uber-wealthy cronies, will end. Reality will intrude. The global economy MUST crash because there are simply too many dollars "worth" of worthless assets gathering dust in the safes and hard drives and account ledgers of the world's financial instutions. Tens of Trillions of dollars worth! And no amount of mass hypnosis (in the form of 'pundits optimism'), or empty words (in the form of government guarantees on EVERYTHING), or spin can change reality. Get that? Reality cannot be changed.
No volume in DJIA between 10 and 10:30
The sea has parted, a small party got across. I see them stepping onto the shore here right now. I pray for the rest.
"But you beer is watered down rats piss and Marlboro's give you cancer....."
Kick start the party with boilermakers. We also make Viagra, that will be on the shopping list also. I wonder if Mellisa Lee could be enticed over for a weekend?
Old age is over rated.
SPY getting a work out.....love watching all those "buys"
Ciao
MS
I've been watching the SSE index as I have Chinese bluechips as part of my IRA portfolio and am very confused. We are seeing massive rallies 11% in the US and 14% in Japan yet the Shanghai Index was down by over 2% this morning when the market closed. What gives? Do they know something we don't know?
The Nikkei 225 soared 14% yesterday - the biggest one day gain ever.
Now the bad news. Despite yesterday's huge gains, the Nikkei is trading below its level from 1984
NIKKEI 225 Index Chart - Yahoo! Finance
Good thing a slump like that can't happen here.
Fed and Treasury policy mandates every member of PPT must have daily 3 fresh undergarments as recent events have proven to rugged for single daily change.
Christmas. The biggest ripoff of Americans ever made up.
Wait until January. Everything is FAR CHEAPER and this year there should be plenty of it.
Then you can celebrate 12th Night. Lots of fun and a very old tradition. It is much older than our Retail Christmas.
Twelfth Night (holiday) - Wikipedia, the free encyclopedia
How can one learn to short the market?
IMO china must be exploring it's nuclear debt option. Wouldn't you be at this point?
They have massive problems of there own and it is much larger than anything we've ever had here. You can't grow that fast and not have "issues".
Ciao
MS
I'd love to see Volcker as Sec of Treasury under Obama, but Volcker is 81! Born in 1927.
He is an advisor to Obama now, and let's hope he stays healthy and can be consulted for some more years.
I'd like Laura Tyson as Sec of Treasury - chair of council of economic advisors under Clinton, does not carry the baggage that Robert Rubin does.
Obama has a deep bench on economy and finance.
McCain has Phil Gramm and the First Dude.
Fed and Treasury policy mandates every member of PPT must have daily 3 fresh undergarments as recent events have proven to rugged for single daily change.
I read that Paulson and Bernanke have been wearing "Depends"
Instead of giving banks 250 billion, they could have helped 2.5 million people stay in their homes by refinancing at more realistic market values and nationalizing the sale profits.
But in terms of difficulty, 2.5 million homes vs. 9 banks is a pretty easy choice. I'm sure that there are plenty of loan agents out of work to get it done.
We're all built up with progress
But sometimes i must confess.
We can deal with rockets and dreams
But reality, what does it mean?
Freddie's Dead
How can one learn to short the market?
There are many resources, but fundamentally one learns to short the market through thousands of hours of grief and piles and piles of lost money.
When you first start out it's a bit like BASE jumping without a parachute.
"How can one learn to short the market?"
it's easy...you just do it. Find some ETF's (plenty of Ultrashort products available-QID x2 Tech short for example) or a sector you know fairly well and just short it.
Ciao
MS
I can vouch for AC - but the pain was worth it. The key is, there is learning the methods of shorting, and there is learning when to short, and then there is learning, who is out there trying to give you a wedgie. You need to know all three. Learning just the first puts you in AC's predicament.
and I do agree with AC.....it's not an easy thing to do psychologically speaking. You must be aware of what you are doing. Took me a few year's to be comfortable with it.
Ciao
MS
The market right now is like a groom on wedding night hearing his bride say "Is that it? Is that as big as it gets?"
IMO china must be exploring it's nuclear debt option. Wouldn't you be at this point?
Yes, but I think the problem at this point is that the US and China have become conjoined twins. They're essentially sharing organs and any attempts to separate the two could be catastrophic for both nations.
China particularly has to be worried that a severe recession could cause so much internal unrest that it could threaten the government.
That doesn't mean it can't happen.
That was quite a drop there around 10:30! what happened?
long-distance dedication to Ben, and Hank and Sheila -- victims of ghetto demands
YouTube -
roubini to be on bloomberg shortly.
barney frank currently
"stop watching the DOW"
Yahoo!
When does GE start begging for a bailout?
Is there any safe way off this debt mountain? With the massive market interventions, it sure seems that the Feds just want us to go back to our spending ways.
Anecdotal evidence anyone?
Here are two:
"How can one learn to short the market?"
As MS mentioned, ETFs are the easiest way for common folk.
Some Ultrashort ETF suggestions:
SKF (financials)
SRS (CRE, mostly)
QID (NASDAQ)
DOG (DOW)
SCC (Retail)
Just make sure that you understand the risks before you jump in...
"How can one learn to short the market?"
Plenty of ways to learn how to do it. Simple buy and sell orders.
But learning how to do it without getting burned is a different question, especially in a hyper-volatile market.
Everyone needs to know their own skills and limits, their own risk tolerance, etc.
Some folks on this board are very smart. Some brag a lot. Most probably don't shout about their losses. And everyone uses pseudonyms.
Analyzing debates about the economy and finance is something that can be done here by critical reading and thinking.
Taking market tips . . . blog reader, beware.
MS writes:
"How can one learn to short the market?"
MS - Please don't take this the wrong way, but this is not a trading environment where you want to try to learn something new. You will with probability greater than 0.5 probably just lose money, and possibly more than you thought you could...
If you are remotely unsure about how to execute a particular strategy right now, stay in cash and sit on your hands... or get a paper trading account someplace (open an Interactive Brokers account and create a paper trading account) and spend a few weeks getting used to how things work.
This is not the time for anyone to get creative. Stick with what you know. If you don't see any opportunities to make money with what you already know, focus on keeping what you already have from being lost.
AC-
have to agree....China's internal recession is a bigger factor than our own. Not too many people understand that IMO. They are already pissed at us for the "investments" they made last year. CIC has got to be boiling over BX methinks...and that doesn't even scratch the surface....massive inflation, market off by over 60%, they are a great example of growing to fast with OPM....ours namely.
Ciao
MS
I'd like Laura Tyson as Sec of Treasury - chair of council of economic advisors under Clinton, does not carry the baggage that Robert Rubin does.
She's one of the pigs. I read something a few weeks ago about her vetting the bailout for Dems in congress. The article went on to explain who she works for now, how much money she makes and how her firm would make out with the bailout
joe shmoe
Robert Rubin was a co-conspirator with greenspan in engineering the strong dollar policy which fueled already filthy habits of spend and spend. he then went on to lead C into the ground. Further he was a merger arb guy at GS, i.e. the filthies of the lot on WS. Sad that people would look to anyone who was associated with either party / adminsitration over the past 2 decades.
Credit Crunch Cosmetic Beauty Consultations With Wendy Lewis From Your Own PC
NEW YORK, October 14 /PRNewswire/ --
International beauty expert and leading image enhancement consultant Wendy Lewis (http://www.wlbeauty.com) dubbed The Knife Coach(R) by the media, understands that beauty is on a "need-to-do" budget in today's economy. To bridge the gap between her phone consultations and more personal meetings, Wendy Lewis has introduced another valuable beauty service -- live Webcam consultations -- which clients can conveniently conduct from their home or office anywhere in the world.
Advice seekers unable to travel to New York, London, Paris or Palm Beach where Lewis holds appointments, can dial her directly through Skype(TM), a free Internet-based phone service and talk "face to face" with Wendy -- live -- via the Webcam feature. Clients will receive personalized counseling to answer all their questions and address their concerns in real-time. Webcam consultation fees are US$300.00 per hour for U.S.-based clients, or the equivalent in British Pounds or Euros for clients from abroad, a savings of US$100 over her highly coveted in-person sessions.
Told you so. Crack-up boom is over, baby. Keynesian-fed financial Armageddon is ready to go off. Keynes is dead. Krugman will be the last Keynesian to get a "Nobel" prize (actually, the prize is given out by "Sweden's Central Bank", didn't you know that, cutie?). Long live Ludwig Von Mises and the Austrian School of Economics!!!
Does anyone know anything about Soveriegn Bank? My mortgage was with them, and I liked the fact that they didn't sell their loans. Maybe that backfired on them, as they are getting bought out by a Spanish bank. Wonder if my future statements will be in english? Still payable in USD? Or euros?...
They will not be weaned from the government, now. What has been done cannot now be undone. Banking losses will now disappear into the black hole of government balance sheets worldwide. Indeed, you will now see lending to zombie enterprises (altogether now, say GM, Ford, and Chrysler!) so that they can employ born and bred dopes.
"DK writes:
Instead of giving banks 250 billion, they could have helped 2.5 million people stay in their homes by refinancing at more realistic market values and nationalizing the sale profits."
Or they could just bulldoze all homes that are foreclosured...
Outsider - start learning Spanish.
Then go to the bank and say :
Hola, donde esta mi dinero?
true dat peter...
I have a friend who is trying to learn in this environment and I do not envy him at all.
I must caveat what I said in the previous thread...the mechanics of shorting is easy...not the actual comfort factor. That takes time and as Peter-san has pointed out, this is not the time to begin a wholesale restructuring of what you have used in the past.
There are alot of pissed off people who sold on Friday morning...my mother in-law is one of them.
Ciao
MS
roubini looks like a zombie on bloomberg, top button not buttoned...
McCain Unveils New Economic Stimulus Proposal: Tax Cut For Millionaires
On Monday, Barack Obama announced a new economic rescue plan Monday geared toward middle-class voters. McCain didnt announce anything, which caused some head scratching.
And now, on Tuesday, McCain is unveiling his new proposals, going back to the well of tax cuts for the rich. McCain is planning to announce a two-year cut the capital gains tax on stock profits in half, from 15 percent now on stocks held a year or longer to 7.5 percent a $10 billion proposal.
Old John McDepends really means it when he says My Friends.
Learn to short?
The same way my dumbass did. Go with your gut, buy short and ultra short ETF's. Execute the trades. Watch the ticker and be consumed by mood swings, anxiety attacks, glee and utter despair.
China particularly has to be worried that a severe recession could cause so much internal unrest that it could threaten the government.
I think our current recession and bailout mania is going to drastically change our country - starting this November.
Fred
that is why I noted that Tyson does not carry the baggage that Rubin carries.
Anonymous,
Tyson's principal employer is the University of California at Berkeley, where she is a Professor. Yes, she is or has been on the board at MS, but that is less of a conflict than you'll find with just about anyone else, and her politics are much more labor friendly than just about anyone else likely to be a candidate for Sec of Treasury.
I'd go to the nearest homeless shelter and randomly pick the third person in a soup line to be the next Sec Tsy.
I would then go to a junior high school and randomly pick 5 students to be Asst/Und Secs.
Any policies they come with can't be any worse than giving $125 billion to banks at 5% interest for them to do as they please.
MS
tell anyone upset about selling on Friday to wait a few days, or a few weeks. My hunch is that by then they will feel more comfortable with their action, maybe even be happy about it.
Sandy Weil was on tv this morning saying since we can borrow at 1% right now and are getting 5% from our 'preferred' bs stake, the taxpayers are already making money. ha.
"buy short and ultra short ETF's."
This is the best way for a beginner. Your losses are limited to your investment. And you can just forget about them for awhile without losing everything.
If Anonymouse is around,
You were pretty gung-ho on the Friday rally, and I said there wouldn't be a turning point for a bear market rally until the second last week of Oct, allowing the rally to begin in the last week of Oct.
Before we get until that target we have earnings reports, economic reports (particularly consumer and manufacturer surveys -- which are still worse than expected so far), options expiry, and some possibly confusing government interventions (Dimon of JPM was angry that the injection was forced according to a friend of Yves' at Naked Capitalism, general idea being it devalues the saving up for rainy days JPM did).
Come the last week of October there will be a respite from negative economic surveys, earnings reports will have given some idea and certainty of companies, the Fed will do the next 25bp cut, the CP market will loosen up even if the gov't has to lead by example in buying, would be easily within the 90day avoid end of year rollover window, house price declines will stabilize due to the season, we face fewer foreclosures heading into winter as it is illegal in some jurisdictions to evict then. There are other reasons behind my thinking but that is a good overview of my perspective.
Things will then take a turn for the worse heading into the spring. New surveys and earnings will rattle some people. For others it will be auto-plant closures (they typically shut down the plants twice a year for maintenance and upgrades, matter of minimizing cost), and accelerating business bankruptcies (weak consumer, expensive financing. first time for that combination in 20 years.) The key will be the credit markets, and its key is housing prices. If the credit markets can be solved, there is still a hard recession to face, as we have learned through many blog postings -- housing (+consumer) led recessions are the roughest.
I could see the next President approving a make-work public-works spree, and even though it would directly help employ laid off construction workers, I am skeptical that the economic response will be quick or effective.
another input for shorting (and this goes for anything else FTM). You must have an entry and exit strategy that is independent from the daily market "wash". IF you have an entry point PLEASE have an exit strategy on both sides of the entry. You are not always going to pick winners and you will have loser's...count on it. making sure the losers don't become BIG loser's is the point of having an exit on both sides of the entry.
Ciao
MS
Yikes. The photo on the WSJ online front page looks like a funeral.
The market (big, dumb animal) realizing that we're still facing a deep, protracted recession, no matter how much money banks have.
roubini to be on bloomberg shortly.
barney frank currently
serf alan greenspend | Homepage | 10.14.08 - 11:05 am | #
There is a gay porn joke in there somewhere...
"Is there any safe way off this debt mountain?"
There are two ways down. First is to pay it off over years and years as it saps the work of future years and limits new investments and technologies. Second is to promote inflation (wages and prices) so that the debt melts away and new wealth can be invested in productive enterprises.
Which method do you think the world will choose? So: protect yourself.
Elvis writes:
"buy short and ultra short ETF's."
This is the best way for a beginner. Your losses are limited to your investment. And you can just forget about them for awhile without losing everything.
Perhaps not. These funds have as their principal assets a swap with an unnamed counter-party (usually an equity swap).
If the counter-party turns out to be solvent, great - but if you bought an ultra short fund, the further it goes up in expected value, the more likely the other side of that swap is insolvent and unable to pay up.
So, as with anything else, the answer to "how low can it go?" is zero.
Weaning the banks from the dole will be trivial from weaning the government from controlling the banks.
Joe-
I did tell her that. I also made her aware that it would have been making up money that was lost already.
It's a trust account that is not known for nimbleness. I actually told her to do it 6 months ago but she decided to do it on that day.......
Ciao
MS
Can the banks still fail? Will fail? Just wondering if there is still another shoe to rdop on some of these big banks? Is this band-aid not strong enough? JPM down 5% today.
Weaning the banks from the dole will be trivial from weaning the government from controlling the banks.
jon | 10.14.08 - 11:21 am | #
Not if McCain is elected and Phil Gramm is in his administration.
Mike "The golden ear" Tyson for Sec of Treasury: he's both bald and bold.
So, as with anything else, the answer to "how low can it go?" is zero.
Peter-san
Yes, but your risk is definite which is the important thing for a beginner.
I really don't see the point of McCain's capital gains tax cuts on stocks right now, since I assume most have lost money if they've held their positions for at least a year. It's a do-nothing proposal IMO.
Can the banks still fail?
Sort of. The weak ones can end up basically government owned.
I can just see C saying that they intend use a portion of their $25 billion to set up an IT center in Hyderabad and the rest as severance for the 15,000 employees the intend to fire.
Evil Henry writes:
"I could see the next President approving a make-work public-works spree, and even though it would directly help employ laid off construction workers, I am skeptical that the economic response will be quick or effective."
I agree with your general assessment that the recession/depression will be worsening as we go throught the winter and into spring. But on fiscal interventions, I do think an Obama administration would have a properly bifurcated vision: both short term relief and long term infrastructure investing. There is lots of attention to the latter in Obama circles. Lots.
"Elvis writes:
Or they could just bulldoze all homes that are foreclosured..."
But they're worth something...
Latest News:C (11:16-DJN)=DJ Update Bush Admin mulling use of 2nd tranche of TARP funds.
Like there was any question of that. Use it up before it gets taken away from you.
Ciao
MS
Thank you for all of the comments re: shorting.
Can you start with small amounts with ETFs while you are learning so that you don't get killed?
Didn't Citibank just strike a huge deal with an Indian outsourcing company? And we are giving them 25 billion? Why aren't the presidential candidates talking about THAT?!
Oooh, because math is hard!
Reserve Misses Target for Distributing $20 Billion to Investors
By Christopher Condon
Oct. 14 (Bloomberg) -- Reserve Management Corp. said it failed to meet its target of returning $20 billion to investors in its frozen Reserve Primary Fund yesterday because it couldn't calculate their holdings.
``The process of determining accurately the number of shares each investor held in the Primary Fund has proven extremely complex and could not be completed in the originally anticipated time frame,'' the New York-based company said in a statement posted on its Web site. Ming Lee Hatch, a Reserve Management spokeswoman, didn't immediately return a phone call seeking comment.
Reserve Misses Target for $20 Billion Distribution (Update1) - Bloomberg.com
FFDIC writes:
Weaning the banks from the dole will be trivial from weaning the government from controlling the banks.
jon | 10.14.08 - 11:21 am | #
Not if McCain is elected and Phil Gramm is in his administration.
. . .
Indeed. If Gramm is Sec of Treasury, then the problem will be the opposite, i.e., how to wean the govt away from being controlled by the banks, which is the problem we already face with Paulson/Bush.
Banks controlled by the govt! I wish. Paulson won't even take any voting rights with his equity. Voting rights! A competent government would demand colonoscopy rights over the banks right now! Ask the Swedes how to do it right.
"Weaning the banks from the dole will be trivial from weaning the government from controlling the banks."
This, big time. The government never gives up a power once it has it.
This is the new structure of the Way Things Are.
Or they could just bulldoze all homes that are foreclosured..."
But they're worth something...
DK
They may be worth something, but their effect is to cause the price of houses to continue to fall and cause the value of their financing instruments to fall. So, if you get rid of oversupply, you get rid of the rippling drag...
MsIndy, just buy short EFTs if you think the market/sector is going down. Some go up 2x for every 1x the market/sector drops.
indy-
you can do whatever you like.....
I caution against paper trading.....you get a false sense of security when there is no money on the line IMO. Start with 10 shares of so...
Best way to go is to jump in but don't go all in and make yourself feel like you have to be in something.
Ciao
MS
Elvis- good point. I would rather let ppl live there for free, which would be better for the economy than destroying property.
This, big time. The government never gives up a power once it has it.
I so wish that were true. If it were, we'd still have Glass-Steagal and the failure of a single bank wouldn't threaten to bring the entire banking system to a complete halt. But, unfortunately, the government did give up that power, and any important financial institution can blackmail the government into almost unlimited assistance.
hi ho, hi ho, it's off to work I go.
see you all later.
if you see the PPT, please take pictures and get DNA samples. Same with Bigfoot and Nessie.
cheers
Joe
Gramm won't get through confirmatio
From the credit desk, we see the guarantee programs as a transformative event that has financials as the new sovereigns, and the sovereigns as the new monolines," said Brett Williams, credit analyst with BNP Paribas.
"Our argument is simply that as credit risks are transferred from the banks to the sovereigns, so too should the spread risk premia," Williams added.
Credit spreads have ballooned since September amid fears the financial crisis will spread to Asia, especially in countries such as South Korea, Indonesia and India that are seen having weaker current account positions and where the bank sector may need financial assistance.
Analysts said corporates would be ignored in the initial stage of the rally and these credits would attract buying only if the recovery was a sustained one.
"I dont think we are out of the woods yet. At this point I would sink my teeth into sovereigns and banks which would be supported by the government. I would not look at corporates," said a Singapore-based credit analyst
People who aren't paying their mortgage are already living there for free!
On public works spending:
It didn't work in the 30s to revive the economy, and it is even less likely to do so today. The pool of real savings in the US is in a dilapidated state, and government borrowing will simply crowd out even more private investment leaving people even poorer than they would be had you done nothing. In addition, it is impossible to build any public work in this country that isn't vastly overbudget and behind schedule. You will end up spending 2 trillion dollars for a dozen bridges and a hundred miles of commuter rail, and you won't get them finished before Obama dies of old age.
so what happened to the purchasing of bad MBS?
they are still there, and with mark-to-market optional, things are even murkier.
What does Volcker mean by the phrase "the real economy"? It almost sounds like he is saying that the parts that are already in serious trouble are not part of the real economy. This is a very exciting idea, because it suggests an obvious solution: we split the economy.
In the future, we will have a real economy and a fake economy. The real economy will provide food, clothing, and shelter (add what you want to this list). The fake economy will do whatever it's doing now - judging by what parts are in failure, Volcker would probably include the creation and manipulation of SIVs, CDOs, CDSs, and the rest of that stuff.
The fake economy will have its own currency. I'm imagining something like the Second Life currency - in fact, come to think of it, Second Life, World of Warcraft, and so on are pretty good models. People can, if they want, have a fake-economy job, where they construct and trade elaborate investment securities all day, making trillions of fakedollars for their fakecompanies, and earning fakebonuses of millions of fakedollars for themselves.
However, to prevent the fake economy from damaging the real economy, the two currencies will not be interchangable. You can't use your fakedollars to buy food or pay the rent; you have to get a real job that earns real currency for that.
In this way, we keep everyone happy. The people who need the rush of those billion-dollar deals can spend their time (or most of it; after all, they still have to pay their rent) in fakeeconomy jobs. If some of them screw up and bring down the fake economy, it won't matter to the real economy.
citizen energyecon writes:
Oooh, because math is hard!
Reserve Misses Target for Distributing $20 Billion to Investors
This would piss me off. There will be lawsuits.
How does cutting long term capital gains tax for stocks do anything for most of America invested in 401k's, pensions, roth, etc? Oh it doesn't. Who is advising this guy. I am very afraid of Obama but McCain may not be competent to lead. What a country.
I've thought about buying gold, but I'm concerned by the possibility that the government might confiscate it in some future crisis or set a price cap. How realistic are these threats?
Do you think McCain is trying to help those who sold during the past month?
Just wondering if there is still another shoe to rdop on some of these big banks.
Quarterly reports. Now that banks won't be able to leverage profits by going 40:1. Plus credit card usage is considerably down as shown by BAC's report while delinquencies are up. You can buy up all the hoopajoops you want, but it's difficult to buy up a new revenue model.
@There are alot of pissed off people who sold on Friday morning...my mother in-law is one of them.
I hear that, man. Watching the same thing unfold with some family and it's terrible. They're hard-working people and it totally sucks for them.
If some of them screw up and bring down the fake economy, it won't matter to the real economy.
Ken
Would you be able to use fake money to get fake boobs? Because, I'd be generally for that.
w writes:
How does cutting long term capital gains tax for stocks do anything for most of America invested in 401k's, pensions, roth, etc? Oh it doesn't. Who is advising this guy. I am very afraid of Obama but McCain may not be competent to lead. What a country.
Who is advising this guy? People who have disdain for J6P's and rely on their ignorance to get elected
Learn to short?
Options take a lot less balls, and you can limit your losses....
Oh well, Palin is cute.
What fair econ said. We are in this horror show because banks cannot self-control / self-regulate. Never could, never will.
Time to throw momma Ayn from the train.
Best we can do is a fair market, with idiot behavior punished and transparency/solid business practices rewarded via regulatory referees. Real ones, with teeth.
I am praying the Dems win in November so a little "tough love" can be provided. I agree Volcker would be magnificent as either Fed Chair or Sec. Treasury. He might for one term, obviously his brain hasn't suffered any deficits. If anyone could put the fear of God into the new breed bankers and Wall St. he's the man.
I think O is pushing for the 3 month moratorium on foreclosures so the Congress can ram through bankruptcy reform allowing the judges to do cramdowns and I think they will raise interest rates to get the last of the housing bubble prices through the system.
"Oh well, Palin is cute.
w"
I don't get this. If you want to see cute go to a college football game.
I think O is pushing for the 3 month moratorium on foreclosures
Sweet 3 month free rent, on an asset no one can tell me what it's worth.
for you options traders...
check out the SSO NOV 45 CALLS symbol
SUCKS
"I've thought about buying gold, but I'm concerned by the possibility that the government might confiscate it in some future crisis or set a price cap. How realistic are these threats?"
price cap possibly....outright confiscation? Does'nt stand a chance..the logistics boggle the mind with that.
The real problem now is physical delivery...buying today you are looking at 3-4 months for actual delivery....and spot pricing? not gonna happen. Silver getting to be the same way.
Ciao
MS
"JP writes:
anonymous writes:
my question is how do the banks not blessed with unlimited government balance sheet .. how do they compete?
Well obviously well-capitalized conservative banks are run by fools, so we need to punish them by doling out lots of money to their competitors."
In the Brave New Economy, being efficient will be an "anti-competitive" practice and violation of the Sherman Anti-Trust Act.
CONJURE COMMUNIQUE
Conjure says, "LIBOR is now irrelevant."
"This news should make a lot of ARM borrowers feel even better about walking away from their mortgages."
"Have a nice day."
MsIndy writes:
Do you think McCain is trying to help those who sold during the past month?
No he's not. If you sold during this past month you have losses. McCain wants to continue Bush economic policies of supply/side economics. Give tax breaks/cuts to the wealthiest and they will create jobs for us morons
Re: shorting Treasuries.
There's a new double short ETF: PST
"the real economy"
Young people may not be familiar with what someone like Volcker means by that. It means the "people economy" or political economy. Good and services providing by and to people for real money. It's an interesting concept that would be nice to return to.
MS writes:
indy-
you can do whatever you like.....
I caution against paper trading.....you get a false sense of security when there is no money on the line IMO. Start with 10 shares of so...
Ok, that is what I will do when I think there is an opportunity. I will report on my outcome, good or bad. And I will look into options. Thanks to all again!
Palin is cute?
Ah, maybe next to McCain she is.
You really should get out more.
Believe it or not you'll find many cuter and almost all brighter....
In Poland, in 1500, compulsory labour was insignificant; statutes of 1519-20 fixed it at one day a week or 52 days a year. By 1550 it was fixed to three and by 1600, East European serfs had to devote six days a week to compulsory labour. Their daily extractions of wealth and comfort came to depend entirely on the good will and pleasure of their lord.
Yes, we may pretend to our freemen status. But we see the historical precedent.
The real problem now is physical delivery...
Does or didn't GLD stock physical inventory?
BTW Put options are another possibility however that's a whole different ball 'o' wax. Stick with something that doesn't have an artificial time limit like options do for starters.
Good luck....
Ciao
MS
No he's not. If you sold during this past month you have losses. McCain wants to continue Bush economic policies of supply/side economics. Give tax breaks/cuts to the wealthiest and they will create jobs for us morons
Igor | 10.14.08 - 11:40 am | #
Not necessarily--many have had gains but liquidated.
It didn't work in the 30s to revive the economy, and it is even less likely to do so today.
A bit early in the morning to trot out such a stale right wing canard, isn't it?
"Does or didn't GLD stock physical inventory?"
They do, but not enough to cover everything. They also lay title to gold in the hands of other custodians, or so I read last week. And therein lies the rub.
I say that as someone who holds some GLD. But plans to get out in the near-medium term even as I hold on to physical gold.
MsIndy,
Check this out. It's free.
CBOE - The Options Institute
Elvis writes:"they could just bulldoze all homes that are foreclosured...their effect is to cause the price of houses to continue to fall and cause the value of their financing instruments to fall."
Elvis, not to be mean, but I think that your statement shows a severe lack of understanding of what is happening:
Hey, where are all those write-UPS I have been reading about for the past year ?
Anyone who thinks Volcker really gets listened to in an Obama administration is pretty naive. Volcker is only there to convince the socially liberal Reps to vote Obama.
Rubin is the kind of guy Obama will look to in his admin, not Volcker.
Obama will do for America what he did for the Southside of Chicago. Nothing.
He will have to pander to the constituencies that elected him which means the public sector unions, the Black Caucus and those who live off of government spending.
The 'real' economy will get to pay for it all till it peters out under the burden.
Alo,
Banks can self-regulate -- the problem is that they self-regulate at the desk level where going for broke is encouraged. The executive level of the banks see no reason to limit those excesses because they have the short term bonuses and the long term puts the government implicitly (and now explicitly) provides. If all banks move in the same direction, there is no risk the government put cannot be exercised.
Pretty much what I just described is the social structure of a mob in a riot . . .
Just did some quick research on gold confiscation or price caps. They look to be big enough threats to make gold undesirable as a "bunker" financial asset.
Gold Confiscation: Will it happen again?
I'm starting to think about buying foreign currency to protect against the impending dollar collapse. But what currency? How about the Canadian dollar? I can drive up to a bank account there, plus Canada's economic future looks bright with their oil reserves.
Sorry, should read "fiscally conservative" not "socially liberal".
I often see comments here, either saying overtly or implying as a "given", that the US exports a few useless objects or services. And there's a common conception among some here that US manufacturing has vanished or become insignificant.
At the link below is BEA's breakout of exports by category by quarter. Scroll down to sec. C "Trade in goods by principal end-use category."
BEA File Error
The figures are in millions of dollars, not thousands.
Yancey Ward writes:
On public works spending:
It didn't work in the 30s to revive the economy, and it is even less likely to do so today. The pool of real savings in the US is in a dilapidated state, and government borrowing will simply crowd out even more private investment leaving people even poorer than they would be had you done nothing. In addition, it is impossible to build any public work in this country that isn't vastly overbudget and behind schedule. You will end up spending 2 trillion dollars for a dozen bridges and a hundred miles of commuter rail, and you won't get them finished before Obama dies of old age.
Totally agree.
are there any good academic stuidies that look at infrastructure readiness / development and GDP correlations. off the top, I keep thinking of high speed train (and well kept highways) in France and the morbid GDP etc.. Infrastructue (unless toll) do not generate tangible returns (unless privatized). so if that is the route, why not bid it out to infrastructure funds and let them price the value and capture the rents. The money raise could be better directed to r&d and potentially cash flo9wing enterprises that provuide prospects for growth. not sure how a road ensures anything other than a worsening budget deficit.
We are all under the userer's thumb; as today the stability of the past has been replaced with justified fears that all our stored wealth and future endeavours will be devalued by the arbitrary powers to debase the currency and the capricious whims of our leaders to spend further debt. Cereal growers, shepherds, and carpenters have had their livelihoods demolished as indebtedness has replaced production. Moneylenders and gilded pawnshops have subordinated a free and prosperous society to debt slavery and economic bondage.
It sucks to be in SUCKS.X today...for the time being.
There used to be a ticker symbol of POS... Catalina Marketing..they wisely changed it to this:
XM4.BE: Summary for CATALINA MARKETING- Yahoo! Finance
Ciao
MS