I am patting myself on the back for calling:
- 50bp cut (3wk ago)
- in conjunction with other CBs (3wk ago)
- day before short selling expires (2?wk ago)
The final part of the prediction:
- cut 25bp more at the Oct 28-29 meeting
I am less certain on the final one now that the Fed pays interest on reserves which might have the same effect as a 25bp cut
Every move the Fed and Treasury have made to this point is akin to someone whose bathtub drain is clogged thinking they can solve the problem by turning the faucets up.
And, yes, if you turn the water flow up high enough, you will eventually see the flow of water out of the tub increase as well.
However, it will not necessarily be in the places where you wanted it to come out.
re: Cut has less of an impact
What 50 bp means to:
1.0%, 50%
1.5%, 33%
2.0%, 25%
3.0%, 16%
4.0%, 12.5%
5.0%, 10%
The stimulus a rate cut gives is really because it steepens the yield curve, and makes investing (borrow short, lend long) more profitable. So you need to look at the change in say the 2yr - 10yr spread, more than the change in the FF itself
The European markets were not impressed with this move.
Moral of the story: A bad move does not become better simply by coordinating said move with others.
It is akin to thinking, "well, I'm a terrible singer, but if I get three of my terrible-singing friends to join me on this karaoke stage, together we'll all sound fine."
I thought the Fed Funds was effectively trading at 1% anyway. BFD.
Yawn.
safe_as_apartments
You're correct, the 1.5% target rate -- if hit -- would be a rate increase since Lehman went to sleep with the fishes. However, the change in the target rate should have more of an impact on lowering some T-bills which will steepen the curve. With a stealth rate cut, you can never depend on it to be there in a month
The end game is nigh. Inflating is the only palatable option for overleveraged governmental, corporate, and household sectors. The way to play this is the precious metals, as its much harder to print those.
That said, not all corporations have difficulty in an inflationary environment. Those that have pricing power won't be as hurt as those that have a lot of elasticity on the demand side.
These boneheads at the Fed are NOT engineers. Any responsible engineer at this point would have recognized long ago that their interventions were making their target system (our economy) less stable and pushing it even further out of tune.
Of course, any responsible engineer wouldn't have let their system ever get this far out of tune to begin with.
o matter the rate cut, the importance is the central banks are probably going to work together from now. The worse this gets, the more they will go beyond their local charters to save the country of capitalism.
iceman, agreed. But this will take a while. I'm beginning to believe that it will take at least a year to reflate the economy before inflation really takes off.
Krugman's link helps interpet the Fed's latest move:
Chapman: Trouble at mill.
Cleveland: Oh no - what kind of trouble?
Chapman: One on't cross beams gone owt askew on treadle.
Cleveland: Pardon?
Chapman: One on't cross beams gone owt askew on treadle.
Cleveland: I don't understand what you're saying.
Chapman: [slightly irritatedly and with exaggeratedly clear accent] One of the cross beams has gone out askew on the treadle.
Cleveland: Well what on earth does that mean?
Chapman: I don't know - Mr Wentworth just told me to come in here and say that there was trouble at the mill, that's all - I didn't expect a kind of Spanish Inquisition.
Bernake. Unplug the computers on the hedge funds and the big banks. Get congress back here and tax all short term trades at OI and get ride of the carry trade on private equity and hedge funds. Also make iit retroactive to September 30..
The "wall street client" trying to save their tax free profits have destroyed the value of my house, destroyed my 401k and have made my dollar savings wortless. How I am going to pay for the education of a junior in College and a senior in high school keeps me up at night.
Too much many has been chasing to fee assets for two long and this is the mess that has been created by the unregulated financial sector.
Day old news,
On October 6, 2008, the Federal Reserve conducted an auction of $150 billion in 85-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate:\t1.390 percent
\t
Total propositions submitted:\t$138.092 billion
Total propositions accepted:\t$138.092 billion
Bid/cover ratio:\t0.92
\t
Number of bidders:\t71
The awarded loans will settle on October 9, 2008, and will mature on January 2, 2009. The stop-out rate shown above will apply to all awarded loans.
Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on October 7, 2008. Participants have until 12:30 p.m. EDT on October 7, 2008, to inform their local Reserve Bank of any error.
Institutions did not even bid for all the 85 day paper which expires Jan 2. MAX interest rate of 1.29% THAT'S A STEAL
Complex, dynamic systems are best kept within operating parameters where the controls have well understood effects. Outside of their operating parameters, these same systems can behave in erratic ways when typical attempts at control are tried.
Do the Fed's models of the economy incorporate modern understandings of nonlinear, chaotic systems?
I suppose when it appears that boorish TV hosts can insert ideas for implementation on the Fed's agenda, models are the last thing on anyone's mind.
Cheap money days are GONE, what we need is a global securities shutdown so that we can go over the books of these institutions and sort them into two piles; those that can survive in the new market and those that cant. We use the 700b to make bridge loans to those that are salvageable and let the rest die.
EvilHenry - Regarding the TAF, I don't understand. Banks were going to get cash in return for lending assets to the Fed, right? Are you saying they didn't have any decent assets to lend, or they didn't have anything to do with the cash if they got it? Or?
"The Micex Index plunged for a sixth day, falling 14 percent to 637.87, the lowest level in more than three years, before trading was halted at 11:05 a.m. in Moscow. The bourse won't open until Oct. 10 unless regulators say otherwise, Micex Chief Executive Officer Alexei Rybnikov said in an interview. The dollar-denominated RTS exchange was shut indefinitely. "
It is a good thing your Treasury Department is tightening their belts to deal with the crisis. Check out their posh conference locations:
TREASURY DEPARTMENT PUBLIC ENGAGEMENTS SCHEDULE
FOR THE WEEK OF OCTOBER 4 OCTOBER 10, 2008
Tuesday, October 7, 2008, 1:15 p.m. EDT
Treasurer Anna Escobedo Cabral
Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr.
Panel on Financial Literacy at Department of Housing and Urban Development Summit on Housing: Partnering for Responsible Policy
Mandarin Oriental Hotel>Ritz Carlton Hotel South Beach>Gaylord Resort and Convention Center>Gaylord National Resort & Convention Center>The Palmetto Club>The Biltmore Hotel
MLM writes:
EvilHenry - Regarding the TAF, I don't understand. Banks were going to get cash in return for lending assets to the Fed, right? Are you saying they didn't have any decent assets to lend, or they didn't have anything to do with the cash if they got it? Or?
Oh my I got confused
In the TAF, banks aren't borrowing, they are bidding for treasuries -- which means banks bid so high that the rate highest rate they got was 1.39%???
But they get to pledge paper (not cash) and get treasuries back which anyone will lend against. I still was surprised that it was undersubscribed, even if it was $150b
I have been in treasuries and net short forever....waiting....keeping my powder dry for just such a moment when the Fed loses control.
And evertime I thought that was going to happen they pulled it back out. So at 9500 I go long (calls) thinking that it will bounce like every other time we have been on the edge of the abyss....
And now it looks like the circuit breakers will be tripped. I still got a ton of dry powder but I sure wished I would have waited.
Nova, welcome to life as a ballistic object. If a 50bp cut is only good for a two-hour pop, there's really nothing left to do but wait for the bear to eat his fill.
MS -10%, BAC -18% in pre-open trading. Rumors aren't the problem; reality is.
Yeah, banks should have borrowed all they could.
For 90 CP,
AA non-financial 2.27%
A2/P2 non-financial no quotes available
AA financial 3.99%
AA asset backed 4.2%
They can lend in any sector during that term and get positive carry with 0 liquidity risk (terms match up)
Comrade Baron Von Helmut III writes:
I read that the US gubment is ceasing production of 1/2 and 1/4 oz gold coins, because they have to make up the demand for 1 oz coins?
Yes they have, check Reuters today.
There is a $100+ premium for physical gold bullion in the market now and $8 over spot for Silver.
What does that tell you?
Comex is near collapse, paper futures are not able to deliver on physical.
The only way out is if we shut the markets down for a week or two and resolve the whole thing. Banks that don't survive after the two week period should be shot in the head.
yogi, Stochastic: randomly determined; having a random probability distribution or pattern that may be analyzed statistically but may not be predicted precisely.
Take some graduate courses in adaptive filters and non-linear control systems, and you will wish for the day when they were just magic numbers
In the name of God, when is Bush going to ask for Bernanke's resignation?
Middyfeek | 10.08.08 - 9:26 am | #
Like the NASA space navigation team at JPL that crashed the $1 billion Mars Climate Observer into the Red Planet (aptly named), BB and HP are the best at what they do in the world and can't be fired.
All of Europe is being crushed. ALL. CRUSHED. Big bad Mr. Stock Market is nothing - NOTHING! - compared to a banking system gone wrong. NOTHING! /cramer
You think so, but during the depression they lost money just like everybody else. Kept getting paid in script and IOUs. It's still a business and somebody has to PAY the bills.
Might want to market the backyard funeral kit complete with pine box, lye, and shovel.
In terms of broader market P/E, the S&P needs to get down in the 10-12 range to look attractive given the current economic "outlook". I suspect that's somewhere around 600-650 on a trailing basis. Perhaps a bit lower. Lots of room on the downside...
So does anyone know why the $150bn TAF was undersubscribed? The lowest yield obtained was 1.39%, but there were another $12bn available for auction so better prices were possible
MW
CDN is undervalued for now (look to trade flows, they are the law of its price when it comes out every 3 months) however it is very much a relatively small country and vulnerable to illogical swings. That said there shouldn't be much more downside from here, with a safe target of 94cents CDN/USD in the next few months.
"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its report.
Could have coordinated that bit with the rate cuts and been just a bit cheerier... but, no.
If you find yourself in some quicksand, it will start to pull you down into it. A typical reaction when this happens is for people to start thrashing around in the quicksand to try to get out.
All of this activity changes the chemical bonds between the sand and the water, causing the quicksand to act more like a liquid. The process has the technical name of liquefaction. The more liquid-like the quicksand, the less the resistance and the faster one sinks into it. So the irony is that the more you fight with the quicksand, the more the quicksand will win, pulling you down faster.
By contrast, if you make no movement at all, the chemical bonds between the sand and the water stay strong and the quicksand acts more like a solid. The natural buoyancy of your body will create a sense of equilibrium with the ground and you will stop sinking. In fact, you might even float up a little bit closer to the surface.
Therefore, the safest thing to do when confronted with quicksand is practically nothing. Slow, gentle, purposeful movement will get you safely out. No more cuts.... no more facilities... no more "coordination." Be still.
None of this shit CAN work. The banks have piled of CRAPital for 15 years. There is not enough REAL capital to cover the CRAP. CRAPital is malinvested labor , materials, resources, tools, factories, land, and of course intellectually malinvested capital (people making careers in bubble industries)...these malinvestments won't disappear by papering over them. They need to be wrung out of the system. At this point, there is no major industry that hasn't been HIGHLY distorted by these malinvestments of the last 15 years...ON A GLOBAL SCALE to boot.
Ammo and squirrel recipes folks. I've been predicting this for years. I just couldn't believe it could go on this long. Party's over now.
ova,
At the risk of bursting someone's bubble, I am very much self taught in finance. I'm an electrical engineer who is finishing a degree in economics. Often when I speak up I'm as much looking to learn from my own stream of thought as I'm looking to learn from those who may correct me.
finally markets may be getting close to levels that price in decent future expected returns. for 10 YEARS they have been grossly overvalued and priced for a big fat nothingburger return. patience....patience.
Zombie Beach-san writes:
These boneheads at the Fed are NOT engineers. Any responsible engineer at this point would have recognized long ago that their interventions were making their target system (our economy) less stable and pushing it even further out of tune.
Of course, any responsible engineer wouldn't have let their system ever get this far out of tune to begin with.
An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place.
@ theyieldcurve - your line is good. But still forward looking. Mine has a nice ring of finality to it. Plus, it is immediately followed by the sub imploding. Very fitting and visceral visual.
EvilHenryPaulson writes:
nova,
At the risk of bursting someone's bubble, I am very much self taught in finance. I'm an electrical engineer who is finishing a degree in economics.
Nice to see another fellow Canadian E.Eng in the crowd here.
yogi,
then I completely agree. There are too many pricing models (black-scholes) that do not properly apply to the situation where they are being used. At best they rely on perfect markets, which is a rarity (my favorite part of the free market is that no firm should be earning any profit)
Oh-My-Loan Kenobi writes:
@ theyieldcurve - your line is good. But still forward looking. Mine has a nice ring of finality to it. Plus, it is immediately followed by the sub imploding. Very fitting and visceral visual.
An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place.
noobgoldberg | 10.08.08 - 9:37 am | #
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
AIG toes | 10.08.08 - 9:39 am |
I love Jeopardy!
"What is fly to Martinique with a private plane large enough to carry tonnes of cash and avoid refueling in countries with extradition treaties"
This rate cut is going to have the opposite effect of its intended purpose. LIBOR isn't going down much, but Prime will.
Let's say 3 Month LIBOR (what banks borrow at) goes down 30 bps tomorrow while Prime (what banks lend at) goes down 50 bps.
Congratulations Bernake, you just succeeded in killing consumer lending even further by compressing NIM for anyone who lends on Prime (think consumer loans, student loans, credit cards).
"An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place."
Hmmmm...That, of course is Hayek's and the Austrian's in genral central premise.
In fact engineers got economics into the modern mess it is.
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
Baloney, that's akin to an engineer stating "what if this entire bridge was packed bumper to bumper with overweight concrete trucks"? You add a safety margin to the worse case scenario; you don't plan for the impossible. Otherwise planes would be too heavy to fly, bridges would end up being solid causeways, and laptops would be made out of pure titanium so they could withstand a bus driving over them.
The uptick rule is the most retarded piece of regulation I have ever heard of in my life in the context of a modern financial exchange operating effectively on fractions of a cent with millions of trades per equity per minute
Anyone who brings it up, is just a fan of the nostalgia they have for their trading days in the 1980s when this whole debt growth bega
In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
so they cut rates now for a crisis that is primarily credit based and then when the credit based crisis really affects the economy ( after Obama is in) the fed will have less ability to rev the economy when the cut really would have helped
Baloney, that's akin to an engineer stating "what if this entire bridge was packed bumper to bumper with overweight concrete trucks"? You add a safety margin to the worse case scenario; you don't plan for the impossible. Otherwise planes would be too heavy to fly, bridges would end up being solid causeways, and laptops would be made out of pure titanium so they could withstand a bus driving over them.
noobgoldberg | 10.08.08 - 9:43 am | #
In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
There is a $100+ premium for physical gold bullion in the market now and $8 over spot for Silver.
What does that tell you?
Comex is near collapse, paper futures are not able to deliver on physical.
A colleague of mine at work who is long silver told me the same thing a week or two ago. He was having problems finding dealers who would give him delivery of the bagged silver dollars.
He also gave the same advice -- get the physical stuff, not a piece of paper.
According to satan, all Canadian banks have gone bankrupt and people are eating mud pies for nourishment. I never met the Sebastien character, but it seems we lost another character on CR comments.
I don't think Canadian banks are too eager to dive in just yet, similar to HSBC. If they wait: they always get a better price, they have more certainty with respect to government interventions, and they can also ensure the stability of their own balance sheets by seeing how things develop. It could be a full year before there are true acquisitions (and not merging parts of 2 bad banks into 1 new one)
Nope, Canada has been given the option to purchase slightly used deck chairs, with the proviso that they be chained securely to both the Titanic, and to the Canadian rescue vessel.
PPT is thought to be myth by many--yet this misadministration has been shown to screw around with every department--Justice,, Defense, etc. They will be found out and they will be proud of their defense of our economy. They are the scum of the earth--in it for the money and power--no patriotism--no compassion--no morals--no ethics--just fucking greed. Right now, on the deathbed, they are stealing body parts.
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
If only economists would have a similar institutional memory. Alas, we keep repeating the same mistakes.
Jewish traders will be leaving early today to get home before sundown--I expect they will not want to be exposed to the markets tomorrow--a true sine curve of a day.
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
What I like about the story is that the bridge designer drove his own car out to the middle of the bridge to try to dampen the resonance. That "taking some responsibility" thing. (Another EE here).
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
I was wrong about the Tacoma Narrows, but not about the myth--apparently it's Canadian:
What's up with McPain saying last night he is going to cram down mortgages for the morons who got ARM's to current market value. What about those of us who are paying off the original loan. This is out and out socialism. Will this stand up in court. Where is a sleazly lawyer when you need one.
In Canada, engineers are given an Iron Ring after graduation as a reminder of their responsibility to society. The legend goes that the rings are made of the metal from a collapsed bridge. The truth is that it is a cheap piece of steel that can be made for about $7 CDN.
I am not sure if the US has something similar.
By the way, the PPT is pretty amazing. It looked like they were losing initially, but it seems like they have managed to "secure" the day... or maybe just the next few minutes.
What I like about the story is that the bridge designer drove his own car out to the middle of the bridge to try to dampen the resonance. That "taking some responsibility" thing. (Another EE here).
You're absolutely right...Henry Paulson and Ben Bernanke would need to walk into the trading pit in Chicago in order to replicate that show of responsibility.
Could MetLife be the "major insurer" that Congressman Souder said was in danger of going under? Met announced today that it's selling 75 million shares, valued at $2.8 billion at current prices.
Krugman points out that the Fed Funds rate has little effect anymore on real interest rates.
Another proposal: ask the Chinese to save us.
The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance buying US bonds was indirect and unconditional. Not so in this case.
Chinas loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.
What would be the nature of the strings or conditionality as the US Treasury, a longtime practitioner of this art, has called it? Conditionality as imposed by the World Bank and International Monetary Fund was underpinned by an ideology that favoured markets and globalisation. But there was also an assumption that either borrowing third world governments did not understand their benefits or the reformers there needed a spoonful of sugar to help overcome any internal opposition.
China would impose two conditions. First, it would declare that the offer of money was conditional on the US governments adopting a particular approach to rescuing the banks, namely to favour in the next round the use of government money to recapitalise the banks. Europe has been using this approach and evidence suggests it is the most effective way of dealing with large-scale financial crises.
The US government like third world governments in the past has been unable to adopt the most efficient course of action. This stems from an ideological obsession against socialising banks or because inducement is necessary to overcome any domestic opposition to it.
The second condition would relate to social safety nets, which had become standard embellishments to World Bank/IMF adjustment programmes. China would stipulate that monies be devoted to cushioning the impact on vulnerable homeowners, so that they would not be forced into forgoing the American dream of home ownership. Chinese conditionality on this front would achieve an outcome that several economists on the left and right have argued for on grounds of fairness, and also to address the fundamental problem in the housing market.
For China, this offer of help would have three virtues. First, it would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates, which led to lax global liquidity conditions. Second, its economic interest would be served because successful US efforts at rescuing its financial sector could help avert an economic downturn, protecting Chinas exports, its growth engine.
Perhaps most important, it would seal Chinas status as a responsible superpower willing to deploy its economic resources for the sake of protecting the world economy. And if the means for achieving that are by providing the current hegemon with the largest aid package the world has ever seen with a healthy dose of sensible conditionality, well, what could be more statesmanlike than tha
One other thing the Chinese might impose as a condition would be no more arms sales to Taiwan and the cessation of support for its "independence."
In both economics and physics, if the predicted outcome doesn't appear, there is an unknown variable unaccounted for--or the theory is wrong. My bet is the PPT is that variable--and must be factored into the equation if you want to "play" the market.
I don't understand why everybody is pessimistic, the team we have is fantastic and can only succeed:
how can our Darling from UK under La Garde from France with Cash&Carry from the US fail to cross the German Stonebridge to a bright future?
At worst it will only be three Italian bumps on the way...
In both economics and physics, if the predicted outcome doesn't appear, there is an unknown variable unaccounted for--or the theory is wrong. My bet is the PPT is that variable--and must be factored into the equation if you want to "play" the market.
I don't know about physics, but in economics that unknown variable is either panic or greed, the results of which are impossible to predict.
Just as the Reagan deregulation movement has now been thoroughly discredited by events, I think economists who take too strong a monetary approach are being creamed, too.
All the approach today is: get money to the banks, to the institutions. Money is the lubricant, money is the life-blood.
Well, here's a clue: money has to DO SOMETHING, too. That's pretty fundamental. Putting it in the banks so it can zip back and forth is pointless if it does no work during the trip.
McSame did not propose cramdowns. He is a opposed to them, because they are necessary and economists recommend them. What he did propose, exactly, is a mystery born of the dark pool in his own mind.
The PPT is trying to administer the
Emergency Liquidity-Shock Device.
Here's a report:
Standing by the the Fed helplessly watched as the Dow didn't respond to his treatment.
Bernake said the Dow "was face down, bleeding. . . . We assumed it had hit its head when it fell."
The PPT rolled the Dow onto its back and applied the AED pads to its index to check his vital signs.
"It said he needed a shock, and we shocked him," Paulson of the PPT said.
At that point, the PPT kept administering the Emergency Liquidity-Shock Device to get it started again...
Japan wishes us round-eyes luck with our lost decade.
150 more to go.
OIS >3.2, TED 3.91, FTSE up, US Futures up. Mexican standoff.
push on that string.
honestly, if you were running a bank, who would you lend to?
Let's see if it's a string.
... and Ben bends over again.
Dow futures now negative. Wasted bullet.
I'd like to know what Hank Paulson is up to. He's unusually quiet.
When he announces his toxic clean-up plan, the market should rally big.
Other than a bump at opening today, this is a waste.
We are discouraging savings and encouraging added debt.
We are discouraging foreigners buying our debt.
At some point, we go so far into the hole and the $ gets devalued and we look like a big copy of Iceland.
I hope Russia can help us out.
Futures falling fast. WTF?
I am patting myself on the back for calling:
- 50bp cut (3wk ago)
- in conjunction with other CBs (3wk ago)
- day before short selling expires (2?wk ago)
The final part of the prediction:
- cut 25bp more at the Oct 28-29 meeting
I am less certain on the final one now that the Fed pays interest on reserves which might have the same effect as a 25bp cut
we are already substantially negative w/the REAL inflation rate
The Fed is impotent at this point.
USD/JPY rolling over again
Don't get carried away, guys
Of course, this just raises valuations on all that stuff that Kash'n'Karry is going to buy ...
Not that it isn't the right mone, just sayi
The Fed is impotent at this point.
Viagra was part of the rate cut
Reposted from prior thread, but:
Every move the Fed and Treasury have made to this point is akin to someone whose bathtub drain is clogged thinking they can solve the problem by turning the faucets up.
And, yes, if you turn the water flow up high enough, you will eventually see the flow of water out of the tub increase as well.
However, it will not necessarily be in the places where you wanted it to come out.
Thus endeth today's object lesson.
Dow futures now negative. Wasted bullet.
theyieldcurve | 10.08.08 - 8:41 am | #
it usta be good for a few hours.
All this means is it is now totally outta control
gold bumping...
Please make sure your tray table is stowed and the maskis placed over your face. Oxygen will begin to flow. Assume crash positio
"This business will get out of control. It will get out of control and we'll be lucky to live through it."
I thought the Fed Funds was effectively trading at 1% anyway. BFD.
Yawn.
TED spread having fun at 4.00 now.
turning japanese, i think I'm turning japanese... i really think so! what's that zirping sound i hear?
The European markets were not impressed with this move.
Cypherd writes:
turning japanese, i think I'm turning japanese... i really think so! what's that zirping sound i hear?
We're all sashimi now.
re: Cut has less of an impact
What 50 bp means to:
1.0%, 50%
1.5%, 33%
2.0%, 25%
3.0%, 16%
4.0%, 12.5%
5.0%, 10%
The stimulus a rate cut gives is really because it steepens the yield curve, and makes investing (borrow short, lend long) more profitable. So you need to look at the change in say the 2yr - 10yr spread, more than the change in the FF itself
For the past two weeks, the effective rate has average 1.5%. I just checked the data.
Federal Funds Rate Data - Federal Reserve Bank of New York
This is a nothingburger served with small beer.
The European markets were not impressed with this move.
Moral of the story: A bad move does not become better simply by coordinating said move with others.
It is akin to thinking, "well, I'm a terrible singer, but if I get three of my terrible-singing friends to join me on this karaoke stage, together we'll all sound fine."
... and there's another Japan reference. Oops.
Ben should save the last bullet for Hank. Out of control now.
Krugman makes a funny: A morning thought - Paul Krugman Blog - NYTimes.com
The sheeple are awakening...USAToday's banner headline:
Dow falls despite rate hint: Fed chief signals cut to rev economy but stocks drop 508 points
Point of recognition.
I thought the Fed Funds was effectively trading at 1% anyway. BFD.
Yawn.
safe_as_apartments
You're correct, the 1.5% target rate -- if hit -- would be a rate increase since Lehman went to sleep with the fishes. However, the change in the target rate should have more of an impact on lowering some T-bills which will steepen the curve. With a stealth rate cut, you can never depend on it to be there in a month
EvilHenryPaulson, thanks for the clarification.
Welcome to Red October.
You just don't get much with trillions of dollars of stimulus anymore.
Futures way down again.
Another 50bps pre-market maybe?
How about closing the banks on Monday? (oops, that's already scheduled!).
The end game is nigh. Inflating is the only palatable option for overleveraged governmental, corporate, and household sectors. The way to play this is the precious metals, as its much harder to print those.
That said, not all corporations have difficulty in an inflationary environment. Those that have pricing power won't be as hurt as those that have a lot of elasticity on the demand side.
Does Nemo or CR sleep?
I think they are both bots...
These boneheads at the Fed are NOT engineers. Any responsible engineer at this point would have recognized long ago that their interventions were making their target system (our economy) less stable and pushing it even further out of tune.
Of course, any responsible engineer wouldn't have let their system ever get this far out of tune to begin with.
o matter the rate cut, the importance is the central banks are probably going to work together from now. The worse this gets, the more they will go beyond their local charters to save the country of capitalism.
yikes, the FF went ranged up to 6.04% yesterday
It so doesn't have a balance sheet deep enough to handle these markets anymore. I thought the interest payments would have helped limit the range.
std dev of 1.53! Absolutely unprecedented. Average was 2.97% btw
Comrade Bagholders,
Said it on previous thread. For this to work there must be a long trade on the other side. THERE IS NO LONG TRADE. This will do nothing.
It shows that BSBernutty is TOTALLY incompetent.
We need higher rates, and a clean out of the insolvent. Only thing that will work.
Nostrovia,
iceman, agreed. But this will take a while. I'm beginning to believe that it will take at least a year to reflate the economy before inflation really takes off.
Did they open trading eatly or just high volume preopen?
gold going hyperbolic.
+$20 in less than an hour, post coordinated rate decision.
The next move is a return to the gold standard. Anyone? Anyone?
We need higher rates, and a clean out of the insolvent. Only thing that will work.
Think Obama will enlist Volkner to do exactly that?
Well, I think we can say without a shadow of a doubt that the U.S. dollar will not be the reserve currency in 10 years time.
Go long.
YouTube - Lost Bus Hit
Paulsons actions:
Bazooka
Grenade launcher
shotgun
pistol
slingshot
Next:
throwing stone
yelling loud
running in a serpentine fashion to the parking lot
man, it doesn't pay to go to bed anymore.
Nikkei down 9.8%?
This is, I believe, going to be a no-shit honest-to-God circuit breaker day.
Possibly multiple.
So how far down the R2k do I run the TWM/RWM?
We need higher rates, and a clean out of the insolvent. Only thing that will work.
Bingo! Can we get you to go run the Fed?
Krugman's link helps interpet the Fed's latest move:
Chapman: Trouble at mill.
Cleveland: Oh no - what kind of trouble?
Chapman: One on't cross beams gone owt askew on treadle.
Cleveland: Pardon?
Chapman: One on't cross beams gone owt askew on treadle.
Cleveland: I don't understand what you're saying.
Chapman: [slightly irritatedly and with exaggeratedly clear accent] One of the cross beams has gone out askew on the treadle.
Cleveland: Well what on earth does that mean?
Chapman: I don't know - Mr Wentworth just told me to come in here and say that there was trouble at the mill, that's all - I didn't expect a kind of Spanish Inquisition.
Mr. Market says: MOAR CUTZ!1!
We are soooo through the looking glass.
I thought I could at least get a sucker's rally to unload the last of my long positions.
Boy crying "wolf" too many times? No one's listening to the Fed any longer.
We break 9k today.
Watch GS and $115.
Bernake. Unplug the computers on the hedge funds and the big banks. Get congress back here and tax all short term trades at OI and get ride of the carry trade on private equity and hedge funds. Also make iit retroactive to September 30..
The "wall street client" trying to save their tax free profits have destroyed the value of my house, destroyed my 401k and have made my dollar savings wortless. How I am going to pay for the education of a junior in College and a senior in high school keeps me up at night.
Too much many has been chasing to fee assets for two long and this is the mess that has been created by the unregulated financial sector.
It feels like xmas eve to me - tomorrow I can SHORT stocks again!
Too bad we're not going to get a 1000pt rally today
Anonymous @ 8:58 am: LOL. Thanks.
What is the fed saving for options experation? Will treasury come with bailout II?
CR clocks are 4 min fast
NO ONE EXPECTS an interest rate hike...
FTSE is crashing again. I guess the rally is over.
an unexpected interest rate hike would make the euro implode...
Then who would buy all the empty condos in brooklyn?
Where is Henry Paulson?
He's got something big cooking. I wonder if it will be too late, though?
Nice...we hardly enjoyed the 9000's.
Then who would buy all the empty condos in brooklyn?
Why, the Russians, of course.
Oh, wait ...
Nice coordination of a pointless effort.
Gold up, tbills up, futures down....problem solved...
yeaahhhhhhhh,....
Could this be the day that the market delivers the big one, after all of the months of gestating?
The CRVIX is dilating, up to 430 as of 9:00.
I really miss the days of 19 people on a Tuesday morning.
So what will you all be doing today at 1.5% that you would not have done yesterday at 2%?
Might have actually worked, had those idiots done this Sunday night.
Bernanke has obviously learned NOTHING, NOTHING!!!
Bernanke is no expert on monetary policy, he is a fraud.
Day old news,
On October 6, 2008, the Federal Reserve conducted an auction of $150 billion in 85-day credit through its Term Auction Facility. Following are the results of the auction:
Stop-out rate:\t1.390 percent
\t
Total propositions submitted:\t$138.092 billion
Total propositions accepted:\t$138.092 billion
Bid/cover ratio:\t0.92
\t
Number of bidders:\t71
The awarded loans will settle on October 9, 2008, and will mature on January 2, 2009. The stop-out rate shown above will apply to all awarded loans.
Institutions that submitted winning bids will be contacted by their respective Reserve Banks by 11:30 a.m. EDT on October 7, 2008. Participants have until 12:30 p.m. EDT on October 7, 2008, to inform their local Reserve Bank of any error.
Institutions did not even bid for all the 85 day paper which expires Jan 2. MAX interest rate of 1.29% THAT'S A STEAL
Surprising no one has reported on this yet
Bank of America prices secondary at $22.30 and premarket price promptly drops to the $19's.
You'd almost start to get the idea that somebody out there is realizing none of this s@#t is going to work.
dollar broke the 100 barrier on the yen and now at 99.915.
Is my puter stuck, or is the Russian mkt closed?
Complex, dynamic systems are best kept within operating parameters where the controls have well understood effects. Outside of their operating parameters, these same systems can behave in erratic ways when typical attempts at control are tried.
Do the Fed's models of the economy incorporate modern understandings of nonlinear, chaotic systems?
I suppose when it appears that boorish TV hosts can insert ideas for implementation on the Fed's agenda, models are the last thing on anyone's mind.
Comrade Baron Von Helmut III writes:
Is my puter stuck, or is the Russian mkt closed?
Russian market is closed until Friday. I'm not sure which Friday, but they definitely announced Friday.
Interpretation for the lay-man
Market price for 90 day AA financial paper is 3.99%
At a stop out of 1.39%, every bank that could have bid should have tried to get as much as it had the cash for.
The fact they didn't kind of implies that they have a significant capital shortage
we are beyond covering problems with liquidity
Russian dollar-denominated market suspended indefinitely, ruble-denominated marketed suspended for two days
thanks for the explanation EHP!
Also, watch the Treasury buy up commerical paper, starting to see an impact
The Fed has lots of models they use - some are actually pretty advanced and do incorporate stochastic processes.
The problem is that ultimately the chairman can choose to throw all of those out the window and 'wing it'
I think they've been winging it for a while now...
Cheap money days are GONE, what we need is a global securities shutdown so that we can go over the books of these institutions and sort them into two piles; those that can survive in the new market and those that cant. We use the 700b to make bridge loans to those that are salvageable and let the rest die.
oh.. two things I don't like to see together in the same sentence...
Russia
suspended indefinitely
"indefinitely" means "don't hold your breath Comrades" right?
Oops, sorry I got that wrong. MICEX and RTS both suspended till Friay, my source got it wrong
Market price for 90 day AA financial paper is 3.99%
At a stop out of 1.39%, every bank that could have bid should have tried to get as much as it had the cash for.
Maybe that's why Huntington Bank keeps sending me junk mail offering me a HELOC?
Happy trading, folks.
.TEDSP:IND = 4.01 (!!)
wow, that lasted a whole 30 minutes and regular people couldnt even benefit with markets closed. Doh.
Let me tell you as I watch from trading screen, that these downruns are fierce
Never mind again. RTS was indeed suspended indefinitely. I think I got it right this time
The Fed has lots of models they use - some are actually pretty advanced and do incorporate stochastic processes.
when did they start actually running their models, three weeks ago?
EvilHenry - Regarding the TAF, I don't understand. Banks were going to get cash in return for lending assets to the Fed, right? Are you saying they didn't have any decent assets to lend, or they didn't have anything to do with the cash if they got it? Or?
There are older and fouler things than inflation in the depths of ZIRP. This foe is beyond any of you. Fly you fools!
Gold is on steriods today. spot price almost 920
"The Micex Index plunged for a sixth day, falling 14 percent to 637.87, the lowest level in more than three years, before trading was halted at 11:05 a.m. in Moscow. The bourse won't open until Oct. 10 unless regulators say otherwise, Micex Chief Executive Officer Alexei Rybnikov said in an interview. The dollar-denominated RTS exchange was shut indefinitely. "
Russia Halts Shares as Medvedev Funding Plan Fails to Stem Rout - Bloomberg.com
/YM[Z8} off almost 300. This is either armageddon or it's the mother of all head fakes. Tempting to make and OTM options play in both directions.
I wonder if Anonymouse is sticking to his "bounce" plan for the day.
Perhaps today would be a good day to decrease my position in the gold ETFs?
As far as Fed models, NPR did a short piece on one Bernanke built with a professor at NYU:
Ben Bernanke: Calm Leader Or Timid Intellectual? : NPR
It is a good thing your Treasury Department is tightening their belts to deal with the crisis. Check out their posh conference locations:
TREASURY DEPARTMENT PUBLIC ENGAGEMENTS SCHEDULE
FOR THE WEEK OF OCTOBER 4 OCTOBER 10, 2008
Tuesday, October 7, 2008, 1:15 p.m. EDT
Treasurer Anna Escobedo Cabral
Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr.
Panel on Financial Literacy at Department of Housing and Urban Development Summit on Housing: Partnering for Responsible Policy
Anything for an orderly rewind, and for the well - manicured gods to get to their financial bomb shelters.
All arms combined magnificently together.
Here is the link. Sorry for the crappy layout and trundication.
U.S. Treasury - Public Schedule
Gold is an open, obvious exit right now for spooked stock. It also will be closed off, going forward.
SL:
Gaylord Resort and Convention Center>Gaylord National Resort & Convention Center>
?
Gold is an open, obvious exit right now for spooked stock. It also will be closed off, going forward.
What exactly do you mean by closed off?
MLM writes:
EvilHenry - Regarding the TAF, I don't understand. Banks were going to get cash in return for lending assets to the Fed, right? Are you saying they didn't have any decent assets to lend, or they didn't have anything to do with the cash if they got it? Or?
Oh my I got confused
In the TAF, banks aren't borrowing, they are bidding for treasuries -- which means banks bid so high that the rate highest rate they got was 1.39%???
But they get to pledge paper (not cash) and get treasuries back which anyone will lend against. I still was surprised that it was undersubscribed, even if it was $150b
It appears a bottom doesn't exist
"Russia suspended indefinitely"
There's gotta be a Red October pun in here somewhere . . .
The October '29 crash party has been cancelled.
Tim-ber!
Ever ride a dirt bike to fast? There is that moment, far to fleeting, when you realize you have lost it.
Today I woke up, checked the news, and realized that none of these programs are going to work. Please reassure me.
There's gotta be a Red October pun in here somewhere . . .
ozajh | 10.08.08 - 9:21 am | #
How's the stock doing in the company selling Putin's judo DVD?
Stochastics=bullshit
I read that the US gubment is ceasing production of 1/2 and 1/4 oz gold coins, because they have to make up the demand for 1 oz coins?
I heard that there are backlogs of orders for delivery of weeks...
Anyone else hear this?
Paging Mr. Bottom to the white courtesy phone, Mr. Bottom.
I have been in treasuries and net short forever....waiting....keeping my powder dry for just such a moment when the Fed loses control.
And evertime I thought that was going to happen they pulled it back out. So at 9500 I go long (calls) thinking that it will bounce like every other time we have been on the edge of the abyss....
And now it looks like the circuit breakers will be tripped. I still got a ton of dry powder but I sure wished I would have waited.
Ted Spread now at 4.03...........
ova @ 9:22
Back when I was (a lot) younger and (a lot) dumber, I experienced that sensation a couple of times on a road bike.
Today I woke up, checked the news, and realized that none of these programs are going to work. Please reassure me.
nova | 10.08.08 - 9:22 am | #
The next step will be to give each American taxpayer $10,000 tax free dollars for Christmas. Even if it doesn't work it will be fun.
.5 bps cut???
THAT'S JUST PO!
WE WANT OUR PONY!!!
4.03 TED.. I have never seen it this high.. not even 1987
Nova, welcome to life as a ballistic object. If a 50bp cut is only good for a two-hour pop, there's really nothing left to do but wait for the bear to eat his fill.
MS -10%, BAC -18% in pre-open trading. Rumors aren't the problem; reality is.
Gaylord Entertainment = Grand Ole Opry. They probably lobby the government for conference bookings... pork.
"Perhaps today would be a good day to decrease my position in the gold ETFs?"
Only if you find some physical to put the money in to.
WE WANT OUR PONY!!!
Soylent Green is Sheeple | 10.08.08 - 9:24 am | #
What does a crash look like?
Low! How the mighty are falling.
Steady As She Sinks
Looks like gold=900 has morphed from resistance into support.
Yeah, banks should have borrowed all they could.
For 90 CP,
AA non-financial 2.27%
A2/P2 non-financial no quotes available
AA financial 3.99%
AA asset backed 4.2%
They can lend in any sector during that term and get positive carry with 0 liquidity risk (terms match up)
In the name of God, when is Bush going to ask for Bernanke's resignation?
Comrade Baron Von Helmut III writes:
I read that the US gubment is ceasing production of 1/2 and 1/4 oz gold coins, because they have to make up the demand for 1 oz coins?
Yes they have, check Reuters today.
There is a $100+ premium for physical gold bullion in the market now and $8 over spot for Silver.
What does that tell you?
Comex is near collapse, paper futures are not able to deliver on physical.
In this environment, Gold could double overnight.
Buy Physical and hold it.
Be safe
The only way out is if we shut the markets down for a week or two and resolve the whole thing. Banks that don't survive after the two week period should be shot in the head.
Us plebes should max out cards and helocs, return our SUVS and house keys. Get off the grid. I'm thinking Canada.
The health care thingy.
I certainly hope they know what the H*** they are doing, because yet again they have stabbed the small saver in the side of the neck.
$8 over spot??/ So I have to pay 20+ an oz for silver and $1000+ for gold ?
OOFA
I've never seen the haloscan "new comment(s)" numbers update in real time before . . .
(and where's Sebastien??)
yogi,
Stochastic: randomly determined; having a random probability distribution or pattern that may be analyzed statistically but may not be predicted precisely.
Take some graduate courses in adaptive filters and non-linear control systems, and you will wish for the day when they were just magic numbers
REBear,
I agree. Shutdown market, wheel out RTC 2.0. Prepare mass graves. uggg
TED is up 13%+. Somebody find the fat lady and tell her she's on in 5 minutes.
/crivens/
Oh and, lest I sound morbid, perhaps its time to go long funeral home chains.
Hank Williams sang "I'm going down three times, but I'm only coming up twice"
CNBC update: Advertisement for government minted gold coin auctio
CNBC (short version) - this is just a reaction to JCP's 12% decrease in sales
In the name of God, when is Bush going to ask for Bernanke's resignation?
Middyfeek | 10.08.08 - 9:26 am | #
Like the NASA space navigation team at JPL that crashed the $1 billion Mars Climate Observer into the Red Planet (aptly named), BB and HP are the best at what they do in the world and can't be fired.
Can anyone recommend a reliable online vendor for physical gold (that still has stock)?
(and where's Sebastien??)
ozajh | 10.08.08 - 9:27 am
Probably licking his wounds after that long call.
Can anyone ever remember a day where the Dow finished down 5% and bonds didn't rally?
All of Europe is being crushed. ALL. CRUSHED. Big bad Mr. Stock Market is nothing - NOTHING! - compared to a banking system gone wrong. NOTHING! /cramer
I am thinking Canada too.
They understand Natural Resources and the Gold market.
They actively trade everyday.
We are witnessing the demise of the USD as a reserve currency.
A debtor nation cannot be the reserve of the World.
Expect the Euro to collapse before yearend, and the emergence of a new Pan-Asian gold backed currency.
Russia may participate as well our create a new gold backed Rouble.
This is real.
Now, uncle Ben has only six more bullets left in his gun.
RayOnTheFarm,
You think so, but during the depression they lost money just like everybody else. Kept getting paid in script and IOUs. It's still a business and somebody has to PAY the bills.
Might want to market the backyard funeral kit complete with pine box, lye, and shovel.
At this pace Nasdaq will break 1k in a few days...someone turn off the lights in siliCON valley
In terms of broader market P/E, the S&P needs to get down in the 10-12 range to look attractive given the current economic "outlook". I suspect that's somewhere around 600-650 on a trailing basis. Perhaps a bit lower. Lots of room on the downside...
EvilHenryPaulson writes:
Interpretation for the lay-man
Please continue to do these.
-200 on open before a rally... down -700 for the day.
The Great Unwind continues...
There's gotta be a Red October pun in here somewhere . . .
This line comes to mind: "You arrogant ass. You've killed us!"
(Officer on the doomed Russian attack boat speaking to the captain at the end of The Hunt for Red October.
So does anyone know why the $150bn TAF was undersubscribed? The lowest yield obtained was 1.39%, but there were another $12bn available for auction so better prices were possible
MW
CDN is undervalued for now (look to trade flows, they are the law of its price when it comes out every 3 months) however it is very much a relatively small country and vulnerable to illogical swings. That said there shouldn't be much more downside from here, with a safe target of 94cents CDN/USD in the next few months.
Builder Bob:
Here are a few excellent dealers that I have bought from. You can' buy online, but will need to pick up the phone and place an order.
Buy gold coins, Canadian maple leaf, krugerrands and silver coins from your gold dealer, MJPM.COM
William Youngerman Inc
Investing in gold; gold investing; about investing in gold
Best of luck.
Is this the part where Bush steers the ship straight onto the rocks?
AAEC - Political Cartoon by David Horsey, Seattle Post-Intelligencer - 10/08/2008
"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its report.
Could have coordinated that bit with the rate cuts and been just a bit cheerier... but, no.
To Paulson / Bernanke:
If you find yourself in some quicksand, it will start to pull you down into it. A typical reaction when this happens is for people to start thrashing around in the quicksand to try to get out.
All of this activity changes the chemical bonds between the sand and the water, causing the quicksand to act more like a liquid. The process has the technical name of liquefaction. The more liquid-like the quicksand, the less the resistance and the faster one sinks into it. So the irony is that the more you fight with the quicksand, the more the quicksand will win, pulling you down faster.
By contrast, if you make no movement at all, the chemical bonds between the sand and the water stay strong and the quicksand acts more like a solid. The natural buoyancy of your body will create a sense of equilibrium with the ground and you will stop sinking. In fact, you might even float up a little bit closer to the surface.
Therefore, the safest thing to do when confronted with quicksand is practically nothing. Slow, gentle, purposeful movement will get you safely out. No more cuts.... no more facilities... no more "coordination." Be still.
Dow futures down 280. Gold up $41. TED 4.01.
Hows that BAC offering doing? "Oversubscribed".....OY
The Great Unwind continues...
Think of it as defragmenting a hard drive. In the end there will be plenty of space!
Oh-My-Loan Kenobi writes:
There's gotta be a Red October pun in here somewhere . . .
This line comes to mind: "You arrogant ass. You've killed us!"
(Officer on the doomed Russian attack boat speaking to the captain at the end of The Hunt for Red October.
At the risk of repeating myself: "This business will get out of control. It will get out of control and we'll be lucky to live through it."
Comrade Bagholders,
None of this shit CAN work. The banks have piled of CRAPital for 15 years. There is not enough REAL capital to cover the CRAP. CRAPital is malinvested labor , materials, resources, tools, factories, land, and of course intellectually malinvested capital (people making careers in bubble industries)...these malinvestments won't disappear by papering over them. They need to be wrung out of the system. At this point, there is no major industry that hasn't been HIGHLY distorted by these malinvestments of the last 15 years...ON A GLOBAL SCALE to boot.
Ammo and squirrel recipes folks. I've been predicting this for years. I just couldn't believe it could go on this long. Party's over now.
Nostrovia,
I hope Bush comes on TV and fixes this soon.
crispy&cole writes:
The Great Unwind continues...
--
crispy, trademark that!
doesn't this seem like trying to survive a heart attack victim with one paddle???
if they took all their actions and did them all in one day, a while ago, we might have escaped the more serious part of what is to come.
Crapital. Lol.
Is this the part where Bush steers the ship straight onto the rocks?
Comrade Blogenfreude POBS | Homepage | 10.08.08 - 9:33 am | #
More like where Bush tries to rope the calf and he gets pulled off the horse into a cactus.
The BAC "offering" is the big story...they failed miserable
ova,
At the risk of bursting someone's bubble, I am very much self taught in finance. I'm an electrical engineer who is finishing a degree in economics. Often when I speak up I'm as much looking to learn from my own stream of thought as I'm looking to learn from those who may correct me.
Evil: I meant only as applied to human behavior patterns
finally markets may be getting close to levels that price in decent future expected returns. for 10 YEARS they have been grossly overvalued and priced for a big fat nothingburger return. patience....patience.
There goes 9.000...?
EvilHenryPaulson | 10.08.08 - 9:35 am
Ok, wanna talk about guns then? I know about them.
Zombie Beach-san writes:
These boneheads at the Fed are NOT engineers. Any responsible engineer at this point would have recognized long ago that their interventions were making their target system (our economy) less stable and pushing it even further out of tune.
Of course, any responsible engineer wouldn't have let their system ever get this far out of tune to begin with.
An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place.
@ theyieldcurve - your line is good. But still forward looking. Mine has a nice ring of finality to it. Plus, it is immediately followed by the sub imploding. Very fitting and visceral visual.
Ben Bernanke will be a shaken man after this.
Utter despondent, broken.
EvilHenryPaulson writes:
nova,
At the risk of bursting someone's bubble, I am very much self taught in finance. I'm an electrical engineer who is finishing a degree in economics.
Nice to see another fellow Canadian E.Eng in the crowd here.
yogi,
then I completely agree. There are too many pricing models (black-scholes) that do not properly apply to the situation where they are being used. At best they rely on perfect markets, which is a rarity (my favorite part of the free market is that no firm should be earning any profit)
Ok, wanna talk about guns then? I know about them.
nova | 10.08.08 - 9:36 am | #
let's talk about guns, cars, booze and broads.
Edward G. Robinson just headed into the soylent green 'theatre' for his 'movie'.
Oh-My-Loan Kenobi writes:
@ theyieldcurve - your line is good. But still forward looking. Mine has a nice ring of finality to it. Plus, it is immediately followed by the sub imploding. Very fitting and visceral visual.
I bow to your greater theatrical touch.
Dow -120. That's a good thing, which is really sad.
and dogs
ova, I'm a fan of using a pen knife to defend myself from cougars. Guns are toys.
theyieldcurve, TAP-TAP-TAP
Ok, wanna talk about guns then? I know about them.
looks like it's time to go long SWHC!
An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place.
noobgoldberg | 10.08.08 - 9:37 am | #
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
PPT just entered the room, S&P futures and Dow Futures getting bought.
Very obvious if you know where to look.
and dogs
the best dogs are free ;^)
Uptick rule before short ban expires
"Ben Bernanke will be a shaken man after this."
Pride goeth before destruction and a haughty spirit before the fall.
He was sure his academic learning gave him insight to a problem that millions of people have never been able to resolve. He could be a god...
PPT is selling GLD today, while buying other stuff.
PPT just entered the room, S&P futures and Dow Futures getting bought.
My, they're up early today.
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
AIG toes | 10.08.08 - 9:39 am |
I love Jeopardy!
"What is fly to Martinique with a private plane large enough to carry tonnes of cash and avoid refueling in countries with extradition treaties"
Paulson can't buy futures fast enough, looks like a waterfall is coming.
Buckle-up!
This rate cut is going to have the opposite effect of its intended purpose. LIBOR isn't going down much, but Prime will.
Let's say 3 Month LIBOR (what banks borrow at) goes down 30 bps tomorrow while Prime (what banks lend at) goes down 50 bps.
Congratulations Bernake, you just succeeded in killing consumer lending even further by compressing NIM for anyone who lends on Prime (think consumer loans, student loans, credit cards).
Helluva job Bernake.
That is not Erin in green on CNBC speaking in front of the big Euro? Is it this bad?
Comrade Bagholder noobgoldberg,
"An engineer would have started with the premise that the economy is some sort of mechanistic device, instead of the collaborative psychologies of six billion human beings. Which is kind of what got us into this mess in the first place."
Hmmmm...That, of course is Hayek's and the Austrian's in genral central premise.
In fact engineers got economics into the modern mess it is.
Nostrovia,
The only perfect market is for widgets, which economists had to invent, and which serve no purpose.
An engineer would ask: "what if all the insurance policies I have written get claims on them", and plan accordingly.
Baloney, that's akin to an engineer stating "what if this entire bridge was packed bumper to bumper with overweight concrete trucks"? You add a safety margin to the worse case scenario; you don't plan for the impossible. Otherwise planes would be too heavy to fly, bridges would end up being solid causeways, and laptops would be made out of pure titanium so they could withstand a bus driving over them.
The uptick rule is the most retarded piece of regulation I have ever heard of in my life in the context of a modern financial exchange operating effectively on fractions of a cent with millions of trades per equity per minute
Anyone who brings it up, is just a fan of the nostalgia they have for their trading days in the 1980s when this whole debt growth bega
In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
We are being given our own deck chair! Yay!!
so they cut rates now for a crisis that is primarily credit based and then when the credit based crisis really affects the economy ( after Obama is in) the fed will have less ability to rev the economy when the cut really would have helped
Hmmmm...That, of course is Hayek's and the Austrian's in genral central premise.
In fact engineers got economics into the modern mess it is.
It's like we live in the same mind. I don't even know why we talk at all...
Anyone who brings it up,
I fell the same way when someone mentions the PPT.
Baloney, that's akin to an engineer stating "what if this entire bridge was packed bumper to bumper with overweight concrete trucks"? You add a safety margin to the worse case scenario; you don't plan for the impossible. Otherwise planes would be too heavy to fly, bridges would end up being solid causeways, and laptops would be made out of pure titanium so they could withstand a bus driving over them.
noobgoldberg | 10.08.08 - 9:43 am | #
I have a bridge to sell you.
YouTube - Tacoma Bridge
And we're positive! PPT baby!
Special Liquidity Schemes: at least the UK has dignity of using the proper word to describe their activity. The US would call it a Facility.
In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.
--
Wait until they look OFF our balance sheets!!!
What the hell just happened to SRS?
The PPT is going to pound Gold and Silver as hard as they can. Unfortunately the Comex isn't the market maker any more for Physical bullion.
The Asian and European markets are controlling the game now. They have had enough of the paper market.
Look for a new exchange to be set up in Asia very soon. They aren't going to let Paulson do it to them twice.
I expect a similar exchange in Dubai.
There is a $100+ premium for physical gold bullion in the market now and $8 over spot for Silver.
What does that tell you?
Comex is near collapse, paper futures are not able to deliver on physical.
A colleague of mine at work who is long silver told me the same thing a week or two ago. He was having problems finding dealers who would give him delivery of the bagged silver dollars.
He also gave the same advice -- get the physical stuff, not a piece of paper.
Have a nice day.
Gold is tanking big time. Did not pull the trigger fast enough at the peak
Canadian watching with popcorn
According to satan, all Canadian banks have gone bankrupt and people are eating mud pies for nourishment. I never met the Sebastien character, but it seems we lost another character on CR comments.
I don't think Canadian banks are too eager to dive in just yet, similar to HSBC. If they wait: they always get a better price, they have more certainty with respect to government interventions, and they can also ensure the stability of their own balance sheets by seeing how things develop. It could be a full year before there are true acquisitions (and not merging parts of 2 bad banks into 1 new one)
When your house is on fire, throw some more dollars at it.
That'll solve the problem.
"We are being given our own deck chair! Yay!!"
Nope, Canada has been given the option to purchase slightly used deck chairs, with the proviso that they be chained securely to both the Titanic, and to the Canadian rescue vessel.
PPT running out of buying power. They're like the winch that pulls you up the roller coaster...
Clink, clank, clunk. Clink, clank, clunk.
Wheeeeeeeee!
Gold tanking? What are you talking about?
Go try to buy some.
We are in for a big rally until ~11am, if volume quiets down then we're headed for a big day of losses
While teaching at Princeton, Bernanke once crashed the widget market.
PPT is thought to be myth by many--yet this misadministration has been shown to screw around with every department--Justice,, Defense, etc. They will be found out and they will be proud of their defense of our economy. They are the scum of the earth--in it for the money and power--no patriotism--no compassion--no morals--no ethics--just fucking greed. Right now, on the deathbed, they are stealing body parts.
VIX still at 55 (20 is 'normal')
You must have physical bullion.
There has been a "slow motion" national bank run for months now.
You want to hold dollars now?
After all of the foreign debts are cleared in dollars, I think we will see the USD below .50
They rang a bell. See you in January.
Regards
BAC still below the offering price. BWAHAHA!
I have a bridge to sell you.
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
If only economists would have a similar institutional memory. Alas, we keep repeating the same mistakes.
EvilHenryPaulson
Don't listen to Satan.
PPT is real.
They were just discussed last week by Ambrose at the Telgraph, they don't even hide anymore.
The two dark liquidity pools they set up in London is where they do it from, Bakall and Turquoise.
Unfortunately, they are having trouble coordinating their trades now with all of the International chaos.
This will all end badly.
Don't you think they wanted to "mask" the actual health of the US until after the election if they "Could" have.
Take my stocks...please!
Feel free to substitute in banks, bonds, CDS, CDOs, house, CRE, CC debt, car loan, currency, etc.
@the best dogs are free
A dog saved from death row is a friend for life. Byron said about dogs: "all of men's virtues, but none of their vices."
Greed makes you stupid but it seems banker's greed requires a) natural talent and b) many years of specializing in that topic.
2009 will be brutal
Jewish traders will be leaving early today to get home before sundown--I expect they will not want to be exposed to the markets tomorrow--a true sine curve of a day.
Mel:
excellent point.
This is another Yom Kippur war of sorts.
Be very careful. We could easily see a waterfall of 2000 points.
Be safe
Dicknose says "It's crazy!". lol
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
What I like about the story is that the bridge designer drove his own car out to the middle of the bridge to try to dampen the resonance. That "taking some responsibility" thing. (Another EE here).
Am I wrong in thinking that there is some sort of legend about engineers' rings being made out of the steel from the Tacoma Narrows Bridge (or some other failed bridge) in order always remember that failure?
I was wrong about the Tacoma Narrows, but not about the myth--apparently it's Canadian:
EIR.CA
It's official! We've found the bottom!
What's up with McPain saying last night he is going to cram down mortgages for the morons who got ARM's to current market value. What about those of us who are paying off the original loan. This is out and out socialism. Will this stand up in court. Where is a sleazly lawyer when you need one.
oobgoldberg,
In Canada, engineers are given an Iron Ring after graduation as a reminder of their responsibility to society. The legend goes that the rings are made of the metal from a collapsed bridge. The truth is that it is a cheap piece of steel that can be made for about $7 CDN.
I am not sure if the US has something similar.
By the way, the PPT is pretty amazing. It looked like they were losing initially, but it seems like they have managed to "secure" the day... or maybe just the next few minutes.
DJIA +2%? XCUSE ME WTF YOU'RE DOING?
I love having my morning coffee with you cheery folks here at CR...On a happy note, my penny stock is up 31% today...flight to quality and all..
one of those L shaped take offs.
anonymous: did you use both hands (and a flashlight)?
It's official! We've found the bottom!
Anonymous | 10.08.08 - 9:57 am
Don't you mean suckers?
Run Forest, Run!
Be very careful. We could easily see a waterfall of 2000 points.
You know, if you keep predicting a circuit breaker day, every day, then one day you might be right.
What I like about the story is that the bridge designer drove his own car out to the middle of the bridge to try to dampen the resonance. That "taking some responsibility" thing. (Another EE here).
You're absolutely right...Henry Paulson and Ben Bernanke would need to walk into the trading pit in Chicago in order to replicate that show of responsibility.
Awwww PPT ran outta ammo already?
Hah, look at GS and the 115 line.
"Awwww PPT ran outta ammo already?"
No, it's just that +40 is considered a major rally these days.
Will we see our first circuit breaker day?
PPT's pump is partially airlocked. Calling in the engineers.
LIQUIDITY SALE
I don't think PPT[if there is one] will give up easily today. Global rate cut and all should add up to some confidence.
Could MetLife be the "major insurer" that Congressman Souder said was in danger of going under? Met announced today that it's selling 75 million shares, valued at $2.8 billion at current prices.
MetLife Plans Stock Sale as Quarterly Profit Declines (Update1) - Bloomberg.com
Lefty sez:
LIQUIDITY SALE
Liquor's on sale? I'm so there.
RallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRallyRally
Krugman points out that the Fed Funds rate has little effect anymore on real interest rates.
Another proposal: ask the Chinese to save us.
The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance buying US bonds was indirect and unconditional. Not so in this case.
Chinas loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.
What would be the nature of the strings or conditionality as the US Treasury, a longtime practitioner of this art, has called it? Conditionality as imposed by the World Bank and International Monetary Fund was underpinned by an ideology that favoured markets and globalisation. But there was also an assumption that either borrowing third world governments did not understand their benefits or the reformers there needed a spoonful of sugar to help overcome any internal opposition.
China would impose two conditions. First, it would declare that the offer of money was conditional on the US governments adopting a particular approach to rescuing the banks, namely to favour in the next round the use of government money to recapitalise the banks. Europe has been using this approach and evidence suggests it is the most effective way of dealing with large-scale financial crises.
The US government like third world governments in the past has been unable to adopt the most efficient course of action. This stems from an ideological obsession against socialising banks or because inducement is necessary to overcome any domestic opposition to it.
The second condition would relate to social safety nets, which had become standard embellishments to World Bank/IMF adjustment programmes. China would stipulate that monies be devoted to cushioning the impact on vulnerable homeowners, so that they would not be forced into forgoing the American dream of home ownership. Chinese conditionality on this front would achieve an outcome that several economists on the left and right have argued for on grounds of fairness, and also to address the fundamental problem in the housing market.
For China, this offer of help would have three virtues. First, it would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates, which led to lax global liquidity conditions. Second, its economic interest would be served because successful US efforts at rescuing its financial sector could help avert an economic downturn, protecting Chinas exports, its growth engine.
Perhaps most important, it would seal Chinas status as a responsible superpower willing to deploy its economic resources for the sake of protecting the world economy. And if the means for achieving that are by providing the current hegemon with the largest aid package the world has ever seen with a healthy dose of sensible conditionality, well, what could be more statesmanlike than tha
One other thing the Chinese might impose as a condition would be no more arms sales to Taiwan and the cessation of support for its "independence."
What we need is a couple circuit breaker days. Put this sucker down!
My guess is the market will do ok today. It's been down 5 days in a row, it may well be pretty stable today.
Clink, clank, clunk. Clink, clank, clunk.
What a view from up here!
Time for Bush to go on the airwaves and plead with everyone to buy into the stock market.
What's up with McPain saying last night he is going to cram down mortgages for the morons who got ARM's to current market value.
Like the man says, "I'm a maverick"
In both economics and physics, if the predicted outcome doesn't appear, there is an unknown variable unaccounted for--or the theory is wrong. My bet is the PPT is that variable--and must be factored into the equation if you want to "play" the market.
AIG toes writes:
Time for Bush to go on the airwaves and plead with everyone to buy into the stock market.
AIG toes: it's faster to enforce people not to sell, isn't it?
Harper was on the tube last night, says good time to buy, lot of bargains out there.
I don't understand why everybody is pessimistic, the team we have is fantastic and can only succeed:
how can our Darling from UK under La Garde from France with Cash&Carry from the US fail to cross the German Stonebridge to a bright future?
At worst it will only be three Italian bumps on the way...
In both economics and physics, if the predicted outcome doesn't appear, there is an unknown variable unaccounted for--or the theory is wrong. My bet is the PPT is that variable--and must be factored into the equation if you want to "play" the market.
I don't know about physics, but in economics that unknown variable is either panic or greed, the results of which are impossible to predict.
Just as the Reagan deregulation movement has now been thoroughly discredited by events, I think economists who take too strong a monetary approach are being creamed, too.
All the approach today is: get money to the banks, to the institutions. Money is the lubricant, money is the life-blood.
Well, here's a clue: money has to DO SOMETHING, too. That's pretty fundamental. Putting it in the banks so it can zip back and forth is pointless if it does no work during the trip.
Pending Home Sales Jumped 7.4% in August (Story Developing)
Gross to Bernanke I said 100 bps bitch. Now go put on that teddy and make me a rum & coke
bargains come with an extra helping of melamine....
McSame did not propose cramdowns. He is a opposed to them, because they are necessary and economists recommend them. What he did propose, exactly, is a mystery born of the dark pool in his own mind.
Like it or not, either of the two candidiates will bail out foreclosure 'victims'.
We will have round 2 of stupidity continues....
Nobody expects the U.S. Treasury!!!
Builder Bob writes:
Hah, look at GS and the 115 line.
Disturbing isn't it.
Warren Buffet owns this market.
No PPT.
Just Fear and Greed.
We have had about 7 years of pure Greed.
Now we have had 12 months of Fear.
Some greed will come in today.
I'm sure it's 7.4% MoM. BFD. What's YoY?
Breaking news on CNBC "The buyers are in"
@moqui - 10:06 am. Nice visual. Disturbing, but fitting. LOL at the Rum & Coke.
The PPT is trying to administer the
Emergency Liquidity-Shock Device.
Here's a report:
Standing by the the Fed helplessly watched as the Dow didn't respond to his treatment.
Bernake said the Dow "was face down, bleeding. . . . We assumed it had hit its head when it fell."
The PPT rolled the Dow onto its back and applied the AED pads to its index to check his vital signs.
"It said he needed a shock, and we shocked him," Paulson of the PPT said.
At that point, the PPT kept administering the Emergency Liquidity-Shock Device to get it started again...
Hmm...it appears that it is 8.8% higher than August 2007. That is good news. Of course, prices continue to collapse well after sales volume collapses.
Pending Home Sales up Strongly
ew post
Nuthred!
heard CNBC talking head saying that "speechless" over how the Dow jumped so quickly. Where's it coming from? What programs?
Duh.
So, let's have a contest. What's the PPT mascot?
Janitor with a broom?
And, of course, pending activity doesn't necessarily translate into closing activity.
Add in continuing job losses and this is probably going to go down in the future.
Boing! Boing! Boing! I'm a tigger!
Last
Doh!
PPT's mascot? Obviously the Mario twins.
It's not a buyer's market if you don't buy.
Last one out turn off the lights.
Good call. Luigi is bad ass on the futures purchases.
1000 point rally!
PPT mascot--Hansel and Gretl dropping bread crumbs.