<< <i>Cohodk, it looks like I am seeing lots of classic "double tops" in several of those precious metals charts. Do you think this portends a significant short term downturn in the precious metals?? >>
FWIW, I expect a rather large correction coming soon. By soon, I believe within 2 to 6 weeks.
Probably closer to 3-4 weeks if I had to try and pick a tighter time frame.
It's been coming, I've been expecting it, nothing continues upward 100% of the time.
Don't let it bother you. It's simply going to be due to profit taking and shoring up positions by the big boys.
On the upside, it won't last long and will be a great buying opportunity.
I'd expect to see prices recover to current levels or higher by the end of May.
After that, it's off to the races again. By early September, we'll be 10-15% above today's levels.
The continued commodities bull isn't anywhere near running out of steam, we've still got years to go.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
The currency basket may have a hole in it. Full stories can be read at Bloomberg.com and have been posted within the last 24 hours.
1. Malaysian Ringgit Slumps 2. New Zealand Dollar Falls a Third Day 3. Australian Dollar May Decline on Slowing Growth, Worsening Credit Concerns 4. Canadian Dollar Falls Amid Speculation Central Bank Will Extend Rate Cuts 5. Turkish Lira Posts Biggest Weekly Drop in a Month as Investors Avoid Risk 6. South African Rand Falls Against Dollar For Third Week as Shares Decline 7. Rupee Has Biggest Weekly Loss Since August on Oil, Decline in Asian Stocks
ttown - another complete breakdown in society. And remember, Hillary Clinton is pushing to let these guys in $3mm houses get a break on their payments, too. (a 5-year moratorium?) Isn't it grand?
Edited to add: and it's not just Hillary. Obama essentially wants the same thing. I don't know about McCain.
And then, there's Ron Paul. You know, the guy that the networks and powers-that-be pushed out early on.
Q: Are You Printing Money? Bernanke: Not Literally
This solution seems to be like giving alcohol to an alcoholic. The FED has resorted to fighting inflation with more liquidity creating more inflation it seems to me. This will take a turn for the worse soon IMO.
Looks like it's possible to stop the run of gold and silver. It doesn't look like ANYTHING can stop oil, unfortunately, until something occurs that causes the bubble to pop.
those Florida folks saw too much CSI Miami before they moved there from California....
we have seen the tip of an iceberg, a very large one. the glacier it came from could calve another larger one and tsunami the market. those who think we can solve this with more fiat policy are on very thin ice.
And Americans are selling thier gold to pay thier bills:
<< <i>Midge Elias watched prices rise for months until she finally gave in to the temptation and walked into a Manhattan coin shop with two mounted Liberty Walking gold pieces she'd once worn on long chains. She left with a check for $1,150. >>
$200 billion more 'infused' today-- and the market loves it. Is anyone here keeping track of how much infused so far over the past 12 months?
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
It is hard to say what is the best solution to the mortgage meltdown crisis. I'm really not in favor of bailing out people who bought because they thought they could become millionaires overnight flipping real estate.
One fact is ABSOLUTELY inescapable. We need more government regulation to prevent these types of things from happening again. America didn't learn its lesson with the meltdown of the S&L's in the 80s, which will cost taxpayers over a trillion after interest costs. Unfortunately they probably won't learn it again this time.
It is amazing that somehow people (taxpayers) think less government regulation is better after having that very policy cost them (taxpayers) trillions!
<< <i>Looks like it's possible to stop the run of gold and silver. It doesn't look like ANYTHING can stop oil, unfortunately, until something occurs that causes the bubble to pop. >>
I for one, do not believe the gold and silver run is over with.... they have been able to stop it, but I will place my bet that it will be for only a few days. Then it will continue upwards. More and more people out there are not being fooled with the games the Fed is playing...
This mess was a direct result of the Glass Steagall Act that congress passed in the 1930s after the banks got greedy in the 1920s. They repealled this law so the bankers could get rich and they did. And just like the 1930's the public got the hangover.
There is nothing they can do to "bail out" the speculators, they are already dead. This is to bail out the banks and the economy before we all end up in soup lines. The result is a further toasting of the dollar.
<< <i>Looks like it's possible to stop the run of gold and silver. It doesn't look like ANYTHING can stop oil, unfortunately, until something occurs that causes the bubble to pop. >>
Not a chance.
Oil is a commodity and while it's importance can't be diminished, all commodities will follow as a result.
The Fed is much more concerned about keeping the house of cards that is the major financial institutions afloat.
The metals manipulators are just a small part of the equation and they are losing the battle, soon the dam will burst. It's a battle that can't be won and metals prices can't be suppressed much longer. Just look around, you can see them losing the battle right now. Look for $35 silver and $1650 gold next year. From there, quadruple the silver and perhaps triple the gold within 3 years or so.
That's where we are going to be at. When the major financial institutions start failing, the metals will rise sharply in accordance. Citicorp is teetering on the edge as we speak.
This isn't overpriced real estate with greedy bankers and even greedier buyers looking for the quick flip.
This isn't a bubble that is going to pop. World consumption assures that.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
The FEDs actions today have probably placed at least a short term bottom in the dollar. Dont be surprised if the FED announces that next weeks rate cut will be the last.
<< <i>The FEDs actions today have probably placed at least a short term bottom in the dollar. Dont be surprised if the FED announces that next weeks rate cut will be the last. >>
What has the market & USDx factored in-- a 50 or 100 bp cut-- if it will the last?
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
<< <i>The FEDs actions today have probably placed at least a short term bottom in the dollar. Dont be surprised if the FED announces that next weeks rate cut will be the last. >>
What has the market & USDx factored in-- a 50 or 100 bp cut-- if it will the last? >>
Everyone here knows that I am bullish on gold, but yesterday's 200Billion facility did not create money like the TAF does. The balance sheets are the same.
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy.
This will encourage lending and allow for the dollar to take a breather from its freefall. IMO, the gold and bond market are trying to figure out how to digest the move.
Everyone here knows that I am bullish on gold, but yesterday's 200Billion facility did not create money like the TAF does. The balance sheets are the same.
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy.
This will encourage lending and allow for the dollar to take a breather from its freefall. IMO, the gold and bond market are trying to figure out how to digest the move.
What's a TAF and an MBS?
Is it my imagination, but doesn't it seem that for every stimulus they try, the market goes up, and back down - while gold goes up and then DOES NOT GO BACK DOWN?
To me, this seems to be how the relative re-pricing is being done - without raising too many eyebrows.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Everyone here knows that I am bullish on gold, but yesterday's 200Billion facility did not create money like the TAF does. The balance sheets are the same.
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy. >>
Another thing it will likely do is stop all the margin calls that are killing the financials. TMA has rebounded from 80 cents a share two days ago to $3.22 now, mostly as a result of being freed from the margin calls that were leading to a death spiral. Banks can't lend if they have to use all their available capital meeting margin calls.
Frankly, this is a much better move than cutting interest rates more. I think this could lead to more liquidity in the credit markets than another rate cut and it's not nearly as inflationary. I think the Bernanke Fed may have finally done something right.
Q] I think this could lead to more liquidity in the credit markets than another rate cut and it's not nearly as inflationary. I think the Bernanke Fed may have finally done something right. >>
it may not be as inflationary, yet TIPS fell below zero for the first time late yesterday (inception 1997)
this move was a good, albeit temporary one. sometimes i think all this "stuff" the Fed is doing is relative to giving a laxative to someone on a high fat, low fiber diet who is resisting a healthy lifestyle.
No - that is money creation because the Fed is basically allowing the banks to borrow against collaterals that are worthless (or at least worth much less than the amount they are used as collateral for).
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>this move was a good, albeit temporary one. sometimes i think all this "stuff" the Fed is doing is relative to giving a laxative to someone on a high fat, low fiber diet who is resisting a healthy lifestyle. >>
I think where this analogy breaks down is that if someone resists a healthy lifestyle and we allow them to "die," they don't take everyone else down with them.
Unfortunately, that's not the case in this situation. If we just allow the irresponsible players in this soap opera shrivel and die, it takes out a huge segment of the world economy. In other words, the collateral damage is just too great. If this doesn't force banks and lenders to meet one margin call after another because they have to keep marking to market with their MBS assets, maybe that can help alleviate the constipation in the credit market.
I'm not a fan of big government and regulation, but I think this is a poster child for what can happen when you combine greed and a lack of oversight. Something that has such a profound effect on the national (and world) economy is everyone's business -- especially since we all "pay" for the cleanup.
The move yesterday is NOT money creation. They are essentially allowing banks (and brokerages) to exchange MBS for treasuries to shore up their balance sheets. Banks are leveraged 12 to 1 or so. Brokerages 18 to 1 and hedge funds up to 32 to 1. If MBS are shown to be worthless, then in order to keep that leverage ratio, they need to raise cash.
They are concerned that with the MBS on their sheet that could get downgraded at any time. In order to combat this, they were keeping any capital injection on their sheets...and not lending it. The MBS for treasuries swap allows for a more stable leverage and should encourage them to loan out cash which will stimulate growth.
There are other concerns that will probably rear their head with this IMO, but I think that is the fed's plan
coinlieutenant, Please educate me on this...I can understand why this may be better than a rate cut but where does this "injection" come from. My guess is the printing press or M3 which hasn't been reported in a couple of years(?) If this is true, then isn't this injection just more inflation that will have to be paid by 2/3's of the economy, mainly us, which in turn should prolong our stagflation. I know this may oversimplified (and maybe even incorrect.)
I think where this analogy breaks down is that if someone resists a healthy lifestyle and we allow them to "die," they don't take everyone else down with them.
The analogy is valid. If you don't kill the disease, the patient will certainly die. The patient may not die if he converts to a healthy lifestyle in time. Taking laxatives to address a fat issue is a more likely way to kill him off.
Unfortunately, that's not the case in this situation. If we just allow the irresponsible players in this soap opera shrivel and die, it takes out a huge segment of the world economy. In other words, the collateral damage is just too great. If this doesn't force banks and lenders to meet one margin call after another because they have to keep marking to market with their MBS assets, maybe that can help alleviate the constipation in the credit market.
Honest capital will find a way to be utilized, if it's not being ripped off by the "borrowers". That's why lending standards need to be enforced, and that's why deadbeats shouldn't get loans in the first place. Letting the crooks off only encourages more of it. If banks are illiquid, they shouldn't remain in business. At some point, they have to fail. Bad management should never be rewarded over and over, in any company or government agency. Hoping that the constipation goes away will not make it so. The interest rate market would correct this in an instant if it were allowed to float freely. Lenders will materialize from everywhere, once the risk factors are fairly defined, the rates move up, the crooks get taken out, and the playing field is made level.
I'm not a fan of big government and regulation, but I think this is a poster child for what can happen when you combine greed and a lack of oversight. Something that has such a profound effect on the national (and world) economy is everyone's business -- especially since we all "pay" for the cleanup.
Doing nothing = more greed and more lack of oversight. Nobody pays except you and me. If a bad loan is worth nothing, why say that it's worth something? It's not. Take the property and value it to market. Then get out of the way. If you screwed up and can't manage a business effectively or honestly, you shouldn't be running one.
Q: Are You Printing Money? Bernanke: Not Literally
The TASF (I might have that acronym wrong) isnt inflationary as in creating money in the way you think.
The TAF is inflationary as it is a loan of money... but it is a book entry that carries with it an interest rate that the bank has to repay. It is not the fed delivering a load of hard cash to a bank. This was being used to keep banks liquid and leveraged at the levels of acceptance described above. The problem was that the banks were not lending that money because they were concerned about MBS's and other derivatives becoming worthless via a downgrade by the rating agencies....which would render them insolvent.
The book entry becomes cash whenever the banks lend out (at a higher interest rate than the fed was lending to them) to someone else via lines of credit or other vehicles that they can go out and spend. Sometimes that spending are book entries too...sometimes it is actual cash. As more and more of those fed loans that are now loans issued by the banks to business and individuals trickle down, it results in more cash in the system...which is inflationary.
The fed move yesterday (TASF) does one thing only. It encourages banks to take the equity in their balance sheets and start loaning it because it shores up their leverage (with government "safe" bonds) in exchange for MBS's. This is supposed to give the banks a warm and fuzzy feeling about their liquidity (already injected via TAF's and low interest rates) and therefore loan money which should stimulate the economy via spending.
I dont agree with it (we should be saving, not spending), but it is nonetheless the gameplan. The amazing thing is the blatant fraud associated with this whole plan.
IMO, this was an ace in the hole for Ben B. and he was using severe pressure in any way shape or form to influence Moody's and other rating agencies to keep the AAA rating on the bond insurers. IF they hadnt kept the AAA rating, then the gov would not have been able to take the MBS's and derivatives on THEIR balance sheet.
It is all the same, but having our currency in the last 80 or so years go from being backed by gold to junk bonds would have crushed the dollar. They are junk bonds anyway, but not on ratings paper....and this is what Ben was using every ounce of influence he could muster. I wish I could hear what was really going on behind the scenes.
This whole thing btw, is not for joe public. Joe public is just a pawn in all this...he needs to keep spending to keep the banks that drank their own kool-aid from drowning in it. It is sick.
I think the drop below key technical levels in the S&P and Dow was the trigger to drop the Ace.
am i the only one hearing constant, and i mean constant pitches now for buying precious metals?
radio, magazines, etc... (i do not have tv so i cannot comment there).
but it is simply everywhere i go now.
this time last year.. just once in a while.
heck, even dealers on this forum are getting air time on the radio now. rare coins of NH for example.
it is making me think the peak is near. once the economy starts getting steam in the near future metals will be forgotten as they once were a few years back.
If you screwed up and can't manage a business effectively or honestly, you shouldn't be running one.
Hey, hey, that's not the America we all know and love. We don't put ineffective management out on the curb counting cars... we do like Enron and American Airlines... and pay them retention bonuses!
<< <i>am i the only one hearing constant, and i mean constant pitches now for buying precious metals?
radio, magazines, etc... (i do not have tv so i cannot comment there).
but it is simply everywhere i go now.
this time last year.. just once in a while.
heck, even dealers on this forum are getting air time on the radio now. rare coins of NH for example.
it is making me think the peak is near. once the economy starts getting steam in the near future metals will be forgotten as they once were a few years back. >>
The peak is nowhere near.
It's just that the profit ratio has gone up. You also see full page ads in newspapers and the gypsy rogues traveling around the country buying up precious metals as well. Right now, many uninformed sellers are taking the money and thinking they are getting a good deal and some fast cash. That filters to dealers who are finding a larger markup.
Also, it seems most of those ads are offering prices that are absurdly high and using this metals run up as a ruse on another group of the uninformed.
It's getting harder and harder to find 10 and 100 ounce bars these days without paying exorbitant prices on the net. Local B&M shops are selling out as soon as any show up.
That's not an indication of any sort of peak. Give it three more years and then we can think about any sort of a possible peak. Even a peak doesn't indicate a huge drop, this isn't 1980 and world consumption guarantees that this isn't artificial like those days were.
The amount of refined silver on the planet today is somewhere in the neighborhood only 10% of what existed back in 1980. It's a surface metal and the easy pickings are long gone. With gold, probably 90% of what existed in 1980 is still here, but then there wasn't that much to begin with and industrial consumption is rapidly growing there as well. How many people know that there would be no USB cables without gold? That's just one small example.
This phenomena is just an indication of the metals bull picking up steam. We've got long legs yet and we ain't seen nothing yet.
This recent decrease in production hasn't even hit the radar yet, but continued consumption will guarantee that it's coming and another large spike in prices is on the way later this year.
That will only cause more of the ads you are now seeing.
I remember 1980, I remember how saturated we were with radio, TV and newspapers ads back then. This is nothing in comparison.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
It is all the same, but having our currency in the last 80 or so years go from being backed by gold to junk bonds would have crushed the dollar. They are junk bonds anyway, but not on ratings paper....and this is what Ben was using every ounce of influence he could muster. I wish I could hear what was really going on behind the scenes.
This whole thing btw, is not for joe public. Joe public is just a pawn in all this...he needs to keep spending to keep the banks that drank their own kool-aid from drowning in it. It is sick.
I think the drop below key technical levels in the S&P and Dow was the trigger to drop the Ace. >>
coinlieutenant, thanks for the explanation. Just looking at the "markets"....it seems confidence has been lost this last hour of trading. Not a good sign if no follow-through on yesterdays Dow 415 point rise.
fc, I must agree with you. I had my two crewmembers ask about gold. When Pilots, Lawyers, and Doctors get involved it's near a short term (in this case) top. We may just be building a new high base this summer.
<< <i>Just looking at the "markets"....it seems confidence has been lost this last hour of trading. >>
Rallies fading in the last hour. Except for yesterday's short-covering blip, how is this different than 90% of the rallies since November?
Bottom line, IMO, is that the markets fell as oil hit $110. Oil is going to be the achilles heel of any economic/market recovery. It's more than the dollar. It's rampant speculation, especially given "good news" on ample crude and gasoline supplies. Until that bubble pops, it's one step forward and two steps back.
<< <i>Just looking at the "markets"....it seems confidence has been lost this last hour of trading. >>
Rallies fading in the last hour. Except for yesterday's short-covering blip, how is this different than 90% of the rallies since November?
Bottom line, IMO, is that the markets fell as oil hit $110. Oil is going to be the achilles heel of any economic/market recovery. It's more than the dollar. It's rampant speculation, especially given "good news" on ample crude and gasoline supplies. Until that bubble pops, it's one step forward and two steps back. >>
ziggy, Right, no difference since November. We've had many years where the mantra was buy on the dips. Now that equity indexes have rolled over, it's sell the spikes.
Remember when Katrina hit and oil per barrel hit around $60 and gas per gallon (in my area) hit the low $3.00's. Here we are at $110 and a gallon is about $3.05!? Yes, there's a lot a speculation in oil and that speculation will be the death knell for this summer's vacation/driving season.
pressures. Mortgage rates are actually going higher,
then new jumbo conforming is almost a joke due to the
many restrictions on qualifying, inability to take cash out
in excess of 2000 dollars and inability to roll over a second
mortgage into the new jumbo first. We still have a freeze up in
credit markets. We have not seen more then a fraction of the losses
that banks and financial institutions are hiding. With the
clear downturn of the economy, this destructive and corrosive economic
atmosphere has much longer to run before it is played out. I would not
be amazed to see this condition continue well into 2009 before there are
signs of improvement. Its hunker down time folks. People will continue to
lose their homes in spite of cosmetic attempts to help.
Soon, the Fed will run out of arrows in it's quiver and the problem will be
turned over to the Congress. If we have to rely on Congress and the President,
then heaven help us. >>
This is true but keep in mind that every day the dollar is down is a day closer to stability.
The dollar still has value and will seek that value. In the meantime the FED may or may not have to inject liquidity.
When the dollar stabilizes (which won't be at much lower levels) then most of the equity markets will begin to stabilize and the winners and losers will start getting sorted out. During this time the much of the liquidity will spill over into currencies and commodities. Greater inflation will drive much of this excess into gold as more and more people seek the protection of this barbarous relic.
Sinclair summed it up quite well when he said that this latest $200B offering by the FED is indicative of a solvency issue, not a liquidity issue. As Deadhorse said, Citigroup and others are teetering on a precipice. There is so much to be wrung out from here it can't possibly be resolved in months or even a year. The banks don't dare come clean with their potential (or actual) losses for fear of stampeding the markets. This will be a slow process with tacit approval by the FED and SEC because they know that full and immediate compliance takes down the banking system hard. While the PPT has helped spin this as positive for stocks and negative for gold, don't expect that spin to last for more than a couple of days.
While there is more mainstream talk on gold it still comes down to it that your average guy is still not buying any gold. For every airline pilot or lawyer buying some, there are 98 other Joes not even considering it. And Joe won't be buying it until gold is $1500 or $2000. By that time he'll be afraid he'll miss the boat to $3000 or $5000 and might consider getting on board.
Here's a great Dow/gold chart as well as Oil/gold chart. The Dow-gold chart clearly shows the preference to gold since 2001. That's a given and we're all aware of it. But the RSI (relative strength) and MACD clearly show were the future movement of this ratio likely lies. One couldn't state it any clearer than this. It's the future direction that I'm interested in, not where we've been.
I brought this link back up front at the request of a forum member. Feel free to plug in the bank of your choice to assess derivatives exposure. Entering exact Bank name, town, and state get you right in. ex. " Liberty Bank, Middletown, CT" "Generate Report" Select page 5a and 5b which are off balance sheet items to check derivatives exposure. In this case it's $55 MILL of which most of it is over-the-counter derivatives and swaps (ie the most lethal kind, non-exchange traded or no ready market). The bank lists over $2B in total assets. ex "Evergreen Bank" "Seattle, WA" shows no derivatives exposure.
Also worth noting is that on the Liberty Bank sheet it lists all those derivatives as "marked to market." That means they are listed on the balance sheet as to what the real market values them at. The odds of all 100% of those OTC derivatives being marked to "real" market is very unlikely. But the game is to say you've done it and let the real numbers slowly leak out down the road and blame the additional losses found on illiquid markets or erroneous pricing.
For giggles I picked another Bank at randon, Fleet National Bank of Connecticut, Providence, RI.... Ouch! $80B in total average assets yet $110B in derivatives (mostly interest rate contracts, nearly all OTC, $44 BILL in swaps, etc.). I won't be moving my assets to that one anytime soon.
I guess this is what happens when you turn your economy over to the group!
I wonder if all those countries joining the EU ever counted on this?
And exactly where does it leave the Euro in the end, if bunches of the members have these problems?
Last Updated: 1:02am GMT 13/03/2008 U.K. Telegraph
“The Irish banking system faces acute strains and may require a phase of temporary nationalisation as the property slump leads to a wave of defaults, according to a leading Irish economist.
Morgan Kelly, of University College Dublin, said the government is almost powerless to stop the downturn becoming a severe slump. "We're in a classic post-bubble recession, yet we can't do anything that a country would normally do in this situation because we're inside the eurozone," Prof Kelly said. "We can't cut interest rates, we can't devalue, and there is a lot less room for fiscal stimulus than people think. We're stuck.
"Look at all the signs: every single one is screaming that the economy is in big, big trouble. Housing market dead, new car sales dead, consumer confidence is dead, record job losses, exporters being killed off by a strong euro, fuel prices spike, housing repossessions increase," it said.”
Those who believe that all these rate cuts and injections of federal money into business will stabilize the economic situation of the US seem to always forget one thing...who's going to pay for these actions? What this all amounts to is a forced taxpayer funded program for business and the financial industry. This is not the "free-market" system that the people currently leading our country keep talking about...it's communism with present and future generations of US taxpayers expected to pay for the continuing excesses of US business. We might just as well federalize the banks and eliminate the middle man...at least in that way we might be able to unload the high-salaried managers who continue to rake in millions even as their banks are circling the bowl. In order for our economy to work, we need to re-regulate the banking industry ; set interest caps, set stiffer borrowing standards, eliminate most bank fees (which have run rampant since the current de-regulation), and in general hold the banks responsible for their screw-ups. The world will not end if these financial institutions and businesses are allowed to fail - US businesses close every day...what does matter to the big-wigs in Washington though is that these financial institutions are owned and run by many of their friends and campaign contributors, so the importance of their continuing operation is taking on additional importance, especially in this election year.
"What this all amounts to is a forced taxpayer funded program for business and the financial industry."
Yes, this is certainly beginning to look like a game of "tag, you're it" or maybe a friendly "pin the tail on the donkey" (no political implications here). Oh well, Au will be a K today so that should give the paper boys some grief knowing that there are people that have the actual where with all and not some of their stinkin' paper.
Edited to add: I would think that most of the folk that perpetrated this "lack of liquidity" are long gone to the Bahamas or maybe some comfortable little get away in S. America. They certainly wouldn't want to go to Europe to enjoy their spoils...the Europeans are sucking air now because they dipped into the honey pot too.
Comments
PFE 6% dividend, ED 51/2% dividend. As of this
moment, I own no stocks, but I am thinking about
high dividend stocks where the profits and cash flow
guarantee the dividends.
Camelot
<< <i>Cohodk, it looks like I am seeing lots of classic "double tops" in several of those precious metals charts. Do you think this portends a significant short term downturn in the precious metals?? >>
FWIW, I expect a rather large correction coming soon. By soon, I believe within 2 to 6 weeks.
Probably closer to 3-4 weeks if I had to try and pick a tighter time frame.
It's been coming, I've been expecting it, nothing continues upward 100% of the time.
Don't let it bother you. It's simply going to be due to profit taking and shoring up positions by the big boys.
On the upside, it won't last long and will be a great buying opportunity.
I'd expect to see prices recover to current levels or higher by the end of May.
After that, it's off to the races again. By early September, we'll be 10-15% above today's levels.
The continued commodities bull isn't anywhere near running out of steam, we've still got years to go.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I will offer my thoughts on your question tomorrow.
But for now I offer more evidence of what I have been eluding to for several months now.
We are not alone.
And it spreads.
The currency basket may have a hole in it. Full stories can be read at Bloomberg.com and have been posted within the last 24 hours.
1. Malaysian Ringgit Slumps
2. New Zealand Dollar Falls a Third Day
3. Australian Dollar May Decline on Slowing Growth, Worsening Credit Concerns
4. Canadian Dollar Falls Amid Speculation Central Bank Will Extend Rate Cuts
5. Turkish Lira Posts Biggest Weekly Drop in a Month as Investors Avoid Risk
6. South African Rand Falls Against Dollar For Third Week as Shares Decline
7. Rupee Has Biggest Weekly Loss Since August on Oil, Decline in Asian Stocks
Knowledge is the enemy of fear
Foreclosure-Proof Homeowners
Edited to add: and it's not just Hillary. Obama essentially wants the same thing. I don't know about McCain.
And then, there's Ron Paul. You know, the guy that the networks and powers-that-be pushed out early on.
I knew it would happen.
Gold, silver decline after Fed liquidity move
<< <i>
<< <i>I welcome the great minds of this board to give me optimism for the future based on fact and solutions. >>
<< <i>Hot topic and interesting read:
Foreclosure-Proof Homeowners >>
those Florida folks saw too much CSI Miami before they moved there from California....
we have seen the tip of an iceberg, a very large one. the glacier it came from could calve another larger one and tsunami the market. those who think we can solve this with more fiat policy are on very thin ice.
<< <i>Midge Elias watched prices rise for months until she finally gave in to the temptation and walked into a Manhattan coin shop with two mounted Liberty Walking gold pieces she'd once worn on long chains. She left with a check for $1,150. >>
and the sheep get fleeced again.
real scary how all these bandaids do nothing but prolong the inevitable.....maybe it's a way to soften the crash, when it happens??
One fact is ABSOLUTELY inescapable. We need more government regulation to prevent these types of things from happening again. America didn't learn its lesson with the meltdown of the S&L's in the 80s, which will cost taxpayers over a trillion after interest costs. Unfortunately they probably won't learn it again this time.
It is amazing that somehow people (taxpayers) think less government regulation is better after having that very policy cost them (taxpayers) trillions!
<< <i>Looks like it's possible to stop the run of gold and silver. It doesn't look like ANYTHING can stop oil, unfortunately, until something occurs that causes the bubble to pop. >>
I for one, do not believe the gold and silver run is over with.... they have been able to stop it, but I will place my bet that it will be for only a few days. Then it will continue upwards. More and more people out there are not being fooled with the games the Fed is playing...
There is nothing they can do to "bail out" the speculators, they are already dead. This is to bail out the banks and the economy before we all end up in soup lines. The result is a further toasting of the dollar.
<< <i>Looks like it's possible to stop the run of gold and silver. It doesn't look like ANYTHING can stop oil, unfortunately, until something occurs that causes the bubble to pop. >>
Not a chance.
Oil is a commodity and while it's importance can't be diminished, all commodities will follow as a result.
The Fed is much more concerned about keeping the house of cards that is the major financial institutions afloat.
The metals manipulators are just a small part of the equation and they are losing the battle, soon the dam will burst. It's a battle that can't be won and metals prices can't be suppressed much longer. Just look around, you can see them losing the battle right now. Look for $35 silver and $1650 gold next year. From there, quadruple the silver and perhaps triple the gold within 3 years or so.
That's where we are going to be at. When the major financial institutions start failing, the metals will rise sharply in accordance. Citicorp is teetering on the edge as we speak.
This isn't overpriced real estate with greedy bankers and even greedier buyers looking for the quick flip.
This isn't a bubble that is going to pop. World consumption assures that.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Knowledge is the enemy of fear
<< <i>The FEDs actions today have probably placed at least a short term bottom in the dollar. Dont be surprised if the FED announces that next weeks rate cut will be the last. >>
What has the market & USDx factored in-- a 50 or 100 bp cut-- if it will the last?
<< <i>
<< <i>The FEDs actions today have probably placed at least a short term bottom in the dollar. Dont be surprised if the FED announces that next weeks rate cut will be the last. >>
What has the market & USDx factored in-- a 50 or 100 bp cut-- if it will the last? >>
Futures indicate a 97% probablility of 75 bps
Knowledge is the enemy of fear
Amazing that such a weak and ineffective administration has dominated the congress so brilliantly.
Or is the congress worthless, too?
<< <i>I think maybe this administration is trying to postpone things
Amazing that such a weak and ineffective administration has dominated the congress so brilliantly.
Or is the congress worthless, too? >>
I do believe Congress has a lower approval rating than GW.
Maybe we should just do with any politicians for 10 years? Lets see it good ole capitalism can fix things?
Knowledge is the enemy of fear
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy.
This will encourage lending and allow for the dollar to take a breather from its freefall. IMO, the gold and bond market are trying to figure out how to digest the move.
siliconvalleycoins.com
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy.
This will encourage lending and allow for the dollar to take a breather from its freefall. IMO, the gold and bond market are trying to figure out how to digest the move.
What's a TAF and an MBS?
Is it my imagination, but doesn't it seem that for every stimulus they try, the market goes up, and back down - while gold goes up and then DOES NOT GO BACK DOWN?
To me, this seems to be how the relative re-pricing is being done - without raising too many eyebrows.
I knew it would happen.
<< <i>Everyone here knows that I am bullish on gold, but yesterday's 200Billion facility did not create money like the TAF does. The balance sheets are the same.
All they are doing is swapping MBS's for treasuries to essentially make the banks feel better about their balance sheets so that they will lend more. No one is lending and it is crushing the economy. >>
Another thing it will likely do is stop all the margin calls that are killing the financials. TMA has rebounded from 80 cents a share two days ago to $3.22 now, mostly as a result of being freed from the margin calls that were leading to a death spiral. Banks can't lend if they have to use all their available capital meeting margin calls.
Frankly, this is a much better move than cutting interest rates more. I think this could lead to more liquidity in the credit markets than another rate cut and it's not nearly as inflationary. I think the Bernanke Fed may have finally done something right.
it may not be as inflationary, yet TIPS fell below zero for the first time late yesterday (inception 1997)
this move was a good, albeit temporary one. sometimes i think all this "stuff" the Fed is doing is relative to giving a laxative to someone on a high fat, low fiber diet who is resisting a healthy lifestyle.
Robert A. Heinlein
<< <i>this move was a good, albeit temporary one. sometimes i think all this "stuff" the Fed is doing is relative to giving a laxative to someone on a high fat, low fiber diet who is resisting a healthy lifestyle. >>
I think where this analogy breaks down is that if someone resists a healthy lifestyle and we allow them to "die," they don't take everyone else down with them.
Unfortunately, that's not the case in this situation. If we just allow the irresponsible players in this soap opera shrivel and die, it takes out a huge segment of the world economy. In other words, the collateral damage is just too great. If this doesn't force banks and lenders to meet one margin call after another because they have to keep marking to market with their MBS assets, maybe that can help alleviate the constipation in the credit market.
I'm not a fan of big government and regulation, but I think this is a poster child for what can happen when you combine greed and a lack of oversight. Something that has such a profound effect on the national (and world) economy is everyone's business -- especially since we all "pay" for the cleanup.
The move yesterday is NOT money creation. They are essentially allowing banks (and brokerages) to exchange MBS for treasuries to shore up their balance sheets. Banks are leveraged 12 to 1 or so. Brokerages 18 to 1 and hedge funds up to 32 to 1. If MBS are shown to be worthless, then in order to keep that leverage ratio, they need to raise cash.
They are concerned that with the MBS on their sheet that could get downgraded at any time. In order to combat this, they were keeping any capital injection on their sheets...and not lending it. The MBS for treasuries swap allows for a more stable leverage and should encourage them to loan out cash which will stimulate growth.
There are other concerns that will probably rear their head with this IMO, but I think that is the fed's plan
siliconvalleycoins.com
Please educate me on this...I can understand why this may be better than a rate cut but where does this "injection" come from. My guess is the printing press or M3 which hasn't been reported in a couple of years(?) If this is true, then isn't this injection just more inflation that will have to be paid by 2/3's of the economy, mainly us, which in turn should prolong our stagflation. I know this may oversimplified (and maybe even incorrect.)
Ren
The analogy is valid. If you don't kill the disease, the patient will certainly die. The patient may not die if he converts to a healthy lifestyle in time. Taking laxatives to address a fat issue is a more likely way to kill him off.
Unfortunately, that's not the case in this situation. If we just allow the irresponsible players in this soap opera shrivel and die, it takes out a huge segment of the world economy. In other words, the collateral damage is just too great. If this doesn't force banks and lenders to meet one margin call after another because they have to keep marking to market with their MBS assets, maybe that can help alleviate the constipation in the credit market.
Honest capital will find a way to be utilized, if it's not being ripped off by the "borrowers". That's why lending standards need to be enforced, and that's why deadbeats shouldn't get loans in the first place. Letting the crooks off only encourages more of it. If banks are illiquid, they shouldn't remain in business. At some point, they have to fail. Bad management should never be rewarded over and over, in any company or government agency. Hoping that the constipation goes away will not make it so. The interest rate market would correct this in an instant if it were allowed to float freely. Lenders will materialize from everywhere, once the risk factors are fairly defined, the rates move up, the crooks get taken out, and the playing field is made level.
I'm not a fan of big government and regulation, but I think this is a poster child for what can happen when you combine greed and a lack of oversight. Something that has such a profound effect on the national (and world) economy is everyone's business -- especially since we all "pay" for the cleanup.
Doing nothing = more greed and more lack of oversight. Nobody pays except you and me. If a bad loan is worth nothing, why say that it's worth something? It's not. Take the property and value it to market. Then get out of the way. If you screwed up and can't manage a business effectively or honestly, you shouldn't be running one.
I knew it would happen.
The TAF is inflationary as it is a loan of money... but it is a book entry that carries with it an interest rate that the bank has to repay. It is not the fed delivering a load of hard cash to a bank. This was being used to keep banks liquid and leveraged at the levels of acceptance described above. The problem was that the banks were not lending that money because they were concerned about MBS's and other derivatives becoming worthless via a downgrade by the rating agencies....which would render them insolvent.
The book entry becomes cash whenever the banks lend out (at a higher interest rate than the fed was lending to them) to someone else via lines of credit or other vehicles that they can go out and spend. Sometimes that spending are book entries too...sometimes it is actual cash. As more and more of those fed loans that are now loans issued by the banks to business and individuals trickle down, it results in more cash in the system...which is inflationary.
The fed move yesterday (TASF) does one thing only. It encourages banks to take the equity in their balance sheets and start loaning it because it shores up their leverage (with government "safe" bonds) in exchange for MBS's. This is supposed to give the banks a warm and fuzzy feeling about their liquidity (already injected via TAF's and low interest rates) and therefore loan money which should stimulate the economy via spending.
I dont agree with it (we should be saving, not spending), but it is nonetheless the gameplan. The amazing thing is the blatant fraud associated with this whole plan.
IMO, this was an ace in the hole for Ben B. and he was using severe pressure in any way shape or form to influence Moody's and other rating agencies to keep the AAA rating on the bond insurers. IF they hadnt kept the AAA rating, then the gov would not have been able to take the MBS's and derivatives on THEIR balance sheet.
It is all the same, but having our currency in the last 80 or so years go from being backed by gold to junk bonds would have crushed the dollar. They are junk bonds anyway, but not on ratings paper....and this is what Ben was using every ounce of influence he could muster. I wish I could hear what was really going on behind the scenes.
This whole thing btw, is not for joe public. Joe public is just a pawn in all this...he needs to keep spending to keep the banks that drank their own kool-aid from drowning in it. It is sick.
I think the drop below key technical levels in the S&P and Dow was the trigger to drop the Ace.
siliconvalleycoins.com
now for buying precious metals?
radio, magazines, etc... (i do not have tv so i cannot comment there).
but it is simply everywhere i go now.
this time last year.. just once in a while.
heck, even dealers on this forum are getting air time on the radio now. rare coins of NH for example.
it is making me think the peak is near. once the economy starts getting
steam in the near future metals will be forgotten as they once were
a few years back.
Hey, hey, that's not the America we all know and love. We don't put ineffective management out on the curb counting cars... we do like Enron and American Airlines... and pay them retention bonuses!
<< <i>am i the only one hearing constant, and i mean constant pitches
now for buying precious metals?
radio, magazines, etc... (i do not have tv so i cannot comment there).
but it is simply everywhere i go now.
this time last year.. just once in a while.
heck, even dealers on this forum are getting air time on the radio now. rare coins of NH for example.
it is making me think the peak is near. once the economy starts getting
steam in the near future metals will be forgotten as they once were
a few years back. >>
The peak is nowhere near.
It's just that the profit ratio has gone up. You also see full page ads in newspapers and the gypsy rogues traveling around the country buying up precious metals as well. Right now, many uninformed sellers are taking the money and thinking they are getting a good deal and some fast cash. That filters to dealers who are finding a larger markup.
Also, it seems most of those ads are offering prices that are absurdly high and using this metals run up as a ruse on another group of the uninformed.
It's getting harder and harder to find 10 and 100 ounce bars these days without paying exorbitant prices on the net. Local B&M shops are selling out as soon as any show up.
That's not an indication of any sort of peak. Give it three more years and then we can think about any sort of a possible peak. Even a peak doesn't indicate a huge drop, this isn't 1980 and world consumption guarantees that this isn't artificial like those days were.
The amount of refined silver on the planet today is somewhere in the neighborhood only 10% of what existed back in 1980. It's a surface metal and the easy pickings are long gone. With gold, probably 90% of what existed in 1980 is still here, but then there wasn't that much to begin with and industrial consumption is rapidly growing there as well. How many people know that there would be no USB cables without gold? That's just one small example.
This phenomena is just an indication of the metals bull picking up steam. We've got long legs yet and we ain't seen nothing yet.
This recent decrease in production hasn't even hit the radar yet, but continued consumption will guarantee that it's coming and another large spike in prices is on the way later this year.
That will only cause more of the ads you are now seeing.
I remember 1980, I remember how saturated we were with radio, TV and newspapers ads back then. This is nothing in comparison.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
As long as the fed needs to keep this economy from hitting the gutter by keeping rates low.....there is a pretty good chance people will run to gold.
People have to do SOMETHING....for every dollar you have in your savings account...............it becomes 85 cents at the end of 12 months.
It is all the same, but having our currency in the last 80 or so years go from being backed by gold to junk bonds would have crushed the dollar. They are junk bonds anyway, but not on ratings paper....and this is what Ben was using every ounce of influence he could muster. I wish I could hear what was really going on behind the scenes.
This whole thing btw, is not for joe public. Joe public is just a pawn in all this...he needs to keep spending to keep the banks that drank their own kool-aid from drowning in it. It is sick.
I think the drop below key technical levels in the S&P and Dow was the trigger to drop the Ace. >>
coinlieutenant, thanks for the explanation. Just looking at the "markets"....it seems confidence has been lost this last hour of trading. Not a good sign if no follow-through on yesterdays Dow 415 point rise.
fc, I must agree with you. I had my two crewmembers ask about gold. When Pilots, Lawyers, and Doctors get involved it's near a short term (in this case) top. We may just be building a new high base this summer.
Ren
<< <i>Just looking at the "markets"....it seems confidence has been lost this last hour of trading. >>
Rallies fading in the last hour. Except for yesterday's short-covering blip, how is this different than 90% of the rallies since November?
Bottom line, IMO, is that the markets fell as oil hit $110. Oil is going to be the achilles heel of any economic/market recovery. It's more than the dollar. It's rampant speculation, especially given "good news" on ample crude and gasoline supplies. Until that bubble pops, it's one step forward and two steps back.
<< <i>
<< <i>Just looking at the "markets"....it seems confidence has been lost this last hour of trading. >>
Rallies fading in the last hour. Except for yesterday's short-covering blip, how is this different than 90% of the rallies since November?
Bottom line, IMO, is that the markets fell as oil hit $110. Oil is going to be the achilles heel of any economic/market recovery. It's more than the dollar. It's rampant speculation, especially given "good news" on ample crude and gasoline supplies. Until that bubble pops, it's one step forward and two steps back. >>
ziggy,
Right, no difference since November. We've had many years where the mantra was buy on the dips. Now that equity indexes have rolled over, it's sell the spikes.
Remember when Katrina hit and oil per barrel hit around $60 and gas per gallon (in my area) hit the low $3.00's. Here we are at $110 and a gallon is about $3.05!?
Yes, there's a lot a speculation in oil and that speculation will be the death knell for this summer's vacation/driving season.
Ren
offer some relief for 1-2 days in the downward
pressures. Mortgage rates are actually going higher,
then new jumbo conforming is almost a joke due to the
many restrictions on qualifying, inability to take cash out
in excess of 2000 dollars and inability to roll over a second
mortgage into the new jumbo first. We still have a freeze up in
credit markets. We have not seen more then a fraction of the losses
that banks and financial institutions are hiding. With the
clear downturn of the economy, this destructive and corrosive economic
atmosphere has much longer to run before it is played out. I would not
be amazed to see this condition continue well into 2009 before there are
signs of improvement. Its hunker down time folks. People will continue to
lose their homes in spite of cosmetic attempts to help.
Soon, the Fed will run out of arrows in it's quiver and the problem will be
turned over to the Congress. If we have to rely on Congress and the President,
then heaven help us.
Camelot
(I just had to find an excuse to post this OT.)
I knew it would happen.
<< <i>Each move by the Fed has only been able to
offer some relief for 1-2 days in the downward
pressures. Mortgage rates are actually going higher,
then new jumbo conforming is almost a joke due to the
many restrictions on qualifying, inability to take cash out
in excess of 2000 dollars and inability to roll over a second
mortgage into the new jumbo first. We still have a freeze up in
credit markets. We have not seen more then a fraction of the losses
that banks and financial institutions are hiding. With the
clear downturn of the economy, this destructive and corrosive economic
atmosphere has much longer to run before it is played out. I would not
be amazed to see this condition continue well into 2009 before there are
signs of improvement. Its hunker down time folks. People will continue to
lose their homes in spite of cosmetic attempts to help.
Soon, the Fed will run out of arrows in it's quiver and the problem will be
turned over to the Congress. If we have to rely on Congress and the President,
then heaven help us. >>
This is true but keep in mind that every day the dollar is down is a day closer to stability.
The dollar still has value and will seek that value. In the meantime the FED may or may not have to inject liquidity.
When the dollar stabilizes (which won't be at much lower levels) then most of the equity markets will begin to stabilize and the winners and losers will start getting sorted out. During this time the much of the liquidity will spill over into currencies and commodities. Greater inflation will drive much of this excess into gold as more and more people seek the protection of this barbarous relic.
While there is more mainstream talk on gold it still comes down to it that your average guy is still not buying any gold. For every airline pilot or lawyer buying some, there are 98 other Joes not even considering it. And Joe won't be buying it until gold is $1500 or $2000. By that time he'll be afraid he'll miss the boat to $3000 or $5000 and might consider getting on board.
Here's a great Dow/gold chart as well as Oil/gold chart. The Dow-gold chart clearly shows the preference to gold since 2001. That's a given and we're all aware of it. But the RSI (relative strength) and MACD clearly show were the future movement of this ratio likely lies.
One couldn't state it any clearer than this. It's the future direction that I'm interested in, not where we've been.
Dow vs Gold and Oil vs. Gold charts
roadrunner
I brought this link back up front at the request of a forum member.
Feel free to plug in the bank of your choice to assess derivatives exposure. Entering exact Bank name, town, and state get you right in. ex. " Liberty Bank, Middletown, CT" "Generate Report"
Select page 5a and 5b which are off balance sheet items to check derivatives exposure. In this case it's $55 MILL of which most of it is over-the-counter derivatives and swaps (ie the most lethal kind, non-exchange traded or no ready market). The bank lists over $2B in total assets. ex "Evergreen Bank" "Seattle, WA" shows no derivatives exposure.
Also worth noting is that on the Liberty Bank sheet it lists all those derivatives as "marked to market." That means they are listed on the balance sheet as to what the real market values them at. The odds of all 100% of those OTC derivatives being marked to "real" market is very unlikely. But the game is to say you've done it and let the real numbers slowly leak out down the road and blame the additional losses found on illiquid markets or erroneous pricing.
For giggles I picked another Bank at randon, Fleet National Bank of Connecticut, Providence, RI.... Ouch! $80B in total average assets yet $110B in derivatives (mostly interest rate contracts, nearly all OTC, $44 BILL in swaps, etc.). I won't be moving my assets to that one anytime soon.
I wonder if all those countries joining the EU ever counted on this?
And exactly where does it leave the Euro in the end, if bunches of the members have these problems?
Last Updated: 1:02am GMT 13/03/2008 U.K. Telegraph
“The Irish banking system faces acute strains and may require a phase of temporary nationalisation as the property slump leads to a wave of defaults, according to a leading Irish economist.
Morgan Kelly, of University College Dublin, said the government is almost powerless to stop the downturn becoming a severe slump. "We're in a classic post-bubble recession, yet we can't do anything that a country would normally do in this situation because we're inside the eurozone," Prof Kelly said. "We can't cut interest rates, we can't devalue, and there is a lot less room for fiscal stimulus than people think. We're stuck.
"Look at all the signs: every single one is screaming that the economy is in big, big trouble. Housing market dead, new car sales dead, consumer confidence is dead, record job losses, exporters being killed off by a strong euro, fuel prices spike, housing repossessions increase," it said.”
Yes, this is certainly beginning to look like a game of "tag, you're it" or maybe a friendly "pin the tail on the donkey" (no political implications here). Oh well, Au will be a K today so that should give the paper boys some grief knowing that there are people that have the actual where with all and not some of their stinkin' paper.
Edited to add: I would think that most of the folk that perpetrated this "lack of liquidity" are long gone to the Bahamas or maybe some comfortable little get away in S. America. They certainly wouldn't want to go to Europe to enjoy their spoils...the Europeans are sucking air now because they dipped into the honey pot too.