Here is a copy of the legislation Congress plans to move next week to avert a meltdown in the U.S. financial system. The following is the text of that legislation and authors dissection of its' components:
<< <i>Here is a copy of the legislation Congress plans to move next week to avert a meltdown in the U.S. financial system. The following is the text of that legislation and authors dissection of its' components:
Here is a thought on the dollar's strength, and it is a theory I have presented before.
The USA is still the largest most stable country on the planet. In times of extreme distress, people(investors) will always go towards safety--and you can perceive safety differently. In any case, the present financial crisis is a case in point for the strength of the US dollar. We just bailed out the investment banks, giving them perhaps a chance to fight another day. Word is that if UBS were to go under, it would be too big for the Swiss to bail out. I have heard that they--the Swiss--would only help Swiss account holders and leave the rest high and dry. In this scenerio, which country would gather investment, the USA or Switzerland?
Is the dollar strength sustainable? I dont know, as its strength probably depends on the relative weakness of the rest of the world. So do you bet for the USA being crappy or the world being crappier?
Have we moved from inflation to deflation? As many know I have written about this possiblity before as global growth suffered from overexpansion and a bubble in commodity and currencies. Some economists and money managers discuss the possiblity in this article....`Same as Japan' ?
Deleveraging assets is one thing. Printing or creating TRILLIONs of new money for bailouts is highly inflationary.
There can be no real strength in the dollar in the above scenario. If strength is the ability to continue to create money out of thin air with no chance of paying it back, then we are very strong.
To coincide with more news of the $700B bailout today, I would expect a fairly-well coordinated take down in gold and a bump up in the dollar from all of our friends overseas. This will be met by some FED/PPT coordination in the US markets Monday am. A $30-40 takedown Monday and possibly Tuesday should give them some breathing room. But don't confuse this with dollar strength. At some point those dollars have to be sold right back and the naked gold shorts removed.
I suppose it is now obvious who runs the world and my prediction is either more economic chaos short term or that the sheeple start falling in line for the march over the cliff!!
GOLDMAN AND MORGAN STANLEY BECOME BANKS SO THEY CAN DUMP TOXIC WASTE!
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks overnight.
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Does anyone think that the dismissal of the Up Tick Rule for the next two weeks (est.) is to prop up confidence long enough for the rest of smart money to get out? Then, look out below.
Also, I heard on the radio (caveat emptor so to speak) that $190 billion was put into money markets because the redemptions on Wednesday, 17th, was feared to be too excessive. Institutions normally hold $2 billion in reserves day in day out for redemptions. And, thursday morning the redemptions totaled $145 billion! It was estimated that if this injection was not done the Dow could've opened Thursday at 8,400!
<< <i>Deleveraging assets is one thing. Printing or creating TRILLIONs of new money for bailouts is highly inflationary.
There can be no real strength in the dollar in the above scenario. If strength is the ability to continue to create money out of thin air with no chance of paying it back, then we are very strong.
To coincide with more news of the $700B bailout today, I would expect a fairly-well coordinated take down in gold and a bump up in the dollar from all of our friends overseas. This will be met by some FED/PPT coordination in the US markets Monday am. A $30-40 takedown Monday and possibly Tuesday should give them some breathing room. But don't confuse this with dollar strength. At some point those dollars have to be sold right back and the naked gold shorts removed.
roadrunner >>
Looks like there is nothing that the bears are allowed to short except for the dollar for the next few weeks . I wonder how the FEd and the treasury will deal with a worthless currency? Maybe Ron Paul was correct about the gold standard.
<< <i>Does anyone think that the dismissal of the Up Tick Rule for the next two weeks (est.) is to prop up confidence long enough for the rest of smart money to get out? Then, look out below.
Also, I heard on the radio (caveat emptor so to speak) that $190 billion was put into money markets because the redemptions on Wednesday, 17th, was feared to be too excessive. Institutions normally hold $2 billion in reserves day in day out for redemptions. And, thursday morning the redemptions totaled $145 billion! It was estimated that if this injection was not done the Dow could've opened Thursday at 8,400!
Ren >>
I would vote for the "Look Out Below" option.
I have believed for over a year that the DOW will drop below 9,000 within a few years or less.
"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 stock market has been propped up with promises and IOUs for quite a while now. The bailout bump that we saw on Friday seems to be on the wane as people digest what this whole stituation means to them and future generations. What else can the government promise to the businesses to prop up the market, I think that we've about run out of options. I think that tangible assets are going to see a steady rise as people look for somewhere "safe" to put their money.
Gold and oil are traded round the clock in a world market. It would be insanity for the US to put some controls on them. Makes sense though, can't short financials so you buy oil and gold as your hedge.
<< <i>Not that I'm agreeing with Hank and the boys, but I never did like the concept of 'Shorting a stock'.
Just didn't seem right to me. >>
Shorting is a necessary and important market function. It provides liquidity. It also keeps management "honest". Shorts usually see through the bullchit quicker than anyone else. What needs to be done is to reinstate the uptick rule and enforce the prohibitions on NAKED shorting.
“When the people find that they can vote themselves money, that will herald the end of the republic.” — Benjamin Franklin
My icon IS my coin. It is a gem 1949 FBL Franklin.
The uptick rule was removed to alllow the banksters to try and bail themselves out. Apparently it didn't work. But what it did was allow them to pound the metals in March and July/August/Sept. without penalty. It only delayed the inevitable.
I just have to wonder what is the strategy of suggesting a 5% level of your total portfolio should/could be in precious metal. So, just what is that supposed to do for ya'? 1/20th of your portfolio in metal, it's like having a nickel in your pocket to go with the other 95 cents. If your stocks collapse, what good is 5% metal going to do for you? Is it going to bail you out...no. Is it going to cover your nut...no. In fact, 5% does nothing for you other than presupposing that if you lost the whole 5% then you would not be out anything substantial.
So, why waste money on PM if a speculative 5% is the recommended depth? Anything you invest in should be at a minimum 20% level. If you stand to lose 20% of what you have because of poor decision making or unforseen circumstances then so be it but it should not really hurt you. Can't stand 20% for speculation...then don't worry about speculative investments, buy the CD and make it easy on everyone. In my thinking i have never seen a table with 5 legs why not go 25% and just have a nice, sturdy, four legged table as the foundation of your investments?
So, to those that recommend only 5% exposure to metal, better to just blow it off. Don't recomment 5%, recommend 20% or more if you are going to recommend anything at all...I mean, after all, isn't it a well studied and tried recommendation or is it just some lipservice response to the question: Shouldn't I have some PM?
Please return to your regularly scheduled program.
Studies have shown that portfolios with 5% in PM's have outperformed portfolios without PM's. My insurance policy on my house costs me 0.1% of the price of my house every year, but I wouldn't think of not having it.
Do some reading on the Weimar inflation and who was able to survive. If something like that happened here, those with 5% in PM's would become the new wealthy class. Those without would be wiped out.
PM skeptics need to do some basic research before sounding off. Read some history books, go to shadowstats.com, do some homework.
PM's have outperformed stocks for 10 years now. Typically, commodities run in 15 year or so cycles.
PMs have historically only been a 5% recommendation because they have been lousy long term investments. Of course the last 7 years has been different, but in a long term perspective--since they dont pay dividends--they do not carry much weight among money managers.
So, why waste money on PM if a speculative 5% is the recommended depth?
Personally, if an idea's only good enough for 5%, it ain't worth doing.
But the answer to your question is simple. Salesmen gets to sound like experts when they make the 5% "recommendation," and then no matter how it turns out the commission-payers are retained. Therefore, future commissions are not jeopardized.
If gold rises, the salesmen pretend they "called it right," or otherwise it's swept under the rug with minimal pain.
One of the reasons gold rose so high, was because "advisors" (sic) moved clients to gold when it became fashionable.
<< <i>PMs have historically only been a 5% recommendation because they have been lousy long term investments. Of course the last 7 years has been different, but in a long term perspective--since they dont pay dividends--they do not carry much weight among money managers. >>
How many stocks actually pay dividends these days? Quite few, I would guess. It's not the lack of dividends that makes money managers shy away from PMs.... my guess is it's because PMs don't generate any fees for them.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>PMs have historically only been a 5% recommendation because they have been lousy long term investments. Of course the last 7 years has been different, but in a long term perspective--since they dont pay dividends--they do not carry much weight among money managers. >>
How many stocks actually pay dividends these days? Quite few, I would guess. It's not the lack of dividends that makes money managers shy away from PMs.... my guess is it's because PMs don't generate any fees for them. >>
That is may be a good part of the reason, but there are many ways to play PM's via equities. From personal experience, the general public doesnt understand the role of PMs which makes them a hard sell. And you have increased carrying costs such as SDB's, insurance, large transaction fees in the form of spreads, and buglary concerns.
Tell us how you really feel Bear My fear is that now that the politicos have let the Feds know how the masses feel, the Paulson/bernanke crowd feel like they have to protect their credibility by forcing the issue
I noticed a poll on the Lou Dobbs Show that said 94% of the American People were against the Bailout and 6% were for it. I do not believe I have ever seen such a lopsided poll!
Bernanke has always has a tremble in his voice. He has a much different audience now than when he was a college professor.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
94% of Americans have no idea of what is going on and what is still left buried out there in bad paper. If they knew that $700B was being suggested as the panacea for the losses on $1 QUAD in potentially bad paper they would freak out.
Paulson, like all his Wall Street brethren is of no help in this current situation. We'd be better off with someone more distanced from the banking industry. Ron Paul would not be a bad choice.
This is "his" business and he will know how to turn a profit.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do.
You underestimate the American public. They might not know the answers to this problem, but they are getting the drift that they've been had. And there's no guarantee that Paulson's plan will work, per his own admission. So, why is he in charge? Why not just pick straws?
The people who allowed this problem to be created, to grow and then to get completely out-of-hand are still the ones devising new "plans" to bail out the very same banking industry who were busy cheating and scamming the public and the markets in the first place. This is Enron x 1,000,000 - without an endgame.
This isn't a tin foil hat conspiracy. It's happening right in front of our noses - for all to see.
As you were.
Q: Are You Printing Money? Bernanke: Not Literally
You crack me up. One part of me wants the USA to succeed and one part wants you doom and gloomers to realize your dreams.
You have no idea what this bailout entails and can therefore make no reasoned opinion on its economic feasiblity. I suppose you would rather have your auto mechanic remove your spleen.
Personally I dont care if the the banks are bailed out or not, but I do feel for my fellow Americans if this doesnt work. As Paulson said, "Heaven help us."
<< <i>Bernanke has always has a tremble in his voice. He has a much different audience now than when he was a college professor.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit. >>
Paulsen and Bernanke are bedmates and all this bailout does is save the Wall street banks.
I'll admit the alternative is very harsh for the average American, but the end result of this bailout will be much worse.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
I had to laugh tonight when I watched "Krudlow and Company".
Apparently 'Mr. free markets' and 'Mr. no gov't interventions' is all for THIS government intervention/bailout.
What a hypocrate!!
He is such a complete moron.
The best part was when the Senator for Idaho questioned Krudlow on air regarding his apparent turn of convictions regarding why he is all for this government intervention.
What a complete arse....(Oh I forgot I already mentioned this)
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
Do you know the implications of a failed banking system?
Some of you think that this is to keep CEOs in their ivory towers. I am with you and say throw them all in jail and sell their assets to the citizens. But that isnt what this is about.
edited to add....If the banks fail you wont have to repay your mortgage. Whoohoo!!!!
You have no idea what this bailout entails and can therefore make no reasoned opinion on its economic feasiblity. I suppose you would rather have your auto mechanic remove your spleen.
My auto mechanic would have a better chance of successfully removing my spleen than Paulson has of successfully bailing out the finanical system with $700B. Why not just come clean and tell the public the real number.......$10-$20 TRILLION? That assumes a fairly small but realistic failure rate on otc derivatives. Paulson knows what it is. He knew what it was back in March. One thing for sure, I would prefer to have someone else besides Paulson, Dodd, Franks, and others already responsible for getting us here, deciding what the $700B bailout scheme would entail.
Personally I dont care if the the banks are bailed out or not, but I do feel for my fellow Americans if this doesnt work. As Paulson said, "Heaven help us."
What Paulson meant was "Heaven help us poor banksters." Since he already got out years ago with his $500MILL he is sitting pretty. I wonder how much of that he now has in gold. That would be a hoot to find out.
I don't believe that most or hardly any Main Street Americans are aware that they are being positioned to be responsible for the losses on hundreds of TRILLIONs in failed derivatives. I don't need to know ANY details of a proposed bailout to know that hundreds billions will not take care of hundreds or even tens of TRILLIONS. That's simple percentages, a skill apparently lacking at the FED, Treasury, and Congress. The $700B gets us through the current step of the housing crisis, nothing more. Should be assume this time that Paulson is telling us the truth, unlike the last dozen or so times he spoke publically on the credit crisis? Let him step forward and tell us that it will take at least $10 TRILLION to possibly get us through. The US taxpayers deserve to know what the best number is....right now....not next year.
But honestly I really dont think we have to worry about 10s or 100s of $TRILLIONS of derivatives. These are being unwound at an alarming pace and are not being replaced. The total value of the worlds assets is probably not worth much more than $100 trillion. Global equity markets are currently worth about $40 Trillion--up from $20 Trillion in 2002. Add in real estate and other "assets" and I think my $100 Trillion is fairly accurate.
The mortgage crisis is the problem and when real estate stabilizes and I believe we are close we will be able to get our arms around the problem. I know you have a much different view of the RE market.
edited to add.... Yes, I do know there is a notional value of $10-20 Trillion on the hook for these derivatives, but to put into perspective, about $20 Trillion has been wiped out of the global equity markets in the last 12 months. I am quite confident we will survive.
Sure, joe6P maybe doesn't understand the whats and wherefores of the bailout nor do they understand the implications either pro or con; few people have that level of grasp on our total economic picture. What joe6P does know is that he feels like he's been had. It doesn't take a genius or economics wizard to know what it feels like when you have been had, it comes from within and most of us know what it feels like so it is easy to recognize the emotion.
The one thing that seems pretty inconsistent is that we have our government with it's 9% approval rating about to embark on an ever expanding committment of public funds for the benefit and for the welfare of private for profit corporations and their CEO's. That doesn't pass the smell test, in fact, it stinks. Remember when Chrysler did the same thing many years ago, people balked but it seemed kind of innocuous so we did it and of course we had that ever charismatic Lee Iacoca. Now, we got fannie, freddie, and maybe even the whole darned banking industry with stern, lifeless looking multimillion ceo's pictures in the paper...somewhat overwelming for j6p. Most j6p's know that government is supposed to govern ie, provide for the public defense and provide for the public health, safety, and welfare. Governments are not supposed to be engaged in risky economic behavior by buying for profit corporations to keep us from going under economically. That would assume that the US govt is dependent upon for profit corporations that are "too big to fail" to keep from having the US economic system fail and that's likely to be the message that folk are probably getting. Maybe reality is not as distant as people would think, maybe lobbyists and corporate worms have so diluted the will of the people through their congressional influence that they have evolved to actually being responsible for our economic survival...or so they would have us believe. J6P probably doesn't believe, he feels like he's being had here.
I do know one thing, nature abhors a vacuum and where ever a vacuum is created, something will fill the space. If a corporation is destroyed, a new one will take its place; one that is smarter, faster, cheaper, more efficient, better run. If the banks need bailed out...what's to say that maybe since they have a poor business model and even worse management that they should survive in their current state. Maybe it's time for the next generation of "banking", maybe this titanic of a system will have survivors that can swim or at least make it to the life boats. Maybe it's time to either embrace the banking system by the federal government through conspicuous and visible oversight or maybe it's time to get a divorce and let the unfit fail where they may, fill the voids and evolve in a natural survival of the fittest type mode.
Maybe it's time for a US currency that is more international in usability, maybe it's time for metal backed paper that people can trust and believe in across the globe. Certainly something is going to change, something will fill the vacuum regardless of who survives and who doesn't.
Just been watching the Paulson/Bernanke show on C-span , Sounds like a % of the 700 bil will go to some of their "expert" friends who will be called in to save America. Bottom line appears to me to be to save the financial institutions and their CEO buddies that got themselves into this mess and then there will be a trickle down effect that will benefit j6pack. They both looked like deer in the headlights
<< <i>Just been watching the Paulson/Bernanke show on C-span , Sounds like a % of the 700 bil will go to some of their "expert" friends who will be called in to save America. Bottom line appears to me to be to save the financial institutions and their CEO buddies that got themselves into this mess and then there will be a trickle down effect that will benefit j6pack. They both looked like deer in the headlights >>
Yes, my greatest concern is that this is just a Marxist move to save the plutocrats.
Only the public masses will be left to fail and they are probably going to be really angry when this mess washes out.
Just another money grab for the Wall Street boys and their bankers.
"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
As I watch all this bail out business play out I keep wondering who is left to save?
Just exactly what is the 700 B for?
Fannie and Freddie are taken care of, AIG is done, Bear is gone, Lehman is being sold out, Goldman has become a bank with 5 B from Buffet, Countrywide is gone, Morgan is now a bank.
Who is left? Foreign Banks? Greedy credit card companies who have been charging mafia rates for decades.
Isn’t it funny how the Politicians always say everyone will lose their jobs?
We DO NOT have a liquidity crises in this country we have a BAD investment crises, and the government wants to bailout their buddies as usual. The banks won’t loan because the collateral is junk!
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BAILOUT BROKEN DOWN
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<< <i>Here is a copy of the legislation Congress plans to move next week to avert a meltdown in the U.S. financial system. The following is the text of that legislation and authors dissection of its' components:
BAILOUT BROKEN DOWN >>
It's enough to make one go "Peter Finch."
I'm as mad a he// and I'm not going to take this anymore
How appropriate is this video in todays world.
Ren
ed. 4 vid
The USA is still the largest most stable country on the planet. In times of extreme distress, people(investors) will always go towards safety--and you can perceive safety differently. In any case, the present financial crisis is a case in point for the strength of the US dollar. We just bailed out the investment banks, giving them perhaps a chance to fight another day. Word is that if UBS were to go under, it would be too big for the Swiss to bail out. I have heard that they--the Swiss--would only help Swiss account holders and leave the rest high and dry. In this scenerio, which country would gather investment, the USA or Switzerland?
Is the dollar strength sustainable? I dont know, as its strength probably depends on the relative weakness of the rest of the world. So do you bet for the USA being crappy or the world being crappier?
Knowledge is the enemy of fear
Knowledge is the enemy of fear
There can be no real strength in the dollar in the above scenario. If strength is the ability to continue to create money out of thin air with no chance of paying it back, then we are very strong.
To coincide with more news of the $700B bailout today, I would expect a fairly-well coordinated take down in gold and a bump up in the dollar from all of our friends overseas. This will be met by some FED/PPT coordination in the US markets Monday am. A $30-40 takedown Monday and possibly Tuesday should give them some breathing room. But don't confuse this with dollar strength. At some point those dollars have to be sold right back and the naked gold shorts removed.
roadrunner
I suppose it is now obvious who runs the world and my prediction is either more economic chaos short term or that the sheeple start falling in line for the march over the cliff!!
GOLDMAN AND MORGAN STANLEY BECOME BANKS SO THEY CAN DUMP TOXIC WASTE!
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks overnight.
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Part 1
Part 2
Part 3
Also, I heard on the radio (caveat emptor so to speak) that $190 billion was put into money markets because the redemptions on Wednesday, 17th, was feared to be too excessive. Institutions normally hold $2 billion in reserves day in day out for redemptions. And, thursday morning the redemptions totaled $145 billion! It was estimated that if this injection was not done the Dow could've opened Thursday at 8,400!
Ren
<< <i>Deleveraging assets is one thing. Printing or creating TRILLIONs of new money for bailouts is highly inflationary.
There can be no real strength in the dollar in the above scenario. If strength is the ability to continue to create money out of thin air with no chance of paying it back, then we are very strong.
To coincide with more news of the $700B bailout today, I would expect a fairly-well coordinated take down in gold and a bump up in the dollar from all of our friends overseas. This will be met by some FED/PPT coordination in the US markets Monday am. A $30-40 takedown Monday and possibly Tuesday should give them some breathing room. But don't confuse this with dollar strength. At some point those dollars have to be sold right back and the naked gold shorts removed.
roadrunner >>
Looks like there is nothing that the bears are allowed to short except for the dollar for the next few weeks . I wonder how the FEd and the treasury will deal with a worthless currency? Maybe Ron Paul was correct about the gold standard.
<< <i>Does anyone think that the dismissal of the Up Tick Rule for the next two weeks (est.) is to prop up confidence long enough for the rest of smart money to get out? Then, look out below.
Also, I heard on the radio (caveat emptor so to speak) that $190 billion was put into money markets because the redemptions on Wednesday, 17th, was feared to be too excessive. Institutions normally hold $2 billion in reserves day in day out for redemptions. And, thursday morning the redemptions totaled $145 billion! It was estimated that if this injection was not done the Dow could've opened Thursday at 8,400!
Ren >>
I would vote for the "Look Out Below" option.
I have believed for over a year that the DOW will drop below 9,000 within a few years or less.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
They are also allowed to go long on gold and oil. That seems to be acceptable at the moment.
roadrunner
Just didn't seem right to me.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>Not that I'm agreeing with Hank and the boys, but I never did like the concept of 'Shorting a stock'.
Just didn't seem right to me. >>
Shorting is a necessary and important market function. It provides liquidity. It also keeps management "honest". Shorts usually see through the bullchit quicker than anyone else. What needs to be done is to reinstate the uptick rule and enforce the prohibitions on NAKED shorting.
My icon IS my coin. It is a gem 1949 FBL Franklin.
it's interesting to read stuff over a year old.....but take it FWIW
roadrunner
need a very large jar of Petroleum Jelly
before this is all over.
Camelot
<< <i>Oh, Momma, we are gonna
need a very large jar of Petroleum Jelly
before this is all over. >>
Just for you Bear................
A week after their marriage,
the Redneck newlyweds paid a visit to their doctor...
'I can't figure it out doc, and I'm really worried,'
said the husband.
'My testicles are turning blue.' 'That's pretty unusual,'
said the doctor. 'Let me examine you.'
The doctor takes a look. Sure enough,
the Redneck's testicles are blue.
The doctor turns to the wife.
'Are you using the diaphragm that I prescribed?'
'Yes, I am,' she replied.
'And what kind of jelly are you using with it?'
'Grape'
So, why waste money on PM if a speculative 5% is the recommended depth? Anything you invest in should be at a minimum 20% level. If you stand to lose 20% of what you have because of poor decision making or unforseen circumstances then so be it but it should not really hurt you. Can't stand 20% for speculation...then don't worry about speculative investments, buy the CD and make it easy on everyone. In my thinking i have never seen a table with 5 legs why not go 25% and just have a nice, sturdy, four legged table as the foundation of your investments?
So, to those that recommend only 5% exposure to metal, better to just blow it off. Don't recomment 5%, recommend 20% or more if you are going to recommend anything at all...I mean, after all, isn't it a well studied and tried recommendation or is it just some lipservice response to the question: Shouldn't I have some PM?
Please return to your regularly scheduled program.
Do some reading on the Weimar inflation and who was able to survive. If something like that happened here, those with 5% in PM's would become the new wealthy class. Those without would be wiped out.
PM skeptics need to do some basic research before sounding off. Read some history books, go to shadowstats.com, do some homework.
PM's have outperformed stocks for 10 years now. Typically, commodities run in 15 year or so cycles.
Knowledge is the enemy of fear
<< <i>My insurance policy on my house costs me 0.1% of the price of my house every year, but I wouldn't think of not having it. >>
So, where you live, you can insure a million dollar house for 1k? Man, I'm getting ripped!
My icon IS my coin. It is a gem 1949 FBL Franklin.
Personally, if an idea's only good enough for 5%, it ain't worth doing.
But the answer to your question is simple. Salesmen gets to sound like experts when they make the 5% "recommendation," and then no matter how it turns out the commission-payers are retained. Therefore, future commissions are not jeopardized.
If gold rises, the salesmen pretend they "called it right," or otherwise it's swept under the rug with minimal pain.
One of the reasons gold rose so high, was because "advisors" (sic) moved clients to gold when it became fashionable.
<< <i>PMs have historically only been a 5% recommendation because they have been lousy long term investments. Of course the last 7 years has been different, but in a long term perspective--since they dont pay dividends--they do not carry much weight among money managers. >>
How many stocks actually pay dividends these days? Quite few, I would guess. It's not the lack of dividends that makes money managers shy away from PMs.... my guess is it's because PMs don't generate any fees for them.
<< <i>
<< <i>PMs have historically only been a 5% recommendation because they have been lousy long term investments. Of course the last 7 years has been different, but in a long term perspective--since they dont pay dividends--they do not carry much weight among money managers. >>
How many stocks actually pay dividends these days? Quite few, I would guess. It's not the lack of dividends that makes money managers shy away from PMs.... my guess is it's because PMs don't generate any fees for them. >>
That is may be a good part of the reason, but there are many ways to play PM's via equities. From personal experience, the general public doesnt understand the role of PMs which makes them a hard sell. And you have increased carrying costs such as SDB's, insurance, large transaction fees in the form of spreads, and buglary concerns.
Knowledge is the enemy of fear
classical rare coins will prove as good as holding gold in
the long run. Am I right in this opinion, who knows. At least
I have put my money where my mouth is.
My reasoning is that there is too much meddling in the price of
gold, by the various Federal Reserve Banks thru out the world.
The number of quality rare coins is fixed and there is demand
thru good times and bad. Folks have been collecting coins for 1000 years,
I doubt that this will change during my lifetime.
Camelot
What struck me was Bernake.... seemed to be speaking in a shaky voice..... I think these people are in PANIC mode.
Perhaps if we knew more, we would be also.
Not sure what to make of the 700 BILLION bailout plan. No guarantee that it will work, even if it is approved.
THAT I AM NOW DUBIOUS OF WHATEVER I HEAR.
THE FACT THAT LOBBYISTS HAVE WRITTEN THE PROPOSAL
DOES NOT FILL ME WITH CONFIDENCE.
THE FACT THAT WE ARE EXPECTED TO BAIL OUT FOREIGN BANKS
CREDIT CARD LOSES AND INSTITUTION THAT ARE FINANCIALLY STRONG,
ACTUALLY MAKES ME ILL.
I WOULD JUST LET THESE COMPANIES FAIL AND GO INTO BANKRUPTCY.
LET THE FAT CATS SUFFER RIGHT ALONG WITH US COMMON FOLKS.
Camelot
My fear is that now that the politicos have let the Feds know how the masses feel, the Paulson/bernanke crowd feel like they have to protect their credibility by forcing the issue
I do not believe I have ever seen such a lopsided poll!
Chance favors the prepared mind.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
Knowledge is the enemy of fear
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
94% of Americans have no idea of what is going on and what is still left buried out there in bad paper. If they knew that $700B was being suggested as the panacea for the losses on $1 QUAD in potentially bad paper they would freak out.
Paulson, like all his Wall Street brethren is of no help in this current situation. We'd be better off with someone more distanced from the banking industry. Ron Paul would not be a bad choice.
This is "his" business and he will know how to turn a profit.
Now that's the POTY.
roadrunner
You underestimate the American public. They might not know the answers to this problem, but they are getting the drift that they've been had. And there's no guarantee that Paulson's plan will work, per his own admission. So, why is he in charge? Why not just pick straws?
The people who allowed this problem to be created, to grow and then to get completely out-of-hand are still the ones devising new "plans" to bail out the very same banking industry who were busy cheating and scamming the public and the markets in the first place. This is Enron x 1,000,000 - without an endgame.
This isn't a tin foil hat conspiracy. It's happening right in front of our noses - for all to see.
As you were.
I knew it would happen.
You crack me up. One part of me wants the USA to succeed and one part wants you doom and gloomers to realize your dreams.
You have no idea what this bailout entails and can therefore make no reasoned opinion on its economic feasiblity. I suppose you would rather have your auto mechanic remove your spleen.
Personally I dont care if the the banks are bailed out or not, but I do feel for my fellow Americans if this doesnt work. As Paulson said, "Heaven help us."
Knowledge is the enemy of fear
<< <i>Bernanke has always has a tremble in his voice. He has a much different audience now than when he was a college professor.
If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit. >>
Paulsen and Bernanke are bedmates and all this bailout does is save the Wall street banks.
I'll admit the alternative is very harsh for the average American, but the end result of this bailout will be much worse.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Apparently 'Mr. free markets' and 'Mr. no gov't interventions' is all for THIS government intervention/bailout.
What a hypocrate!!
He is such a complete moron.
The best part was when the Senator for Idaho questioned Krudlow on air regarding his apparent turn of convictions regarding why he is all for this government intervention.
What a complete arse....(Oh I forgot I already mentioned this)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Do you know the implications of a failed banking system?
Some of you think that this is to keep CEOs in their ivory towers. I am with you and say throw them all in jail and sell their assets to the citizens. But that isnt what this is about.
edited to add....If the banks fail you wont have to repay your mortgage. Whoohoo!!!!
Knowledge is the enemy of fear
My auto mechanic would have a better chance of successfully removing my spleen than Paulson has of successfully bailing out the finanical system with $700B. Why not just come clean and tell the public the real number.......$10-$20 TRILLION? That assumes a fairly small but realistic failure rate on otc derivatives. Paulson knows what it is. He knew what it was back in March. One thing for sure, I would prefer to have someone else besides Paulson, Dodd, Franks, and others already responsible for getting us here, deciding what the $700B bailout scheme would entail.
Personally I dont care if the the banks are bailed out or not, but I do feel for my fellow Americans if this doesnt work. As Paulson said, "Heaven help us."
What Paulson meant was "Heaven help us poor banksters." Since he already got out years ago with his $500MILL he is sitting pretty. I wonder how much of that he now has in gold. That would be a hoot to find out.
I don't believe that most or hardly any Main Street Americans are aware that they are being positioned to be responsible for the losses on hundreds of TRILLIONs in failed derivatives. I don't need to know ANY details of a proposed bailout to know that hundreds billions will not take care of hundreds or even tens of TRILLIONS. That's simple percentages, a skill apparently lacking at the FED, Treasury, and Congress. The $700B gets us through the current step of the housing crisis, nothing more. Should be assume this time that Paulson is telling us the truth, unlike the last dozen or so times he spoke publically on the credit crisis? Let him step forward and tell us that it will take at least $10 TRILLION to possibly get us through. The US taxpayers deserve to know what the best number is....right now....not next year.
roadrunner
roadrunner
But honestly I really dont think we have to worry about 10s or 100s of $TRILLIONS of derivatives. These are being unwound at an alarming pace and are not being replaced. The total value of the worlds assets is probably not worth much more than $100 trillion. Global equity markets are currently worth about $40 Trillion--up from $20 Trillion in 2002. Add in real estate and other "assets" and I think my $100 Trillion is fairly accurate.
The mortgage crisis is the problem and when real estate stabilizes and I believe we are close we will be able to get our arms around the problem. I know you have a much different view of the RE market.
edited to add.... Yes, I do know there is a notional value of $10-20 Trillion on the hook for these derivatives, but to put into perspective, about $20 Trillion has been wiped out of the global equity markets in the last 12 months. I am quite confident we will survive.
Knowledge is the enemy of fear
The one thing that seems pretty inconsistent is that we have our government with it's 9% approval rating about to embark on an ever expanding committment of public funds for the benefit and for the welfare of private for profit corporations and their CEO's. That doesn't pass the smell test, in fact, it stinks. Remember when Chrysler did the same thing many years ago, people balked but it seemed kind of innocuous so we did it and of course we had that ever charismatic Lee Iacoca. Now, we got fannie, freddie, and maybe even the whole darned banking industry with stern, lifeless looking multimillion ceo's pictures in the paper...somewhat overwelming for j6p. Most j6p's know that government is supposed to govern ie, provide for the public defense and provide for the public health, safety, and welfare. Governments are not supposed to be engaged in risky economic behavior by buying for profit corporations to keep us from going under economically. That would assume that the US govt is dependent upon for profit corporations that are "too big to fail" to keep from having the US economic system fail and that's likely to be the message that folk are probably getting. Maybe reality is not as distant as people would think, maybe lobbyists and corporate worms have so diluted the will of the people through their congressional influence that they have evolved to actually being responsible for our economic survival...or so they would have us believe. J6P probably doesn't believe, he feels like he's being had here.
I do know one thing, nature abhors a vacuum and where ever a vacuum is created, something will fill the space. If a corporation is destroyed, a new one will take its place; one that is smarter, faster, cheaper, more efficient, better run. If the banks need bailed out...what's to say that maybe since they have a poor business model and even worse management that they should survive in their current state. Maybe it's time for the next generation of "banking", maybe this titanic of a system will have survivors that can swim or at least make it to the life boats. Maybe it's time to either embrace the banking system by the federal government through conspicuous and visible oversight or maybe it's time to get a divorce and let the unfit fail where they may, fill the voids and evolve in a natural survival of the fittest type mode.
Maybe it's time for a US currency that is more international in usability, maybe it's time for metal backed paper that people can trust and believe in across the globe. Certainly something is going to change, something will fill the vacuum regardless of who survives and who doesn't.
Bottom line appears to me to be to save the financial institutions and their CEO buddies that got themselves into this mess and then there will be a trickle down effect that will benefit j6pack.
They both looked like deer in the headlights
<< <i>Just been watching the Paulson/Bernanke show on C-span , Sounds like a % of the 700 bil will go to some of their "expert" friends who will be called in to save America.
Bottom line appears to me to be to save the financial institutions and their CEO buddies that got themselves into this mess and then there will be a trickle down effect that will benefit j6pack.
They both looked like deer in the headlights >>
Yes, my greatest concern is that this is just a Marxist move to save the plutocrats.
Only the public masses will be left to fail and they are probably going to be really angry when this mess washes out.
Just another money grab for the Wall Street boys and their bankers.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
As I watch all this bail out business play out I keep wondering who is left to save?
Just exactly what is the 700 B for?
Fannie and Freddie are taken care of, AIG is done, Bear is gone, Lehman is being sold out, Goldman has become a bank with 5 B from Buffet, Countrywide is gone, Morgan is now a bank.
Who is left? Foreign Banks? Greedy credit card companies who have been charging mafia rates for decades.
Isn’t it funny how the Politicians always say everyone will lose their jobs?
We DO NOT have a liquidity crises in this country we have a BAD investment crises, and the government wants to bailout their buddies as usual. The banks won’t loan because the collateral is junk!