Cavemen knew everything there is to know about free market economics. The rest of it is just boolshiat designed to obfuscate the political nature of capitalism.
You can't even participate in options trading without a margin account, even if all you're doing is selling covered calls, which don't require borrowing money. Bottom line: if the capitalists don't get their cut you won't be allowed to play.
There's nothing free about this market and the numbers they're feeding you are pure boolshiat.
Equal access to markets and capital are the two essential ingredients that make free markets free. Capitalism, in true Orwellian double-speak fashion, seeks to limit access to both those things, thereby favoring some people (wealthy aristocrats) over others (poor laborers). That's why there's such an income gap between those on the top and those on the bottom in America. Such a disparity could not exist in a society governed by the principals of free-market economics.
SOME DEROGITORY COMMENTS ON GOLD AND POSITIVE COMMENTS ON ELECTRONIC MONOPOLY MONEY!
At the bottom are segments from articles in Bloomberg’s this morning.
What I think is very interesting about these two articles is this gives us a look at the potential future of both Gold, and potential economic disasters that we have discussed here for the last several years.
Gold first: It seems quite obvious that after the craziness we have all seen in the derivates markets, as well as other markets this past two weeks, that most of the investors on the planet do just not see Gold as a real alternative to the floods of paper being printed. In fact just the reverse, they see “ safer” paper as their solution.
The fact is that even the most adamant doomsayers, like my buddy Peter Schiff, with his Euro Pacific Capital and its $700 million in customer accounts, could have handled the over flow of some $581 million in central bank gold sales this past year.
Those of us that think that gold may be a savior for us if things go to the devil in the paper world, may be counting on to much here?
The gold market is so thin, so derided by nearly every government and financial planner that the price of Gold no longer moves on inflation, no longer moves in times of financial melt downs, in fact who knows when it does move? It seems to keep up with inflation some, but it has never really adjusted for the inflation of the last two decades.
Electronic monopoly money: I think we can glean a very important lesson here form what has happened in the last couple of weeks.
Those that thought that we might be headed for a recessionary, or deflationary, period can now give up that idea for good.
No matter what happens, the governments of the world are just going to print the money in times of financial panic, having issued electronic money in amounts exceeding $350 billion in the last week.
They will print the money to pay for their social programs, to prop up stock markets, to cover bad mortgage loans, or what ever else they need to print money for. The current biggest lie on the planet is that central banks are the, “Inflation Hawks of the World”
“Gold Trails Treasuries as Dollar's Fall Fails to Ignite Rally, Aug. 13 (Bloomberg) -- Gold is going nowhere. It should be the best of times for investors in the metal. The dollar has weakened 3.6 percent against the euro this year. The Federal Reserve says inflation remains the ``predominant risk'' to the economy. Commodity prices, as measured by the UBS Bloomberg CMCI index, are heading for a sixth straight annual gain. The supply of gold is falling for the third time in four years, and global stock investors lost as much as $2.66 trillion in the most volatile trading since 2003.
``It's a mystery,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts. ``These are ideal conditions for gold. The fact that gold hasn't risen means there's a lot of complacency out there. People aren't panicked yet.''
Investors' optimism is waning because central banks in Europe have increased sales of reserves this year by 7.3 percent, or 24.5 more tons valued at $581 million.
Gold investors say the last time they saw as many reasons to buy was in the 1970s, after Iran cut oil supplies, U.S. inflation rose to 12.8 percent, the Standard & Poor's 500 Index fell to a 12-year low.
“ECB Injects Cash for Third Day to Avert Credit Crunch, Aug. 13 (Bloomberg) -- The European Central Bank added emergency funds to the banking system for a third trading day. The ECB loaned an additional 47.7 billion euros ($65 billion) to banks today.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10.
Gold will maintain its position as the storehouse of wealth during financial upheavals for some time yet. However barring a realignment of existing wealth it will probably continue to drift lower in value. This means one should hold gold only for the short term except for a core amount which is kept as insurance. Gold has no value as a store of wealth in a major breakdown but it does when inflation causes disturbances.
The Central Banks and major brokerages can only keep this game going for so long before it tips. We have to hand it to the FED for their masterful handling of the gold price over the past 2 years. It nearly got out of control when it broke through $700 last year, but it's been firmly socked down. Unfortunately when you least expect it, is when it's gonna break to $750, $800, and $875. The gold market was declared dead in 2001 after 20 years of losses. Well it went up 2.8X following its "demise." Gold will eventually cover the inflation that has occurred since 1980. You mean this time it is "finally" different after 5000 years?
These banks have 4-8 dollars debt for every dollar of assets.
The out flow of money by Central Banks is not to supports the stock market . It is to prevent the meltdown of the derivative market. If folks can not pay of on a losing position, look out Nellie.
91% of all derivatives are not on any recognized market and are thus not reviewed by the government or market regulators.
Derivatives are bets on Interest rates, mortgage rates, foreign currency rates, commodities, stock market prices, and any other strange or arcane thing related to anything at all.
Remember, 418 TRILLION DOLLARS, is 8 times the world combined GDP.
Nine years ago, the derivative market was only about 20 TRILLION DOLLARS.
Clad, why keep singing the same old tired song: "gold is a lousy long term investment.....ie 50-200 yrs!" Stocks are a lousy investment as well if you are on the wrong side of a 20 year cycle. But since we have been on one of those since 1982...talk of the next cycle (a la 1929-1954 or 1966-1982) is rarely discussed.
There's not one person on this forum who has stated that gold was a good long term investment. It has it's uses in the short term (months to several years) but that's about it. It cycles up and down, and is easily manipulated by the FED and its cronies. It protects your wealth when paper assets are floundering and being inflated to the moon (ie moon money). It has been proven to be an extremely beneficial short term investment since we came off the gold supply. And to anyone who thinks that the 1981-2001 gold market will define all of future history to come, is gonna be in for a rude awakening.
The FED did indeed create the money (along with help from Japan and other CB's) but we have to give the Bankers, brokers, and Hedge funds the full credit for coming up with the wonderful idea of "mark to model" derivatives, and then pump the thing to high heaven.
Now that they are trying to figure out how to "mark them to market" (ie fairly value and assess them on both sides of the transaction), this is where the roof is caving in. Every major banker loved derivatives up to the last few weeks, and felt they were essential to minimizing market risk. I wonder if they still feel that they offer a nearly fool-proof way to spread out risk......rather than they HAD offered a nearly fool-proof way to make Trillions as long as they could sell them to an end user who would not have need to sell them.
What portion of our "free market system" is actually free. I'd like to know because I'm not aware of any part of any market that is entirely free (ie not manipulated or where the playing field is solidly level for all, access is the same, etc). And I'm not talking about just having equal knowledge.
Goldman Sachs says that they are experiencing a 25 standard deviation event? Huh? If I recall my statistics, that might be somewhat significant. I sure hope that they planned for it!
Q: Are You Printing Money? Bernanke: Not Literally
The stock market isn't the economy and the DOW isn't the stock market. What amazes me is how all the crooks come out of the woodwork to pump up their hedge fund buddies but could care less when everyone else is in the cr@pper and losing their homes. Maybe we should start shipping in financial advisors from India on H1B visas who'll work for minimum wage.
Sorry, but I really don't see how any of this affects me so I really don't care. Wake me up when the NASDAQ goes somewhere. I'll be taking a nap.
Um, a 25 standard deviation event is beyond my comprehension without sitting down with a statistical calculator. But, isn't that almost like a once-in-creation type of magnitude?
Q: Are You Printing Money? Bernanke: Not Literally
Ha Ha Ha Ha, We need to stop all these redemptions because we cannot make trades with our galactic computers! Help us, help us, we are a victim!
“Aug. 14 (Bloomberg) -- Sentinel Management Group Inc., the Illinois-based firm that manages $1.6 billion, said it asked regulators for permission to freeze client withdrawals because credit-market turmoil made it impossible to trade. The firm said it was a victim of panic by investors caused by the collapse of the subprime-mortgage market. ”
There are approximately 7,000 hedge funds in the U.S., and who knows how many overseas? If the smartest guys in the room at these big funds are going thru this kind of bloodletting, then what is happening to all the other thousands of funds, HUM?
"...it asked regulators for permission to freeze client withdrawals because credit-market turmoil made it impossible to trade."
Actually, that seems to be correct that it is difficult to trade these funds because the actual value of the underlying securities is unknown at the moment. Either the underlying securities are a serious question mark for them or else it's so bad they don't want to say. I suspect the latter, kind of like stopping trading until the market settles out some and they can tell who has what.
The problem with most folks is that they place their trust in
so called experts and the lemming syndrome . When everyone
is dreaming of sugar plums and rigged government statistics as
well as the so called experts, folks stretch resources to bet on a
dream. For those of us who have been thru depressions , recessions
as well as inflation , deflation, inverted bond yield curves, we old timers
are always cautious. While I have predicted a melt down prematurely for two years, I
have eliminated all short term debt, built cash assets in government backed
instruments and have been preparing to hunker down.Perhaps I have not participated
in the frenzy, but I would rather survive in the worst possible case then play the millionaire lottery.
The rules I follow are this:
1. Always be suspicious of any Goverment statistics
2. Always be suspicious of investment gurus
3. Always listen to your own instincts for survival
4. Always have a cash reserve to accommodate unexpected negative developments in your life
5. As you should not follow the mob in the stock market frenzy on the way up. Neither should you follow the panic sell off on the way down. Slow, steady accumulation in solid, dependable stocks will generally, generate satisfactory returns.
6. High returns always defines high risk
7. High levels of short term debt (credit cards), uncertainty of job stability, low saving rate as well as over ambitious consumer spending , are the stuff that nightmares are made of.
8. To be prepared for the unexpected will not make you popular to the lemmings, but it will allow you to survive until a better day arrives.
9. Us old fuddy duddies are dull, out of touch with the latest fad and not interested in making a billion dollars get rich schemes. However, we are the folks who are now bailing out our kids and taking care of our aged parents. We do not do much in the frothy frenzy of quick profits, but we are the rock of stability when things go south.
But, isn't that almost like a once-in-creation type of magnitude?
EXACTLY!
The current market derivatives risk is at a level that IS a once in a creation type magnitude. Nothing like this has ever been seen before. John Law or Ponzi could not have thought of anything so outlandish....unless they had dreamed up the Federal Reserve System on their own.
And what happens if derivatives fall apart is a complete unknown. What has occurred this past week is just a 3 ft wave compared to the Tsunami that could eventually arrive.
The current market derivatives risk is at a level that IS a once in a creation type magnitude. Nothing like this has ever been seen before. John Law or Ponzi could not have thought of anything so outlandish....unless they had dreamed up the Federal Reserve System on their own.
And what happens if derivatives fall apart is a complete unknown. What has occurred this past week is just a 3 ft wave compared to the Tsunami that could eventually arrive.
I wonder if this squares with the creation of a new currency, since the coinage has been outpriced anyway. Of course, that's only the myopic view - if Goldman Sachs puts out a statement like that, they are actually measuring something to 25 Standard Deviations. I wonder what it is that they are measuring so far, far, far out?
By my figuring, a Tsunami is only about 5 Standard Deviations. Ulp!
Q: Are You Printing Money? Bernanke: Not Literally
I think this is what we can expect to see from many of these funds as they take big losses. Not only do they not want to give anyone a straight answer as to what their real assets are, but they have no intention of taking any responsibility for their wild schemes.
Anyway you have to give these Canadian guys an “A” for good names, “Rocket Trust?”
Credit crunch claims victim in Canada: ANDREW WILLIS AND BOYD ERMAN
From Tuesday's Globe and Mail
August 14, 2007
The global credit crunch claimed a Canadian victim yesterday, as financing company Coventree Capital Group Inc. [COF-T] saw its stock plummet by 34 per cent on news that investors have turned their backs on its $16-billion portfolio of loans.
In a move that speaks to the market's newfound aversion to risk, Toronto-based Coventree reported yesterday that "unfavourable conditions" in credit markets meant it could not find investors for $250-million of asset-backed loans that came due yesterday.
Coventree's woes come on the heels of global debt market turmoil that has seen hedge funds blow up, France's largest bank, BNP Paribas, freeze withdrawals on three asset-backed funds and a government-based bailout of a German bank burned by mortgage investments.
Coventree, Canada's largest independent player in the $120-billion domestic asset-backed security market, ran into trouble after investors big and small woke up to the risks that come with making loans, after years of carefree lending.
Coventree bundled up $16-billion of this debt with flashy names: Rocket Trust, Comet Trust and Apollo Trust are among the nine trusts it sells.Coventree doesn't tell investors exactly what is in each of these baskets of loans.
Coventree itself has no legal obligation to backstop the trusts."If Coventree were to support its conduits in such circumstances, the cost of such support could require the expenditure of significant amounts of capital and significantly reduce Coventree's profitability," the company stated.
For those who see the injection of money into the market by the Fed as a bail out of the wealthy here is a question I posed a few days ago in this thread:
<< <i>Which would you rather have, an orderly financial system that can have time to figure out what the value of mortgage securities and other loan are really worth, and then adjust prices accordingly, while business continues on even keel, or periodic melt downs that can whip saw investors out of the market and stifle investment? >>
Today Thornburg Mortgage stock plummeted, as its net asset value tumbled and it had to hold on to cash and defer a quarterly dividend, even though its mortgage assets are high quality rather than subprime. The liquidity crunch has caused the valuation of quality mortgage assets to be indetereminable, as lenders either will not lend against them or are requiring borrowers like Thornburg to over collateralize new loans. Without a source of lending, Thornburg cannot generate new loans, so it has to retain cash rather than pay dividends. In the meantime, thanks to the blunder by the SEC in eliminating the uptick rule the shorts have nailed the stock. We now have a company holding a portfolio of peforming quality mortgages that cannot use those assets to finance its operations even though there is a demand for new mortgage loans. Thornburg could wind up in Chapter 11, and if so hopefully enough time will elapse to permit an orderly liquidation of its assets after the markets have recovered and the assets can be properly valued and sold for a price that correctly reflects the yield and borrower credit quality.
By the way, the CEO of Thornburg just bought 500,000 shares of stock a few weeks ago. Ouch.
thanks to the blunder by the SEC in eliminating the uptick rule the shorts have nailed the stock
Dont think of it as a blunder, think of it as an opportunity. What a great chance to buy cheap stock. Amazing how the stock market is the only thing people dont want to buy when it is on sale.
"Amazing how the stock market is the only thing people dont want to buy when it is on sale."
Same thing with gold...it sits with out any love at $650 for a month and everyone turns their noses up at it. If it breaks out at all, the punters will be standing in line to spend $850 for a wrapped J&M. There should be something akin to Murphy's Law. Maybe it should be called The Lemming Hypothesis: The more unrealistically expensive a commodity or equity becomes, the more it is in demand. Amazing that gold has not even flinched during all this...it's held $700 like a rock climber on a side slope.
"Amazing how the stock market is the only thing people dont want to buy when it is on sale."
The problem, for me, and presumably most of us, is knowing when it is really on sale!
I would confess to having joined the sellers over the past several months. I don't claim any market timing prowess, but my gut feeling is that we could be well away from a bottom.
I'm not sure what I would call cheap. If equities were 20 % lower than they are now at year end, I would probably be a buyer.
PS -- the Goldman comment regarding 25 standard deviations was extremely amusing. That was a very indirect way of saying "our models don't work"
For me the market will be on sale once it tests and bounces off recent lows DOW 12000 and s&p `1350, I prefer to buy into a rising market vs trying to catch a falling knife
“We now have a company holding a portfolio of performing quality mortgages that cannot use those assets to finance its operations even though there is a demand for new mortgage loans. Thornburg could wind up in Chapter 11.”
Cal Gold, I saw that interview with Larry Goldstone, but you have to ask yourself, If they have a zillion dollars worth of performing loans, and the real book value is $14.28 per share, why can’t they just collect the mortgage payments, pay the overhead, and just wait things out?
Aug. 14 (Bloomberg) -- Thornburg Mortgage Inc. Capping a day in which the shares lost nearly half their value after five brokerages downgraded the stock. The shares plunged 47 percent to a seven-year low of $7.61. In a statement on Business Wire, Goldstone said Thornburg's own analysis concluded that its book value is $14.28 a share. Moody's today cut Thornburg's credit ratings two levels to B2.
I am still waiting to see who goes to JAIL on these Hedge fund deals! And their accountants should go also.
All these hedge fund guys sound more and more like the Enron crowd every day.
I thought that assets of publicly held companies, were valued by auditors, at cost or market, which ever is less?
It looks like all these assets were valued at cost or MODEL which ever was greater?
Ha, Ha, Ha, Ha, Come on down and give your money to us, we only lost $1.4 billion last month! Hurry this may be your last chance for such a deal!
Goldman Fund Cuts Fees to Woo Investors After Loss.
Aug. 15 (Bloomberg) -- Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month. New participants won't pay the 2 percent management charge and Goldman will cut its performance fee in half.
Basis Capital Tells Investors Loss May Exceed 80% Aug. 15 (Bloomberg) -- Basis Capital Fund Management Ltd. told investors losses at one of its hedge funds may exceed 80 percent, the firm managed $1 billion in March. Basis Capital is unable to ``accurately estimate'' the value of units in its Yield Fund, the hedge fund said today.
<< <i>Ha, Ha, Ha, Ha, Come on down and give your money to us, we only lost $1.4 billion last month! Hurry this may be your last chance for such a deal!
Goldman Fund Cuts Fees to Woo Investors After Loss.
Aug. 15 (Bloomberg) -- Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month. New participants won't pay the 2 percent management charge and Goldman will cut its performance fee in half. >>
This is stuff I dont understand. These guys leverage to the hilt and when the market is good they get 30% returns. Then market turns a little south and they get wiped out. They should have returns in the 500-1000$ range to justify being destroyed like this.
It's all about GREED people. The movie, Wallstreet, wasn't fiction in the world markets today. I do have a question. Shouldn't gold and silver be on the rise? You have a super weak dollar and a market that is being choked to death. I would appreciate your insight.
Also keep in mind that the CPI is a lagging indicator. So you won't really know the damage Bernanke has done until it's too late. Kind of like your radar detector going off after a cop clocks you going 100 MPH. It's pretty useless for making trading decisions.
I shouldnt be giving away too many secrets but here you go.
% of SP500 above 200 DMA is 39% matching the low in Aug 2004.
% of SP500 above 50 dma is 14.2% and at lowest since early 2003. At market bottom in 2002 it was 0.20%. LOL Only 1 stock in sp500 was above 50 dma. What a buy signal that was.
A more normal low for this index is 10% so we be close. A bad day today would probably do it.
MMs are getting desperate. Where do you think the volatility comes from? Better believe they'll be selling DTCC borrowed shares into any strength. They're not in business to make you money.
You can see them lining up on level 2... like vultures circling a carcass. Here's another tip: find out who the transfer agent is for your stock. Then call them every week to find out how many shares are really outstanding and how fast your friendly CEO is printing shares.
In summary: the MMs aren't there to make you money. The CEOs aren't there to make you money. And the Fed doesn't interfere with markets to make you money -- they shouldn't be interfering at all except to curb inflation, actually. Saving Goldman's arse isn't the Fed's job.
Oh, and for anyone thinking about buying VMWare, you should know there's a dispute over whether they've stolen code covered by the GPL. Nobody on CNBC will mention that fact because it's their job to hype the market, not deliver sound financial news. http://www.venturecake.com/the-vmware-house-of-cards/ So expect a long, drawn out legal battle along the lines of SCO.
<< <i>Cal Gold, I saw that interview with Larry Goldstone, but you have to ask yourself, If they have a zillion dollars worth of performing loans, and the real book value is $14.28 per share, why can’t they just collect the mortgage payments, pay the overhead, and just wait things out? >>
It appears that is what they will have to do. But they can't operate as a mortgage lender in the meantime if they can't borrow against their portfolio to get the funding needed to make new loans, which is how they make their money.
If their NAV is really above $14 (and valuing these kinds of assets can be difficult in the best of circumstances, let alone during a break in the market) the stock was a rip at yesterday's close--close to half NAV. Which is why it bounced back up to over $11 this morning--still a considerable discount to NAV for the brave of heart and some arbs are not doubt playing that risk, but not a play for the typical Thornburg investors who were looking for yield on a high quality mortgage portfolio.
Isn't Treasure Secretary Paulson the former CEO of Goldman? If so, that seems like a conflict of interest to have the Fed bail 'em out for their stupidity.
"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)
Comments
There's nothing free about this market and the numbers they're feeding you are pure boolshiat.
Knowledge is the enemy of fear
At the bottom are segments from articles in Bloomberg’s this morning.
What I think is very interesting about these two articles is this gives us a look at the potential future of both Gold, and potential economic disasters that we have discussed here for the last several years.
Gold first:
It seems quite obvious that after the craziness we have all seen in the derivates markets, as well as other markets this past two weeks, that most of the investors on the planet do just not see Gold as a real alternative to the floods of paper being printed. In fact just the reverse, they see “ safer” paper as their solution.
The fact is that even the most adamant doomsayers, like my buddy Peter Schiff, with his Euro Pacific Capital and its $700 million in customer accounts, could have handled the over flow of some $581 million in central bank gold sales this past year.
Those of us that think that gold may be a savior for us if things go to the devil in the paper world, may be counting on to much here?
The gold market is so thin, so derided by nearly every government and financial planner that the price of Gold no longer moves on inflation, no longer moves in times of financial melt downs, in fact who knows when it does move? It seems to keep up with inflation some, but it has never really adjusted for the inflation of the last two decades.
Electronic monopoly money:
I think we can glean a very important lesson here form what has happened in the last couple of weeks.
Those that thought that we might be headed for a recessionary, or deflationary, period can now give up that idea for good.
No matter what happens, the governments of the world are just going to print the money in times of financial panic, having issued electronic money in amounts exceeding $350 billion in the last week.
They will print the money to pay for their social programs, to prop up stock markets, to cover bad mortgage loans, or what ever else they need to print money for.
The current biggest lie on the planet is that central banks are the, “Inflation Hawks of the World”
“Gold Trails Treasuries as Dollar's Fall Fails to Ignite Rally,
Aug. 13 (Bloomberg) -- Gold is going nowhere.
It should be the best of times for investors in the metal. The dollar has weakened 3.6 percent against the euro this year. The Federal Reserve says inflation remains the ``predominant risk'' to the economy. Commodity prices, as measured by the UBS Bloomberg CMCI index, are heading for a sixth straight annual gain. The supply of gold is falling for the third time in four years, and global stock investors lost as much as $2.66 trillion in the most volatile trading since 2003.
``It's a mystery,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts. ``These are ideal conditions for gold. The fact that gold hasn't risen means there's a lot of complacency out there. People aren't panicked yet.''
Investors' optimism is waning because central banks in Europe have increased sales of reserves this year by 7.3 percent, or 24.5 more tons valued at $581 million.
Gold investors say the last time they saw as many reasons to buy was in the 1970s, after Iran cut oil supplies, U.S. inflation rose to 12.8 percent, the Standard & Poor's 500 Index fell to a 12-year low.
“ECB Injects Cash for Third Day to Avert Credit Crunch,
Aug. 13 (Bloomberg) -- The European Central Bank added emergency funds to the banking system for a third trading day.
The ECB loaned an additional 47.7 billion euros ($65 billion) to banks today.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10.
for some time yet. However barring a realignment of existing wealth it will probably
continue to drift lower in value. This means one should hold gold only for the short
term except for a core amount which is kept as insurance. Gold has no value as a store
of wealth in a major breakdown but it does when inflation causes disturbances.
hand it to the FED for their masterful handling of the gold price over the past 2 years. It nearly got out of control
when it broke through $700 last year, but it's been firmly socked down. Unfortunately when you least expect it,
is when it's gonna break to $750, $800, and $875. The gold market was declared dead in 2001 after 20 years of
losses. Well it went up 2.8X following its "demise." Gold will eventually cover the inflation that has occurred since
1980. You mean this time it is "finally" different after 5000 years?
roadrunner
91% are owned by 5 American banks.
These banks have 4-8 dollars debt for every
dollar of assets.
The out flow of money by Central Banks is not to supports
the stock market . It is to prevent the meltdown of the derivative
market. If folks can not pay of on a losing position, look out Nellie.
91% of all derivatives are not on any recognized market and are thus
not reviewed by the government or market regulators.
Derivatives are bets on Interest rates, mortgage rates, foreign currency rates,
commodities, stock market prices, and any other strange or arcane thing related to anything at all.
Remember, 418 TRILLION DOLLARS, is 8 times the world combined GDP.
Nine years ago, the derivative market was only about 20 TRILLION DOLLARS.
Camelot
It's safe and will maintain its value no matter what other instruments do but it's still a lousy long term hold except as insurance.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
But since we have been on one of those since 1982...talk of the next cycle (a la 1929-1954 or 1966-1982) is rarely discussed.
There's not one person on this forum who has stated that gold was a good long term investment. It has it's uses in the short term (months to several years) but that's about it. It cycles up and down, and is easily manipulated by the FED and its cronies. It protects your wealth when paper assets are floundering and being inflated to the moon (ie moon money). It has been proven to be an extremely beneficial short term investment since we came off the gold supply. And to anyone who thinks that the 1981-2001 gold market will define all of future history to come, is gonna be in for a rude awakening.
roadrunner
My 1866 Philly Mint Set
Now that they are trying to figure out how to "mark them to market" (ie fairly value and assess them on both sides of the transaction), this is where the roof is caving in. Every major banker loved derivatives up to the last few weeks, and felt they were essential to minimizing market risk. I wonder if they still feel that they offer a nearly fool-proof way to spread out risk......rather than they HAD offered a nearly fool-proof way to make Trillions as long as they could sell them to an end user who would not have need to sell them.
roadrunner
is entirely free (ie not manipulated or where the playing field is solidly level for all, access is the same, etc). And I'm not talking about just having equal knowledge.
roadrunner
Yeah, you never know how serious someone is until you reach for their money...I suspect the bigger the money, the more serious they are.
Interesting short news clip from this morning states that the sky is indeed not falling...Keeping things in perspective
I knew it would happen.
Sorry, but I really don't see how any of this affects me so I really don't care. Wake me up when the NASDAQ goes somewhere. I'll be taking a nap.
I knew it would happen.
We need to stop all these redemptions because we cannot make trades with our galactic computers! Help us, help us, we are a victim!
“Aug. 14 (Bloomberg) -- Sentinel Management Group Inc., the Illinois-based firm that manages $1.6 billion, said it asked regulators for permission to freeze client withdrawals because credit-market turmoil made it impossible to trade. The firm said it was a victim of panic by investors caused by the collapse of the subprime-mortgage market. ”
There are approximately 7,000 hedge funds in the U.S., and who knows how many overseas? If the smartest guys in the room at these big funds are going thru this kind of bloodletting, then what is happening to all the other thousands of funds, HUM?
Knowledge is the enemy of fear
Actually, that seems to be correct that it is difficult to trade these funds because the actual value of the underlying securities is unknown at the moment. Either the underlying securities are a serious question mark for them or else it's so bad they don't want to say. I suspect the latter, kind of like stopping trading until the market settles out some and they can tell who has what.
<< <i>The sky is falling. The sky is falling. And are people buying today??? The good 'ole US dollar.
That's only because everyone's liquidating their assets, converting to dollars. A flight to safety? I don't think so.
so called experts and the lemming syndrome . When everyone
is dreaming of sugar plums and rigged government statistics as
well as the so called experts, folks stretch resources to bet on a
dream. For those of us who have been thru depressions , recessions
as well as inflation , deflation, inverted bond yield curves, we old timers
are always cautious. While I have predicted a melt down prematurely for two years, I
have eliminated all short term debt, built cash assets in government backed
instruments and have been preparing to hunker down.Perhaps I have not participated
in the frenzy, but I would rather survive in the worst possible case then play the millionaire lottery.
The rules I follow are this:
1. Always be suspicious of any Goverment statistics
2. Always be suspicious of investment gurus
3. Always listen to your own instincts for survival
4. Always have a cash reserve to accommodate unexpected
negative developments in your life
5. As you should not follow the mob in the stock market frenzy
on the way up. Neither should you follow the panic sell off on the
way down. Slow, steady accumulation in solid, dependable stocks
will generally, generate satisfactory returns.
6. High returns always defines high risk
7. High levels of short term debt (credit cards), uncertainty of job stability,
low saving rate as well as over ambitious consumer spending , are the stuff
that nightmares are made of.
8. To be prepared for the unexpected will not make you popular to the lemmings,
but it will allow you to survive until a better day arrives.
9. Us old fuddy duddies are dull, out of touch with the latest fad and not interested in
making a billion dollars get rich schemes.
However, we are the folks who are now bailing out our kids and taking care of our aged parents.
We do not do much in the frothy frenzy of quick profits, but we are the rock of stability
when things go south.
Camelot
EXACTLY!
The current market derivatives risk is at a level that IS a once in a creation type magnitude. Nothing like this has ever been seen before. John Law or Ponzi could not have thought of anything so outlandish....unless they had dreamed up the Federal Reserve System on their own.
And what happens if derivatives fall apart is a complete unknown. What has occurred this past week is just a 3 ft wave compared to the Tsunami that could eventually arrive.
roadrunner
And what happens if derivatives fall apart is a complete unknown. What has occurred this past week is just a 3 ft wave compared to the Tsunami that could eventually arrive.
I wonder if this squares with the creation of a new currency, since the coinage has been outpriced anyway. Of course, that's only the myopic view - if Goldman Sachs puts out a statement like that, they are actually measuring something to 25 Standard Deviations. I wonder what it is that they are measuring so far, far, far out?
By my figuring, a Tsunami is only about 5 Standard Deviations. Ulp!
I knew it would happen.
I think this is what we can expect to see from many of these funds as they take big losses.
Not only do they not want to give anyone a straight answer as to what their real assets are, but they have no intention of taking any responsibility for their wild schemes.
Anyway you have to give these Canadian guys an “A” for good names, “Rocket
Trust?”
Credit crunch claims victim in Canada:
ANDREW WILLIS AND BOYD ERMAN
From Tuesday's Globe and Mail
August 14, 2007
The global credit crunch claimed a Canadian victim yesterday, as financing
company Coventree Capital Group Inc. [COF-T] saw its stock plummet by 34 per
cent on news that investors have turned their backs on its $16-billion
portfolio of loans.
In a move that speaks to the market's newfound aversion to risk,
Toronto-based Coventree reported yesterday that "unfavourable conditions" in
credit markets meant it could not find investors for $250-million of
asset-backed loans that came due yesterday.
Coventree's woes come on the heels of global debt market turmoil that has
seen hedge funds blow up, France's largest bank, BNP Paribas, freeze
withdrawals on three asset-backed funds and a government-based bailout of a
German bank burned by mortgage investments.
Coventree, Canada's largest independent player in the $120-billion domestic
asset-backed security market, ran into trouble after investors big and small
woke up to the risks that come with making loans, after years of carefree
lending.
Coventree bundled up $16-billion of this debt with flashy names: Rocket
Trust, Comet Trust and Apollo Trust are among the nine trusts it
sells.Coventree doesn't tell investors exactly what is in each of these
baskets of loans.
Coventree itself has no legal obligation to backstop the trusts."If
Coventree were to support its conduits in such circumstances, the cost of
such support could require the expenditure of significant amounts of capital
and significantly reduce Coventree's profitability," the company stated.
<< <i>
I wonder if this squares with the creation of a new currency >>
The Amero
and a bank holiday. Better keep some cash handy. Remember,
when the government tells you not worry and everything is under
control. BE WORRIED, BE VERY WORRIED.
Camelot
<< <i>Which would you rather have, an orderly financial system that can have time to figure out what the value of mortgage securities and other loan are really worth, and then adjust prices accordingly, while business continues on even keel, or periodic melt downs that can whip saw investors out of the market and stifle investment? >>
Today Thornburg Mortgage stock plummeted, as its net asset value tumbled and it had to hold on to cash and defer a quarterly dividend, even though its mortgage assets are high quality rather than subprime. The liquidity crunch has caused the valuation of quality mortgage assets to be indetereminable, as lenders either will not lend against them or are requiring borrowers like Thornburg to over collateralize new loans. Without a source of lending, Thornburg cannot generate new loans, so it has to retain cash rather than pay dividends. In the meantime, thanks to the blunder by the SEC in eliminating the uptick rule the shorts have nailed the stock. We now have a company holding a portfolio of peforming quality mortgages that cannot use those assets to finance its operations even though there is a demand for new mortgage loans. Thornburg could wind up in Chapter 11, and if so hopefully enough time will elapse to permit an orderly liquidation of its assets after the markets have recovered and the assets can be properly valued and sold for a price that correctly reflects the yield and borrower credit quality.
By the way, the CEO of Thornburg just bought 500,000 shares of stock a few weeks ago. Ouch.
CG
Dont think of it as a blunder, think of it as an opportunity. What a great chance to buy cheap stock. Amazing how the stock market is the only thing people dont want to buy when it is on sale.
Knowledge is the enemy of fear
Same thing with gold...it sits with out any love at $650 for a month and everyone turns their noses up at it. If it breaks out at all, the punters will be standing in line to spend $850 for a wrapped J&M. There should be something akin to Murphy's Law. Maybe it should be called The Lemming Hypothesis: The more unrealistically expensive a commodity or equity becomes, the more it is in demand. Amazing that gold has not even flinched during all this...it's held $700 like a rock climber on a side slope.
The problem, for me, and presumably most of us, is knowing when it is really on sale!
I would confess to having joined the sellers over the past several months. I don't claim any market timing prowess, but my gut feeling is that we could be well away from a bottom.
I'm not sure what I would call cheap. If equities were 20 % lower than they are now at year end, I would probably be a buyer.
PS -- the Goldman comment regarding 25 standard deviations was extremely amusing. That was a very indirect way of saying "our models don't work"
DOW 12000 and s&p `1350,
I prefer to buy into a rising market vs trying to catch a falling knife
“We now have a company holding a portfolio of performing quality mortgages that cannot use those assets to finance its operations even though there is a demand for new mortgage loans. Thornburg could wind up in Chapter 11.”
Cal Gold, I saw that interview with Larry Goldstone, but you have to ask yourself, If they have a zillion dollars worth of performing loans, and the real book value is $14.28 per share, why can’t they just collect the mortgage payments, pay the overhead, and just wait things out?
Aug. 14 (Bloomberg) -- Thornburg Mortgage Inc. Capping a day in which the shares lost nearly half their value after five brokerages downgraded the stock. The shares plunged 47 percent to a seven-year low of $7.61. In a statement on Business Wire, Goldstone said Thornburg's own analysis concluded that its book value is $14.28 a share.
Moody's today cut Thornburg's credit ratings two levels to B2.
I am still waiting to see who goes to JAIL on these Hedge fund deals! And their accountants should go also.
All these hedge fund guys sound more and more like the Enron crowd every day.
I thought that assets of publicly held companies, were valued by auditors, at cost or market, which ever is less?
It looks like all these assets were valued at cost or MODEL which ever was greater?
Come on down and give your money to us, we only lost $1.4 billion last month!
Hurry this may be your last chance for such a deal!
Goldman Fund Cuts Fees to Woo Investors After Loss.
Aug. 15 (Bloomberg) -- Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month. New participants won't pay the 2 percent management charge and Goldman will cut its performance fee in half.
Basis Capital Tells Investors Loss May Exceed 80%
Aug. 15 (Bloomberg) -- Basis Capital Fund Management Ltd. told investors losses at one of its hedge funds may exceed 80 percent, the firm managed $1 billion in March.
Basis Capital is unable to ``accurately estimate'' the value of units in its Yield Fund, the hedge fund said today.
<< <i>Ha, Ha, Ha, Ha,
Come on down and give your money to us, we only lost $1.4 billion last month!
Hurry this may be your last chance for such a deal!
Goldman Fund Cuts Fees to Woo Investors After Loss.
Aug. 15 (Bloomberg) -- Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month. New participants won't pay the 2 percent management charge and Goldman will cut its performance fee in half. >>
This is stuff I dont understand. These guys leverage to the hilt and when the market is good they get 30% returns. Then market turns a little south and they get wiped out. They should have returns in the 500-1000$ range to justify being destroyed like this.
Knowledge is the enemy of fear
It's all about GREED people. The movie, Wallstreet, wasn't fiction in the world markets today. I do have a question. Shouldn't gold and silver be on the rise? You have a super weak dollar and a market that is being choked to death. I would appreciate your insight.
Thanks,
eddye mack
% of SP500 above 200 DMA is 39% matching the low in Aug 2004.
% of SP500 above 50 dma is 14.2% and at lowest since early 2003. At market bottom in 2002 it was 0.20%. LOL Only 1 stock in sp500 was above 50 dma. What a buy signal that was.
A more normal low for this index is 10% so we be close. A bad day today would probably do it.
Knowledge is the enemy of fear
Oh, and for anyone thinking about buying VMWare, you should know there's a dispute over whether they've stolen code covered by the GPL. Nobody on CNBC will mention that fact because it's their job to hype the market, not deliver sound financial news.
http://www.venturecake.com/the-vmware-house-of-cards/
So expect a long, drawn out legal battle along the lines of SCO.
There's also the new KVM (kernel-based virtual machine) built into recent versions of Linux that's completely free BTW. Here's a few screenshots of me using it with Windows Server 2003 R2, just in case anyone thinks I don't know what I'm talking about:
http://4crito.com/screenshots/july7_2007.png
http://4crito.com/screenshots/july8_2007.png
http://4crito.com/screenshots/july9_2007.png
I like Crito. He will post in 3's and makes very good sense. Thanks for the advice Crito. Now how can we kick gold and silver is the pants?
eddye
GO STEELERS
<< <i>Cal Gold, I saw that interview with Larry Goldstone, but you have to ask yourself, If they have a zillion dollars worth of performing loans, and the real book value is $14.28 per share, why can’t they just collect the mortgage payments, pay the overhead, and just wait things out? >>
It appears that is what they will have to do. But they can't operate as a mortgage lender in the meantime if they can't borrow against their portfolio to get the funding needed to make new loans, which is how they make their money.
If their NAV is really above $14 (and valuing these kinds of assets can be difficult in the best of circumstances, let alone during a break in the market) the stock was a rip at yesterday's close--close to half NAV. Which is why it bounced back up to over $11 this morning--still a considerable discount to NAV for the brave of heart and some arbs are not doubt playing that risk, but not a play for the typical Thornburg investors who were looking for yield on a high quality mortgage portfolio.
CG
<< <i> Saving Goldman's arse isn't the Fed's job.
L] >>
Isn't Treasure Secretary Paulson the former CEO of Goldman? If so, that seems like a conflict of interest to have the Fed bail 'em out for their stupidity.