patrick.net

So there are non-clowns other than Ron Paul. I stand corrected.

Guys, just an observation but the currency isn't collapsing. It is getting stronger. Money is starting to be worth something again. I look at this as a good thing. Look at gold and oil. Oil is falling consistently now, and gold jumped again due to the panic but is now back on a decline in balance with the gain of the dollar. I know people starting to buy houses literally with cash around the country. It is a new day, but we've got to think differently now than our parents did.

If we expect them not to rob us, we need to put something more permanent in place, and this means having a leader.

TOB, I agree. GWB has absolutely disappointed us.

Guys, just an observation but the currency isn’t collapsing. It is getting stronger. Money is starting to be worth something again.

Yes. I was chatting with a friend yesterday... dollar-euro parity is not impossible in the next few years.

This is because Europe sucks more.

Not investment advice.

Would LOVE to see more discussion on the video posted above. I came here to post it.

Can anyone provide insight into it's veracity?

tinyurl.com/3f5wzw

FormerAptBroker Says:
September 30th, 2008 at 6:42 am
Paul Says:
> On a lighter note-
> Whatever happened to the good ole days?
"Rember when we had a large number of posters telling us we were crazy and real estate would never drop in value?"

Yesterday I was in a room with some very scared 'former?' millionaires. I smiled internally as one said "Who could have seen this was coming?"

Who could have seen this was coming?

Yes... ;)

Who could have ignored the writings on the wall?

Malcolm,

Of course the dollar is stronger. We just saved $700 billion :)

The only thing we have to beware of is falling into a deflationary spiral... but Ben won't let that happen. They'll print money to balance it out.

The important thing about continuing to vote down the bill is the message behind it... that we will protect our currency.

This has been posted many times here, but I think it is important that we remember:

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

-- Thomas Jefferson

TOB
What is that Bernanke quote? Where? When? Context?

How is this analysis:
1. Market is too crazy to be into. Deleveraging means we are ALL just waiting for the other show to drop. The death sprials of the hedgies and badly managed banks make the ride too hard for investors.
2. Bonds look bad as they may pop. If no rescue, we move into the phase of more than just equity stake holders getting wiped out, we move into debt-holders getting wiped out.
3. Treasuries look bad as massive holders of Treasuries may be dumping them to solve their own need for cash. Why buy a 0% T-Bill when you can get China's 5% bill below par?
4. Cash looks good as it is a realtive safe haven until we figure out which way all of this is going to break. I mean, inflation losses stink, but it seems to be a smaller loss than anything else.
5. In theory, gold should have been good but the momnertum plays by the big boys makes those waters to dangerous to swim in.

So - the dollar is strong as it is seemingly the safest store of value in these uncertain times. And with everyone wanting them, we are rallying the dollar.

Once the BailieMae bill is passed, dollar will fall then move back to reflecting ecnomic fundamentals. Which may be bad for Europe.

I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

Who else thinks this full quote, in which Bernanke is talking to Milton Friedman in 2002 about the role of the central bank in the great depression, is differnet than TOBs quote - wihch seemed to imply Ben is now sad about what he personly just did.

Invoking The Great Depression would be a fear tactic. There is NOTHING the Fed can do NOW that can stop an unwanted economic event.

They COULD HAVE lowered the severity of the coming recession by turning off the excess liquidity cool-aid spigot a lot earlier.

My favorite quote from yesterday:
Rep. Paul Braun, R-Georgia, voted against it.
Before his vote, he called the bill "a huge cow patty with a piece of marshmallow stuck in the middle, and I'm not going to eat that cow patty."

EB
Quite similar to Surfer X's 'shit sandwich'--though he was actually referring to the traunches.

Duke Says:

> Once the BailieMae bill is passed...

I like "No Banker Left Behhind" more than "BailieMae" to describe the bailout bill...

More evidence that the market is fixed.

On what basis did DOW rally 500 pts? Somebody is not doing a good job in keeping DOW half dead to scare the sh*t of retiring or retired voters.

I can understand the -770 part, I am still perplexted by the +485 part. Obviously our economy is doing very well, since we rallied almost 500 pts on nothing.

OO,

Why do you expect the market to be rational ? As much as panic selling, there is panic buying. Traders are always fearful of loosing money by missing out on cashing on a trend. Economic fundamentals do not dictate day-to-day gyrations.

Who knows OO. Could be traders optimism about the bill passing on a revote. In which case, we'll drop the 5% again if it doesn't pass. Buy on rumor, sell on news. Even if it had passed yesterday, I bet we would have dropped the 9% over the course of the week anyways.

All the arguments I'm hearing for the bailout are retarded. In their attempts to convince people it's NOT a bailout, they have made it completely obvious that it IS a bailout.

I think the Trinity (Bush, BB, Paulson) are not doing a good job marketing this bailout, due mostly to their arrogance.

Paulson came out as the most abrasive and arrogant personality in finance (probably an overstatement, Fuld is worse), asking for financial dictatorship out of the blue while drumming up the dire consequence of financial Armageddon, which people on this blog know will be coming. That was right after telling the American public for months that everything was doing just fine. Don't you need a transitional episode here?

What they should have done is to let the market crash even harder, and let a few pension funds go belly up, bailing out the rest with NO retroactive extension of protection for those that have failed, that will present a far more convincing danger to the public. Then the Trinity can come up with the same terms, at that point the American public will be far more receptive. I am sure they (minus Bush) are smart enough to think of this, but the fact that Paulson doesn't even want to bother with such maneuvers means that he is simply too confident of himself.

Paulson grossly miscalculated. After being in Goldman Sachs for years, I presume he know all the negotiating techniques. He is no dummy.

This time he tried the Bush model - create panic and gather support. It worked for Iraq war. But since he is not a seasoned politician, he had no idea about how to gauge public response. He flunked big time on this.

He wanted to create panic to get the bailout pass quickly so he gets to choose which of his cronies get the money. But the bailout did not pass, and panic actually increased by his action.

Everyone who is coming out on TV supporting the bailout (from both sides) is talking about "retirement savings and ability to send kids to college". They are desperately trying to spread fear and succeeding to some extent.

So the theory is, if there are no student loans, no one will be able to go to college ? Prices will still keep going up, even when there is no one to pay ? Idiots. And these people are going to save capitalism ?

One of the reasons deflation is so scary is - hardly anyone understands it.

My favorite argument is the following...

1. The banks are fundamentally sound
2. They have assets that are stuck that they can't sell
3. It would be silly to let them fail just because they can't sell their assets for what they're "really" worth.
4. Therefore, we should save them by buying that asset.

Through the same logical sequence, I could argue the following...
1. I am financially sound
2. I have an asset (a house) that I can't sell for a "fair" market value (more than I bought it for)
3. It would be silly to let my go bankrupt just because I can't sell my house for more than I bought it for.
4. Therefore, the government should save me by buying my house.

Substitute house for any other asset you can imagine and the argument still works! Brilliant!

3. I would

while I am sure the bailout vs 2.0 or 2.01 etc will pass (and we know we do need a bailout, just that the distribution of reward and risk is too skewed), I am more impressed by the sheer arrogance of our overlords.

I know that they own America and we are just little guys trying to be left alone under the system, it seems like the overlords will stop at nothing to grab the last cent from the new-age American serfs.

There are already reports of organized push to the retirees telling them that if the bailout doesn't pass, they will not receive their SS checks. This will only get worse when more boomers head into retirement without sufficient funding, the government can tell them to vote for anything if the threat is "your SS check will be bounced!".

EBGuy pointed out what I think is the most underreported story of the day: The huge expansion of the Fed balance sheet.
justme,
Thanks for noticing. I was pulling my hair out yesterday wondering about this and the Treasury injections to the Fed. I guess I was about half a day ahead of the news cycle (the failure of the bailout bill was, well, THE major story yesterday). The Fed is open for business. Rollin', rollin', rollin', keep the TAF and TSLF rollin' over...
Here's an article from today's NY Times.

The Treasury Department has already created a series of “supplemental” Treasury securities to finance the Fed’s activities, and there is no limit to how many more it can issue and sell.
...But because of all the new lending programs for banks and Wall Street firms, analysts estimate that the Fed’s balance sheet now has less than $300 billion in unfettered reserves.

Usually for a PE or LBO to fund a deal, the key stakeholders (CXO levels) need to commit a sizable portion of their personal money, usually in the hundreds of thousands.

I would support a bailout plan (which is really a private injection of capital from the public), if the key stakeholders (CEOs of all the banks) also contribute $10s of Ms of their own money in equity, and they can make decent return as they claimed if the bailout works out just as they claimed.

There is nothing wrong with a bailout, just need to ask the Wall Street stakeholders if they will fund a deal like this.

EBGuy,

I am confused. Since the Treasury can issue Tbills with "no limit" to help out the Fed (still unclear where the no-limit buyers come from), why does the Treasury need the $700B?

Can't they just solve this issue by themselves through offering T-bills to "no limit"?

OO says: On what basis did DOW rally 500 pts? ...I can understand the -770 part, I am still perplexted by the +485 part.

In short, this was some sort of electronic avalanche or squeeze. Don't take my word for it, look at the charts yourself. The 5-day interactive chart on Yahoo! is sufficient to see the phenomenon.

After the bill passed, the Dow lost about 300-400 points. It stabilized there for most of the afternoon. Towards the very end of trading, there were two 200 point trough/spikes, and then a slam with only five minutes left in trading, after which the Dow ended -770. If you look at today's level, it started almost exactly where it plateaued after the bill was defeated.

My theory is that a bunch of hedgies bet big that stocks would surge yesterday, and probably margined into those positions. What else could move the entire DJIA by -200 with less than 5 minutes to trade? Perhaps a massive sell-off in mutual funds? All you can tell is, people were almost certainly trying to desperately close long positions at the very end of the day.

So there was no REAL -700 and then +500. Seriously, look at the charts! For all trading segments but a few unconnected five minute intervals, the DJIA took a -200 beating, or less than -2%.

Something seriously fucked up happened yesterday in trading. I cannot explain that much money moving around, but what happened was artificial way beyond panic and dismay at politics. No trader can manually move stocks that fast, let alone enough to shift the DJIA. The volume and speed indicate this was all a pre-triggered computer event, which means that a lot of very big players moved a lot of money by computer in a tremendously short window.

It's even possible that they triggered the trading curbs, because those limits were put in place to stop computerized trading from going wild and causing market crashes during unexpected events.

Brand,

what you said made perfect sense. I am sure the WS insiders know exactly where the trigger point these computer trading programs are set at.

why does the Treasury need the $700B?
The Fed can only loan (or swap out) against the toxic assets. The Treasury needs the $700 Billion to actually buy the underlying assets.

EBGuy,

why don't they resort to printing from the thin air? I am still very perplexed at where the $630B comes from, I never realized that we had $630B lying somewhere, they should have told me earlier then I could have slept tight.

Brand,

I believe that this week's Wall Street trading will go down in history as the most politically manipulated trading by a small group of insiders to finish their looting of America.

I hope these Wall Street insiders will not bring rage again upon their race, because there are lots of people from this ancient tribe that I respect and like very much, like Jon Stewart, Al Franken, and my family doctor, all honest and noble men.

CNN (and probably others) are turning up the heat to the max to pressure the public into supporting the bailout bill. We need to get out the following message:

No bailout without equity
is the modern day equivalent of
No taxation without representation.

Do not pass a bill to buy bad assets, if absolutely necessary
invest the public money in senior-preferred-voting-convertible-stock ONLY. It is crucial that the public as shareholder has its interest aligned with the remaining shareholders of the troubled institutions.

why don’t they resort to printing from the thin air? I am still very perplexed at where the $630B comes from, I never realized that we had $630B lying somewhere, they should have told me earlier then I could have slept tight.
I can't tell if you're being sarcastic here... printing would obviously debase the currency. The Fed gets the money from the Supplementary Financing Program at the Treasury Dept -- which gets dollars from patriotic (and scared) Americans and foreigners (central banks and the lot) who are buying Treasuries at even at extremely low interest rates.

The Treasury needs $700B for the Paulson Plan because Ben wants to run a central bank, not a graveyard (Over here boys. Bury the bodies where you see the TAF and TSLF signs.

They probably want to buy these crappy loans and use the anticipated future proceeds to fund Social Security.

EBGuy,

I am being sarcastic. I just think we are down that path, so why don't we just hurry down and be done with it. It is not like we can ever crawl out of the debt hole if we don't debase the currency.

What's the options left? Committing ourselves to be the debt slave for the rest of our and our children's life? Or, debase the currency and deal with a sharp drop in quality of life, but we are freed of debt.

The only reason why we haven't started debasing is perhaps all the elites haven't entirely cashed out of their USD positions.

Hmmm how about instead of bailing out the GBFs (greedy boomer fucks) we take the 700 very very very large and build a bunch of LHCs? (Large Hadron Colliders)?

Just a thought. Another option would be paying the Zep 200bil for reunion concert in Idaho, and another 100bil for hookers and blow.

Sound good Dennis, or is it justme?

We will probably start debasing the currency right after the election.

Hmmm how about instead of bailing out the GBFs (greedy boomer fucks) we take the 700 very very very large and build a bunch of LHCs? (Large Hadron Colliders)?

So that enough strange-lets can be created to temporally reverse the bubble bust?

Interesting video on "Real reason for bailout"

http://www.youtube.com/user/kdenninger

I think if we don't pass 700B bailout, china might have special plan for us.

This is what happens when you become Debt slaves to other countries.
They start black mailing you the moment they see you weak.

But ho...a story of an honest banker. From NRO's Mark Steyn.
Two weeks ago, I was overseas and called my assistant back in New Hampshire to find out what was up. And, after all the tedious business stuff, she mentioned that she'd gone into our general store just before closing and was surprised to find that behind the counter, working the evening shift, was our bank manager (of one of these First National Bank of Dead Skunk Junction-type banks). "Oh," explained Shelley [name ever so slightly changed to spare her blushes]. "I went crazy with the spending, and figured I could use some extra cash to dig myself out of the hole."