patrick.net

OO,

If USD is to be devalued - then against WHAT ? Without coming up with viable answer to that, the claim that USD will get devalued is not even a complete sentence.

Euro ? GBP ? Fat chance. Which currency then ? It has to be a major currency. Oil is also influenced by many other factors and demand destruction is real.

What I do concede is USD will not enjoy the reserve currency status it has. We already have seen countries breaking away from that and it's a trend that will continue.

The only long term alternative I see is gold. This is going to be a very slow trend, as central banks around the world may start a return to gold standard - either officially or unofficially.

Treasuries on the other hand may eventually see a sharp sell-off.

I understand currency markets even less than stock markets - so take this comment with appropriate amount of salt.

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OO, what margin calls in what derivative FOREX instruments are we talking about here?

Do you have a reference or some background material to link to?

I got this mail:

I hope Monday has been kind to you so far. I was reading through my news feeds today, and I saw some unfortunate news that Ebay is reducing work force. Being an eBay alum, I wanted to drop you a message - If any of your colleagues have been affected by this recent turn of events, pls. feel free to share my contact information with them should they approach you - Our agency is working on 225+ searches right now from Marketing to Engineering, individual contributor to the VP level and I can help them identify job leads that fit their requirements. The majority of my open searches are perfect for candidates with consumer focused web experience and range from social networking to interactive broadcast, early stage startups to established media plays. Regardless, I hope your week stays manageable, and I appreciate your time & any forwards you feel are appropriate. Kind Regards, Christian Cervero
Executive & Technical Recruiter
Cross Creek Systems
(650) 261-0411 Office
Christian@Xcreek.com
www.Xcreek.comhttp://www.linkedin.com/in/cervero

No, Obama never worked as a laywer for ACORN. The Republicans know that they can't run on their record, since Bush is now officially the most unpopular President ever, so they hope they can run on a bunch of lies about Obama. Not working this time, sorry.

What caused the mortgage meltdown? Republican refusal to regulate the markets, plain and simple. Why didn't they reign in Fannie Mae during the six years they enjoyed control of Congress and The Presidency from 2000-2006? They were simply on the take.

http://www.nytimes.com/2008/09/28/opinion/28sun1.html?_r=1&hp&oref=slogin

I have decided that I will vote against all incumbents and will vote independent this November.

I laugh at the desperate republicans who try to set the clock of blame back to 1999. And also to put the blame on acorn and Obama. It is almost as funny as calling the dems liberal elites. They are very good at one thing, and everyone can see though it -- blaming others for the very thing that is wrong with them. I even heard Palin talking about "the Big Lie." What a riot. Absolutely no oringinal thought whatsoever.

PS -- Wasn't Meg Whitman of E-Bay just whooping it up at the republican convention in St Paul just a few weeks ago?

Capitalism is the only thing that can work.

Um, maybe capitalism is the one thing that can't work.

Capitalist Equilibrium?

Bap: I think if you can buy a $585K bubble house for $150K + repairs, there is a WSJ article somewhere in your future.

Hope this ominous "transformative" stuff I am reading about Oct 7 is bogus, and you all come out okay from whatever the hell it is.

StuckinBA

USD against a basket of currencies will IMHO go down, some more some less, Yen, Euro, Swiss Franc all have significant upside potential at this point, CAD and AUD will recover to their previous heights, I am very negative on GBP, that is the only component I am not sure that will appreciate against the USD.

sriramgopalan Says:
Peter Schiff (one of the few economists I respect) had this recommendation: People should stop paying their mortgage!

This "strategy of default" may be bigger than you or Peter Schiff are referring to. There is speculation in the tinfoil crowd that a false-flag operation will provide cover for wiping out the trillions in derivative obligations.

Normally, I would dismiss the tinfoil chatter, but with what we have seen already from the Neocons, anything is possible.

Stuck,

I was wondering the same thing, about the USD. Maybe they'll devalue it against gold. There has already been a precedent for doing that. It would mean going back on the gold standard, but we've gone off and then back onto it again, during and after the War of the Rebellion. Maybe they'll confiscate gold again like in 1934 and reopen the gold counter for foreign banks. Like, maybe they'll confiscate it at 1000 per ounce but then revalue at 2K per ounce, something like that. At the same time issue a new gold backed currency, expiring our old one with some kind of gimmickery to goose consumer spending.

I dunno. I don't think this will happen, but gold is the only money not backed by a political entity that will jump onto the debasement bus in a race to the bottom.

OO Says:
35 years old, ex-engineer-turned IBanker, very typical path. But the joker part is he was only a VP (not even ED, MD) at Goldman in its IT practice, and he has never lived through any recession, any major event, and now he is suddenly in charge of “financial stability” department for the world?

Either he is:
1. very bright and exceptional
2. in posession of compromising pictures of Paulson with a sheep
3. exceptionally pliant and can be counted upon to ensure that taxpayer money is used for the greatest benefit to the greatest number of banksters
4. being set up to be a patsy

My personal pick is 3, 4, 2, 1.

OO said:
I am just enjoying this big pile of SH*T landing right in the face of Fuhrer Bush. Bring it on, collapse more.

Think like a Neocon. Maybe they _want_ this crisis to hit before his term ends, so they can get what they want to "fix the problem" :-)

PermaRenter,

I have decided that I will vote against all incumbents and will vote independent this November.

To everyone who is on a tear about "voting against the incumbents", please stop and think about what that really means:

1. you will be voting for the Republicans to take over congress.
2. you will be voting against Obama for president if you vote "independent"

Just do the math. Since the democrats have a majority among the incumbents, you are in effect voting Republican. Is that really what you want to do?

One thing is to vote against the incumbents in a PRIMARY (nominational) election, but it is something different to vote against the incumbents in the GENERAL (real) election.

# justme Says:
What I do NOT get is the clamor for USD. I can understand the flight-to-safety argument to some extent, and perhaps the oil-price-is-dropping argument. But what is really going on here?

I just had this discussion after supper with an MIT alumna - she had had a couple of stiff Negronis, so I don't know whether that sharpened or dulled her reasoning... but her explanation for the strong dollar was that due to massive amounts of deleveraging, notional "dollars" were getting destroyed, which creates upward pressure on the actual dollars that are in the system. Made sense to me and the Harvey Wallbanger that I was having at the time.

Jimbo,

extra right on the cause of the financial crisis.

SP,

That sort-of-kind-of sounds like an explanation, of only I could wrap my head around what "de-leveraging" means in this context. Mind you, I'm not being sarcastic, I jut do not quite get it. Appreciate the attempt there.

Socialist regulation of capitalism is the only thing that can work.

Congrats! The congress just granted your wish.

Capitalism without failures is the worst form of Socialism.

Capitalism without losers makes everybody a loser.

To everyone who is on a tear about “voting against the incumbents”, please stop and think about what that really means:

1. you will be voting for the Republicans to take over congress.
2. you will be voting against Obama for president if you vote “independent”

Excellent!!!

@justme, I suspect you just want to see if I am too drunk to type "deleveraging" correctly again. :-)

What I mean is that banks are unwinding huge (tens of billions) of trades any way they can - writedowns, netting, etc. This takes a lot of dollar-denominated liquidity out of the market. If you look at the worldwide pool of dollars as money+debt, and the debt side is shrinking precipitously , it follows that the remaining money is worth more.

Taking oil futures as an example - an oil contract may have sold at 130 a month ago, but is liquidated today at say 90. You now have 40 fewer notional dollars against the same barrel of oil. Multiply the same thing across different assets that are deleveraging and it makes the dollar worth more. I am not sure if this is what is going on, but it sounds vaguely plausible to me when someone smarter than myself explains it. :-)

justme,

no I do not have data for this, and nobody has any data on this. But you can try to triangulate things yourself.

In July, when the dollar has already gotten strong and banks were already looking very shaky, we started having the biggest drop in foreign demand for US Treasury, US securities and US agency bonds. The July negative capital outflow number was $75B.

I don't yet have Aug number, but of course you can argue the situation changed a lot in August. But from what I heard on ground 0 in parts of Asia, my contacts in private wealth management are telling me otherwise, wealthy Asians are pulling money out of the US into Swiss Franc, PM and Euro bonds.

So someone else other than these fence-sitting foreigners must be filling the void. The only logical answer at this point are the holders of USD denominated speculative instruments which all went poof at the same time. Just JPM alone has an exposure to derivatives to the extent of $90T, go figure how big that black hole is.

After the dust settles in a couple more months, when we look back the report of Sept and Oct, I won't be surprised to find Japan and China to have significantly reduced their USD holdings to take advantage of this god-given opportunity.

Permarenter is is a typical one-issue voter, whoever that kicks out the H1Bs will be the on his ticket.

News for him - Fiorina is the biggest proponent of H1B, she has been crying for lack of H1B talents in this country for years.

I personally don't have a problem with McCain except his mental and physical deterioration, but you will have to point a gun at my face to vote Fiorina into any kind of position that will have even the slightest impact on my life.

Surfer-x, please tell me this ain't you:

http://www.cnn.com/2008/CRIME/10/06/california.murder.suicide/index.html

Seriously expect to see a lot more of this stuff. ".....when black Friday comes, ....catch the brave men when the dive ...." -Steely Dan

Bush's approval rating -->> 25%

Congress's approval rating -->> 10%

NADER/GONZALES '08

Jimbo Says:

> What caused the mortgage meltdown?
> Republican refusal to regulate the markets,
> plain and simple.

It is not that plain and simple…

There is very little difference between Republicans and Democrats these days and they will all (with a few exceptions) do what they need to do to get money and stay in office. Both parties were paid off by the banking and real estate lobby and did not regulate the markets.

P.S. I read something a while back about a super liberal that was big in to deficit spending and pouring tons of money in to programs to help recent immigrants, poor people and Africans with AIDS. The same article talked about a right winger that was a multi-millionaire who entertained rich business executives at her mansions in some of the most exclusive areas of the country while fighting to stop the workers at her restraint chain and vineyard from organizing. The article ended with the names of the liberal “George W. Bush” and the big business conservative “Nancy Pelosi”…

Or more accurately: Brazil, Argentina drop US dollar as intermediary in their bi-lateral trade.

If that gaming steps up: fake divorces, wllingly halting payments, asigning titles to family members, we will see a huge reposnse. For now, the FBI does not have the resources to pursue fraud. But $1.4t (the amount the Fed is dumping into this mess so far) can fund a lot of anti-fraud agents. And there are a TON of people who would just love to play tough love on their gamester neighbors.
I am recalling something Perma stated a while back. Since MOST peple refi homes as the price goes down, and since ALL refis are recourse (as opposed to nonrecourse) loans, a new fraud agency can start taking a lot of assets from a lot of people. So while Perma has never seen banks go after assets, yet, they will.
Play Peter Schiff's game at your peril.
The powers that be are rightly understanding the scope of fraud in the current debacle. If crushing fraud prevents this from getting worse, then crushing fraud we will have.

FAB,

I agree with Jimbo that it REALLY IS that plain and simple. Without the republicans having lawmaking and executive power for 20 of the last 28 years, this whole crisis would never have happened.

The whole argument that there is little difference between R and D these days, so you might as well vote R is just plain bogus.

I could agree that any republican might consider to vote against his own party because their own grand leader GWB ran up the biggest budget deficit in history. Now THAT is substantial, Some anecdote about a small local labor strife in San Franscisco non-withstanding.

Bao33,

"This dollar disaster was brought to you by, Super Liberal !!!, and his trusty sidekick, Greedy Bastard !!!”

Which one of these is George Bush? I have a hard time telling. Or maybe both of them are?

Bap33,

Why don't you instead worry about who some republican is sleeping with? For example Hanky Paulson? You sound like a bad repeater for Rush Limbaugh radio show.

Herb Moses was a director of something-or-other at FNM. He was not even a C-level executive. You are assigning way too much importance to him. Not that I am surprised. You have your blinders fastened on as usual.

But good luck with the lowball offer, I wish you well on that one.

"The whole argument that there is little difference between R and D these days, so you might as well vote R is just plain bogus."

Actually, I believe the argument is that there is no difference between R and D, so vote for Ron Paul :)

Duke,

I disagree with you on the fraud. Every step the banks have taken the last 9 years could pass as fraud in a court of law. I don't think they'll push it very hard in fear of a backfire.

Also, they are facing a PR crisis right now. There is palpable anger over the bailout, and in manifests in people's minds as the banker from Deal Or No Deal that fucked them over.

If they started pushing fraud on the people who are merely taking the routes legally available to them, they might start seeing angry mobs attacking their branches.

If the Fed and the Treasury really want banks to trade loans and credit with each other, is it not counterproductive to create ever new facilities for trading loans with government entities instead?

Just sayin'....

Fuzzy, a vote for Ron Paul is a vote for the Republicans, until they fix the election system.

I'm never going to buy into that bullshit argument, that by voting for my favorite candidate, I am in fact voting for someone else.

Especially when the 2 main candidates both believe the same thing. I could care less which one of them wins. I'm voting for who I want.

I applaud the Fed's decision to bail out CP with printing. This bailout effort probably helps out the J6Ps the most, because if the CP market is as locked up as it was, we ain't gonna get any payroll soon.

I know there are people arguing that only financial CP is locked up, but fear easily spreads. Unless you are rich and retired, a locked-up CP market is good for none. I would rather deal with inflation tax, which one can avert if properly positioned in investment, than seeing employment opportunities dry up.

My only complaint is Fed has been printing a bit too slow too late, they should just speed it up from now on and really get the helicopter going.

I was reading a number of economists views on alternate plans to the current TARP.
One struckme as particularly funny. An economist that teaches at Harvard stated that the best thing the governement could do would be to start making loans out of Fannie and Freddie at 5.25%. It would put a floor under housing, and bla blah blah.
I amost peed laughing.
I think this guy was formerly part of Carter or Clinton's panel on something or rather too.

Okay, Mr Harvard, here is a news flash. The days of how-mucha-month are over. Everyone now knows that buying today means you will lose your 20% down payment AND be stuck for a very long time since you will not be able to sell. Given the risk in the employment, taking on a house now is folly.
The only people who should be buying now are people with large reserves to weather pro-longed unemplyment and/or those that can handle the near-term loss and long-term malaise. And even then it should really only be done to get into those you-can-never-buy-here properties since waiting is still and obviousy the best buying policy.