patrick.net

Hello all

I just have to say something (even though I know certain individuals will come out and say "be careful what you wish for" etc etc etc).

What has happened to Bare (tm) Sterns is literally making me giddy. Particularly when I read that the partners' retirement wealth just went poof.

Is that wrong? If so, I'm sorry. I just can't help it.

Can you still get to your safe deposit box during a "bank holiday"?

Lehman Brothers CEO Richard Fuld has cut short a trip in India, and is currently flying back from there to NYC today. The trip was supposed to last well into next week.

According to Goldman Sachs, the U.S. economy lost the title of “world’s biggest” to the euro zone this week as the value of the dollar slumped in currency markets.

The size of the Eurozone economic output now exceeds that of the US as calculated with the latest Euro USD exchange rates.

Yikes.

I don't see how Lehman makes it through this week, given their holding a similiar portfolio of MBS as Bare. Broker dealers live and die on liquidity, and they don't got liquidity and NOTHING to be done to improve this. I'd be interested in hearing any different opinions, am I missing something?

*Not investment advice*

OO

FXF and FXY seem to be an easy way to buy the currencies of Japan and Switzerland. Do you see a down side to that approach ?

Is anyone able to understand how monumental this is? (is it?) - does it mean the Fed is now playing the markets or making PPT explicit? I don't get it...what is this lending straight to dealers thingy?

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Danville woman,

as long as the party managing these two ETFs remain sane and solvent, I don't see any downside except the annual management fee.

They are freaking out on CNBC about this.

Gold has now breached $1000 definitively. I am still cautious about gold, but I have to retract my old predictions about it. No way to foresee just how much the fed would react, and how quickly they would screw responsible savers with this absolutely reckless financial policy.

No way to foresee just how much the fed would react, and how quickly they would screw responsible savers with this absolutely reckless financial policy.

No way to foresee financial recklessness? Huh? :)

as long as the party managing these two ETFs remain sane and solvent, I don’t see any downside except the annual management fee.

I thought ETFs have less counterparty risks than ETNs...

With big banks like MER and C likely to go down, and LEH almost sure to go down, I don't know how to evaluate counterparty risk any more.

Peter P Says:
March 16th, 2008 at 7:23 pm
"No way to foresee financial recklessness? Huh? "

I grew up thinking that the government catered to old people with savings. Now that the older voters are broke boomers it is amazing to see how quickly things have changed. It is fascinating to see whose side the fed is on. We are literally going to bankrupt the country to save a few people their jobs. If the big banks failed, no one would take their place?

I grew up thinking that the government catered to old people with savings.

Malcolm, it is a new paradigm. It is different this time. :)

The graphic for this thread should have been a wheelbarrow full of dollars. I think the time is apropriate.

What in the world changed? This could literally start wars. Everyone who is holding dollars overseas have basically lost a bunch of wealth this year. If I am on the verge of panic with my little nestegg I can only imagine what people with larger fortunes are fearing. Can you imagine what is going through some older retired person's mind right now?

Can you imagine what is going through some older retired person’s mind right now?

They are wondering what happened.

So how much do you guys thing the DOW will drop tomorrow, or is there still a drug effect by slashing rates? I was talking about this with family yesterday, I used the metaphor of a drug addict needing a bigger and bigger dose just to get an effect. That's what this interest rate/stock market policy resembles to me.

What in the world changed?

Only change is permanent. But again, the more it changes, the more it stays the same. Human nature is just what it is.

Survive and thrive!

So how much do you guys thing the DOW will drop tomorrow, or is there still a drug effect by slashing rates?

Dow futures are currently down about 200 points.

They are reporting market after market around the world taking huge hits right now.

There is a paradox. In economics I believe there is a concept of not being able to have inflation and recession at the same time. One is going to win over the other.

In economics I believe there is a concept of not being able to have inflation and recession at the same time.

What about stagflation?

"probably the same thing thats been going through 20 somethings mind for several years: we are fucked.."

Any color but green is the saying on CNBC now. Nice!

Black = oil good
Gold = gold good
Silver = silver good

Peter P Says:
March 16th, 2008 at 7:43 pm
"What about stagflation?"

I used to wonder about that myself. I think the answer is that stagflation is not a recession, it is just inflation with no real growth.

" They are wondering what happened."

Yes, they are and they vote.

What will the unemployment numbers look like because so many of the boomers won't be able to retire and have to keep working. I had a co-worker that had to keep working into his mid 70's thanks to Keating.

This pattern has clearly changed the normal makeup in the workforce. I call them entrenched boomers, because they use the Civil Rights laws to entrench themselves in low value add expensive corporate positions.

I think the answer is that stagflation is not a recession, it is just inflation with no real growth.

It is all linguistics. :)

When we have more people in the world than there should be, anything is possible.

Where are the scapegoats? I've been patiently waiting to see some heads roll but it's not PC to blame anyone anymore. They started parading bankers infront of Congress but now there is no finger pointing. There really needs to be finger pointing.

Peter P Says:
March 16th, 2008 at 7:51 pm
"It is all linguistics.

When we have more people in the world than there should be, anything is possible."

How come when I say there are too many people in the world, people like you ask me if I am really serious?

TOB :)

I’ve been patiently waiting to see some heads roll but it’s not PC to blame anyone anymore.

What about mortgage brokers? They are a small group and they are the detached "money" guys (as opposed to the likable realtors).

I know, I've been waiting to see a chain gang of brokers. Instead, they are crying about how slow business is and our impartial government seems to be letting them run the policy.

I can say in all certainty that We are screwed this November. One of the "Keating Five" is a nomination for president and the other 2 contenders are fighting it out for the Democrats nomination are not much better.

I am 27 years old and have only managed to save $15,000 for a home downpayment. The way prices keep going up and my wages not keeping up is seriously hurting me. Since paying off my 2005 Saturn Ion, I have been able to save more. It is all almost futile! I have no debt and am struggling to keep my living standard, which is not great, from going down more.

At this point, I would welcome foreign governments changing over to a Euro for Oil policy. I want this crap to collapse and do the Coup De grace to the struggling banks that created this mess. I want the dollar to deflate and make the savers the people who are rewarded. The sooner we can get through the collapse the sooner we can start to rebuild our economy.

I much rather have one of the "Keating Five" than someone who will raise tax.

> Just because you give loans backed by crap MBS doesn’t mean you create money.

Actually, it does. Those loans were made with money created from NOTHING. The Fed creates the money it lends out. That dilutes the cash you have in your pocket.

The collateral accepted for that new cash is crap. Ergo, the Fed is making a gift of cash in exchange for crap loans.

Who loses? You do, when you buy gas, milk, bread for higher prices.

Who wins? Banks, because they can keep their profits, and the Fed makes you pay their losses.

Again, I have no problem with the Fed bailing out banks.

This deflation = apocolypse talk is really just the banksters covering their asses.

Anyone with in interest in social stability should agree that *broad-based* deflation should be avoided at all cost.

If the dollar sinks past a certain threshold, India has got millions of unemployed young people to worry about.

When that happens, will that be bullish (geopolitical instability) or bearish (jewelery demand) for gold?

My hands are sweating after reading the blogs, and checking out Bloomberg tonight.
Most of my friends are clueless as to what has been happening in the financial world in the last few months. They are still very trusting of our government and are hopeful about the near future.

In addition, a coworker says there have been multiple offers on homes in the last few weeks in Antioch.

What a bizarre juxtaposition of thoughts and events !

Peter P the stench of a rat is all over you. You strike me as the kind of guy that goes out to dinner with "friends" and then bail to the bathroom when the check arrives. Your attitude reminds me a fat peer in grade school that was always trying to get food from everyone else's lunch after eating all of his but never returned the favor by sharing his candy.

Like it or not, taxes need to be raised and we must cut spending all across the board. We have been using the collective gubermint cc too long and now we must endure a hangover of pain for a long time. The alternative is to get rid of the SS system, medicare, medicaid and other programs that are breaking the system. You will also have to relax the gun laws for the law abiding citizen because you will see many desperate criminals on the streets when the gubermint tit is removed.

Just hope we still have something of value to give back to the Chinese and Arabs for all that crap paper we gave them. Unlike the Indians, which we gave firewater and small pox contaminated blankets for land, we can't screw these trade partners. I hope we can pay off these debts with grain grown in our bread basket. The last time I looked, China is losing massive amounts of farm land every year and will soon be looking for ways to feed its people.

It is people like Peter P who made me leave the Republican Party and declare myself an independent in 2000. You people always want others to pay for gubermint programs that we can't afford and will stop at nothing to destroy this great country. When fiscal sanity is again returned to government I will become a bull again. You all claim to be patriotic by waving that "Made in China" American flag, but when push comes to shove, you are going to cut and run from your fair share of the costs to run the gubermint.

The fiscal prudence of the "greatest generation" and the "boomers" make me want to puck.