patrick.net

That’s why I discourage people from investing in commodities as a way to beat inflation, because not everyone has a stomach for days like today. But if you know what you are doing, it could be a very lucrative path.

Today is not so bad for gold and silver, at least when compared to BSC. :lol:

Well, if you look at the YTD gains for all major commodities, you are still at a double-digit gain, some over 20%. Not bad at all even compared to the bankster-manipulated financial stocks.

When the Arabs refuse to take monopoly money USD for oil and demand Euros/ any other currency instead, that will be the start of the real turmoil.

Well we can always go onto the barter system, since they would starve without the food exports of "OFEC". :)

Egypt today is in a major food crisis, with bread lines. Many of Eqypts 70M population survive solely on subsidized bread. Mubarak today ordered army and police bakeries to distribute to citizen their own supplies. From BBC.

Not to be insensitive (but perhaps I am?), Nature has ways to deal with unchecked population growth.

I won't be surprised if world population decreases by 20+% over the next 10 years.

Well, if you look at the YTD gains for all major commodities, you are still at a double-digit gain, some over 20%. Not bad at all even compared to the bankster-manipulated financial stocks.

Yeah, but I went to sleep "knowing" gold was trading at 1025. Anyway... :)

BSC at $4. As I said before, JPM had a sweet deal. btw, I really would like to know the idiots who are buying BSC at $4 right now. Who? Who? Who? Who?

Dinor,

I suspect "The Term" will come to be known as 'fat tail'.

A financial market of very high levereage (traditionally we do not have the entire market at 20-30x), and a national housing loss registering 10% in a year (when we have never had a national negative number) triggered margin calls that would have failed at 5% market loss.

What suprises me is how well equities have held up. Given the massive losses and de-leveraging forced sales, the entire capitalization of the market should have declined more.

The only thing I can figure is there are bigger losses across foreign markets to which I am only peripherally privy - which is probaly a huge mistake. But I am pretty fatigued already, I don't think I can add following all foreign exchanges to my list. So, in the end I am just suprised it is not already worse here.

What people may take as investment advice is this:

I think there should already be bigger losses, and for all of the US lack of transprancy, I think other markets are even more opaque. And when people (money managers locally) give you advice to invest in foreign securities, they are really asking you to cover their positions there because the loss has yet to be revealed.

Wow am I getting cynical or what?

DinOR :

I was first introduced to these "seeds of destruction" by an article by Bill Fleckenstein in early 2005.

I have saved the article and the link still works. All this is common knowledge now, but this was one reason why I decided to join the bubble camp.

Whenever anyone says, "who could have known this", let them know that this article was available on the internet since last 3 years. So many people must have realized it even earlier.

Sorry for the missing closing tag for bold.

Here is the part 2.
http://www.fleckensteincapital.com/hotpotato_pt2.htm

The last part with closing remarks.

Now that we’ve seen how both the subprime and conforming secondary market mortgages work, we can look to the future and ask “Where do we go from here?” and “What’s wrong with this picture?”

It seems to me that if the regulatory environment allowed this all to continue, then we would eventually have to contend with a lot worse than just rising foreclosures in the subprime market, and housing price paranoia for the general public. And when big players push their weight around to hide conflicts of interest, and play games with assumptions we all take for granted, those games suddenly get a lot more serious.

Link for the last part.
http://www.fleckensteincapital.com/hotpotato_pt3.htm

OO, do you think Yen is still a good buy at this price level?

Solid? How about some shiny yellow metal?
I almost went "all in" on IAU today, but held back a little cash so I am not totally bereft in my retirement. OO, keep us updated on when the "idiots" start buying gold... or am I already in good company?
And still, buying "virtual PMs" does not exactly engender warm fuzzies (where exactly are they keeping my gold?). From IAU prospectus:
The custodian [Bank of Nova Scotia] may keep the trust's gold at locations in the vicinity of New York, Toronto, Canda, Montreal, Canada, London, England, or with the consent of the trustee and the sponsor, in other places.

I don't think I like Maria Bartiromo's new haircut. In fact, I'm sure of it.

"triggered margin calls that would have failed at 5% market loss"

Well exactly. Makes you wonder how anyone signed off on this stuff? Btw the coverage on CNBC today has been very strange. There IS... only (1) story today.

Will Bank of Japan attempt to slow the advance of Yen by supporting our Continental 2.0 dollar?

EBGuy,

don't worry, one of the "idiots" I met was still busy finding deals in financial stocks, he bought C all the way down, gold was not even on his radar screen.

Peter P,

I think the resistance level is @80, and BOJ is running without a chief right now, so short-term wise Yen could surprise everyone by shooting that high. But I won't put lots of money into Yen, because I am not completely confident on BOJ's spine.

I think AUD is a good buy today, as Yen carry trade unravels. RBA has proven to be a more disciplined central bank than BOJ, and as long as Yen climbs in the longer term, AUD will climb, because Japan is the biggest export destination of Oz.

Not investment advice.

I am not completely confident on BOJ’s spine.

You think they have cut interest rate? Is it even possible? :)

OO, your analysis on AUD is reasonable.

My only worry is the effects of unwinding Yen-carry trades on high-yield currencies, AUD being one of them.

“#1 NYC area salesgirl”

Ashley Alexandra Dupre?

At some point, especially when food price soars, Japan will have to break the peg with USD, but I am not sure if right now is the moment. 90% of the raw materials Japan needs, food inclusive, is imported. So a weak Yen is very detrimental to the standard of living for Japanese. When Yen breaks the peg, there will be inevitably overreaction, so breaking historical high will not surprise me.

Historical high of Yen was 83:1 in 95.

Yen carry trade unwinding has dragged down AUD several times in the past, but the general trend was still up. AUD will definitely be suppressed in the short term, but it will never return to the original trading range, because nothing can be going down against USD at this point.

Does anyone find it comical that Dow is up over 100 pts? The PPT is working too hard this morning, it doesn't even look realistic any more.

As all of you are begining to demonstrate, the winning hand is food in a hot commodities market. Making stuff no-one can buy because everyone is spending all of their money on food means - hold food.

Japan will break peg, and import of food is what will drive their economy for the foreseable future.

skibum,

Isn't that like the 3rd or 4th name she's had?

For the conspiracy lovers out there, rumors of "big" player withdrawal from commodities towards equities to prop markets. Not surprising speculation all things considered.

Clearly there has been an attempt to influence and diffuse market psychology and sentiment. Invisible hands are at work.

Here's a nice summary page for world food imports/exports:
http://news.bbc.co.uk/2/hi/in_depth/7284196.stm

The US is clearly the "Saudi Arabia of food".

The media and most everyone are forgetting several important bigger picture factors in this whole BSC mess. First, We haven't even seen the bulk of ARM resets yet. If the subprime collapse was the precipitating factor for what we're seeing today, what happens when Alt-A starts failing? Second, everyone glumly worries about fire sales of MBS and other securitized products leading to huge markdowns on the values of these securities. Well, HELLO! These securities are in fact worth jack sh-it, since they are full of toxic loan crap. So, why keep pretending???

skibum,

don't forget our lovely option/ARM reset after Alt-A.

Wall Street banksters have to pretend, if they stop pretending, they will be left penniless. At least pretending wins time. You won't want to see them suffer from a cliff-dive in standard of living, will you?

If the subprime collapse was the precipitating factor for what we’re seeing today, what happens when Alt-A starts failing?

I''ve 'heard' that said scenario leads to WaMu going poof. Or being 'bought' by someone (Wells?) for a pittance.

This BSC mess is happening now simply due to lack of liquidity. Short term repo money evaporated. Uncertainty as to future ARM performance is already factored in, the suckers have long left the room (exception for US taxpayer of course). Future ARM resets do not *matter* in this current environment, the wheels of our securities market have grounded to a halt. Nobody knows what these things are worth, and no one is willing to invest capital in them until they become relatively known quantities.

There simply is no secondary market for mortgage backed securities. And when a secondary market does arise from the ashes, it will not be like the one we once enjoyed.

OO :

Today's market action stinks big time. If this was indeed PPT or some Fed induced manipulation, then it's going to end badly. If they kill the shorts with any fake rally, they will simply remove the floor beneath the market. But given their past history, another pathetic attempt to push the day of reckoning wouldn't surprise me at all.

Does anyone find it comical that Dow is up over 100 pts?

I wonder if foreign holders of large amounts US dollars are jumping in for bargains after they see a drop.

Stuck,

DOW is the most manipulated index, because that is what the sheeple care about the most.

When US indices lose their credibility, that is when huge capital flight will start. At that point, USD will unfortunately see a total collapse. Investment is all about confidence in the market, in the system, if that confidence is breached, there will be no market, period.

Headset,

My knee-jerk reaction was to say, "At these prices? and then I was going to make an argument that holders of foreign dollars ould do well to wait.

Then it occured to me, that handing US dollars back to the US while the Fed is doing all of the heavy lifting to prop up the equity markets is pretty smart.

I would not be at all suprised to see a ton of buying coming from Japan and China, two huge holders of dollars. Spend 'em today, cause tomorrow they won't be worth much.

So after decline, the smart foreign bag holders jump in, and they buy till the price is higher than open? That sounds like a lot of ultra-smart foreign bag holders.

Foreign USD bag holders get stuck with the USD toilet paper not because they are dumb, but because they have no choice. They are either reliant on US consumers (which becomes a smaller reason for them to continue being the bag holder), or cannot get rid of the USD fast enough (oil money). If Middle East and China stop injecting fund directly into US financial institutions at a bulk discount price, don't expect them to buy in the open market. Japan has already started dumping USD since early 2007.

I find it hard to believe that the inexplicable rise in DOW is not a concerted action by Fed & Co.

Sovereign Wealth funds have very strict mandates, they are not allowed to day trade.

oo,

The stock market is SO manipulated, it's not even funny. I can't even try to begin to understand the depths and complexity. Without even invoking an official "PPT", the Hedgies provide such a huge volume of trades that they can probably collude very easily and manipulate the market. Of course that would be a monumental scandal, but it seems plausible to me. the average joe trader on etrade or ameritrade is hopeless against this system.

At this point, today's market moves do not surprise me one bit. As you or someone else pointed out, it's only setting us up for an even larger fall down the road. But by then, all the insiders will have "cashed out."

I find it hard to believe that the inexplicable rise in DOW is not a concerted action by Fed & Co.

JPM, a DOW component, is up 10%.

And DOW is a priced-based, as opposed to a capitalization-based, index.

Spend ‘em today, cause tomorrow they won’t be worth much.

Why buy businesses when you can buy resources?