Well if you did not see today's mega rally coming, you just have not been paying attention! The markets recouped almost the entire temper tantrum induced losses from Monday's session. Renewed hope for a handout, bailout, gift or whatever you want to call it (some are now calling it a "rescue" plan) was seen as the catalyst. The strong belief that congress will fold and indeed flush over a trillion dollars of taxpayer money down the drain is so ingrained that Wall Street simply cannot function under any other circumstances. Crazy times.
It is a Bailout, A Turd by Any Other Name Will Smell Just as Bad
"You can't polish a turd." -Will Darnell from the novel "Christine" by Stephen King
From Wikitionary:
BailoutNoun
Singular bailout
Plural bailouts
a rescue, especially a financial rescue
example: 1. The government bailout of that corporation is going to cost the taxpayers a hundred million dollars.
example: 2. a backup supply of air in scuba diving
Are we clear? Any plan that hands insolvent banks can be called many things, but it IS a bailout. Trying to play with wording to make things sound different is a waste of time. Besides, that ship has sailed and everyone thinks of this thing as a bailout so trying to change that is wasteful.
Nobody Knows What Nobody Knows
The mainstream media was out in full force today, joined by the financial shows and the usual talking heads trying to plead for a bailout bill. The new angle of attack is to try and make the current credit issues relate to an average person. Just in the last hour I have heard on the nightly news and CNBC that if a bailout is not done, and soon, all of the following may happen:
1. You will lose your job
2. You will have no credit card use
3. You will not be able to get a car loan
4. You will not be able to go to college
5. Your kids will all be drug addicts (kidding)
I saw at least 4 different "small business" owners trotted out tonight to tell us all how they will not be able to make payroll unless the credit crunch eases. We can debate the merits of any business that pays employees with borrowed money, but it is clear that Wall Street has called in some favors to get a more sympathetic spin on the current debacle.
So where are we? It seems that a new bill (same as the old bill) is going to come back up for a vote later in the week, maybe after the Senate rubber stamps it first. If this bill does not pass, we are told, a total epic collapse will ensue.
So far the "abyss" has been vague. Something about no loans for bad credit risks or loans that are priced higher for risk. Wow, that is just crazy! See last nights post for more on the "Cheap Money Conundrum".
All over the world governments are scrambling. Ireland nationalized their entire banking system today and guaranteed more debt than their total GNP. I guess we are moving a bit slower here.
I am of the opinion that the whole "banks won't lend to other banks" line is old. If banks will not lend to another one, there may be good reasons. They might know the banks are in bad shape. They may be waiting for free government money to lend. They may be scared. I do not know. It seems nobody knows.
If the markets can rally on the hope of a bill, why not just keep that hope alive? Remember every quarter of banking write downs was "the kitchen sink" and the end of it? Maybe we can give Wall Street the same treatment. Keep trotting out bills that fail but keep promising a new one is going to pass. This way they will move on! Problem solved.
Sadly, I am about 98% sure that the old bill, I mean the new bill, is going to pass. Just too many wimps in congress to do what is right. After passage I will try and coordinate a list of contested seats for any "Yes" vote caster and I will be donating money to the challenger. I urge all the readers to do the same. You may be surprised how little money can swing votes in the smaller house districts, it can make a difference.
Any congress member that votes "Yes" to the bailout bill must be removed from office. It is worth your time and your money. Only after a real credible threat of voter action is established will our elected officials do what we want. The promise of active opposition to any "Yes" caster will be the voter's equivalent of Paulson's "Bazooka" analogy: Cross the voters and we will use it!
Have a good night.
Tuesday, September 30, 2008
Monday, September 29, 2008
Marketwatch: House to Wall Street: Drop dead
Still shocked at all the surprises, twists, and turns? Talk about a WILD day for all things political and financial! Late September and October have always been rough spots for the markets and this fall is shaping up to be diamond sandpaper.
Learn By Listening
The immediate temper tantrum thrown by Wall Street after the bailout bill was defeated tells you quite a bi by itself. Without a tangible "Do Over" handed to them by the Government, the markets sold off violently. While one should be mindful about assigning too much to wild market gyrations, I had two thoughts in mind during today's rout:
1. Wall Street Holds Assets as Hostages: Make no mistake, this is a dangerous game being played by the financial folks. Sending stocks plummeting in a fit over a no bailout vote is a clear threat. Wall Street has to be careful here to cause enough carnage to scare, but not enough damage to disable. If their ability to succeed can only be judged by the great job they did with mortgages, we should all be scared.
2. Insolvency is Serious: The banking sector is so seriously compromised that investors are ready to run for the exits. While some kind of bailout may have calmed things down, this fundamental issue will not go away.
I love to comb through market commentary at times like today because you can learn tons about how someone thinks just by listening. Wondering what traders think about all this? Here is an AP story with some revealing insight:
AP
Stocks tumble as bailout plan fails in House
Monday September 29, 6:03 pm ET
By Tim Paradis, AP Business Writer
Stocks plunge as financial bailout plan fails in House vote; Dow fall 777, biggest drop ever
So there you have it. Congress is not willing to "do their part"? What part is that? Use taxpayer money to save reckless institutions? Prop up asset values that do not reflect any reality? Ok. That quote is an important one as it captures the mindset of Wall Street.
Marketwatch: House to Wall Street: Drop dead
Best headline of the day goes to Marketwatch:
House to Wall Street: Drop deadCommentary: Uneasy Republicans couldn't stomach massive bailout
By MarketWatch
Last update: 2:40 p.m. EDT Sept. 29, 2008
WASHINGTON (MarketWatch) -
Too funny! I love the symbolism and feel of the headline.
So what happened today? I really am as confused as the next guy. The house republicans seemingly turned their votes late, but also plenty of Democrats flipped their vote. Could it be the unrelenting negative reaction the congress has been getting from the public? If the election was 8 months away, I think the bill passes no problem as the politicians would have thought voters would forget about this before the polls. With the election so close, this vote was likely to be issue number one for most voters and I think plenty in the congress just plain got scared. Good enough for me.
All the emails, faxes, and phone calls made a difference. Thanks go to Mike "Mish" Shedlock and Karl "Mad Dog" Denninger for all their work in coordinating the campaign against this bill. This is really quite an accomplishment, and we should all feel relieved.
For about 5 minutes.
We are facing dire consequences from our debt induced buying binge of the last 5 years (or 10, or whatever). The impaired credit markets are a real bomb waiting to explode. Banks are insolvent, and pretend time has been cancelled for the foreseeable future. The world's economies are getting worse, and Spain is looking particularly bad. Something must be done to find a path out of this mess. And no, it will not be a fast turnaround and no I do not know what that path is.
One central premise that I think is being glossed over by many, but has long been a central theme here at Economic Disconnect, is this:
The Era of Cheap Money is Over
No plan I have seen has addressed this simple fact. Since 2001 credit and money has been available at all time historical low rates. Risk was poorly priced, if it was priced at all. You have heard that the credit markets are closed and that banks are not lending. This is indeed true to some degree, but what really is the problem is that it is not feasible for business and borrowers to take loans unless those loans are offered at all time low rates.
How many US business models have an allowance for higher borrowing costs? Not many I would bet. While the obvious bubble in housing and auto loans was easy to pinpoint as credit excesses, take a look at all kinds of banks, retailer, auto manufactures, etc and their business model is predicated in easy, cheap money. Here lies the real issue.
Any plan to get the country back on the right track has to attack what I will term "The Cheap Money Conundrum". Cheap capital is the only way for many to survive due to poor judgement and planning, but cheap money has gone the way of the dinosaur. This basic disconnect MUST be resolved before anything is going to get better.
As always, I try to inform and get you thinking. This is what I was thinking about today. What about you? Use the comments section to open discussions. I will be watching CNBC and the NFL game tonight so I should be able to read comments and be interactive.
Have a good night.
Learn By Listening
The immediate temper tantrum thrown by Wall Street after the bailout bill was defeated tells you quite a bi by itself. Without a tangible "Do Over" handed to them by the Government, the markets sold off violently. While one should be mindful about assigning too much to wild market gyrations, I had two thoughts in mind during today's rout:
1. Wall Street Holds Assets as Hostages: Make no mistake, this is a dangerous game being played by the financial folks. Sending stocks plummeting in a fit over a no bailout vote is a clear threat. Wall Street has to be careful here to cause enough carnage to scare, but not enough damage to disable. If their ability to succeed can only be judged by the great job they did with mortgages, we should all be scared.
2. Insolvency is Serious: The banking sector is so seriously compromised that investors are ready to run for the exits. While some kind of bailout may have calmed things down, this fundamental issue will not go away.
I love to comb through market commentary at times like today because you can learn tons about how someone thinks just by listening. Wondering what traders think about all this? Here is an AP story with some revealing insight:
AP
Stocks tumble as bailout plan fails in House
Monday September 29, 6:03 pm ET
By Tim Paradis, AP Business Writer
Stocks plunge as financial bailout plan fails in House vote; Dow fall 777, biggest drop ever
WASHINGTON (MarketWatch) - With a firm rejection of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the House Republicans have told the financial markets that they'll have to solve their problems on their own, without $700 billion of taxpayer money.
In a stunning vote on Monday, the House rejected the financial rescue package on a vote of 205 to 228. Republicans voted against the bill by a two-to-one ratio, and in the process rejected their own leadership, who had worked for nearly a week to craft a bill that could gain a majority. Nearly 100 Democrats also voted against the bill, spurning their leadership.
The plan's defeat came amid more reminders of how troubled the nation's financial system is -- before trading began came word that Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was being rescued in a buyout by Citigroup Inc. It followed the recent forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies -- Bear Stearns Cos., Washington Mutual Inc. and Lehman Brothers Holdings Inc.; all of them were felled by bad mortgage investments.
And it raised the question: Which banks are next, and how many? The Federal Deposit Insurance Corp. has a list of over 110 banks that were in trouble in the second quarter, and that number surely has grown in the third.
Traders on the floor were stunned by the House vote.
"How could this have happened? Is there such a disconnect on Capitol Hill? This becomes a problem because Wall Street is very uncomfortable with uncertainty," said Gordon Charlop, managing director with Rosenblatt Securities. "The bailout not going through sends a signal that Congress isn't willing to do their part."
So there you have it. Congress is not willing to "do their part"? What part is that? Use taxpayer money to save reckless institutions? Prop up asset values that do not reflect any reality? Ok. That quote is an important one as it captures the mindset of Wall Street.
Marketwatch: House to Wall Street: Drop dead
Best headline of the day goes to Marketwatch:
House to Wall Street: Drop deadCommentary: Uneasy Republicans couldn't stomach massive bailout
By MarketWatch
Last update: 2:40 p.m. EDT Sept. 29, 2008
WASHINGTON (MarketWatch) -
With a firm rejection of Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the House Republicans have told the financial markets that they'll have to solve their problems on their own, without $700 billion of taxpayer money.
Too funny! I love the symbolism and feel of the headline.
So what happened today? I really am as confused as the next guy. The house republicans seemingly turned their votes late, but also plenty of Democrats flipped their vote. Could it be the unrelenting negative reaction the congress has been getting from the public? If the election was 8 months away, I think the bill passes no problem as the politicians would have thought voters would forget about this before the polls. With the election so close, this vote was likely to be issue number one for most voters and I think plenty in the congress just plain got scared. Good enough for me.
All the emails, faxes, and phone calls made a difference. Thanks go to Mike "Mish" Shedlock and Karl "Mad Dog" Denninger for all their work in coordinating the campaign against this bill. This is really quite an accomplishment, and we should all feel relieved.
For about 5 minutes.
We are facing dire consequences from our debt induced buying binge of the last 5 years (or 10, or whatever). The impaired credit markets are a real bomb waiting to explode. Banks are insolvent, and pretend time has been cancelled for the foreseeable future. The world's economies are getting worse, and Spain is looking particularly bad. Something must be done to find a path out of this mess. And no, it will not be a fast turnaround and no I do not know what that path is.
One central premise that I think is being glossed over by many, but has long been a central theme here at Economic Disconnect, is this:
The Era of Cheap Money is Over
No plan I have seen has addressed this simple fact. Since 2001 credit and money has been available at all time historical low rates. Risk was poorly priced, if it was priced at all. You have heard that the credit markets are closed and that banks are not lending. This is indeed true to some degree, but what really is the problem is that it is not feasible for business and borrowers to take loans unless those loans are offered at all time low rates.
How many US business models have an allowance for higher borrowing costs? Not many I would bet. While the obvious bubble in housing and auto loans was easy to pinpoint as credit excesses, take a look at all kinds of banks, retailer, auto manufactures, etc and their business model is predicated in easy, cheap money. Here lies the real issue.
Any plan to get the country back on the right track has to attack what I will term "The Cheap Money Conundrum". Cheap capital is the only way for many to survive due to poor judgement and planning, but cheap money has gone the way of the dinosaur. This basic disconnect MUST be resolved before anything is going to get better.
As always, I try to inform and get you thinking. This is what I was thinking about today. What about you? Use the comments section to open discussions. I will be watching CNBC and the NFL game tonight so I should be able to read comments and be interactive.
Have a good night.
Friday, September 26, 2008
Blatant Manipulation
So far it seems a quiet Friday after all of the fireworks this week. I think everyone needs a breather and a moment to think about what has happened as well as what needs to happen. With a presidential debate tonight and an all weekend long bailout meeting, I fear solid thinking will get passed by once again.
Democrats Have a Large Majority, So What's the Hold Up?
The Democratic party holds a clear majority in both the House and the Senate. They will have the vote of many, though not a majority, of republicans. The Democrats feel they have a bailout (don't bother calling it a "rescue plan" or "investing in America) plan they like ready to go. So just what is the hold up on a vote?
Enter into the fearful world of politics. Every congress member know that public opinion is running wildly high AGAINST any Wall Street bailout with taxpayer dollars at real risk. Some estimates are as high as 75% against to a low figure of 60% against. I do not believe any real sampling could return a 40% pro-bailout result unless you are only asking Goldman Sachs employees! The severe anger and resentment of this possible bill makes the politician the one thing that can influence their behavior: fearful.
The democrats can pass this bill right now. They want to do this with a mega majority vote. In this way when election time comes this November they can say "You cannot blame just us, the republicans voted for this too!" The bailout is a bad policy and it is very unpopular. Our officials know this. Nobody wants to run against an opponent in November that can say "That guy/girl gave all your money to Wall Street, so vote for me instead!"
It is both craven and sad that any congress member would vote for something so opposed by their constituents of they felt they would not suffer at the polls for it. If this bill is the best thing for America, then vote on it and let it stand. If you think the bill will cost you your seat, then do not vote for it. Decision time is upon the congress. What is it going to be?
Blatant Manipulation
The past few weeks have really shown the kind of overt and far reaching manipulation that goes on in our markets. Even the most ardent "there is no manipulation" types have had to throw in the towel as the FED and Treasury show their hands time and time again. From banning short selling to futures market buying the government has been trying to prop up the market in full view for all.
This fact was even more pronounced last night when on a THURSDAY the FDIC made their move to close Washington Mutual and sell off their base to JP Morgan. This kind of thing is always done on a Friday to facilitate an orderly transfer for Monday. Why was Last night so important. The bailout bill of course.
The more I think about this "staring at the abyss" stuff I cannot help but have a certain feeling. A certain thought. Call it conspiracy theory of you will, but at least listen (read) what I have to say (write).
Can the current debacle be in and of itself a creation by Wall Street to get a free do over? Faced with probably a DECADE or more of stagnant earnings and never ending write downs, it seems to me the big boys on Wall Street hatched a plan. Create a desperate credit crunch by refusing to lend money. Call upon the government for help. Transfer all of you bad debt onto the taxpayer and start the game over again with fresh capital. Along the way set up a few fall guys (LEH, WM) to really scare people and this plan just might get off the ground if you had a sympathetic Treasury Secretary (former Goldman head Paulson).
The failure of Washington Mutual was a done deal for over 2 months now. The move to make it happen last night was a direct effort to cause panic and capitulation on a bailout bill that Wall Street wants. All the talk of collapse and living in caves is meant to prey on people's basic fears.
Look, I could be wrong here and in fact I think on the whole I am. I do think there are severe issues facing the debt and credit markets. I do think this is very serious. I also feel that last year I would have laughed if I had read this conspiracy theory on a blog. Tonight, I am not laughing. Discuss in the comments section.
Book Passage
Tonight I am putting in one of my all time favorites:
Max Brooks - World War Z: the battle of Yonkers against the zombies chapter
Rock and Roll
A little music to head into the weekend, yes?
I love this song by the band Adrenalin. It was featured in the film "Iron Eagle" and it is a highly recommended listen. Here is "Road of the Gypsy":
I dug up this classic song and video complete with insanely hot lady! take a look at Eddie Money with "Shakin":
A little speed metal to end the night hot. Try out Megadeth with "Hanger 18":
Have a good night.
Democrats Have a Large Majority, So What's the Hold Up?
The Democratic party holds a clear majority in both the House and the Senate. They will have the vote of many, though not a majority, of republicans. The Democrats feel they have a bailout (don't bother calling it a "rescue plan" or "investing in America) plan they like ready to go. So just what is the hold up on a vote?
Enter into the fearful world of politics. Every congress member know that public opinion is running wildly high AGAINST any Wall Street bailout with taxpayer dollars at real risk. Some estimates are as high as 75% against to a low figure of 60% against. I do not believe any real sampling could return a 40% pro-bailout result unless you are only asking Goldman Sachs employees! The severe anger and resentment of this possible bill makes the politician the one thing that can influence their behavior: fearful.
The democrats can pass this bill right now. They want to do this with a mega majority vote. In this way when election time comes this November they can say "You cannot blame just us, the republicans voted for this too!" The bailout is a bad policy and it is very unpopular. Our officials know this. Nobody wants to run against an opponent in November that can say "That guy/girl gave all your money to Wall Street, so vote for me instead!"
It is both craven and sad that any congress member would vote for something so opposed by their constituents of they felt they would not suffer at the polls for it. If this bill is the best thing for America, then vote on it and let it stand. If you think the bill will cost you your seat, then do not vote for it. Decision time is upon the congress. What is it going to be?
Blatant Manipulation
The past few weeks have really shown the kind of overt and far reaching manipulation that goes on in our markets. Even the most ardent "there is no manipulation" types have had to throw in the towel as the FED and Treasury show their hands time and time again. From banning short selling to futures market buying the government has been trying to prop up the market in full view for all.
This fact was even more pronounced last night when on a THURSDAY the FDIC made their move to close Washington Mutual and sell off their base to JP Morgan. This kind of thing is always done on a Friday to facilitate an orderly transfer for Monday. Why was Last night so important. The bailout bill of course.
The more I think about this "staring at the abyss" stuff I cannot help but have a certain feeling. A certain thought. Call it conspiracy theory of you will, but at least listen (read) what I have to say (write).
Can the current debacle be in and of itself a creation by Wall Street to get a free do over? Faced with probably a DECADE or more of stagnant earnings and never ending write downs, it seems to me the big boys on Wall Street hatched a plan. Create a desperate credit crunch by refusing to lend money. Call upon the government for help. Transfer all of you bad debt onto the taxpayer and start the game over again with fresh capital. Along the way set up a few fall guys (LEH, WM) to really scare people and this plan just might get off the ground if you had a sympathetic Treasury Secretary (former Goldman head Paulson).
The failure of Washington Mutual was a done deal for over 2 months now. The move to make it happen last night was a direct effort to cause panic and capitulation on a bailout bill that Wall Street wants. All the talk of collapse and living in caves is meant to prey on people's basic fears.
Look, I could be wrong here and in fact I think on the whole I am. I do think there are severe issues facing the debt and credit markets. I do think this is very serious. I also feel that last year I would have laughed if I had read this conspiracy theory on a blog. Tonight, I am not laughing. Discuss in the comments section.
Book Passage
Tonight I am putting in one of my all time favorites:
"It's fear, dude, just fear and you don't have to be Sun freakin Tzu to know that real fighting isn't about killing or even hurting the other the other guy, it's about scaring him enough to call it a day. Break their spirit, that's what every successful army goes for, from tribal face paint to the "blitzkrieg" to ...what did we call the first round of Gulf War Two, "Shock and Awe"? Perfect name, "Shock and Awe"! But what if the enemy can't be shocked and awed? Not just won't, but biologically can't? That's what happened that day outside New York City, that's the failure that almost lost us the whole damn war. The fact that we couldn't shock and awe Zack boomeranged right back in our faces and actually allowed Zack to shock and awe us! They're not afraid! No matter what we do, no matter how many we kill, they will never, ever be afraid.
Yonkers was supposed to be the day we restored confidence to the American people, instead we practically told them to kiss their ass goodbye."
Max Brooks - World War Z: the battle of Yonkers against the zombies chapter
Rock and Roll
A little music to head into the weekend, yes?
I love this song by the band Adrenalin. It was featured in the film "Iron Eagle" and it is a highly recommended listen. Here is "Road of the Gypsy":
I dug up this classic song and video complete with insanely hot lady! take a look at Eddie Money with "Shakin":
A little speed metal to end the night hot. Try out Megadeth with "Hanger 18":
Have a good night.
Thursday, September 25, 2008
And One More Thing
I just cannot stay away tonight!
Nasdaq Crash vs. Mortgage Crash - Who Holds Equals Who Gets Bailed Out
The technology stock boom was massive. Known also as the Dot Com Bust, this little tidbit of history yields a lesson.
The Nasdaq crashed from 5048 to a low of about 1200 in the time span of February 2000 to September 2002. Around 5 TRILLION dollars (the dollar was strong then!) was wiped out.
Now ask yourself: Any bailouts? Any emergency government meetings? Any "relief" for the losers? I thought not.
See, the difference here is that individual private investors held the majority of the toxic tech garbage. The taxpayer was already on the hook as they bought into the mania. The banks and brokerages had already pocketed their commission profits, and made out like devils. the Nasdaq today stands at around 2100, still only half the high and no "relief" for the small guy?
Now the banks themselves hold all the crap paper, and now the government would like to stick it to us again? I mean you get hit no matter what!
Wake up folks. Oppose this bailout!
Nasdaq Crash vs. Mortgage Crash - Who Holds Equals Who Gets Bailed Out
The technology stock boom was massive. Known also as the Dot Com Bust, this little tidbit of history yields a lesson.
The Nasdaq crashed from 5048 to a low of about 1200 in the time span of February 2000 to September 2002. Around 5 TRILLION dollars (the dollar was strong then!) was wiped out.
Now ask yourself: Any bailouts? Any emergency government meetings? Any "relief" for the losers? I thought not.
See, the difference here is that individual private investors held the majority of the toxic tech garbage. The taxpayer was already on the hook as they bought into the mania. The banks and brokerages had already pocketed their commission profits, and made out like devils. the Nasdaq today stands at around 2100, still only half the high and no "relief" for the small guy?
Now the banks themselves hold all the crap paper, and now the government would like to stick it to us again? I mean you get hit no matter what!
Wake up folks. Oppose this bailout!
Thursday Addendum
Thursday Addendum
After I had thought about the Michael Douglas funny tidbit at the UN, it got me thinking about a "Wall Street" film sequel idea. Yes, I would love to write a movie script!
Here goes:
After doing jail time for his offences in "Wall Street", Gordon Gekko is released and after some initial resistance to backing him, he finds financial backing at the dawn of the Nasdaq Tech boom. Gekko becomes a master of the classic "pump and dump" tech IPO mania and makes billions. His ego gets him into trouble during the big crash, and at the films end he is broke and dejected.
Last scene: Gekko is working as a bank clerk (circa year 2002) when he is approached by upper management. They ask Gekko "What do you think about the possibility of more aggressive mortgage lending?" Gekko's eyes light up as he sees his way back to success. Film ends with headlines and film form today's debacle.
I think it would be a hit! Plus it would elucidate all the silly excess that was the tech boom/bust and the current real estate meltdown.
What do you think?
After I had thought about the Michael Douglas funny tidbit at the UN, it got me thinking about a "Wall Street" film sequel idea. Yes, I would love to write a movie script!
Here goes:
After doing jail time for his offences in "Wall Street", Gordon Gekko is released and after some initial resistance to backing him, he finds financial backing at the dawn of the Nasdaq Tech boom. Gekko becomes a master of the classic "pump and dump" tech IPO mania and makes billions. His ego gets him into trouble during the big crash, and at the films end he is broke and dejected.
Last scene: Gekko is working as a bank clerk (circa year 2002) when he is approached by upper management. They ask Gekko "What do you think about the possibility of more aggressive mortgage lending?" Gekko's eyes light up as he sees his way back to success. Film ends with headlines and film form today's debacle.
I think it would be a hit! Plus it would elucidate all the silly excess that was the tech boom/bust and the current real estate meltdown.
What do you think?
Too Much Going On
I think it is the television station TNT's motto: "We Know Drama". Well, any TV show is seriously lacking in the kind of real drama that has gripped "A fundamentally sound and strong economy" over the last 2 weeks! So much news, so many headlines. It is hard to stay on top of this stuff and get ready for Armageddon at the same time.
I Just Wanted You to Not Test Nuclear Devices
Sometimes things happen that are so funny you cannot help but laugh till it hurts. Here is one such item I came across today:
AP
So Mr. Douglas was just trying to get more signatures to the nuclear test ban treaty (admirable) and some delusional UN staffer confused the man with one of his roles. I guess it is easy with the Terminator as the governor of California, but I laughed till it hurt on this one!
Too Much Going On
Late word tonight that the FDIC will take over the deposits at the troubled Washington Mutual (WM) and immediately sell that base to JP Morgan (JPM). What happens to the other (mostly bad) assets of WM is guesswork at this point, but I wonder if Paulson and the FDIC had hoped to have that bailout bill passed to run this job. Doing this on a Thursday night is highly unusual, and alas, there is yet another big wig meeting among the FED-Treasury-Congress players scheduled for tonight!
Loyal readers, I would love to write a huge post, but I worked all day (I had a big breakthrough on a tough project that I came up with all by my lonesome! Woo HOO!) and there is just too much. I suggest looking at the Calculated Risk comments section, as the JPM/WM news broke there first!
Things are getting strange, weird, you name it. Use the comments section to answer the following questions:
1. How much cash will I need for 8-14 days in the event of a real crisis?
2. Food and water amounts for 8-14 days?
3. Is transferring cash to a country like Switzerland feasible? How do I do it?
4. Other tips for a possible 8-14 days of unrest?
Have a good night, and take care my friends.
I Just Wanted You to Not Test Nuclear Devices
Sometimes things happen that are so funny you cannot help but laugh till it hurts. Here is one such item I came across today:
AP
Michael Douglas asked about Wall Street crisis
Wed Sep 24, 8:30 PM ET
UNITED NATIONS - Michael Douglas had to field questions Wednesday about the financial turmoil shaking world markets from reporters recalling his role in the 1987 film "Wall Street."
The actor sought to focus on the subject of Wednesday's news conference — urging the United States and eight other holdout nations to ratify a nuclear test ban treaty.
Douglas won an Academy Award for portraying the rapacious banker Gordon Gekko, who popularized the phrase "greed is good" in the movie.
After world leaders here condemned the "boundless greed" of world markets, Douglas was asked to compare nuclear Armageddon with the "financial Armageddon on Wall Street."
But the likening to Gekko did not end there, with a reporter asking: "Are you saying Gordon that greed is not good?"
"I'm not saying that," Douglas replied. "And my name is not Gordon. He's a character I played 20 years ago."
So Mr. Douglas was just trying to get more signatures to the nuclear test ban treaty (admirable) and some delusional UN staffer confused the man with one of his roles. I guess it is easy with the Terminator as the governor of California, but I laughed till it hurt on this one!
Too Much Going On
Late word tonight that the FDIC will take over the deposits at the troubled Washington Mutual (WM) and immediately sell that base to JP Morgan (JPM). What happens to the other (mostly bad) assets of WM is guesswork at this point, but I wonder if Paulson and the FDIC had hoped to have that bailout bill passed to run this job. Doing this on a Thursday night is highly unusual, and alas, there is yet another big wig meeting among the FED-Treasury-Congress players scheduled for tonight!
Loyal readers, I would love to write a huge post, but I worked all day (I had a big breakthrough on a tough project that I came up with all by my lonesome! Woo HOO!) and there is just too much. I suggest looking at the Calculated Risk comments section, as the JPM/WM news broke there first!
Things are getting strange, weird, you name it. Use the comments section to answer the following questions:
1. How much cash will I need for 8-14 days in the event of a real crisis?
2. Food and water amounts for 8-14 days?
3. Is transferring cash to a country like Switzerland feasible? How do I do it?
4. Other tips for a possible 8-14 days of unrest?
Have a good night, and take care my friends.
Wednesday, September 24, 2008
Financial Meltdown has Gone Super Critical
You know I have tons of stuff to do but I cannot draw myself away from all the unfolding drama. I feel that adding coverage to this moment is good use of my time and I hope all the loyal readers feel like this site adds value to your information basket. Be smart and be wary my friends, the dance is about to become dangerous.
Bill Gross Tells the Taxpayer What a Great Deal is Available, it is Just One Nobody Else Wants
I hate spending so much time on one guy, but every time Bill Gross opens his mouth I wish more and more he would take me up on that steel cage match! The latest nugget of wisdom from the PIMCO bond man is this wonderful tidbit:
Reuters
Pimco's Gross: Bailout to benefit Main Street-WPost
So this is a once in a lifetime deal that the taxpayers should be thankful for? If this wonderful return is so in the bag, how come nobody else is rushing in? Why is that Mr. Gross? I would like to further take apart this ridiculous piece, but I am confident that you, dear reader, can put it together by the sections I have marked off. What a sham. The bailout is of Main Street, not Wall Street according to Mr. Gross. OK.
Financial Meltdown has Gone Super critical
Above is a picture of a plutonium sphere as it is used for criticality experiments. There was a serious accident using this setup in 1945 that almost resulted in a nuclear accident:
http://en.wikipedia.org/wiki/Criticality_accident
I include this picture to try and make it clear that the financial system is close to a runaway failure on many levels. We all know about the insolvency issues thanks to fractional reserve banking. We are also facing a point where the average person is beginning to understand just how much of a sucker they are being played for.
The Bernanke/Paulson plan to pay high prices for bad assets has resulted in a widespread revolt. They would have the US taxpayer give a "Do Over" to the banking industry as they threaten the people with "The Abyss" unless this happens. There is NO REASON I can think of to burden ourselves with astronomical taxes and high credit costs for the foreseeable future when all we get in exchange is some kind of freedom to buy more useless lead paint crap from China. The game is up.
We are face with a clear choice:
1. Take the banking losses on our backs and eat the losses over time so they can carry on with business as usual
2. Just say NO and face an impaired system that will require an adjustment to a new way of living.
I cannot know what will happen if the banking system goes really bad. Nobody does. But I do know one thing; Give in to this fiscal hijacking and the failure we are trying to avoid will come soon enough. That is a fact.
It matters who you vote for. A person running for public office cannot be the sort our halls of government are filled with. All is well until something goes wrong and then of course it is too late. It matters who you vote for.
Sorry for the rant. There is just such a DIRTY feel to all of this I think there is no way to come out of it clean. The president will address the nation tonight at 9pm, and I imagine he is going to try and scare us all into stopping our faxes, emails, and phone calls against this action. I will tell you what; I AM SCARED. I am terrified that things could go bad in a hurray. I have a wife and we are taking care of her elderly mother and I could do without the stone age being pressed upon us. I am scared.
I am also fed up with this crap. I think things will pan out. I think this country has too many good people, too many good minds, and too much spirit to collapse. I think we can shatter the old banking network that has brought us to this junction and begin again.
It is decision time. There seems to be some kind of whisper about Monday being time zero for action, and I wonder what or whom is pushing that timeline (hello Japan and China!). I do not like being pushed. In fact I am a bit tired of all the poor treatment my money and my efforts has been put through over the last 10 years. Everyone must do as they feel is best, but my vote is for finding out if "The Abyss" means the end of Wall Street and the entire universe, or just the end of Wall Streets monopoly on financial matters.
Have a good night.
Bill Gross Tells the Taxpayer What a Great Deal is Available, it is Just One Nobody Else Wants
I hate spending so much time on one guy, but every time Bill Gross opens his mouth I wish more and more he would take me up on that steel cage match! The latest nugget of wisdom from the PIMCO bond man is this wonderful tidbit:
Reuters
Pimco's Gross: Bailout to benefit Main Street-WPost
NEW YORK, Sept 24 - The U.S. Treasury's proposed $700 billion bailout for financial firms could yield a profit of at least 7 percent to 8 percent and benefit taxpayers, Bill Gross, who manages the world's biggest bond fund, wrote in an opinion piece in The Washington Post on Wednesday.
Gross, the chief investment officer of Pacific Investment Management Co., or Pimco, estimates the average price of distressed mortgages that pass from "troubled financial institutions" to the Treasury at auction will be 65 cents on the dollar. That will represent a loss of one-third of the original purchase price to the seller, and a prospective yield of 10 percent to 15 percent to the Treasury, Gross said.
"Financed at 3 percent to 4 percent via the sale of Treasury bonds, the Treasury will therefore be in a position to earn a positive carry or yield spread of at least 7 percent to 8 percent," Gross argued. "The Treasury proposal will not be a bailout of Wall Street but a rescue of Main Street, as lending capacity and confidence is restored to our banks and the delicate balance between production and finance is given a chance to work its magic," Gross added.
Gross' estimate of double-digit returns in scooped up mortgage securities assumes lengthy ownership of the assets and is in turn dependent on the level of home foreclosures, "but the Treasury's program is, in fact, directed to prevent just that," he added. Gross manages the $133 billion Pimco Total Return Fund and helps oversee the more than $812 billion in assets at Pimco.
So this is a once in a lifetime deal that the taxpayers should be thankful for? If this wonderful return is so in the bag, how come nobody else is rushing in? Why is that Mr. Gross? I would like to further take apart this ridiculous piece, but I am confident that you, dear reader, can put it together by the sections I have marked off. What a sham. The bailout is of Main Street, not Wall Street according to Mr. Gross. OK.
Financial Meltdown has Gone Super critical
Above is a picture of a plutonium sphere as it is used for criticality experiments. There was a serious accident using this setup in 1945 that almost resulted in a nuclear accident:
http://en.wikipedia.org/wiki/Criticality_accident
I include this picture to try and make it clear that the financial system is close to a runaway failure on many levels. We all know about the insolvency issues thanks to fractional reserve banking. We are also facing a point where the average person is beginning to understand just how much of a sucker they are being played for.
The Bernanke/Paulson plan to pay high prices for bad assets has resulted in a widespread revolt. They would have the US taxpayer give a "Do Over" to the banking industry as they threaten the people with "The Abyss" unless this happens. There is NO REASON I can think of to burden ourselves with astronomical taxes and high credit costs for the foreseeable future when all we get in exchange is some kind of freedom to buy more useless lead paint crap from China. The game is up.
We are face with a clear choice:
1. Take the banking losses on our backs and eat the losses over time so they can carry on with business as usual
2. Just say NO and face an impaired system that will require an adjustment to a new way of living.
I cannot know what will happen if the banking system goes really bad. Nobody does. But I do know one thing; Give in to this fiscal hijacking and the failure we are trying to avoid will come soon enough. That is a fact.
It matters who you vote for. A person running for public office cannot be the sort our halls of government are filled with. All is well until something goes wrong and then of course it is too late. It matters who you vote for.
Sorry for the rant. There is just such a DIRTY feel to all of this I think there is no way to come out of it clean. The president will address the nation tonight at 9pm, and I imagine he is going to try and scare us all into stopping our faxes, emails, and phone calls against this action. I will tell you what; I AM SCARED. I am terrified that things could go bad in a hurray. I have a wife and we are taking care of her elderly mother and I could do without the stone age being pressed upon us. I am scared.
I am also fed up with this crap. I think things will pan out. I think this country has too many good people, too many good minds, and too much spirit to collapse. I think we can shatter the old banking network that has brought us to this junction and begin again.
It is decision time. There seems to be some kind of whisper about Monday being time zero for action, and I wonder what or whom is pushing that timeline (hello Japan and China!). I do not like being pushed. In fact I am a bit tired of all the poor treatment my money and my efforts has been put through over the last 10 years. Everyone must do as they feel is best, but my vote is for finding out if "The Abyss" means the end of Wall Street and the entire universe, or just the end of Wall Streets monopoly on financial matters.
Have a good night.
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