Gold Down Sharply, Markets Up -- On News Of Bank Bailout?
DriftingByTheStorm
Posts: 8,684
Not sure what this movement is indicative of, but gold is down $30 (THIRTY) dollars right now to $803 an ounce.
I was expecting the market to go up slightly and gold to drop a few more dollars today anyhow -- just because gold appeaed to be "stabilizing" and i would have expected it to pull back to $780-$800 without any further "bad" news in the short term ... and the stock market seems to be in a pattern of sharp pull backs ending one day and small gains the next.
HOWEVER.
THE BANKS FINALIZED THEIR SIV BAILOUT OVER THE WEEKEND.
I heard it on MSNBC but can't confirm details in print, but they said the SIV Superfund is only to include the "good" loans and is a package worth "tens of billions" of dollars.
This leaves a lot to be desired, but is a lot more honest than some of the other plans for the fund i saw floating around.
The biggest question is what about the BAD loans !!??!!
I guess those are just going to continue to sit on the banks balances? I mean, not on their balance sheets since they never were (odd, what other business gets to leave liabilities off a balance sheet?) ... but how will this come back to haunt the market in the future?
I'm guessing the government will still get involved somehow to allow the banks some more "creative accounting" options on this.
Either way,
the markets are reacting by putting money back in to the financials today ... most of them are up between 2 and 6 points right now!
I don't know.
I think we've seen a "plateau" for a while ...
the stocks will continue to advance 50 or 70 a day and then have a bad announcement that causes a 150-200 point loss ...
i bet we see gold peel back to around $765 by the end of this month if nothing "picks back up" ... maybe oil down to $90 ...
Kramer is on now saying that with gold down, the fed may be able to ease .. his sexy cohost is saying "no, the fed will not be easing" ...
i dunno ...
... i think this is the calm in the middle of a shit storm.
I was expecting the market to go up slightly and gold to drop a few more dollars today anyhow -- just because gold appeaed to be "stabilizing" and i would have expected it to pull back to $780-$800 without any further "bad" news in the short term ... and the stock market seems to be in a pattern of sharp pull backs ending one day and small gains the next.
HOWEVER.
THE BANKS FINALIZED THEIR SIV BAILOUT OVER THE WEEKEND.
I heard it on MSNBC but can't confirm details in print, but they said the SIV Superfund is only to include the "good" loans and is a package worth "tens of billions" of dollars.
This leaves a lot to be desired, but is a lot more honest than some of the other plans for the fund i saw floating around.
The biggest question is what about the BAD loans !!??!!
I guess those are just going to continue to sit on the banks balances? I mean, not on their balance sheets since they never were (odd, what other business gets to leave liabilities off a balance sheet?) ... but how will this come back to haunt the market in the future?
I'm guessing the government will still get involved somehow to allow the banks some more "creative accounting" options on this.
Either way,
the markets are reacting by putting money back in to the financials today ... most of them are up between 2 and 6 points right now!
I don't know.
I think we've seen a "plateau" for a while ...
the stocks will continue to advance 50 or 70 a day and then have a bad announcement that causes a 150-200 point loss ...
i bet we see gold peel back to around $765 by the end of this month if nothing "picks back up" ... maybe oil down to $90 ...
Kramer is on now saying that with gold down, the fed may be able to ease .. his sexy cohost is saying "no, the fed will not be easing" ...
i dunno ...
... i think this is the calm in the middle of a shit storm.
If I was to smile and I held out my hand
If I opened it now would you not understand?
If I opened it now would you not understand?
Post edited by Unknown User on
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Comments
As you said the good loans will be purchased allowing for credit issuers to unfreeze from their current holdings and be able to issue the revolving credit necessary for the financial markets.
The bad loans will just work their way to resolution through the market process. The holders of the bad SIVs will just take their chops on it (E-Trade is nearing bankruptcy). No private business in their right mind will buy the faulty loans since it would be shooting themselves in the foot.
The only other options for the bad loans are:
1: Government bailout - this will not work because the amount is so dumbfoundingly huge ($600B to $1 trillion) not even the U.S. government can afford it.
2: Debt restructuring - this also will prove fruitless because homeowners are already overleveraged on long term debts. You can't extend the payback period out any longer (you'd need another lifetime to pay it back).
Wow.
FINALLY!
Some intelligent commentary.
Here is the problem though, the way i see it.
The people really in trouble here are the BIG banks (citi, morgan chase, BOA) ... and they aren't actualy the owners of these investments so much as they are the GUARANTORS of them.
In other words, someone else is long on these loans ... the companies that make these SIVs are the ones who are deep in the shit on the home mortgages ... HOWEVER, the big banks (Citigroup in particular is really fucked) are the ones who gave them the FUNDS to buy these loans with ... the funds provided BY the banks to the SIVS were given as SHORT TERM notes ...
but they are covering LONG TERM debt.
YIKES!
Basicaly the banks have guaranteed these SIVS funds in the near term, with no payback on the horizon.
From what i get of this, it seems they (big banks) are ON THE HOOK to make MORE funds available to the SIV company if it is hard up for money to repay its existing short term obligations (which they are) ...
... why would they want to give out more money to someone who couldn't repay them already?
Well, the fact that they have been doing this with 3rd world governments and giant corporations for the last 30 years aside, would you want to watch 30+ billion dollars in invested money (what they already gave to the SIV) disappear due to insolvency, if simply giving them MORE money may cause the problem to "go away" (or atleast stay in the shadows for a while)?
I think that is the real problem here,
and it isn't really being addressed.
I hear you ... the market SHOULD resolve itself and punish these banks ... AND you ARE right, the government can NOT afford to straight up print a trillion dollars, devalue our currency like crazy, and save these fucks ...
again, HOWEVER ... the government (IMHO) will HAVE TO step up here ... just like they have done in the past ... because i'm not sure they intend to find out what the consequences are of letting the 3 or 4 major banks of our nation fall on their face.
The economic implications of that aside, those 4 banks are the banks that actualy own most of the Federal Reserve itself.
How can a system (our government) claim that it can not make an arangement through the Federal Reserve to save the very banks that own that Federal Reserve?
Uh. That sounds like a stupid question to me.
I can't see how the banks would LET the government not bail them out. If the Fed does NOT bail them out, then the entire system will be in a world of shit. The banks fail, the Fed loses its investors, and the system is dead.
?
Am i missing something here
?
I am GUESSING that what will end up happening is
a. the government will allow these assholes to write of losses over an extremely long period of time (like 40 years) instead of taking it immediately like they are supposed to -- this is part of the plan that was enacted for the S&L bailout, so it is tried and true.
b. the government will step in to GUARANTEE any short term loan requirements the banks may have in need of funding the SIVs proper. This is also a tried and true Fed technique.
c. OR, if they are feeling REALLY stupid, the Fed may actually volunteer to TRADE ownership of the failing SIVs outright in exchange for giving these banks an equivilant amount in treasury bills or other government backed loans\securities\promises ...
I dunno.
But i don't think The Fed plans to sit around and see what a 1 TRILLION dollar market collapse looks like.
They will come up with SOME way to fuck YOU AND ME in the ass, all the while telling us it is for our own good.
:(
If I opened it now would you not understand?
The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy.
after 7 straight years of going straight up, you made a bold prediction :rolleyes:
So you admit the bubble has is burst now?
Oh and i made no predictions i just read whats going on.
The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy.
i feel you. i've got a truck full of bling in my apartment now and no cash to buy groceries... fuck!
i love how the impending apocalypse has turned the wall street crackers into gangsta rappers.
no the bubble hasnt burst. certain markets have and are correcting. (credit and housing)
which is perfectly healthy for the economy as a whole.
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
Ok jlew, we will see what happens, but it looks a little more serious than a correction.
http://news.bbc.co.uk/1/hi/business/7086909.stm
The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy.
how so? its a correction for certain sectors of the market. oil, mining, metals, technology are all doing very well. financial and housing are taking a (rightfully so) huge hit right now.
drifting; what happens when something jumps in price? people sell to take out their profits. the fact that gold didn't drop at least $100/oz says a lot about the stability of gold. i expected investors to pull profits and those that know what's going on to hang in there. it's like watching a stock go up and down. the economy is based on the gold standard and always has been.
not around here. housing is booming and it's because we have people from california buying property like there's no tomorrow. many are seeking higher ground and a few are trying to excape "little mexico". mel gibson has a place less than 6 miles down the road so it's not just the every day joe.
like i said before; you have to take all the variables into consideration.
was mel the guy who snuck up out of the bushes and pulled the pistol on you?
honestly though, given some of his behavior on camera of late, i've no doubt he'd fit right into your neighborhood.
that incident happened at my log home just north of phoenix on the north side of lake pleasant. i sold that place. i moved here because it's a "green" community with lots of tourist traffic. (rt 66).
mels really ok. just because the public believes he shouldn't have freedom of speach; dosen't make him bad.
no, but his racism does.
ah; so now we have the public controlling what we think too. we're getting off topic but i think this subject deserves a new thread of it's own.
this is what banks are supposed to do paranoid guy
yep; this is exactly what banks do prior to a crisis.
hardly. has anyone stopped mel from doing whatever the hell he wants? we just all know he's a douchebag and are free to exercise our speech to judge him as such if he wants to share his views.
i agree,
also go check out the last couple of days videos on price-trend.com ... that guy is great ...
basicaly gold jumped up a bit too fast for the "trend" ... $780 looks a little more "in line" with that latest rise.
Either way, i hear you.
I expect gold to hover around $800 for the near future, and then go on up to around $1000 sometime in spring when more of this SIV bullshit really comes home.
The people on here who are saying "boy am i glad i didn't drop all my stocks for gold" ... what the fuck,people?
If anyone had listened to me or onesolong when originaly stated, you would have DOUBLED your money!
Sheesh.
You STILL would have that "double" ... $550 to $840 at last week, down to $800 today ... that is atlest 2\5th increase.
Did your stocks increase in value by 40% recently?
I seriously doubt it.
But i guess those who want to call me a paranoid idiot will continue to do just that.
Even though i turned out to be DEAD on with my call of go in to gold.
:( :( :(
If I opened it now would you not understand?
you were spot on drifting. i started buying gold when it dropped to i think it was $280/oz in the late 70's or early 80's. good o'le inflation made a lot of people rich.
i think you're right except for 1 point. gold will jump in the spring because that's when north america will begin feeling the effects of global warming and when it hits home; americans will act. americans don't care what's happening with the rest of the world. it has to hit home before we'll pay it any attention.
i say watch for another drop. as it hangs at $800/oz; more people will want to "cash out" and we may see $750/oz again.
did you put your money where your mouth is?
Hail, Hail!!!
"RBC Capital Markets interest-rate strategist T.J. Marta says that additional write downs are coming, owing to a new FASB accounting rule, 157, that will force more financial companies to put prices on "Level 3 assets." These assets have no active market, so they've been "marked to model," based on their credit ratings, which are now turning out to have been faulty. FASB 157 is to take effect Thursday, Nov. 15."
http://online.barrons.com/article/SB119465196901888573.html?mod=googlenews_barrons
You got to spend it all
sigh.
i thought i answered this multiple times already.
i was actualy out looking at a fixer upper today that the realtor thinks is "a real steal" ... but part of the issue (even though this place is a whopping $41,900 ask) is figuring out how to do this financing.
I need money in the bank ... to make fun of the current shenanigans, i need LIQUIDITY ... i have a liquidity crisis, so to speak... the small fortune i have in the bank in ... cough cough ... stocks ... is nearly 50% leveraged with sad consumer debt bought on margin ... to liquidate it meant an automatic 50% loss of my "money" due to also having to pay back the debt ... THEN i would get hit with a flat 40% cap gains tax ... which would leave me with a whopping 25% of my money to buy gold with ... and then buy a house with ... because that is what i am trying to do ... in the long run ... and right now!
so what was i really supposed to do?
I couldn't suffer a nearterm 75% immediate loss in bank digits to gain what i THOUGHT was going to be 15 or 25% in the next few months ... what i DID NOT think was that gold was going to double ... which just means i was MORE correct in my outlook ... the economy actually started unraveling faster than i thought (though it has caught on a limb for now) and gold went bezerk ...
but even then ... wouldn't i owe back like 35 or 40% of THAT profit right back to the government in tax?
The mortgage lenders have yet to call me on having any margin loans ... they recognize my credit card debt and have consitently approved me for mortgages based on ONLY that credit card debt and the dollar amount in my bank account which, without fail, gets reported back as the full balance MINUS the margin.
Huh?
So i'm stuck.
You could say i'm a hypocrite,
but as you can see what i was really and STILL am trying to do is squeeze the stocks into a HOUSE before they fall out the bottom of the economy!
Sorry i didn't take my own advice,
it just fell at a pretty poor time for me to go into gold.
Had i thought about using the margin to invest in gold futures or options i would have ... but to be honest i don't know much about those and don't have a forex or globex account ... allthough i think now my interest has piqued and i would like to trade in commodity futures (probably options to start) ... but even then i think i'm going to trade on paper for a while ... maybe i'll but 1 contract or 2 on option ...
If I opened it now would you not understand?
i thought the apocalypse was coming and we weren't even gonna be able to buy smokes at 7-11 anymore? i'd imagine if things were that dire, you'd find a way around your liquidity problem.
ooooohhhhhh; daggers. you tell me; is the ice melting and what happened the last time the earth didn't have ice cover? you can still find corals in the arizona desert as far north as sedona. what happens when water touches permafrost? it's almost there now. we're far past pointing fingers and at the educational point where we have to look at what's happening and how the earth reacted in the past. it's also time to look out that little window in our ivory towers and see how the rest of the world is being effected.
drifting; why do you try to explain yourself? i think getting into a house is most important right now. especially since i don't think the banks will be able to collect in 5 to 10 years. millions are preparing to evacuate the indian islands and india can't afford it. so guess who's door they'll be knocking on? look at what's happening in africa.
i never claim to be right so don't listen to me until you've looked at all the variables that will control a market. smart people look at the current events and match them with what happened last time. history repeats itself. the 1929 crash made many people rich; but only those that saw what was coming.