So the SEC announces that it will begin enforcing naked-short rules (well, kind of....they'll slap the hedge funds' pee-pee and make them find another brokerage to short thru - wouldn't want to actually penalize anyone)....
What's the result? Gold up by 10%? hmmmm.....
Gold is moving on "flight to safety" concerns primarily.
Metals in general have been whacked as of late by deleveraging, and (IMHO) lots of manipulation.
They should have bounced back anyhow, since they were hitting "bottoms" on a technical basis.
Anyhow,
Large funds aren't stupid, and pulled out of several sectors (FINANCIALS, ahem) and threw it right back in to gold.
Also lots of options expired this week, so people may be dumping back in to metals after options expiration.
I'm not sure the new naked short rules were so much to blame for that one.
Metals, oil, and treasuries all made out very well today, and it is little more than "flight to safety", "flight to quality" concerns.
Markets going in to close at their LOWS.
Not very pretty at all, folks.
Dow down 415 points.
Ugh.
Gettin REAL ugly now, boys and girls.
Hate to say i told you so. :(
If I was to smile and I held out my hand
If I opened it now would you not understand?
why believe in Gold.. that is so old school thinking.. if we have economic trouble, what good is gold? it had psychological value when we were in our genesis... but today? I just can't see it.
in fact, I am considering taking all I have had in cash and govt bonds these last two years, and buying back into stocks.. so I am there for the inevitable (however, illogical) recovery.
I also plan on buying some guns. The kids have moved out, and the future seems uncertain. Need to protect my house and food from hungry americans.
Well look for WaMu to be bought out very soon by either Chase or Wells Fargo or maybe the company will be split between the two. Wamu has a strong West and East coast presence. Chase has very little West coast presence and Wells Fargo has no East coast presence. The only obstacle to a WaMu take over was the stipulation in the agreement they have with TPG where WaMu could not be sold if their stock was under $8.40. TPG has waived the stipulation and WaMu is now officially up for sale.
"When one gets in bed with government, one must expect the diseases it spreads." - Ron Paul
why believe in Gold.. that is so old school thinking.. if we have economic trouble, what good is gold? it had psychological value when we were in our genesis... but today? I just can't see it.
in fact, I am considering taking all I have had in cash and govt bonds these last two years, and buying back into stocks.. so I am there for the inevitable (however, illogical) recovery.
I also plan on buying some guns. The kids have moved out, and the future seems uncertain. Need to protect my house and food from hungry americans.
the argument for gold is that is has intrinsic value, and given that if the currency goes to shit, you won't be buying anything with what would then be toilet paper (worthless dollars) ... you would need SOMETHING to transact with ... and gold has ALWAYS had intrinsic value.
That being said, i understand your concern that, in an environment where VERY few actually hold or own metals, that they may certainly be in disfavor as tools of barter.
However, baring absolute collapse of EVERYTHING, metals WILL hold value even when stocks are going bust, and THAT is certainly a salient contention.
Take my grandmother's portfolio for example. She is (was, her estate still is) HEAVILY weighted in financials ... lots of Wachovia, Bank of America, Citi and others in that stupid portfolio ... I would NOT HESITATE to sell ALL of that shit and throw it in to physical metal, because those banks MAY not even be around to bounce back after this shit is over.
ALTERNATIVELY, if you don't believe in metals, and you have significant liquidity, another option could be to purchase a HOME outright.
ANYTHING physical as a store of value would do, but a home bought on the cheap could certainly do the trick for keeping your money safe in an absolute crisis.
But be as it may, do what you will.
If you have confidence the market will still be there in 10 years, and the stocks you have money in will still be there, then by all means, stay with them ... now certainly isn't a good time to sell if you don't think you have to.
If I was to smile and I held out my hand
If I opened it now would you not understand?
Gold is moving on "flight to safety" concerns primarily.
Metals in general have been whacked as of late by deleveraging, and (IMHO) lots of manipulation.
They should have bounced back anyhow, since they were hitting "bottoms" on a technical basis.
Anyhow,
Large funds aren't stupid, and pulled out of several sectors (FINANCIALS, ahem) and threw it right back in to gold.
Also lots of options expired this week, so people may be dumping back in to metals after options expiration.
I'm not sure the new naked short rules were so much to blame for that one.
Metals, oil, and treasuries all made out very well today, and it is little more than "flight to safety", "flight to quality" concerns.
Markets going in to close at their LOWS.
Not very pretty at all, folks.
Dow down 415 points.
Ugh.
Gettin REAL ugly now, boys and girls.
Hate to say i told you so. :(
sure sure....but do you think the fact that the 'flight to safety' happened today (instead of monday, or over the past couple weeks in general) was related to this decision?
You're right about real estate as well...I may be wrong, but i doubt home values can fall too much further in the hardest hit spots...it seems in some places the price is already less than the cost of the materials in the damn thing. I have friends (from here - canada) that have already 'pitched' on a home in AZ...I'm mulling over pitching on one in FL...at worst, it's a fairly priced vacation spot/rental.
A good thing for US that came out of AIG's bail out by the government is that the US now has one of the best football (as in soccer) teams in the world.
U.S. Stocks Rally Most in Six Years on Plan to Shore Up Banks
By Elizabeth Stanton
More Photos/Details
Sept. 18 (Bloomberg) -- U.S. stocks rallied the most in six years on prospects the government will formulate a ``permanent'' plan to shore up financial markets, while regulators and pension funds took steps to curb bets against banks and brokerages.
Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.
Wachovia Corp. soared 59 percent, Citigroup Inc. added 19 percent and Bank of America Corp. jumped 12 percent, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley erased a 46 percent tumble and Goldman Sachs Group Inc. recovered most of a 25 percent slide after the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.
``Any actions regulators or other entities or players take to try to slow down the bear raids will be received positively,'' said David Katz, chief investment officer of Matrix Asset Advisors in New York, which manages $1.4 billion. ``There's no reason a Goldman Sachs or a Morgan Stanley should be forced to sell themselves in a shotgun wedding if they've got economic models that work, and they do.''
The S&P 500 advanced 50.12 points to 1,206.51, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69. Both the S&P 500 and Dow posted their biggest percentage gains since October 2002. The Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1. Seven stocks climbed for each that fell on the NYSE, its broadest rally since April.
`Elevated Pressures'
The S&P 500, which fell 4.7 percent twice this week, rebounded from its lowest level since May 2005. Stocks opened higher after the Federal Reserve said it authorized global central banks to auction funds ``to address the continued elevated pressures in U.S. dollar short-term funding markets.''
The benchmark index for U.S. equities then swung between gains and losses as concern over the health of Morgan Stanley and Goldman dragged on financial shares, before Schumer's proposal spurred a rally in the last hour of trading.
Russell 2000 Rally
The Russell 2000 Index of small-company stocks surged 7 percent, the most since two days after the stock market crash in October 1987. Financial shares in the measure jumped 12 percent, led by a 88 percent gain in Newcastle Investment Corp., a real- estate investment trust.
About $3.6 trillion of market value was erased from global stocks this week before today, triggered by the bankruptcy filing by Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm. Today's rally restored more than $600 billion in value to U.S. stocks, according to Bloomberg data.
Wachovia, the fourth-largest U.S. bank, rallied $5.38 to $14.50, its steepest advance since at least 1983. Citigroup, the biggest, jumped $2.62 to $16.65, its largest gain in 10 years. Bank of America, the No. 2, added $3.38 to $30.58. MGIC Investment Corp., the biggest U.S. mortgage insurer, rose 75 percent for its best rally since July.
The KBW Bank Index added 14 percent as 22 of its 24 companies advanced. The S&P 500 Financials Index climbed 12 percent, with 79 of its 86 companies rising.
Schumer urged forming an agency to inject funds into financial companies in exchange for equity stakes and pledges to rewrite mortgages and make them more affordable. His remarks indicate momentum is building for some wider plan after the Fed and Treasury's takeovers of Fannie Mae, Freddie Mac and American International Group Inc. this month.
`Comprehensive Solution'
``The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,'' Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington. ``I've been talking to them about it.''
Morgan Stanley rose 3.7 percent to $22.55, snapping a seven-day retreat, and Goldman Sachs slipped 5.7 percent to $108. They are the two remaining independent Wall Street brokerages after this week's bankruptcy of Lehman and takeover of Merrill Lynch & Co. Yesterday both fell the most ever on speculation rising financing costs will force them out of business.
Morgan Stanley and Goldman began erasing their declines after the California Public Employees' Retirement System and the New York State Common Retirement Fund joined the California State Teachers Retirement System in deciding to stop lending its shares of the two companies. The decisions curb the supply of shares available to short-sellers.
Short Sales
Morgan Stanley is down almost 45 percent in September. Chief Executive Officer John Mack, in a memo to employees yesterday, blamed short sellers for driving down the price of his company's shares. Morgan may sell a new stake to China Investment Corp., which owns a 9.9 percent position, and is in talks about a possible merger with Wachovia, a person familiar with the matter said.
The Securities and Exchange Commission's new rules force traders to borrow shares before selling them short and make it a fraud for investors to lie to their broker about locating stock to close positions. The SEC may also require hedge funds to disclose their short-sale positions and plans to subpoena the funds' communication records.
``Things have been pretty brutal the last few weeks, as bad as I've seen it 30 years in the business,'' said Phil Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which manages $334 billion. ``Shorting had a lot to do with contributing to this near collapse in the market.''
In the U.K., the Financial Services Authority banned short sales of financial shares for the rest of the year after HBOS Plc, the country's biggest mortgage lender, lost 37 percent of its market value over three days. In a short sale, investors borrow stock and sell it. The sellers profit if the shares go down and they can repay the loan with cheaper stock.
Washington Mutual Speculation
Washington Mutual Inc., the largest U.S. thrift, rallied 98 cents, or 49 percent, to $2.99. JPMorgan Chase & Co., Citigroup, Bank of America and Wells Fargo & Co. may be interested in buying pieces of WaMu, said three people with knowledge of the discussions, who asked not to be identified because the talks are private.
The S&P 500 erased a drop of 2 percent led by asset management companies after Putnam Investments LLC closed a $12.3 billion money-market fund following a surge of investor withdrawals. Putnam Prime Money Market Fund will liquidate and return cash to investors.
`Breaking the Buck'
A money-market fund run by Reserve Management Corp. this week became the first in 14 years to expose investors to losses by ``breaking the buck'' after writing off investments in Lehman debt. Money-market funds strive to maintain a share price of $1 and are intended for capital preservation.
State Street Corp., the world's biggest money manager for institutions, fell 8.9 percent to $59, paring a drop of as much as 55 percent. Federated Investors Inc., the fourth-largest money-fund manager, fell 11 percent to $27.10 after earlier retreating as much as 44 percent. State Street and Federated issued statements saying that none of their money-market funds had fallen below $1 a share.
Kraft Foods Inc., the biggest U.S. foodmaker, jumped 3.3 percent to $33.74 after being named as the replacement for AIG in the Dow Jones Industrial Average. AIG, the biggest U.S. insurance company, was taken over by the government this week after mortgage-related losses led to credit-rating downgrades that drove the company to the brink of bankruptcy.
Times Rallies
New York Times Co. surged 12 percent to $15.25, its biggest gain since 1980, after reporting a smaller revenue decline for August than the previous two months.
Almost 2.45 billion shares traded on the NYSE, the most since March 20 and 77 percent higher than the three-month daily average.
U.S. stocks tumbled yesterday as bank lending seized up in the wake of the government's takeover of AIG, raising concern that more of the nation's biggest financial companies will fail.
The 26 percent drop in the S&P 500 since its October peak through yesterday erased half its gain from the five-year bull market that began in 2002.
The S&P 500 is poised to post its first yearly retreat since 2002 after global banks racked up $518 billion in credit losses and asset writedowns stemming from the first nationwide decline in home prices since the 1930s.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
Last Updated: September 18, 2008 17:17 EDT
A good thing for US that came out of AIG's bail out by the government is that the US now has one of the best football (as in soccer) teams in the world.
U.S. Stocks Rally Most in Six Years on Plan to Shore Up Banks
By Elizabeth Stanton
More Photos/Details
Sept. 18 (Bloomberg) -- U.S. stocks rallied the most in six years on prospects the government will formulate a ``permanent'' plan to shore up financial markets, while regulators and pension funds took steps to curb bets against banks and brokerages.[edited for length by DBTS].
`Comprehensive Solution'
``The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,'' Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington. ``I've been talking to them about it.''
Morgan Stanley rose 3.7 percent to $22.55, snapping a seven-day retreat, and Goldman Sachs slipped 5.7 percent to $108. They are the two remaining independent Wall Street brokerages after this week's bankruptcy of Lehman and takeover of Merrill Lynch & Co. Yesterday both fell the most ever on speculation rising financing costs will force them out of business.
Morgan Stanley and Goldman began erasing their declines after the California Public Employees' Retirement System and the New York State Common Retirement Fund joined the California State Teachers Retirement System in deciding to stop lending its shares of the two companies. The decisions curb the supply of shares available to short-sellers.
[edited again by DBTS
The problem is this "solution" has almost as many problems as the problem itself.
For starters, the government is hardly in a position of solvency itself, so to pretend like it has the money to perform this miracle buyout of any and all bad investments made by banks is laughable at the start.
Even more amusing, is that this plan ASSUMES that banks (many of which are NOT in imminent danger of failure) are going to be WILLING to sell their "toxic" or "level 3" assets to the federal government at bargain basement prices.
THINK ABOUT THIS FOR A SECOND.
IT'S FINANCIAL ALCHEMY ... ie. it's NOT REALLY POSSIBLE.
It sounds great in theory, but how the fuck is it going to work in REALITY?
Here is the plan:
The government, the nice guy that it is, is going to creat a "Resolution Trust" type entity ... a giant shit eating catch-all shell corporation ... that will BUY CRAP from the banks, HOLD it indefinately (this is the part that in theory stabilizes the market), and then SELL it in orderly fashion to WILLING BUYERS.
BUT HOW DOES THIS WORK?
HOW DOES THE GOVERNMENT BECOME THE MIDDLE MAN FOR BAD INVESTMENTS?
The problems are two fold (at least).
1. GETTING BANKS TO SELL
a. the price
the government may be a nice guy, but it isn't THAT stupid.
it is going to ask these banks to sell these "investments" (ie. shit) at RIDICULOUS prices.
Why? Because in theory the government itself must find a BUYER for the paper after it has purchased them itself. So the government is trying to middleman a LOSING product by essentially STEALING it from the banks at unfair prices (what CNBC would have you believe are "reasonable valuations") and then trying to SELL it to someone else. Which raises the whole separate problem of WHO THE FUCK IS GOING TO BUY THIS SHIT OFF OF UNCLE SAM?
b. the game of hide and go seek
what am i talking about, you ask?
Well, this is the REAL problem with this plan.
For the banks to SELL to the government these bad investments, they first have to DISCLOSE said "assets". And that is ONE HELL OF A PROBLEM. Why?
Because we are talking about "level 3" assets in large part here, folks. Shit that stinks so bad that NO ONE will buy it ... that is the DEFINITION of Level 3 Assets -- TOTALLY ILLIQUID ASSETS ... and HOW DO YOU PRICE\VALUE AN ASSET WITH NO MARKET? Answer: You MAKE ONE UP.
So then we come to the problem of HOW DO YOU SELL SOMETHING WITH A VALUE THAT YOU JUST MADE UP? Keep in mind that when you just get to MAKE UP A VALUE you make up a HIGHLY INFLATED VALUE ...
So what do you do when you are selling such a bullshit false valued investment to a VERY scrutinous buyer like the US Government?
Uh. Uh ... well ... see ... you would have to attempt to come to an ACCURATE VALUE ...
BUT WAIT
Anyone see a potential problem here?
Yeah.
If i'm a huge bank and i have, oh lets say ONE TRILLION DOLLARS in Level 3 assets (Citibank has just over 1 trillion in Level 3 Assets) ... and that is all fine and good because no one is really questioning the VALUE of those assets, they just SIT THERE, ON THE BOOKS ... i can't sell them, because they are total shit, and NO ONE will buy them (except good old Uncle Sam) ... but AT LEAST THEY ARE ON THE BOOKS ... meaning, i still can write checks against them, or do whatever i want, but they look good sitting there, and no one is going to tell me they are only worth, oh say 1\10th of that value.
BUT IF I WANT TO SELL THEM TO THE GOVERNMENT, i have to go over those with a fine toothed comb, a government auditor, and a whole bunch of busy bodies who will want to know the "REAL VALUE" (if that is even possible to assess) and the end result will be MANY PLAYERS (ie INSTITUTIONAL INVESTORS) IN THE GAME KNOWING THE REAL VALUE OF MY COMPANY ... and i STILL HAVEN'T SOLD THE SHIT OFF MY BOOKS YET.
So that is your MAJOR CATCH 22.
Many of these firms are NOT FAILING (yet) and they have ZERO incentive to want to disclose to the world the REAL VALUE of their shit shit shit assets ... and they probably don't want to sell them for pennies on the dollar in the first place (part A of this connondrum) ... but the sure as fuck don't want the world to know just how worthless their "assets" are in the meantime ... because for fucksake, if the company wasn't in trouble BEFORE it tried to sell this shit, they SURE AS FUCK are going to be aimed belly up AFTER THEY DISCLOSE the REAL VALUE of their assets, and the entire market discounts their stock accordingly!
2. SELLING THE ASSETS BACK TO THE MARKET.
I'm not going to go to far with this part, because it's pretty self explanatory.
If this shit is SO ILLIQUID that no one will buy it in the first place, WHY THE HELL WOULD THEY BUY IT AFTER THE GOVERNMENT PLAYED HOT-POTATO MIDDLEMAN WITH IT?
It just doesn't make sense. These investments are BAD.
All these fucking idiots on CNBC saying "yeah, we DID IT IN THE 80s with RTC and it WORKED" are FULL OF SHIT. If you want to read some pretty bad criticism of the original RTC, you can do so at the FDIC's VERY OWN WEBSITE ... its a thick article, but every paragraph or so you should be able to find some reference to criticisms, problems, and massive funding dillemas involved with the RTC ... and REMEMBER ... the shit the RTC was trying to buy and sell WAS IN MUCH BETTER SHAPE than the shit on the books of banks this time around ... the two scenarios are simply NOT COMPARABLE by any reasonable stretch of the imagination ... THE SCALE OF THE CRISIS is likewise of several orders of magnitude larger. Like i said, CITIBANK ALONE HAS OVER A TRILLION DOLLARS IN DOG SHIT on its books. The ENTIRE cost to the taxpayer for S&L and RTC was just over a trillion ... we could blow past that in a matter of DAYS this time around!
If I was to smile and I held out my hand
If I opened it now would you not understand?
I've been on vacation/evacuation since last week, and have been too drunk to check the news. any interesting financial news i should know about? probably nothing.
I've been on vacation/evacuation since last week, and have been too drunk to check the news. any interesting financial news i should know about? probably nothing.
ROFLMAO.
thats a joke right?
Sure. Yeah. Nothing.
One major investment bank failure (lehman brothers)
One major brokerage sold to BoA (Merril Lynch)
One major insurance company on the brink of death,
and one major bailout of said company (AIG)
The Federal Reserve is almost out of treasury bills.
The Government is contemplating the most massive general financial bailout in history
and the Russian stock market was shut down two days running,
after a gianormous slide in their securities value.
Oh.
And over a trillion dollars in value vanished in thin air over the course what is probably runner up for the worst single day in stock market history on the NYSE.
Funny joke though.
If I was to smile and I held out my hand
If I opened it now would you not understand?
Sure. Yeah. Nothing.
One major investment bank failure (lehman brothers)
One major brokerage sold to BoA (Merril Lynch)
One major insurance company on the brink of death,
and one major bailout of said company (AIG)
The Federal Reserve is almost out of treasury bills.
The Government is contemplating the most massive general financial bailout in history
and the Russian stock market was shut down two days running,
after a gianormous slide in their securities value.
Oh.
And over a trillion dollars in value vanished in thin air over the course what is probably runner up for the worst single day in stock market history on the NYSE.
Funny joke though.
I'm gone one week and the entire country goes to shit!
Actually, yes, government bailouts are a very bad idea in more ways than one. And no I am not a fear mongerer.
In fact, the fact that these big financial giants expect the government to bail them out just goes to show that a lot of these white collar conservative republican wall street fat cats are really communists/socialists at heart, and tout capitalism only when things are going their way.
Wall Street surges at open on stability plans
Fri Sep 19, 2008 9:41am EDT
(Reuters) - Stocks soared on Friday, extending gains posted in the prior session, as investors cheered a series of steps by governments worldwide to contain the spiraling credit crisis.
Financials led the rally, which added to gains posted on Thursday, Wall Street's best day in six years. The Nasdaq was up more than 5 percent while the S&P 500 added more than 3 percent in the first minutes of trading.
Investor spirits rose after U.S. authorities, led by Treasury Secretary Henry Paulson, said they were working on a plan to mop up hundreds of billions of dollars of bad debt from banks' balance sheets.
The Dow Jones industrial average was up 251.27 points, or 2.26 percent, at 11,268.35. The Standard & Poor's 500 Index was up 36.76 points, or 3.05 percent, at 1,243.27. The Nasdaq Composite Index was up 112.31 points, or 5.11 percent, at 2,311.41
(Reporting by Steven C. Johnson; Editing by Kenneth Barry)
No more shorting financials. What will all you nay-sayers do.
Leave my money on the sideline until Octoberr 2nd when the ban ends.
And it is a ban on "naked swaps" only, anyhow.
Which is to say, it is a ban on something that is TECHNICALY illegal anyhow,
and something only very large institutions do between their own associate firms.
If i were to call up my broker and put on a short, or go on to a trade program and execute a short, i would still be able to do that.
The fundamental premise driving a "Short" position is that i SELL SOMEONE ELSES STOCK and then buy it back on the market, and REPLACE their stock with the one i bought backs, and they never know the difference.
In a naked short a large institution sells NOTHING ... they just lie ... it is essentialy a phantom transaction, and it is a bunch of bullshit.
PS. EDIT HOLY SHIT I'm WRONG.
its a FULL BAN on shorting financials!?!
FUCKED UP SHIT!!!
If I was to smile and I held out my hand
If I opened it now would you not understand?
why do i need prescription drugs simply because i can recognize a market reality?
:rolleyes:
You need them because you seemingly hyperventilate in every post you make with all of your CAPS and BOLDS.
Typically, things are never as good as they seem and things are never as bad as they seem. This is a low point for the economy, sure. Hopefully it will spur more regulation on I-bank practices and make our economy even stronger.
I listened to Peter Day's In Business podcast last night called Casino Capitalism. You should check it out. Might give you some good insight.
I kind of like it when DBTS gets excited. I mean, he is non-biased with his excitement as we have just seen. When he's wrong he doesn't hold back and when he's right he doesn't hold back.
That's what we need more of; impartial non-biased excitement and caring. I'd rather have that then the spoon-fed complacency and laziness that so many seem to be affected with.
I kind of like it when DBTS gets excited. I mean, he is non-biased with his excitement as we have just seen. When he's wrong he doesn't hold back and when he's right he doesn't hold back.
That's what we need more of; impartial non-biased excitement and caring. I'd rather have that then the spoon-fed complacency and laziness that so many seem to be affected with.
Comments
Gold is moving on "flight to safety" concerns primarily.
Metals in general have been whacked as of late by deleveraging, and (IMHO) lots of manipulation.
They should have bounced back anyhow, since they were hitting "bottoms" on a technical basis.
Anyhow,
Large funds aren't stupid, and pulled out of several sectors (FINANCIALS, ahem) and threw it right back in to gold.
Also lots of options expired this week, so people may be dumping back in to metals after options expiration.
I'm not sure the new naked short rules were so much to blame for that one.
Metals, oil, and treasuries all made out very well today, and it is little more than "flight to safety", "flight to quality" concerns.
Markets going in to close at their LOWS.
Not very pretty at all, folks.
Dow down 415 points.
Ugh.
Gettin REAL ugly now, boys and girls.
Hate to say i told you so. :(
If I opened it now would you not understand?
in fact, I am considering taking all I have had in cash and govt bonds these last two years, and buying back into stocks.. so I am there for the inevitable (however, illogical) recovery.
I also plan on buying some guns. The kids have moved out, and the future seems uncertain. Need to protect my house and food from hungry americans.
the argument for gold is that is has intrinsic value, and given that if the currency goes to shit, you won't be buying anything with what would then be toilet paper (worthless dollars) ... you would need SOMETHING to transact with ... and gold has ALWAYS had intrinsic value.
That being said, i understand your concern that, in an environment where VERY few actually hold or own metals, that they may certainly be in disfavor as tools of barter.
However, baring absolute collapse of EVERYTHING, metals WILL hold value even when stocks are going bust, and THAT is certainly a salient contention.
Take my grandmother's portfolio for example. She is (was, her estate still is) HEAVILY weighted in financials ... lots of Wachovia, Bank of America, Citi and others in that stupid portfolio ... I would NOT HESITATE to sell ALL of that shit and throw it in to physical metal, because those banks MAY not even be around to bounce back after this shit is over.
ALTERNATIVELY, if you don't believe in metals, and you have significant liquidity, another option could be to purchase a HOME outright.
ANYTHING physical as a store of value would do, but a home bought on the cheap could certainly do the trick for keeping your money safe in an absolute crisis.
But be as it may, do what you will.
If you have confidence the market will still be there in 10 years, and the stocks you have money in will still be there, then by all means, stay with them ... now certainly isn't a good time to sell if you don't think you have to.
If I opened it now would you not understand?
You're right about real estate as well...I may be wrong, but i doubt home values can fall too much further in the hardest hit spots...it seems in some places the price is already less than the cost of the materials in the damn thing. I have friends (from here - canada) that have already 'pitched' on a home in AZ...I'm mulling over pitching on one in FL...at worst, it's a fairly priced vacation spot/rental.
U.S. Stocks Rally Most in Six Years on Plan to Shore Up Banks
By Elizabeth Stanton
More Photos/Details
Sept. 18 (Bloomberg) -- U.S. stocks rallied the most in six years on prospects the government will formulate a ``permanent'' plan to shore up financial markets, while regulators and pension funds took steps to curb bets against banks and brokerages.
Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.
Wachovia Corp. soared 59 percent, Citigroup Inc. added 19 percent and Bank of America Corp. jumped 12 percent, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley erased a 46 percent tumble and Goldman Sachs Group Inc. recovered most of a 25 percent slide after the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.
``Any actions regulators or other entities or players take to try to slow down the bear raids will be received positively,'' said David Katz, chief investment officer of Matrix Asset Advisors in New York, which manages $1.4 billion. ``There's no reason a Goldman Sachs or a Morgan Stanley should be forced to sell themselves in a shotgun wedding if they've got economic models that work, and they do.''
The S&P 500 advanced 50.12 points to 1,206.51, recovering most of yesterday's 4.7 percent tumble. The Dow surged 410.03, or 3.9 percent, to 11,019.69. Both the S&P 500 and Dow posted their biggest percentage gains since October 2002. The Nasdaq Composite Index jumped 100.25, or 4.8 percent, to 2,199.1. Seven stocks climbed for each that fell on the NYSE, its broadest rally since April.
`Elevated Pressures'
The S&P 500, which fell 4.7 percent twice this week, rebounded from its lowest level since May 2005. Stocks opened higher after the Federal Reserve said it authorized global central banks to auction funds ``to address the continued elevated pressures in U.S. dollar short-term funding markets.''
The benchmark index for U.S. equities then swung between gains and losses as concern over the health of Morgan Stanley and Goldman dragged on financial shares, before Schumer's proposal spurred a rally in the last hour of trading.
Russell 2000 Rally
The Russell 2000 Index of small-company stocks surged 7 percent, the most since two days after the stock market crash in October 1987. Financial shares in the measure jumped 12 percent, led by a 88 percent gain in Newcastle Investment Corp., a real- estate investment trust.
About $3.6 trillion of market value was erased from global stocks this week before today, triggered by the bankruptcy filing by Lehman Brothers Holdings Inc., once the fourth-largest U.S. securities firm. Today's rally restored more than $600 billion in value to U.S. stocks, according to Bloomberg data.
Wachovia, the fourth-largest U.S. bank, rallied $5.38 to $14.50, its steepest advance since at least 1983. Citigroup, the biggest, jumped $2.62 to $16.65, its largest gain in 10 years. Bank of America, the No. 2, added $3.38 to $30.58. MGIC Investment Corp., the biggest U.S. mortgage insurer, rose 75 percent for its best rally since July.
The KBW Bank Index added 14 percent as 22 of its 24 companies advanced. The S&P 500 Financials Index climbed 12 percent, with 79 of its 86 companies rising.
Schumer urged forming an agency to inject funds into financial companies in exchange for equity stakes and pledges to rewrite mortgages and make them more affordable. His remarks indicate momentum is building for some wider plan after the Fed and Treasury's takeovers of Fannie Mae, Freddie Mac and American International Group Inc. this month.
`Comprehensive Solution'
``The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,'' Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington. ``I've been talking to them about it.''
Morgan Stanley rose 3.7 percent to $22.55, snapping a seven-day retreat, and Goldman Sachs slipped 5.7 percent to $108. They are the two remaining independent Wall Street brokerages after this week's bankruptcy of Lehman and takeover of Merrill Lynch & Co. Yesterday both fell the most ever on speculation rising financing costs will force them out of business.
Morgan Stanley and Goldman began erasing their declines after the California Public Employees' Retirement System and the New York State Common Retirement Fund joined the California State Teachers Retirement System in deciding to stop lending its shares of the two companies. The decisions curb the supply of shares available to short-sellers.
Short Sales
Morgan Stanley is down almost 45 percent in September. Chief Executive Officer John Mack, in a memo to employees yesterday, blamed short sellers for driving down the price of his company's shares. Morgan may sell a new stake to China Investment Corp., which owns a 9.9 percent position, and is in talks about a possible merger with Wachovia, a person familiar with the matter said.
The Securities and Exchange Commission's new rules force traders to borrow shares before selling them short and make it a fraud for investors to lie to their broker about locating stock to close positions. The SEC may also require hedge funds to disclose their short-sale positions and plans to subpoena the funds' communication records.
``Things have been pretty brutal the last few weeks, as bad as I've seen it 30 years in the business,'' said Phil Orlando, the New York-based chief equity market strategist at Federated Investors Inc., which manages $334 billion. ``Shorting had a lot to do with contributing to this near collapse in the market.''
In the U.K., the Financial Services Authority banned short sales of financial shares for the rest of the year after HBOS Plc, the country's biggest mortgage lender, lost 37 percent of its market value over three days. In a short sale, investors borrow stock and sell it. The sellers profit if the shares go down and they can repay the loan with cheaper stock.
Washington Mutual Speculation
Washington Mutual Inc., the largest U.S. thrift, rallied 98 cents, or 49 percent, to $2.99. JPMorgan Chase & Co., Citigroup, Bank of America and Wells Fargo & Co. may be interested in buying pieces of WaMu, said three people with knowledge of the discussions, who asked not to be identified because the talks are private.
The S&P 500 erased a drop of 2 percent led by asset management companies after Putnam Investments LLC closed a $12.3 billion money-market fund following a surge of investor withdrawals. Putnam Prime Money Market Fund will liquidate and return cash to investors.
`Breaking the Buck'
A money-market fund run by Reserve Management Corp. this week became the first in 14 years to expose investors to losses by ``breaking the buck'' after writing off investments in Lehman debt. Money-market funds strive to maintain a share price of $1 and are intended for capital preservation.
State Street Corp., the world's biggest money manager for institutions, fell 8.9 percent to $59, paring a drop of as much as 55 percent. Federated Investors Inc., the fourth-largest money-fund manager, fell 11 percent to $27.10 after earlier retreating as much as 44 percent. State Street and Federated issued statements saying that none of their money-market funds had fallen below $1 a share.
Kraft Foods Inc., the biggest U.S. foodmaker, jumped 3.3 percent to $33.74 after being named as the replacement for AIG in the Dow Jones Industrial Average. AIG, the biggest U.S. insurance company, was taken over by the government this week after mortgage-related losses led to credit-rating downgrades that drove the company to the brink of bankruptcy.
Times Rallies
New York Times Co. surged 12 percent to $15.25, its biggest gain since 1980, after reporting a smaller revenue decline for August than the previous two months.
Almost 2.45 billion shares traded on the NYSE, the most since March 20 and 77 percent higher than the three-month daily average.
U.S. stocks tumbled yesterday as bank lending seized up in the wake of the government's takeover of AIG, raising concern that more of the nation's biggest financial companies will fail.
The 26 percent drop in the S&P 500 since its October peak through yesterday erased half its gain from the five-year bull market that began in 2002.
The S&P 500 is poised to post its first yearly retreat since 2002 after global banks racked up $518 billion in credit losses and asset writedowns stemming from the first nationwide decline in home prices since the 1930s.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
Last Updated: September 18, 2008 17:17 EDT
Chelsea FC?
The problem is this "solution" has almost as many problems as the problem itself.
For starters, the government is hardly in a position of solvency itself, so to pretend like it has the money to perform this miracle buyout of any and all bad investments made by banks is laughable at the start.
Even more amusing, is that this plan ASSUMES that banks (many of which are NOT in imminent danger of failure) are going to be WILLING to sell their "toxic" or "level 3" assets to the federal government at bargain basement prices.
THINK ABOUT THIS FOR A SECOND.
IT'S FINANCIAL ALCHEMY ... ie. it's NOT REALLY POSSIBLE.
It sounds great in theory, but how the fuck is it going to work in REALITY?
Here is the plan:
The government, the nice guy that it is, is going to creat a "Resolution Trust" type entity ... a giant shit eating catch-all shell corporation ... that will BUY CRAP from the banks, HOLD it indefinately (this is the part that in theory stabilizes the market), and then SELL it in orderly fashion to WILLING BUYERS.
BUT HOW DOES THIS WORK?
HOW DOES THE GOVERNMENT BECOME THE MIDDLE MAN FOR BAD INVESTMENTS?
The problems are two fold (at least).
1. GETTING BANKS TO SELL
a. the price
the government may be a nice guy, but it isn't THAT stupid.
it is going to ask these banks to sell these "investments" (ie. shit) at RIDICULOUS prices.
Why? Because in theory the government itself must find a BUYER for the paper after it has purchased them itself. So the government is trying to middleman a LOSING product by essentially STEALING it from the banks at unfair prices (what CNBC would have you believe are "reasonable valuations") and then trying to SELL it to someone else. Which raises the whole separate problem of WHO THE FUCK IS GOING TO BUY THIS SHIT OFF OF UNCLE SAM?
b. the game of hide and go seek
what am i talking about, you ask?
Well, this is the REAL problem with this plan.
For the banks to SELL to the government these bad investments, they first have to DISCLOSE said "assets". And that is ONE HELL OF A PROBLEM. Why?
Because we are talking about "level 3" assets in large part here, folks. Shit that stinks so bad that NO ONE will buy it ... that is the DEFINITION of Level 3 Assets -- TOTALLY ILLIQUID ASSETS ... and HOW DO YOU PRICE\VALUE AN ASSET WITH NO MARKET? Answer: You MAKE ONE UP.
So then we come to the problem of HOW DO YOU SELL SOMETHING WITH A VALUE THAT YOU JUST MADE UP? Keep in mind that when you just get to MAKE UP A VALUE you make up a HIGHLY INFLATED VALUE ...
So what do you do when you are selling such a bullshit false valued investment to a VERY scrutinous buyer like the US Government?
Uh. Uh ... well ... see ... you would have to attempt to come to an ACCURATE VALUE ...
BUT WAIT
Anyone see a potential problem here?
Yeah.
If i'm a huge bank and i have, oh lets say ONE TRILLION DOLLARS in Level 3 assets (Citibank has just over 1 trillion in Level 3 Assets) ... and that is all fine and good because no one is really questioning the VALUE of those assets, they just SIT THERE, ON THE BOOKS ... i can't sell them, because they are total shit, and NO ONE will buy them (except good old Uncle Sam) ... but AT LEAST THEY ARE ON THE BOOKS ... meaning, i still can write checks against them, or do whatever i want, but they look good sitting there, and no one is going to tell me they are only worth, oh say 1\10th of that value.
BUT IF I WANT TO SELL THEM TO THE GOVERNMENT, i have to go over those with a fine toothed comb, a government auditor, and a whole bunch of busy bodies who will want to know the "REAL VALUE" (if that is even possible to assess) and the end result will be MANY PLAYERS (ie INSTITUTIONAL INVESTORS) IN THE GAME KNOWING THE REAL VALUE OF MY COMPANY ... and i STILL HAVEN'T SOLD THE SHIT OFF MY BOOKS YET.
So that is your MAJOR CATCH 22.
Many of these firms are NOT FAILING (yet) and they have ZERO incentive to want to disclose to the world the REAL VALUE of their shit shit shit assets ... and they probably don't want to sell them for pennies on the dollar in the first place (part A of this connondrum) ... but the sure as fuck don't want the world to know just how worthless their "assets" are in the meantime ... because for fucksake, if the company wasn't in trouble BEFORE it tried to sell this shit, they SURE AS FUCK are going to be aimed belly up AFTER THEY DISCLOSE the REAL VALUE of their assets, and the entire market discounts their stock accordingly!
2. SELLING THE ASSETS BACK TO THE MARKET.
I'm not going to go to far with this part, because it's pretty self explanatory.
If this shit is SO ILLIQUID that no one will buy it in the first place, WHY THE HELL WOULD THEY BUY IT AFTER THE GOVERNMENT PLAYED HOT-POTATO MIDDLEMAN WITH IT?
It just doesn't make sense. These investments are BAD.
All these fucking idiots on CNBC saying "yeah, we DID IT IN THE 80s with RTC and it WORKED" are FULL OF SHIT. If you want to read some pretty bad criticism of the original RTC, you can do so at the FDIC's VERY OWN WEBSITE ... its a thick article, but every paragraph or so you should be able to find some reference to criticisms, problems, and massive funding dillemas involved with the RTC ... and REMEMBER ... the shit the RTC was trying to buy and sell WAS IN MUCH BETTER SHAPE than the shit on the books of banks this time around ... the two scenarios are simply NOT COMPARABLE by any reasonable stretch of the imagination ... THE SCALE OF THE CRISIS is likewise of several orders of magnitude larger. Like i said, CITIBANK ALONE HAS OVER A TRILLION DOLLARS IN DOG SHIT on its books. The ENTIRE cost to the taxpayer for S&L and RTC was just over a trillion ... we could blow past that in a matter of DAYS this time around!
If I opened it now would you not understand?
ROFLMAO.
thats a joke right?
Sure. Yeah. Nothing.
One major investment bank failure (lehman brothers)
One major brokerage sold to BoA (Merril Lynch)
One major insurance company on the brink of death,
and one major bailout of said company (AIG)
The Federal Reserve is almost out of treasury bills.
The Government is contemplating the most massive general financial bailout in history
and the Russian stock market was shut down two days running,
after a gianormous slide in their securities value.
Oh.
And over a trillion dollars in value vanished in thin air over the course what is probably runner up for the worst single day in stock market history on the NYSE.
Funny joke though.
If I opened it now would you not understand?
I'm gone one week and the entire country goes to shit!
i am sorry, America.
In fact, the fact that these big financial giants expect the government to bail them out just goes to show that a lot of these white collar conservative republican wall street fat cats are really communists/socialists at heart, and tout capitalism only when things are going their way.
http://forums.pearljam.com/showthread.php?t=272825
Wall Street surges at open on stability plans
Fri Sep 19, 2008 9:41am EDT
(Reuters) - Stocks soared on Friday, extending gains posted in the prior session, as investors cheered a series of steps by governments worldwide to contain the spiraling credit crisis.
Financials led the rally, which added to gains posted on Thursday, Wall Street's best day in six years. The Nasdaq was up more than 5 percent while the S&P 500 added more than 3 percent in the first minutes of trading.
Investor spirits rose after U.S. authorities, led by Treasury Secretary Henry Paulson, said they were working on a plan to mop up hundreds of billions of dollars of bad debt from banks' balance sheets.
The Dow Jones industrial average was up 251.27 points, or 2.26 percent, at 11,268.35. The Standard & Poor's 500 Index was up 36.76 points, or 3.05 percent, at 1,243.27. The Nasdaq Composite Index was up 112.31 points, or 5.11 percent, at 2,311.41
(Reporting by Steven C. Johnson; Editing by Kenneth Barry)
Leave my money on the sideline until Octoberr 2nd when the ban ends.
And it is a ban on "naked swaps" only, anyhow.
Which is to say, it is a ban on something that is TECHNICALY illegal anyhow,
and something only very large institutions do between their own associate firms.
If i were to call up my broker and put on a short, or go on to a trade program and execute a short, i would still be able to do that.
The fundamental premise driving a "Short" position is that i SELL SOMEONE ELSES STOCK and then buy it back on the market, and REPLACE their stock with the one i bought backs, and they never know the difference.
In a naked short a large institution sells NOTHING ... they just lie ... it is essentialy a phantom transaction, and it is a bunch of bullshit.
PS. EDIT
HOLY SHIT I'm WRONG.
its a FULL BAN on shorting financials!?!
FUCKED UP SHIT!!!
If I opened it now would you not understand?
LOL!!!!! BBQ!!!
bbq?
I WANT SOME BBQ.
???
:(
In all seriousness, this full ban on shorts is absolutely retarded and unhealthy.
This will actually further DISTORT the market!
:(
If I opened it now would you not understand?
Let that be a lesson to you. Never take a vacation again; America just can't handle you having luxury no matter what the personal cost to you.
There is an excellent drug called Valium. I know some docs who can hook you up with a script. It could really help you out.
why do i need prescription drugs simply because i can recognize a market reality?
:rolleyes:
If I opened it now would you not understand?
You need them because you seemingly hyperventilate in every post you make with all of your CAPS and BOLDS.
Typically, things are never as good as they seem and things are never as bad as they seem. This is a low point for the economy, sure. Hopefully it will spur more regulation on I-bank practices and make our economy even stronger.
I listened to Peter Day's In Business podcast last night called Casino Capitalism. You should check it out. Might give you some good insight.
http://www.bbc.co.uk/radio/podcasts/worldbiz/
That's what we need more of; impartial non-biased excitement and caring. I'd rather have that then the spoon-fed complacency and laziness that so many seem to be affected with.
It IS pretty entertaining, I'll give you that.
I'd have to say that he is a big part of the reason I actually pay attention to what's going on in the world these days. I used to not care at all.
Minus the gold, the latter 2 are on my list and have been for the last 4 years. All good.. I'll be prepared
and oil went through the roof at the speed of light.
LARGEST ONE DAY GAIN IN HISTORY FOR OIL.
Yikes!
This is what inflation looks like folks.
This is reality finally coming home to roost.
This is the central banking supression scheme starting to unwind,
and market forces taking back the reigns.
$1000 an ounce gold may not be too far away anymore.
NOT that i'm an investment advisor,
but if you bought silver last week, you would be sitting on a nearly instant 30% profit.
And no stupid "no shorting" rule could have stopped you.
If I opened it now would you not understand?
yeah me too
regarding the current bail out negotiations in congress, and regarding his current rant about needing to buy gold:
"IF THIS THING (bail out) DOESN'T WORK OUT, WE ARE GOING TO HAVE A GREAT DEPRESSION. THATS RIGHT, ITS GREAT DEPRESSION TWO."
"Think INFLATION, THINK WEIMAR REPUBLIC. THINK WHEELBARROWS FULL OF CASH TO BUY BREAD."
"FINANCIAL APOCALYPSE."
"Gold was down for a long time because CENTRAL BANKS WERE DUMPING THEIR GOLD, SUPRESSING THE PRICE"
"I could see gold going to $1000 an ounce in this chaos."
This is Jim Cramer,
not DBTS The WhackJob.
:cool:
If I opened it now would you not understand?