lannarebirth

A decade late and a Trillion dollars short....

Bernanke Weighs Limiting Consolidation, Asset Bubbles

By Craig Torres

Oct. 15 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank will consider discarding its long- standing aversion to interfering with asset-price bubbles and warned that the banking business may be concentrated in too few companies.

Officials should review how supervision and interest rates can minimize the ``dangerous phenomenon'' of bubbles in housing, stocks and other assets that risk bringing the financial system and economy down with them when they burst, Bernanke said.

``There is no doubt that as we emerge from the current crisis that we are all going to look very hard at that issue and what can be done about it,'' he told the Economic Club of New York in his broadest remarks on future regulatory changes since the credit crisis deepened last month.

The comments signal that the 54-year-old chairman, while trying to quell the worst market turmoil since the 1930s, is crafting an agenda for greater oversight.

Policy makers will toughen their response to ``excessive leverage,'' give more weight to financial stability in economic analysis and examine ways to strengthen the system of trading and settlement behind complex derivative securities, he said.

The U.S. faces ``a very serious too-big-to-fail problem,'' in which the insolvency of a large financial company could threaten a market collapse, Bernanke said in reply to an audience question. ``There are too many firms that are in some sense systemically critical.''

hmmmm.....IF the US and the EU do not implement very strict rules and limits to the extreme paychecks in the banking industry very soon, these bankers will invent new products and the same disaster will happen again, one day in the future.

Extreme paychecks like the $ 70,3 Million in 2007 for another 54 year old.... Mr. Lloyd Blankfein, CEO of Goldman Sachs...a bit more than Paulson, who earned $37.8 million in 2005, his last full year as Goldman's CEO...

http://www.bloomberg.com/apps/news?pid=206...refer=exclusive

LaoPo

To tell you the truth Lao Po, of the 3 groups of principals (shareholders, executives, government), I blame the executives the least (except the outright criminal ones). Everyone knows they're vermin, and ridiculous schemes and greed could be expected. It is the shareholders and the government who failed to curb these excesses I hold most responsible. I guess we know why the shareholders didn't care, but I don't understand why the govt. failed to discharge it's oversight duties. Lobbyists, campaign contributions? Chump change and see what it's wrought.

I don't think they're trying to increase the standing of the Euro. It would appear they're doing everything in their power to debase it. Not that they have much choice, as the kinds of stories I've read about leverage used in European banks are staggering.

In the end, "all politics is local" and there are an awful lot of localities to appease in Europe. America by contrast has shown it is only businesses they hope to protect and the public can go f*** itself. Seems to be good for the currency. In the short term at least.

my [not so] humble opinion on the recent USD strength is that Billions have been and are still repatriated from abroad (buying USD vs. a variety of other forex). the reverse fluctuations/actions USD/markets seem to confirm my theory.

Yes, that's my opinion as well, and has been for awhile. My currency comment in the post you're replying to is just my poor attempt at humor.

A decade late and a Trillion dollars short....

Bernanke Weighs Limiting Consolidation, Asset Bubbles

By Craig Torres

Oct. 15 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank will consider discarding its long- standing aversion to interfering with asset-price bubbles and warned that the banking business may be concentrated in too few companies.

Officials should review how supervision and interest rates can minimize the ``dangerous phenomenon'' of bubbles in housing, stocks and other assets that risk bringing the financial system and economy down with them when they burst, Bernanke said.

``There is no doubt that as we emerge from the current crisis that we are all going to look very hard at that issue and what can be done about it,'' he told the Economic Club of New York in his broadest remarks on future regulatory changes since the credit crisis deepened last month.

The comments signal that the 54-year-old chairman, while trying to quell the worst market turmoil since the 1930s, is crafting an agenda for greater oversight. Policy makers will toughen their response to ``excessive leverage,'' give more weight to financial stability in economic analysis and examine ways to strengthen the system of trading and settlement behind complex derivative securities, he said.

The U.S. faces ``a very serious too-big-to-fail problem,'' in which the insolvency of a large financial company could threaten a market collapse, Bernanke said in reply to an audience question. ``There are too many firms that are in some sense systemically critical.''

DOW drops more than 700 points; NASDAQ -8.5% and S&P500 dropped -9%

Blue-chip index suffers second-biggest point drop in its history

http://www.marketwatch.com/

Dow 8,577.91 -733.08 (-7.87%)

Nasdaq 1,628.33 -150.68 (-8.47%)

S&P 500 907.78 -90.23 (-9.04%)

Oil companies were severely beaten;a Super Giant like EXXON MOBIL went down -14% and lost some $ 40/45 BILLION of their market value in just one day

Some other oil companies went down even more, percentage wise.

Sectors:

Basic Materials -14.03%

Capital Goods -10.19%

Conglomerates -9.77%

Cons. Cyclical -10.44%

Cons. Non-Cyclical -5.63%

Energy -14.47%

Financial -8.64%

Healthcare -5.69%

Services -8.60%

Technology -8.26%

Transportation -8.63%

Utilities -7.06%

LaoPo

It's breathtaking Lao Po. From where I sit, it's not so much the size of the moves I find so alarming, but the speed.

Crude oil prices are back to 13-month lows:

http://news.yahoo.com/s/ap/20081015/ap_on_bi_ge/oil_prices

Currently as low as about $2.70USD/gal in my area.

How long will it take for reduced pump prices in Thailand? Why should diesel still be over 30ThB/l?

I paid 27.59 baht today for B5 (biodiesel 5%)

It's extraordinary what type of behavior people have been conditioned to expect from their government. I don't know, but I would love someone to explain it to me. One thing I do know for certain, the very banks the government is buying interests in, with the peoples money, are short this market. Yeah, that makes sense.?

I would be in favor of a neutral third party leveling the temple and distributing the rubble equally to representatives from each country.

Nice commentary on an important historical site ......

anyways .. null vote for me ... I think it is a waste of both humans and good will to actually FIGHT over this

As far as I'm concerned it's not worth even one mothers sons death.

I would be in favor of a neutral third party leveling the temple and distributing the rubble equally to representatives from each country.

OK. Good. But we are now in the MIDDLE of it. The fact there was a huge VOLATILE gain in one day is in many ways a bad sign, suggesting we may indeed MAY be in times similar to the depression times. I think with the global banking guarantees this can be prevented.

Probably. I don't think anyone's going to starve or anything. But will people continue to pay 20 P/E's or even 15 or 12 for companies that yield a 1% or 2% dividend? Don't ask me, I don't understand the logic in it.

http://nytimes.com/interactive/2008/10/11/...AR_MARKETS.html

"What is it that they try to prevent?"

Basically , I think , the banks do not have enough money to cover their deposits , our cash - So if everyone decides to withdraw there would not be enough money and banks would go bust , people and business would be bankrupt - Panic !

I think protecting the peoples money is only a tangential issue. It is "the system" they seek to protect. That system is riddled with counterparty derivatives risk. They have to bring that down in as orderly a fashion as possible.

Alex,

The reason oil and other commodities are tumbling is because pensions and other money funds became involved in the commodities market. They took an incredible amount of money into a limited marketplace and every month they made one way futures bets at ever higher strikes. Apparently they used a considerable amount of leverage in doing so.

Now it's all got to be undone, and fast, as the trade has moved against them. It's incredible misfeasance and they should be jailed. You're going to be hearing some incredibly sad stories about pension funds soon. Hedge funds too, but I imagine they'll garner less sympathy.

I don't think they're trying to increase the standing of the Euro. It would appear they're doing everything in their power to debase it. Not that they have much choice, as the kinds of stories I've read about leverage used in European banks are staggering.

In the end, "all politics is local" and there are an awful lot of localities to appease in Europe. America by contrast has shown it is only businesses they hope to protect and the public can go f*** itself. Seems to be good for the currency. In the short term at least.

It may appear that these countries are "working together", but you may want to Google "beggar thy neighbor economics". That's what's been going on ever since the US deliberately started driving the $USD down.

Looking for a place as named above. Anyone been there or heard of it?

NbE of Bangkok.

There are two roads to Chiang Rai, you know.

Anyone waiting for the financial industry to return to the glory days of 2006 may have a long wait. As a credit-fueled boom turns into a bubble, it takes more and more lending to produce an additional increment of GDP growth. In the real boom years after WWII, it took about $1.40 worth of credit to produce $1 worth of GDP growth. The ratio rose sharply after the Reagan Revolution…and now stands at about $6 of credit to every extra dollar of GDP. Of course, that is why Wall Street made so much money - it was selling credit. But it's also why that story is history; that show is over. As the cost of growth - in terms of credit - rises, so does the cost in terms of debt service. Even at 5%, the cost of $6 of credit is 30 cents per year. If it produces $1 of GDP growth, that extra output would need a 30% profit margin to break even. Not very likely

I believe the "war on terror" has nothing to do with terrorism and has everything to do with spending as much money as possible in the shortest amount of time. War is really good for that. This bailout scheme would seem to be another fine example. It's Greenspan's ego blowing up for all to see as he fed a credit market frenzy so he could be the first person in history to halt the Long Wave. Colossal ego, collosal idiot.

Bureaucrats and bankers deciding arbitraily which businesses survive and which fail is a whole new kind of risk element.

This scares the Beejeezus out of me You know everyone is paralyzed with fear IMHO

Half of this stuff would never have passed if folks were thinking straight. But fear heaped on us by the Gov has made people numb & helps them just nod their head to anything the Gov tells them will help.

All this talk even on CNBC about folks getting letters about their credit line on cards being reduced or canceled. ( they dont show any actual folks ) I have asked everyone I know. Folks with good & bad credit. Not one of them has received any letters or change in their ability to use their credit cards...LOC's etc.

Nationalizing "energy companies" and "media" in the interests of national security would be a seemingly natural followup. All terror, all the time.

OK. Good. But we are now in the MIDDLE of it. The fact there was a huge VOLATILE gain in one day is in many ways a bad sign, suggesting we may indeed MAY be in times similar to the depression times. I think with the global banking guarantees this can be prevented.

What ever is politically acceptable to call it, make no mistake, America has just nationalized it's major banks. That is not "bullish" IMO. Bureaucrats and bankers deciding arbitraily which businesses survive and which fail is a whole new kind of risk element. Can probably get a nice bounce for OpEx week though.

I heard on the tube that most of the biggest UP days in the history of the US stock market were DURING the great depression (the 1929) one. We don't know what this is yet, but the crash was at great depression levels.

The "crash" was no where near Great Depression levels. The lions share of the downmove was progran traded down and was about as orderly a selloff as you'll ever see. Great Depression stocks lost approx 90% of their value in a DJIA move from 381 to 41.

Are you sure?????

This graph says differently. The text shows three phases nowhere near the levels you stated.

http://upload.wikimedia.org/wikipedia/comm...crash_graph.svg

Timeline

The trading floor of the New York Stock Exchange just after the crash of 1929.

The trading floor of the New York Stock Exchange just after the crash of 1929.

After an amazing five-year run when the world saw the Dow Jones Industrial Average (DJIA) increase in value fivefold, prices peaked at 381.17 on September 3, 1929.[19] The market then fell sharply for a month, losing 17% of its value on the initial leg down. Prices then recovered more than half of the losses over the next week, only to turn back down immediately afterwards. The decline then accelerated into the so-called "Black Thursday", October 24, 1929. A record number of 12.9 million shares were traded on that day. At 1 p.m. on Friday, October 25, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell, president of the National City Bank. They chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers' financial resources behind him, Whitney placed a bid to purchase a large block of shares in U.S. Steel at a price well above the current market. As amazed traders watched, Whitney then placed similar bids on other "blue chip" stocks. This tactic was similar to a tactic that ended the Panic of 1907, and succeeded in halting the slide that day. In this case, however, the respite was only temporary.

Over the weekend, the events were covered by the newspapers across the United States. On Monday, October 28, the first "Black Monday",[20] more investors decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 13%. The next day, "Black Tuesday", October 29, 1929, about 16 million shares were traded.[21][22][23] The volume on stocks traded on October 29, 1929 was "...a record that was not broken for nearly 40 years, in 1968."[22] Author Richard M. Salsman wrote that on October 29—amid rumors that U.S. President Herbert Hoover would not veto the pending Hawley-Smoot Tariff bill—stock prices crashed even further."[18] William C. Durant joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks in order to demonstrate to the public their confidence in the market, but their efforts failed to stop the slide. The DJIA lost another 12% that day. The ticker did not stop running until about 7:45 that evening. The market lost $14 billion in value that day, bringing the loss for the week to $30 billion, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War I.[24]

An interim bottom occurred on November 13, with the Dow closing at 198.6 that day. The market recovered for several months from that point, with the Dow reaching a secondary peak (ie, dead cat bounce) at 294.0 in April 1930. The market embarked on a steady slide in April 1931 that did not end until 1932 when the Dow closed at 41.22 on July 8, concluding a shattering 89% decline from the peak. This was the lowest the stock market had been since the 19th century.[25]

I heard on the tube that most of the biggest UP days in the history of the US stock market were DURING the great depression (the 1929) one. We don't know what this is yet, but the crash was at great depression levels.

The "crash" was no where near Great Depression levels. The lions share of the downmove was progran traded down and was about as orderly a selloff as you'll ever see. Great Depression stocks lost approx 90% of their value in a DJIA move from 381 to 41.

Sort of missed the boat mate, you should have been in yesterday !

That says it all, doesn't it? One day later what is a "good investment", no longer is. I'd better look up the definition of investment again.

It is certainly imprudent to keep ones ownership documents in the keeping of someone else, but that, in itself, conveys no ownership rights. The person who got the loan would have had to commit fraud in order to represent themselves as acting for the recorded owner. I think there is a very good chance your husband can get his property back unencumbered.

Personally, I can't imagine a money lender putting themselves at risk in this fashion and I'm more inclined to think there may be some collusion between the "borrower" and the "lender" to defraud your husband of his land. In some cases we have heard here, it would not surprise me to hear the Thai spouse was in on it as well, but you certainly know best there. Anyhow, I think it's a criminal act and therefore actionable. The very best of luck to you.

I note the UK pumping in billions, any update on what the US are doing?

I believe the US has distributed the funds between the top 10 finishers in CNBC's trading contest. We're going to see if we can daytrade our way out of this mess. So far, so good.

If it's a breezy day, I shall be leaving in the form of smoke.