Global Correction

[cclub75]

I can't see that situation going on much longer. Either a resolution will be found in the next week or so, or something ugly will occur.

What solutions would you imagine ?

A kind of "nationalization" of the muni bonds market with the federal gvt buying en masse ?

I mean : what else ?

My point : it seems like a deadly trap, with on one hand, a very unlikely solution, and the other hand a collapsus...

Talk about plague... and plague.

[Naam]

Either a resolution will be found in the next week or so, or something ugly will occur.

something ugly has already occurred. in the morning i walked around my house and saw on the street in front one REAL UGLY WOMAN

[lannarebirth]

I can't see that situation going on much longer. Either a resolution will be found in the next week or so, or something ugly will occur.

What solutions would you imagine ?

A kind of "nationalization" of the muni bonds market with the federal gvt buying en masse ?

I mean : what else ?

My point : it seems like a deadly trap, with on one hand, a very unlikely solution, and the other hand a collapsus...

Talk about plague... and plague.

I'm just guessing, but I would say less than 1% of muni bonds ever default. It's about as good as it gets in the Bond world. Anyone with a business to do so, would be happy to insure these bonds. That's why Warren Buffet offered to take themm off the hands of the struggling bond insurers. Great for him, a death sentence for them, as all they'd be left with was the junk. Nobody should be worried too much about munis, but for some reason they are. That's potentially a big problem.

[lannarebirth]

Either a resolution will be found in the next week or so, or something ugly will occur.

something ugly has already occurred. in the morning i walked around my house and saw on the street in front one REAL UGLY WOMAN

Don't give me that look. OK, maybe not ugly, but unexpected perhaps. Forced liquidations are already happening. That can snowball. I'm not saying it will, but it could. Everyone like to watch the stock market, but this story is all about bonds and credit.

[cclub75]

I'm just guessing, but I would say less than 1% of muni bonds ever default. It's about as good as it gets in the Bond world. Anyone with a business to do so, would be happy to insure these bonds. That's why Warren Buffet offered to take themm off the hands of the struggling bond insurers. Great for him, a death sentence for them, as all they'd be left with was the junk. Nobody should be worried too much about munis, but for some reason they are. That's potentially a big problem.

-if they manage to separate the good stuff from the uggly... that would be a deadly blow for the... whole market. Because, it would be an admission that a large part of the system is totally flawed, for one very simple reason : too much debt. Like an overdose.

-the proposal of Buffet is exactly the type that they have to refuse: it would be an admission of weakness.

-beyond the problem of the insurance... we can see that there is still people willing to buy these bonds... With only one major difference : higher % (14, or 20 % like we saw this week). Anyway, the truth is that the demand is not large enough.

Like a sponge that can't soak water anymore.

-we are talking about credit crunch. But we forgot the mirror side : credit crunch = overdose of credit.

-this system in which you just have to issue cheap bonds to finance a city for instance, because year after year they are in deficit, can't continue ad vitam aeternam. Same with states and corporations.

-I think we are beyond the idea of "risk" there. There is just too much debt into the system, and the system can take it anymore.

[highdiver]

I'm just guessing, but I would say less than 1% of muni bonds ever default. It's about as good as it gets in the Bond world. Anyone with a business to do so, would be happy to insure these bonds. That's why Warren Buffet offered to take themm off the hands of the struggling bond insurers. Great for him, a death sentence for them, as all they'd be left with was the junk. Nobody should be worried too much about munis, but for some reason they are. That's potentially a big problem.

-if they manage to separate the good stuff from the uggly... that would be a deadly blow for the... whole market. Because, it would be an admission that a large part of the system is totally flawed, for one very simple reason : too much debt. Like an overdose.

-the proposal of Buffet is exactly the type that they have to refuse: it would be an admission of weakness.

-beyond the problem of the insurance... we can see that there is still people willing to buy these bonds... With only one major difference : higher % (14, or 20 % like we saw this week). Anyway, the truth is that the demand is not large enough.

Like a sponge that can't soak water anymore.

-we are talking about credit crunch. But we forgot the mirror side : credit crunch = overdose of credit.

-this system in which you just have to issue cheap bonds to finance a city for instance, because year after year they are in deficit, can't continue ad vitam aeternam. Same with states and corporations.

-I think we are beyond the idea of "risk" there. There is just too much debt into the system, and the system can take it anymore.

i totaly agree with you....

there is way to much credit on the market. the big problem is that a lot of this credit will never be paid back.. and attempts of reseling it as done before are futile..

[bingobongo]

hello highdiver, i am sure you like pictures ,so this graph should keep you busy for a while as you try to interpret it......for those of you understand it, this says a lot...........prepare accordingly

[cclub75]

It would be nice from you BB, if you could explain your chart.

I mean, what is it ?

What the hel_l are "net autonomous factors" ?

[disgruntled]

The effect of higher pork prices has resulted in the small shops, which have their already cooked food displayed in metal trays, using chicken to replace the pork. So when I go out to my usual place often they do not have the stir-fried basil with pork as usual, but they do have the same dish with chicken. One of Thailand's most popular morning and lunch dishes is PadGraPaow or the stirfried basil with meat as I mentioned. A Thai friend whose family has a small daytime restaurant says 70% of her orders are for that dish.

One thing that surprises me is that today the US markets are closed but I can't see any notes about this on the sites I regularly view. Just strange.

[lannarebirth]

I'm just guessing, but I would say less than 1% of muni bonds ever default. It's about as good as it gets in the Bond world. Anyone with a business to do so, would be happy to insure these bonds. That's why Warren Buffet offered to take themm off the hands of the struggling bond insurers. Great for him, a death sentence for them, as all they'd be left with was the junk. Nobody should be worried too much about munis, but for some reason they are. That's potentially a big problem.

-if they manage to separate the good stuff from the uggly... that would be a deadly blow for the... whole market. Because, it would be an admission that a large part of the system is totally flawed, for one very simple reason : too much debt. Like an overdose.

-the proposal of Buffet is exactly the type that they have to refuse: it would be an admission of weakness.

-beyond the problem of the insurance... we can see that there is still people willing to buy these bonds... With only one major difference : higher % (14, or 20 % like we saw this week). Anyway, the truth is that the demand is not large enough.

Like a sponge that can't soak water anymore.

-we are talking about credit crunch. But we forgot the mirror side : credit crunch = overdose of credit.

-this system in which you just have to issue cheap bonds to finance a city for instance, because year after year they are in deficit, can't continue ad vitam aeternam. Same with states and corporations.

-I think we are beyond the idea of "risk" there. There is just too much debt into the system, and the system can take it anymore.

i totaly agree with you....

there is way to much credit on the market. the big problem is that a lot of this credit will never be paid back.. and attempts of reseling it as done before are futile..

Maybe it's saying the same thing in a different way, but I don't think too much credit is the problem. I think too much cash to invest is the problem. With so much available cash to drive really risky investment vehicles, it's no wonder there would be defaults. It's a supply side issue IMO. A Rich Man's Panic is what's needed.

[VegasVic]

I hate to shine on your parade boys, I mean all the doom and gloom makes for such an interesting thread, but new home sales in the U.S. were up slightly and existing inventory numbers actually dropped a little. Granted one months figures certainly don't make a trend, but should the next 2-3 months show continued dropping inventory numbers then it looks like the real estate market in the U.S. may have turned! As more and more of those CDO's start showing up on the books of Black Rock,SoGen,Credit Suisse, UBS, BOJ, BOC and other public and private institutions worldwide, then we will be able to see not only the full scope of the situation, but that it is spread out all over the world much more than originally thought. Lanna, the rich mans panic as you put it may already be underway, there were hundreds of hedge funds that had huge short positions that were crushed in January and early Febuary and many more that have considerable CDO exposure on their books and those hedgies are not allowing their millionaire clients to cash out. When these hedge funds go under we will be able to peel back one more layer of the CDO onion, of course the only ones hurt by the hedge fund colapses will be the millionaire clients who trusted them I had a lengthy conversation with one of my connections at GS this weekend and he doesn't look for the real estate situation in the U.S. to turn until late Q3 or Q4 of this year, but he mentioned that Europe could be in for a far worse real estate downturn than the one that has occured in the U.S. and this could begin by the end of this summer(I guess that will be the gloomsters topic dejour a few months from now) . As for the Muni market, its a dream come true After 1979-1980, I never thought I would see a tax free investment ever reach that level again in my lifetime, but this subprime mess has created all kinds of opportunities (15%+ tax free return ). One final note, there is still a record level of cash sitting on the sidelines both in money market funds and sovereign wealth funds(a point that lanna briefly touched on) and when that cash is released into the market look for new records on the DOW and S&P 500!!! Now, back to the end of the world as we know it

[highdiver]

It would be nice from you BB, if you could explain your chart.

I mean, what is it ?

What the hel_l are "net autonomous factors" ?

he does not know!!!

he just likes cut and paste of pictures.with dooms day predictions .. and positioniong in shorts

[Abrak]

One final note, there is still a record level of cash sitting on the sidelines both in money market funds and sovereign wealth funds(a point that lanna briefly touched on) and when that cash is released into the market look for new records on the DOW and S&P 500!!! Now, back to the end of the world as we know it

Unlikely in my view...

More likely excess cash will drive record prices in bullion prices such as gold platinum and silver.

Seems to make more sense but we shall see....

[lannarebirth]

One final note, there is still a record level of cash sitting on the sidelines both in money market funds and sovereign wealth funds(a point that lanna briefly touched on) and when that cash is released into the market look for new records on the DOW and S&P 500!!! Now, back to the end of the world as we know it

Unlikely in my view...

More likely excess cash will drive record prices in bullion prices such as gold platinum and silver.

Seems to make more sense but we shall see....

Well, that's tthe point. Too much cash means bubbles in everything.

[VegasVic]

One final note, there is still a record level of cash sitting on the sidelines both in money market funds and sovereign wealth funds(a point that lanna briefly touched on) and when that cash is released into the market look for new records on the DOW and S&P 500!!! Now, back to the end of the world as we know it

Unlikely in my view...

More likely excess cash will drive record prices in bullion prices such as gold platinum and silver.

Seems to make more sense but we shall see....

Yep, if I were you I would buy all the gold I can at $930/ounce, and if gold slides back to the low $600's later this year I wouldn't worry because its far more likely that gold sees $1500-$2000/ounce, than it dips back below $500/ounce I mean given all the fundementals for golds recent run like, lower usage in dentistry, lower industrial demand, a slowing worldwide jewelry market and a relatively small price increase for extraction and production over the last 5 years, I would have to say that the only bubble in the world currently that even approaches the magnatude of the gold bubble, would be the bubble in chinese equities (even this bubble is begining to deflate). It will indeed be great fun revisiting this topic next fall

[LaoPo]

It will indeed be great fun revisiting this topic next fall

If your predictions are as reliable as your prediction that Mr. Huckabee will be the next President of the USA it will be indeed fun to watch what's next coming from the keyboard of your PC....watch out for a heat stroke in that desert

LaoPo

[LaoPo]

It will indeed be great fun revisiting this topic next fall

If your predictions are as reliable as your prediction that Mr. Huckabee will be the next President of the USA it will be indeed fun to watch what's next coming from the keyboard of your PC....watch out for a heat stroke in that desert

LaoPo

A reminder VegasVic:

"I will try to contact our next president (Mike Huckabee) and see if he will pray for you, for it sounds like you are in need of some strong prayer..2008-01-23"

It looks like you didn't pray hard enough Vic....

http://www.thaivisa.com/forum/index.php?sh...t&p=1777612

LaoPo

[VegasVic]

It will indeed be great fun revisiting this topic next fall

If your predictions are as reliable as your prediction that Mr. Huckabee will be the next President of the USA it will be indeed fun to watch what's next coming from the keyboard of your PC....watch out for a heat stroke in that desert

LaoPo

A reminder VegasVic:

"I will try to contact our next president (Mike Huckabee) and see if he will pray for you, for it sounds like you are in need of some strong prayer..2008-01-23"

It looks like you didn't pray hard enough Vic....

http://www.thaivisa.com/forum/index.php?sh...t&p=1777612

LaoPo

Poor little lao Have you been relegated to go and find obscure old posts where I was clearly being faceitous and baiting the individual that I was replying to? This is the type of "out of context garbage" I might expect from highdiver,palm,livinlos,abrak and the rest of that crew. While I realize that you have a very protective bent on the chinese equity market and of course I see that as one of the great bubbles of our time, but outside of this topic where we have always disagreed I once thought that you had a fairly objective take on the world economic situation, so I guess if you were to want to make a post about how wrong I once was it would be correct as to my impression of you back then. I don't spend as much time checking out Thai Visa as I use to, but I have noticed over the last 6 months or so that you have developed a penchant for posting obscure articles(sometimes even internet blog garbage), or passages from articles taken out of context to lend creedence to a particular point of view that you have. This makes you no better than Bingo, as a matter of fact Bingo might even have the edge on you because he will often just post an article without giving a point of view (even though everyone knows Bingos POV) and let the reader check out the article to see for themselves if it has any merit. One thing is for sure, one of us will be right and one will not, so we will indeed just have to revisit this in 6-9 months. My take by that time is that chinese equities will be on a continued downtrend as will gold(after it makes a blowoff top very soon), the U.S. market averages will all be higher than they are now, the dollar will have appreciated both against the puond and Euro, and if my friend at GS is correct then GB and the EU states will have entered into a real estate crisis that will dwarf the current U.S. real estate correction. In the mean time, perhaps you will be able to use your time a little more productively

[LaoPo]

It will indeed be great fun revisiting this topic next fall

If your predictions are as reliable as your prediction that Mr. Huckabee will be the next President of the USA it will be indeed fun to watch what's next coming from the keyboard of your PC....watch out for a heat stroke in that desert

LaoPo

A reminder VegasVic:

"I will try to contact our next president (Mike Huckabee) and see if he will pray for you, for it sounds like you are in need of some strong prayer..2008-01-23"

It looks like you didn't pray hard enough Vic....

http://www.thaivisa.com/forum/index.php?sh...t&p=1777612

LaoPo

Poor little lao Have you been relegated to go and find obscure old posts where I was clearly being faceitous and baiting the individual that I was replying to? This is the type of "out of context garbage" I might expect from highdiver,palm,livinlos,abrak and the rest of that crew. While I realize that you have a very protective bent on the chinese equity market and of course I see that as one of the great bubbles of our time, but outside of this topic where we have always disagreed I once thought that you had a fairly objective take on the world economic situation, so I guess if you were to want to make a post about how wrong I once was it would be correct as to my impression of you back then. I don't spend as much time checking out Thai Visa as I use to, but I have noticed over the last 6 months or so that you have developed a penchant for posting obscure articles(sometimes even internet blog garbage), or passages from articles taken out of context to lend creedence to a particular point of view that you have. This makes you no better than Bingo, as a matter of fact Bingo might even have the edge on you because he will often just post an article without giving a point of view (even though everyone knows Bingos POV) and let the reader check out the article to see for themselves if it has any merit. One thing is for sure, one of us will be right and one will not, so we will indeed just have to revisit this in 6-9 months. My take by that time is that chinese equities will be on a continued downtrend as will gold(after it makes a blowoff top very soon), the U.S. market averages will all be higher than they are now, the dollar will have appreciated both against the puond and Euro, and if my friend at GS is correct then GB and the EU states will have entered into a real estate crisis that will dwarf the current U.S. real estate correction. In the mean time, perhaps you will be able to use your time a little more productively

You're using way too many words to cover up your own mistakes and non-sense you're writing.

Maybe you should listen more to Barack Obama...

LaoPo

[sonicdragon]

It would be nice from you BB, if you could explain your chart.

I mean, what is it ?

What the hel_l are "net autonomous factors" ?

he does not know!!!

he just likes cut and paste of pictures.with dooms day predictions .. and positioniong in shorts

Net autonomous factors are instruments over which the Fed it has little or no direct control. It mainly consists of bank notes.

The chart is not a doomsday prediction. What is interesting about it is that it indicates the Fed has been draining the system - not adding to it (yes, really !). It shows a dramatic reduction in the traditional facilities (SOMA and repos) and a simultaneous expansion in the new TAF (the revamped discount window) which effectively redistributes liquidity from the money center banks to regional banks. I'm not sure about the significance of the increase in currency swaps - this may be a way of providing a standing facility to banks that could not provide eligible collateral - another redistribution mechanism, or it might be related to foreign currency reserves.

[bingobongo]

highdiver since you are such a close friend, i advise you to stay with a savings account at the bank of som tham, because if you can not interpret what i post, you have no business investing in global markets because you will soon be separated from your money

anyway, bear markets typically involve three legs: denial, realization and give-up

Edited February 22, 2008 by bingobongo

[Naam]

what's the reason that we can't discuss (what we think are) facts without emotions and personal attacks?

[LaoPo]

what's the reason that we can't discuss (what we think are) facts without emotions and personal attacks?

Hmmmmm...Pot, Kettle Black Naam ?

"feel also free to put one of your thumbs up your xxx. you have my permission to do so."

Remember who wrote that Naam ? you have a short memory Sir because it was you who wrote that, addressed at my person on January 7th, 2008...

I wrote 'xxx' in order not to have myself warned or banned...

Real class, style and dignity are never to be fooled. It always shows,..................... or not.

LaoPo

[midas]

This makes you no better than Bingo, as a matter of fact Bingo might even have the edge on you because he will often just post an article without giving a point of view (even though everyone knows Bingos POV) and let the reader check out the article to see for themselves if it has any merit. One thing is for sure, one of us will be right and one will not, so we will indeed just have to revisit this in 6-9 months. My take by that time is that chinese equities will be on a continued downtrend as will gold(after it makes a blowoff top very soon), the U.S. market averages will all be higher than they are now, the dollar will have appreciated both against the puond and Euro, and if my friend at GS is correct then GB and the EU states will have entered into a real estate crisis that will dwarf the current U.S. real estate correction. In the mean time, perhaps you will be able to use your time a little more productively

Vegas Vic - what miracle in the US will cause these thing to happen ?

[highdiver]

It would be nice from you BB, if you could explain your chart.

I mean, what is it ?

What the hel_l are "net autonomous factors" ?

he does not know!!!

he just likes cut and paste of pictures.with dooms day predictions .. and positioniong in shorts

Net autonomous factors are instruments over which the Fed it has little or no direct control. It mainly consists of bank notes.

The chart is not a doomsday prediction. What is interesting about it is that it indicates the Fed has been draining the system - not adding to it (yes, really !). It shows a dramatic reduction in the traditional facilities (SOMA and repos) and a simultaneous expansion in the new TAF (the revamped discount window) which effectively redistributes liquidity from the money center banks to regional banks. I'm not sure about the significance of the increase in currency swaps - this may be a way of providing a standing facility to banks that could not provide eligible collateral - another redistribution mechanism, or it might be related to foreign currency reserves.

Sonic

you are absolutely right. however the attached posting by the" threat master" was "for those of you understand it, this says a lot...........prepare accordingly"

it is a very wise remak is it not. does it realy say a lot???

so if a central bank distributes liquidity to regfional banks what effect does it have on you and your investments?? how is this conected to the topic of this thread.. global corection??

and since Bingo is in the know how he just states that we should prepare accordingly??? for what?? what can we prepare for when liquidity bases are decentrelised?? should we acuumulate bank notes? should we get rid of them??

Autonomous factors? These are simply those items in the central bank balance sheet that are neither monetary policy operations nor current account holdings of credit institutions.

[highdiver]

This makes you no better than Bingo, as a matter of fact Bingo might even have the edge on you because he will often just post an article without giving a point of view (even though everyone knows Bingos POV) and let the reader check out the article to see for themselves if it has any merit. One thing is for sure, one of us will be right and one will not, so we will indeed just have to revisit this in 6-9 months. My take by that time is that chinese equities will be on a continued downtrend as will gold(after it makes a blowoff top very soon), the U.S. market averages will all be higher than they are now, the dollar will have appreciated both against the puond and Euro, and if my friend at GS is correct then GB and the EU states will have entered into a real estate crisis that will dwarf the current U.S. real estate correction. In the mean time, perhaps you will be able to use your time a little more productively

Vegas Vic - what miracle in the US will cause these thing to happen ?

i dont think it will be a mirracle by the US so muc as it will be a Euro crisis.. it will not be the doillar apreciating from US perfromance but rather a Euro depreciation due to European lack off.

I agree with Vegas on one point Europe is heading for a real estate and credit problem.

[Naam]

what's the reason that we can't discuss (what we think are) facts without emotions and personal attacks?

Hmmmmm...Pot, Kettle Black Naam ?

"feel also free to put one of your thumbs up your xxx. you have my permission to do so."

Remember who wrote that Naam ? you have a short memory Sir because it was you who wrote that, addressed at my person on January 7th, 2008...

I wrote 'xxx' in order not to have myself warned or banned...

Real class, style and dignity are never to be fooled. It always shows,..................... or not.

LaoPo

ripping something out of context and presenting it in a thread which has no relevance is the way of a coward! you Sir deserved my words which i relayed to you in an answer to your PERSONAL MESSAGE in which you wrongly accused me.

that's all i have to say.

[Naam]

i dont think it will be a mirracle by the US so muc as it will be a Euro crisis.. it will not be the doillar apreciating from US perfromance but rather a Euro depreciation due to European lack off.

I agree with Vegas on one point Europe is heading for a real estate and credit problem.

i don't agree as far as a "european real estate crisis" is concerned. presently it looks as if only the bubbles in UK and Spain (and perhaps Ireland) will burst. but Europe consists of a lot of more states where real estate bubbles do not exist. there is no property bubble in Germany. in fact german property prices have hardly moved up within the last decade. luxury homes fetch less than they did 18 years ago after reunification. i also don't see (yet) a credit crunch in France and Germany although GDP expectations have been lowered a second time. problem is still the ECB which considers itself some sort of "Bundesbank successor" with no other task than to fight inflation. Trichet withstood until now political pressure to reduce rates. it will be interesting to watch how long he can defend this position. personally i expect 2 or 3 tiny rate cuts of 0.25%, but not starting before the end of the second quarter.

[LaoPo]

what's the reason that we can't discuss (what we think are) facts without emotions and personal attacks?

Hmmmmm...Pot, Kettle Black Naam ?

"feel also free to put one of your thumbs up your xxx. you have my permission to do so."

Remember who wrote that Naam ? you have a short memory Sir because it was you who wrote that, addressed at my person on January 7th, 2008...

I wrote 'xxx' in order not to have myself warned or banned...

Real class, style and dignity are never to be fooled. It always shows,..................... or not.

LaoPo

ripping something out of context and presenting it in a thread which has no relevance is the way of a coward! you Sir deserved my words which i relayed to you in an answer to your PERSONAL MESSAGE in which you wrongly accused me.

that's all i have to say.

You proved once more that:

"Real class, style and dignity are never to be fooled. It always shows,..................... or not."

My message to you has ALL the relevance in this topic since YOU asked: "what's the reason that we can't discuss (what we think are) facts without emotions and personal attacks? "

Speaking of emotions and personal attacks and telling me that that's the way of a coward...? Maybe you need a well sized mirror ?

I would laugh if it was not so pathetic.

But there's always -very little- hope you could learn from the content of my signature, written by a well known investor

LaoPo

[chiang mai]

Just popped in to say hi and make sure every thing's going OK and everyone's playing well together - yup, everything looks fine to me so I'll head back to the "taxi" thread. Keep up the good work.