U.s. Banking Crisis: Capitalism "gone Wild"?

[OriginalPoster]

I agree, there is still a lot of sht out there. Cash is king an, like yourself, most of my saving are also in fixed income income investments(FDIC). I do own Bank of America and EWY (Korean ETF) shares and am going to hold these. Need $24 for BofA and $33.20 for EWY to break even. Selling and realizing the $19k loss last week might be the wise thing to do, but I'm sticking with both long positions for now.

YES, cash is king IF "FDIC". but when you sit on a pile of cash which is not insured/guaranteed then the only thing guaranteed is insomnia. the only way to have a proper sleep again is buying treasuries or "bunds" which yield a pittance but render peace of mind.

What do you think of US Treasury TIPS (Inflation Protected Securities) bonds as a safe haven? Right now, 10 year TIPS are yielding 2.96% plus an amount equal to whatever inflation rate the US government admits to (in other words, equal to the CPI). The 5 year TIPS are presently yielding 2.46% plus the CPI rate. The ones originally issued earlier this year are below par now when bought on the secondary market but are guaranteed to pay out at at least par ($1000) upon maturity even in the event of deflation; and more than par if the CPI is higher on the bond's maturity date than it is now.

TIPS are indeed not a bad idea. but i rather forego yield instead of buying maturities longer than 12 months. question: "do short maturity TIPS exist and if yes what is their yield?"

The way to get short maturity in TIPS would be to buy a 10 year bond on the secondary market that was issued 9 years ago or a 5 year bond that was issued 4 years ago. Those will be trading above par though, so theoretically if the US government were to claim that we had deflation over the next year you could lose money. I don't know how to get price quotes on those bonds though; if you have an on-line brokerage account you might be able to get such data there.

Edited October 12, 2008 by OriginalPoster

[Naam]

I agree, there is still a lot of sht out there. Cash is king an, like yourself, most of my saving are also in fixed income income investments(FDIC). I do own Bank of America and EWY (Korean ETF) shares and am going to hold these. Need $24 for BofA and $33.20 for EWY to break even. Selling and realizing the $19k loss last week might be the wise thing to do, but I'm sticking with both long positions for now.

YES, cash is king IF "FDIC". but when you sit on a pile of cash which is not insured/guaranteed then the only thing guaranteed is insomnia. the only way to have a proper sleep again is buying treasuries or "bunds" which yield a pittance but render peace of mind.

What do you think of US Treasury TIPS (Inflation Protected Securities) bonds as a safe haven? Right now, 10 year TIPS are yielding 2.96% plus an amount equal to whatever inflation rate the US government admits to (in other words, equal to the CPI). The 5 year TIPS are presently yielding 2.46% plus the CPI rate. The ones originally issued earlier this year are below par now when bought on the secondary market but are guaranteed to pay out at at least par ($1000) upon maturity even in the event of deflation; and more than par if the CPI is higher on the bond's maturity date than it is now.

TIPS are indeed not a bad idea. but i rather forego yield instead of buying maturities longer than 12 months. question: "do short maturity TIPS exist and if yes what is their yield?"

The way to get short maturity in TIPS would be to buy a 10 year bond on the secondary market that was issued 9 years ago or a 5 year bond that was issued 4 years ago. Those will be trading above par though, so theoretically if the US government were to claim that we had deflation over the next year you could lose money. I don't know how to get price quotes on those bonds though; if you have an on-line brokerage account you might be able to get such data there.

thanks OP, but i am not willing bending over backwards and consider presently converting my remaining cash USD into EUR and buy "Bunds". if somebody had told me a couple of years ago that i have to worry holding too much cash i would have laughed out loudly. but banking with two banks who are among the sub-slime loss making frontrunners (one seems to be the champion ) i had to act.

[OriginalPoster]

I agree, there is still a lot of sht out there. Cash is king an, like yourself, most of my saving are also in fixed income income investments(FDIC). I do own Bank of America and EWY (Korean ETF) shares and am going to hold these. Need $24 for BofA and $33.20 for EWY to break even. Selling and realizing the $19k loss last week might be the wise thing to do, but I'm sticking with both long positions for now.

YES, cash is king IF "FDIC". but when you sit on a pile of cash which is not insured/guaranteed then the only thing guaranteed is insomnia. the only way to have a proper sleep again is buying treasuries or "bunds" which yield a pittance but render peace of mind.

What do you think of US Treasury TIPS (Inflation Protected Securities) bonds as a safe haven? Right now, 10 year TIPS are yielding 2.96% plus an amount equal to whatever inflation rate the US government admits to (in other words, equal to the CPI). The 5 year TIPS are presently yielding 2.46% plus the CPI rate. The ones originally issued earlier this year are below par now when bought on the secondary market but are guaranteed to pay out at at least par ($1000) upon maturity even in the event of deflation; and more than par if the CPI is higher on the bond's maturity date than it is now.

TIPS are indeed not a bad idea. but i rather forego yield instead of buying maturities longer than 12 months. question: "do short maturity TIPS exist and if yes what is their yield?"

The way to get short maturity in TIPS would be to buy a 10 year bond on the secondary market that was issued 9 years ago or a 5 year bond that was issued 4 years ago. Those will be trading above par though, so theoretically if the US government were to claim that we had deflation over the next year you could lose money. I don't know how to get price quotes on those bonds though; if you have an on-line brokerage account you might be able to get such data there.

thanks OP, but i am not willing bending over backwards and consider presently converting my remaining cash USD into EUR and buy "Bunds". if somebody had told me a couple of years ago that i have to worry holding too much cash i would have laughed out loudly. but banking with two banks who are among the sub-slime loss making frontrunners (one seems to be the champion ) i had to act.

Agreed, but if you already have a brokerage account in the States it might not require bending over backwards to buy TIPS, most likely it would only take a phone call to the trading desk. For instance, I have Fidility and Vanguard accounts that allow me to buy/sell any US government issued paper with neglible or nonexistent fees. However accounts like that might be hard to set up from abroad if you don't have one already; in my case I had those accounts opened already before I moved out of the US.

Edited October 12, 2008 by OriginalPoster

[Naam]

Agreed, but if you already have a brokerage account in the States it might not require bending over backwards to buy TIPS, most likely it would only take a phone call to the trading desk. For instance, I have Fidility and Vanguard accounts that allow me to buy/sell any US government issued paper with neglible or nonexistent fees. However accounts like that might be hard to set up from abroad if you don't have one already; in my case I had those accounts opened already before I moved out of the US.

although i lived for nearly 15 years in the U.S. and was for some years a "U.S. person" and tax payer i never held any assets there and i am not willing to transfer any assets to the U.S., neither to a bank and definitely not to a broker.

[OriginalPoster]

Agreed, but if you already have a brokerage account in the States it might not require bending over backwards to buy TIPS, most likely it would only take a phone call to the trading desk. For instance, I have Fidility and Vanguard accounts that allow me to buy/sell any US government issued paper with neglible or nonexistent fees. However accounts like that might be hard to set up from abroad if you don't have one already; in my case I had those accounts opened already before I moved out of the US.

although i lived for nearly 15 years in the U.S. and was for some years a "U.S. person" and tax payer i never held any assets there and i am not willing to transfer any assets to the U.S., neither to a bank and definitely not to a broker.

Why's that, do you consider brokerage accounts in the US to be unsafe or is it a matter of political principle? Fidelity and Vanguard accounts are insured by the government's SIPC insurance program for up to US$500K should the brokeage firm go bust or should your broker head to Tijuana in the middle of the night with all your money, and they have private insurance for holdings in excess of US$500K.

Edited October 12, 2008 by OriginalPoster

[midas]

In view of the comments by Dominique Strauss-Kahn head of the International Monetary Fund

over the weekend,I know about the history of the IMF but I cant remember - does the IMF

actually have any decent funds available ? In other words does his assurance that

" IMF was ready to lend to countries in dire need of capital " mean anything ?

It was also interesting to hear The Governor of California wrote to the US Treasury

Secretary also over the weekend warning that the State of California urgently needs

$7 billion and it cant find anywhere to borrow the money right now

[LaoPo]

In view of the comments by Dominique Strauss-Kahn head of the International Monetary Fund

over the weekend,I know about the history of the IMF but I cant remember -

does the IMF

actually have any decent funds available ? In other words does his assurance that

" IMF was ready to lend to countries in dire need of capital " mean anything ?

Here's the answer:

http://www.imf.org/external/np/exr/facts/howlend.htm

On the bottom of which it says:

Fast Facts on IMF Lending

(as of August 28, 2008)

Loanable funds $201.0 billion

Loans outstanding $18.3 billion to 65 countries

of which: concessional loans $6.3 billion to 57 countries

So, Midas, if you're in dire need, I'm sure they will have some dosh left for you

LaoPo

[Naam]

IMF - Loanable funds $201.0 billion

= lukewarm fart in comparison to what is needed.

[lannarebirth]

IMF - Loanable funds $201.0 billion

= lukewarm fart in comparison to what is needed.

Seems like only yesterday that a Triilion Dollars was pretty fair sum of money. Better start learning to pronounce Quadrillion. I know I'll lose track of all those zeroes though.

Edited October 12, 2008 by lannarebirth

[Naam]

Agreed, but if you already have a brokerage account in the States it might not require bending over backwards to buy TIPS, most likely it would only take a phone call to the trading desk. For instance, I have Fidility and Vanguard accounts that allow me to buy/sell any US government issued paper with neglible or nonexistent fees. However accounts like that might be hard to set up from abroad if you don't have one already; in my case I had those accounts opened already before I moved out of the US.

although i lived for nearly 15 years in the U.S. and was for some years a "U.S. person" and tax payer i never held any assets there and i am not willing to transfer any assets to the U.S., neither to a bank and definitely not to a broker.

Why's that, do you consider brokerage accounts in the US to be unsafe or is it a matter of political principle? Fidelity and Vanguard accounts are insured by the government's SIPC insurance program for up to US$500K should the brokeage firm go bust or should your broker head to Tijuana in the middle of the night with all your money, and they have private insurance for holdings in excess of US$500K.

i consider any funds or assets in the U.S. as unsafe. that's why i sold my home and left leaving just a current account on which are never more than a few thousand dollars (which come in handy for certain purposes).

reasons: mainly "homeland security" and "patriot act". i am not an american citizen and i have seen how the constitutional rights of american citizens were and are still raped. the founding fathers would be rotating in their graves if they knew. that i do not agree with american politics is secondary.

edited for addendum: setting up a brokerage account shouldn't be a big problem. both my wife and me have social security numbers, a bank account and a mailing address.

Edited October 12, 2008 by Naam

[NovaBlue05]

You missed my point. My "fear" is not in Obama. To the contrary, I am hopeful, if not confident, he can bring about some significant change. ......"

It is the Congress I worry about, ......."

I agree. It's not even the rank and file Democrats in Congress that I worry about. I voted for Demcrats in my state in '06. It's the members of Congress on the Democrats side that are on the left fringe ideologically but have nonetheless....inexplicably...been placed in the leadership positions of that party. Those in the leadership positions tend to drive the agenda of the rest of their party......and the President cannot ignore them

I would just hope that Barama can be strong enough to keep these kids in check. If not.....he will be a one term flash

[LaoPo]

IMF - Loanable funds $201.0 billion

= lukewarm fart in comparison to what is needed.

....NOW.....DON'T DO THAT ANYMORE on a quiet Sunday Afternoon Naam, you hear ?

LaoPo

[lannarebirth]

i consider any funds or assets in the U.S. as unsafe. that's why i sold my home and left leaving just a current account on which are never more than a few thousand dollars (which come in handy for certain purposes).

reasons: mainly "homeland security" and "patriot act". i am not an american citizen and i have seen how the constitutional rights of american citizens were and are still raped. the founding fathers would be rotating in their graves if they knew. that i do not agree with american politics is secondary.

.

It's not as if they didn't sound a warning. Some Thomas Jefferson comments:

Banking institutions, paper money, and paper speculation are capable of undermining the nation's stability…. The Constitution does not empower the Congress to establish a National Bank. Rather than trust the nation's currency to private hands, the circulating medium should be restored to the nation itself to whom it belongs.

The system of banking

have... ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens.

A spirit … of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped.

Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, … They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation.

All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass…. It nourishes in our citizens habits of vice and idleness instead of industry and morality... It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed.

If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around [the banks], will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.

http://etext.virginia.edu/jefferson/quotations/jeff1325.htm

[flying]

reasons: mainly "homeland security" and "patriot act". i am not an american citizen and i have seen how the constitutional rights of american citizens were and are still raped. the founding fathers would be rotating in their graves if they knew. that i do not agree with american politics is secondary.

Sad to say this is how I also feel for a good many years now.

I wish it were easy for me to leave. I have a ways to go yet & have all of my family here too.

My embaressment of my government started back before the homeland security & patriot act.

Funny when I was younger I would look at folks in other countries that had problems & wonder why they didn't just leave.

Now I know.

[LaoPo]

i consider any funds or assets in the U.S. as unsafe. that's why i sold my home and left leaving just a current account on which are never more than a few thousand dollars (which come in handy for certain purposes).

reasons: mainly "homeland security" and "patriot act". i am not an american citizen and i have seen how the constitutional rights of american citizens were and are still raped. the founding fathers would be rotating in their graves if they knew. that i do not agree with american politics is secondary.

.

It's not as if they didn't sound a warning. Some Thomas Jefferson comments:

Banking institutions, paper money, and paper speculation are capable of undermining the nation's stability…. The Constitution does not empower the Congress to establish a National Bank. Rather than trust the nation's currency to private hands, the circulating medium should be restored to the nation itself to whom it belongs.

The system of banking

have... ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens.

A spirit … of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped.

Our public credit is good, but the abundance of paper has produced a spirit of gambling in the funds, … They say the evil will cure itself. I wish it may; but I have rarely seen a gamester cured, even by the disasters of his vocation.

All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass…. It nourishes in our citizens habits of vice and idleness instead of industry and morality... It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed.

If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around [the banks], will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.

http://etext.virginia.edu/jefferson/quotations/jeff1325.htm

What a vision he had....200 years ago.

LaoPo

[unomi]

It was one of the reasons they wanted full independance, to free themselves of the bank of england.

While they were a colony they were not allowed to have their own currency, it must be imported and loaned to the colony, and they had to pay interest on that loan to the BoE. Exactly the same way that the Fed today loans money to the government and people.

The BoE is as public an institution as the Fed.

http://www.ojczyzna.pl/BOOKS/the-money-changers-ch6-9.htm

[VegasVic]

reasons: mainly "homeland security" and "patriot act". i am not an american citizen and i have seen how the constitutional rights of american citizens were and are still raped. the founding fathers would be rotating in their graves if they knew. that i do not agree with american politics is secondary.

Sad to say this is how I also feel for a good many years now.

I wish it were easy for me to leave. I have a ways to go yet & have all of my family here too.

My embaressment of my government started back before the homeland security & patriot act.

Funny when I was younger I would look at folks in other countries that had problems & wonder why they didn't just leave.

Now I know.

Yes indeed flying! The downfall of the U.S.A. and the deprivation of citizens rights began long before the Patriot Act, back to the early 1960's and LBJ's great society Sadly the Fedral government and its interelationship with special interests and PAC's seems to have strengthened every year since then. Ike warned us all about the military industrial complex when he left office back in 1961, and he was correct except that it expanded way beyond just the military industrial complex, now special interests have a death grip on our government and with the potential election of Mr. Obama I fear that these special interests will grow even further as will the size and power of the fedreral government over its citizens. Mr. Jefferson is undoubtedly turning over in his grave !!! God bless America, even with all of its shortcomings it still remains the greatest nation on earth as far as freedom and opportunity goes, however ten or twenty years from now I fear that I may not be able to say that Perhaps the seeds of a second American Revolution are being sewn presently!

[flying]

now special interests have a death grip on our government and with the potential election of Mr. Obama I fear that these special interests will grow even further as will the size and power of the fedreral government over its citizens. Mr. Jefferson is undoubtedly turning over in his grave !!! God bless America, even with all of its shortcomings it still remains the greatest nation on earth as far as freedom and opportunity goes, however ten or twenty years from now I fear that I may not be able to say that Perhaps the seeds of a second American Revolution are being sewn presently!

Well I agree with the last part & that USA is made up of mostly good folks but.

Whether it is Obama or McCain makes no difference.

The folks that run the USA are not up for election every 4 years.

[geoffphuket]

This is the person we should all blame for the current state of world affairs: http://en.wikipedia.org/wiki/Christopher_Columbus

[lannarebirth]

Is the bailout really meant to help those in need? You decide.

http://articles.moneycentral.msn.com/Inves...-be-afraid.aspx

Edited October 13, 2008 by lannarebirth

[pkrv]

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

[lannarebirth]

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.

[pkrv]

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.

Tough one - Flickering through the board some of the more vunerable countries are sort of doing the same - though I don't think Germany is - Unfortunatly GBPDEM= no longer exists.

[AlexLah]

How can printing more money out of thin air, solve this crisis?

Where is that money suddenly come from?

[pkrv]

How can printing more money out of thin air, solve this crisis?

Where is that money suddenly come from?

The answer is our life long savings, in UK terms our nest egg - This is now a big problem and IMO we have to 'redeploy'.

[sbk]

Off topic and racist comments and their responses, have been deleted. Keep this on topic and keep your racist opinions out of this per forum rules regarding such comments.

3) Religious or racial slurs.... will not be tolerated.

Further such comments will result in moderator action

[flying]

Today is the 13th & the stock market is so happy today.......Why?

[dave_boo]

Today is the 13th & the stock market is so happy today.......Why?

The Dow finished up 936 points(11%); largest gain in terms of points and fifth largest in terms of percentage in history.

[flying]

Today is the 13th & the stock market is so happy today.......Why?

The Dow finished up 936 points(11%); largest gain in terms of points and fifth largest in terms of percentage in history.

Yes & I wonder why?? Nothing has really changed has it?? hmmmm

[dave_boo]

If I had the answer, I'd be having my servant type this message.

I think it's a positive sign, however, I don't slightly believe the downward trend has finished.