Financial Crisis

[12DrinkMore]

Duplicate post deleted.

Edited June 17, 2010 by 12DrinkMore

[12DrinkMore]

Duplicate post deleted.

Edited June 17, 2010 by 12DrinkMore

[12DrinkMore]

I have read so many resources now and everyone is saying the same thing

- the entire oil well is disintigrating through erosion and the hole is getting

bigger which is why the estimates are being revised up- even so way way understated.

But the government would never hold anything back now would it?

Maybe we need an Oil Crisis thread?

Here is a post from a guy who seems to know what he is writing about.

The Oil Drum | Deepwater Oil Spill - A Longer Term Problem, Personnel - and Open Thread 2

He does not exhibit any optimism about a successful (whatever that might mean) solution.

[Gambles]

The additional money isn't circulating

It's being absorbed into bank balance sheets (to plug hideen holes) like rainfall in the desert

You make this point which is absolutely correct 'it is plugging holes in balance sheets' 'it is like rainfall in the desert'.

This is why it is not inflationary (you have merely avoided deflation). Still the whole point is that with enough 'rainfall' you can flood a 'desert' and once the hole is plugged enough water will make the bucket 'overflow'.

yes but once the flood starts it becomes almost impossible to control in the real world (don't tell Ben)

I concur.

No signs of water yet.

and I suspect not for some time. For anyone who didn't see what I wrote for The Nation today -

All economic historians know about the tragic year of 1932. Back then everyone believed that the measures taken by Hoover’s administration had beaten the recession of the day. Stock markets and optimism soared.

Fast-forward 78 years to a similar situation being described by Jeremy Grantham, founder/director of GMO, a leading US-based global investment firm.

“The market has had a near record rally, sprinting far past our estimated fair value of 875 for the S&P 500. [ben] Bernanke [Chairman of the US Federal Reserve] is, in fact, begging us to speculate, and is being mean only to conservative investors like pensioners who cannot make a penny on their cash.”

As in the days that followed the great Wall Street Crash of 1929, the masters of the universe have taken charge. They have prescribed a massive bailout programme that prevented the complete meltdown of the financial system and engineered a temporary economic recovery. The obvious cost of this bailout has been the unprecedented deterioration of the Federal balance sheet. But Grantham points to the less obvious, but perhaps more severe cost incurred by rewarding recklessness and saving the incompetent.

“Weak enterprises, financial and other, were not gobbled up by the stronger, more prudent, and more competent natural survivors, and there is a long-term cost in that. So now, Bernanke begs us to speculate, and we are obedient. Despite being hammered down twice in 10 years and getting punished for speculating, we again pick ourselves up off of the canvas and get back into the good fight. Such persistence is unprecedented – 20 years for each really painful experience has been the normal recovery time – but Uncles Ben and Alan [Greenspan, former Chairman of the US Fed] have treated us so well in these two disasters that, with hindsight, they don’t feel so bad after all. Yes, the market is still down a lot in over 10 years and on our data is likely to have a second consecutive very poor decade, but we have had two wonderful recoveries in which the more speculative you were, the more money you made. So why not break the historical rules and try a third time? Perhaps this time it will be lucky.”

Given the current state of the US economy and the global markets our friend at GMO is far from optimistic about what where the Fed’s policy will likely lead us – off the edge of a cliff.

“To do it twice seems like sadism. And for us to play the game once more seems like lining up behind hot stoves and begging, “Please, can I burn my hand a third time?” Investors used to be more pain averse... The key shift seems to be the confidence we now have in Bernanke’s soldiering on with low rates and moral hazard to the bitter end, if necessary, cliff or no cliff. The concept of moral hazard has changed. It used to be a vague expression of intent: ‘if anything goes wrong, I will help you if I can.’ It seems to have been transmuted into a cast-iron commitment. The Fed seems to be pledging that it will bail us out after every flood. All that is lacking is a rainbow…. This time, the recovery for the total market was 80% in one year, second only to 1932, and the really speculative stocks are almost double the market, as they also were in 1932.”

Back in 1932, however, the conditions were different. Grantham believes they were more conducive to such a rally. But he argues that today’s excessive market responses have occurred because stocks are far more sensitive to low rates and the Fed’s policy than the real economy itself.

The economy is “limping back into action” as it attempts to shake off the excessive mortgage defaults and public debt, he says, but it will face “seven lean years” before the fundamentals get back on the right track. And this calls for a more bearish and boorish approach to investment than the speculative bull being reared on Bernanke’s ranch.

“The economy’s durability and flexibility is usually undersold by the bears, and I have generally been leery of underestimating its potential. But we can probably agree that the economy is plagued by unusual problems this time. It is therefore perhaps more likely that the economy will recover in fits and starts, and that over several years it will underperform its historical record.”

This is why John Sheehan, managing director of Bangkok-based Global Markets Asia, has for some time now seen the 12 months starting from July as both a tricky and crucial time – even a positive outcome is fraught with danger, yet whatever happens over the next year will play a defining role in what path the global economy takes for many years to come.

If both the economic recovery and the drop off in unemployment are slow then Bernanke will keep rates very low, as promised. “In that case,” says Grantham, “stocks and general speculation will very probably rise from levels that are already overpriced. And if they do, Bernanke will definitely not be concerned and has told us as much.”

Despite many foreign central banks taking sensible, precautionary action against the risks from emerging asset class bubbles, Bernanke has adopted Alan Greenspan’s stance of “let the bubbles take care of themselves”. He may event doubt their existence, according to Grantham, which is a disturbing perspective given the speculation-fuelled foam bath that lurks around the corner.

On the upside if the US recovery is strong, sustained and broad then interest rates will likely rise in time to cap the risk from rising bubbles. This, in turn, will leave us the substantially overpriced US market and more moderate global equities and risk premiums to deal with. The market would likely decline, but not disastrously so, says Grantham. “If, however, the economy only limps along, which seems more likely to me, then we run a very real danger of a third dangerous bubble in stocks and in risk-taking in general.”

Despite the seemingly obvious financial disaster this would create, Grantham remains convinced that the Fed chief would still refuse to raise interest rates. “Bernanke will do nothing to let the air out gently. His lack of antibubble action is pretty much guaranteed.”

While the end of such events is notoriously hard to predict, generally speaking the larger the bubble the greater the shock to the economic and financial system when it finally bursts. The key question is how can the economy recover from a third seismic shock? And where would the resources to revive the economy come from?

Improving unemployment just might provide a hook from which to hang our hopes, that combined with something to dash the speculative spirit. Otherwise history will likely repeat itself without the financial mentalists having learned from their past mistakes.

Looking at the current economic fundamentals, Grantham believes we’re facing a clear range of possibilities and these correlate with the “great divergence” referred to by S&P award-winning fund manager Scott Campbell during his recent Bangkok visit – basically an environment where anything that can happen probably will happen.

Those who believe that history repeats or has patterns that emerge over time may be interested in the fact that many of the problems of the “Tragic Year” started in Europe which is also at the heart of the heightened risks and financial shockwaves right now. The difficulties that the global economy faced in 2008 were comparable to the scale of those experienced in 1929. And the equity markets’ initial reactions until the beginning of last year also were very similar.

Looking at the 3 months before & after each of the three crashes:

Graph1.doc

The stimulus packages distorted the picture by providing strong temporary support to equity markets. Observers such as Ron Paul have said the GDP and market rebound is due entirely to stimulus measures which have led to an artificially overvalued position today.

An 18 month time frame:

Graph2.doc

A Dow below 6,000 today is what we might be looking at without the short-term artificial boost from the rescue packages. This coincides much more closely with Grantham’s views on the real value of the Dow today.

The implication that we’ll see a 40% fall when the stimulants wear off may be alarming, but just look at what could happen if we then track the tragic year of 1932 and its consequences.

And finally, here is a five-year graph:

Graph3.doc

The Dow took quite a different track in the years following 1987 (green curve) than it did following 1929 (red curve). However, it was not until late May following either of these crashes that there was any noticeable trend toward either recovery (1988) or further decline (1930).

The lowest close of The Dow during the Great Depression was on 8 July 1932, when it closed at 41.22. This would be the equivalent of about 1330 points today.

It may be much too early to start thinking that the worst is over and it might well be time to wake up to the fact that, after the unprecedented stimulus which has helped paper over the cracks in the market has finally worn off, a DJIA plummet to below 2,000 next year rising to just more than 3,000 in three years time is a distinct possibility if history repeats itself.

If so, it may be time to start feeding Bernanke’s overfed bull to the bears.

[Gambles]

The additional money isn't circulating

It's being absorbed into bank balance sheets (to plug hideen holes) like rainfall in the desert

You make this point which is absolutely correct 'it is plugging holes in balance sheets' 'it is like rainfall in the desert'.

This is why it is not inflationary (you have merely avoided deflation). Still the whole point is that with enough 'rainfall' you can flood a 'desert' and once the hole is plugged enough water will make the bucket 'overflow'.

yes but once the flood starts it becomes almost impossible to control in the real world (don't tell Ben)

I concur.

No signs of water yet.

Arid...

[Gambles]

The problem with discussing naked short selling is that it is a bit like a religion.With its high priests shouting, "If you ban it, the capital markets will cease to exist". But there is no smoke without fire, and because the discussion about banning naked short selling exists there is almost certainly a bit of a fire burning there.

The more efficient the capital markets the greater the volume of capital that should eb attracted. In which case the relevance of naked shorting should be how well it contributes to the efficiency of the markets.

Some activities (insider dealing for example) generate profits but only for an unfairly priviledged minority. Is naked shorting restricted? No- because anyone can.

Is it efficient from a market point of view? If not why would it happen - it exploits inefficiencies in the markets and ultimately investors want to see more efficient markets - this is ultimately the way to broader, more efficient capital markets.

Therefore short selling is in the broad long term interest of all market participants.

Banning it promulgates inefficiencies in security prices and therefore ultimately has a negative effect on the longer term attractiveness of capital markets.

1. Just because anyone can, does not been that the practice should not be controlled for the health of the rest of us. Anybody can smoke, but that does not been they should be allowed to smoke everywhere at any time.

2. I don't think that you are drawing a logical conclusion in that just because something happens it is efficient from a market's point of view.

3. Also I would disagree that all investors are interested in efficient markets, in particular the big guys are much more interested in the creation and exploitation of inefficiencies.

4. And the last two conclusions, based entirely on the premise that "because naked shorting exists it must be beneficial", IMO are also false.

But, if you get a chance, please, please read Machlup.......

The closest I've found is

http://mises.org/boo...chlup-Stock.pdf

Which will join the queue of things to read.

But amongst the myriads of stuff on this subject, here is an excerpt from

http://www.cato.org/...1n1/v31n1-6.pdf

Current security owners' objection to short selling is easy to see, and such objections are not wholly without merit from their perspective. Short selling, after all, does affect

the price at which existing security owners can sell today. If demand curves for securities are downward sloping, then short selling generates prices that are lower than they would be if only the outstanding securities were available for trade in the market. As long as the current demand curve Do reflects existing demand for the security, the amount of the short selling will depress the price by virtue of the "as-if" increase in quantity. This price decline has a real impact on the ability of existing share owners to sell their shares. The short selling has already satisfied the latent demand of all the marginal buyers from Po to Po+s. The marginal seller among existing security owners is clearly worse off after the short sale than before. Before the short sale, the marginal owner/seller would be able to sell at a bit below Po. After the short sale, the marginal owner/seller would have to sell at a bit below Po+s, which is less than Po. Short selling allows a non-owner to satisfy demand from Po to Po+s.

Short selling also generates trading prices that do not reflect the willingness of existing owners to sell at the prices generated by the short sales. In securities markets, a sale price conveys socially valuable information about the minimum value that the marginal buyer places on owning the security sold. If the seller is an existing security owner selling from his current holdings of the security, the sale also reveals that the new buyer values that security more than the selling owner (setting aside liquidity needs that may require a seller to sell despite his or her valuation). But if the seller is a speculative short seller, the sale reveals something different. In particular, a speculative short sale generates the minimum value that the marginal buyer places on the security, just as would be the case in a sale by an existing security owner. But although the speculative short sale allows us to conclude that the speculative short seller values the security less than the new buyer, we cannot conclude that any existing security owner values the security at less than the price struck in the short sale.

Of course, this is why speculative short selling is risky for the seller. The speculative short seller must, at some point, find a current owner willing to sell at below the price struck in the speculative short sale to cover the short. Otherwise, the speculative short seller will incur a loss.Finally, and perhaps most relevant from a social cost/benefit perspective, short selling will generate price volatility even when short sellers are incorrect about future demand for the security. If demand stays fixed at demand curve Do, then short selling can generate price changes from Po to Po+s at the short sale, and then from Po+s back to Po when the short sale is unwound. In this manner, short sellers can bounce the price back and forth. Because they only lose transactions costs in the process, short sellers can — innocently or deliberately — induce heightened price volatility. Importantly, that volatility is unrelated to any changes in economic fundamentals of the economy at large or the security in isolation. Just as society benefits when short sellers generate prices better reflective of rational demand, some parts of society may lose when short sellers generate price volatility unrelated to fundamental valuation.

So who has the greatest right? The short term naked short speculator making a quick turn in the market through increasing volatility and causing prices to be below their fundamental valuation set by the long term holders, or the long term holders right to not have this froth and instability?

And I take the side of stability and the rights of those who actually own the asset.

I take the side of what is right

What you say confers by ownership of the asset the prevention of the rights of others to exploit any fallacy in that opinion - in which case it becomes a self-fulfilling prophecy until it unwinds (generally a harder fall from a loftier position) because there weren't short guys around to keep the price honest

Your assumption is flawed in that it suggests that market price reflects fundamental value - EMH is so long dead, buried and cold in the ground that I think that we all now know that pricing is inefficient. Naked shorting is a mechanism that helps to restore efficiency - ban it and you end up with The Emperor's new clothes - we all know the prices are wrong but no-one can do anything about that either for their own good or for the market.

I think that this is best illustrated by a simple example

Einhorn, Cornwall, Burry, Paulson, a few others and GS were all shorting sub-prime in '06 because they could see that it was nonsense. In 07 sub-prime started to correct and in '08 we had the banking crisis. Leaving aside GS (who weren't naked shorters and therefore would be the only ones that you would be happy with in terms of their actions in relation to the integrity of the markets but with whom I'm mightily unhappy) you wouldn't permit the actions of the others.

Let's just work this through -

Q. Did sub-prime collapse because of the actions of tehse guys or because of flaws in the assets themselves? (A. The assets)

Q. Therefore did the shorters make the situation better or worse? (A. Better because if they hadn't been shorting this phantasm could have run a couple of years longer and been a much more unwieldy bubble by then and its consequences devastating)

Refusing to let markets correct has never worked and I believe will never work. Look back at the The Great Depression (add Rothbard to your reading list if you haven't already read) and you'll see that interference in normal market adjustment mechanisms only makes matters worse

So I'm afraid that suddenly banning naked shorting is just unnatural, bad for the markets, morally indefensible and illogical. Regulate yes (but in a way that benefits the market as a whole and participants as a whole not just a few priviledged existing equity holders), interfere no. It's just wrong, wrong, wrong!

Yes that is the right download for Machlup - from what I remember not much (if at all) about naked shorting - the major concern of the day was stock margin accounts, but the general principles of capital formation would apply very well and should lead to the conclusion that naked shorting is a good thing with a clear reward and risk. My only concern about naked shorting is who should do it - the industry has such an appalling record of (not) explaining risk properly that it's hard to imagine that they would any better with this and therefore individual shorters might end up taking on too much risk. So my only worry os for the shorters themselves but that's really a regulatory issue.

[Abrak]

Arid...

Yes it is and will remain so for a while but it is 'raining'.

I mean who would have thought it - those poor Germans - the Euro is struggling to survive and the concept is rapidly turning from changing the Greeks into Germans, to making the Germans into Greeks. Now that Greek Sovereign debt is turning into junk, the ECB is starting to monetize it. Who would have thought it?

Of course they are just 'plugging holes' in the banks balance sheets, not least the German banks. And with enough monetization, they might even be able to keep the Euro together. But at that point it wouldnt be worth having.

[midas]

I have read so many resources now and everyone is saying the same thing

- the entire oil well is disintigrating through erosion and the hole is getting

bigger which is why the estimates are being revised up- even so way way understated.

But the government would never hold anything back now would it?

Maybe we need an Oil Crisis thread?

Here is a post from a guy who seems to know what he is writing about.

The Oil Drum | Deepwater Oil Spill - A Longer Term Problem, Personnel - and Open Thread 2

He does not exhibit any optimism about a successful (whatever that might mean) solution.

If we keep it one thread it reminds us how yet again just like

in the banking crisis the government treats the sheeple like mushrooms.

[lannarebirth]

The problem with discussing naked short selling is that it is a bit like a religion.With its high priests shouting, "If you ban it, the capital markets will cease to exist". But there is no smoke without fire, and because the discussion about banning naked short selling exists there is almost certainly a bit of a fire burning there.

Naked short selling IS banned. It is illegal, in US markets anyway. I don't deny it occurs and it is harmful to markets but there seems to be a lack of will in enforcement of the law. Normal or covered short selling is just a normal, healthy function of markets.

[churchill]

A Train crash happening in front of our eyes ! Anyone got any better suggestions than gold ? Perhaps Silver !

Spain to Use $30 Billion "Fund for Orderly Bank Restructuring"; Spain's Borrowing Costs Rise; Is an EU or IMF Bailout of Spain in the Works?

Mish's Global Economic Trend Analysis

Edited June 17, 2010 by churchill

[Naam]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

[Abrak]

If we keep it one thread it reminds us how yet again just like

in the banking crisis the government treats the sheeple like mushrooms.

Good idea then we can all remember how people are prone to believing in conspiracy theories in blogs by 'unnamed scientists.'

Oil Volcano Pressure Too Strong For Containment

The carnage to the United States is so staggering, it will take your breathe away. Should what the scientists who are trying to warn everyone about be even close to being true... all of Florida will be completely destroyed as will everyone and everything on it.

Oil Volcano Pressure Too Strong For Containment

Lets start with the flow rate 80,000 to 100,000 barrels a day. Absolutely no problem here. It is at least double current estimates but they have already increased current estimates by at least 5 fold. By the way that makes it already the most 'productive' offshore well in the world.

Next lets move on to theory. Eventually a huge eruption of oil will occur where by 'several billion' barrels will spurt into the ocean causing a massive disaster. No problem with the massive disaster. But lets take several billion as being - '2'. At the 'current' flow rate of 100,000 it will take approximately 54 years for that to happen.

Of course, the expectation is an 'eruption' increases the flow rate say increase 100 fold whereby more oil spills into the sea each day than is produced by 48,000 wells in the US. And this goes on for at least six months.

Now there a couple of reasons this is highly unlikely.

1) If there are huge amounts of oil just waiting to break to the surface then it is rather strange that no similar event has happened in the past 1000 years what with all the earthquakes, fissures and tectonic movements.

2) The other is the simple physics of the concept. The Oil pipe is less than 1.5 metres wide but it extends 4300 metres below the sea bed and another 1500m to the surface. It is rather like a needle that is at least the height of a house. Given the maths imagine exactly how much pressure you need to actually get that oil to the surface.

Or more basically take a large tank of water on the top of a house attach a one inch hose to it and point it in the air. Maybe the water would shoot up 20m. Then attach a 5 inch hose and the water wont go up very far and then will go up even less. So how a 1.5m drill hole could result in some sort of volcanic eruption of oil from 4 kilometres below the sea bed is totally beyond me.

Theoretically if you could increase the diameter of the drill hole, you could stop the oil reaching the surface. That is why they need to drill relief wells. It is also why there are 4,000 offshore wells in the gulf of Mexico.

Edited June 17, 2010 by Abrak

[12DrinkMore]

I take the side of what is right

What you say confers by ownership of the asset the prevention of the rights of others to exploit any fallacy in that opinion - in which case it becomes a self-fulfilling prophecy until it unwinds (generally a harder fall from a loftier position) because there weren't short guys around to keep the price honest

Your assumption is flawed in that it suggests that market price reflects fundamental value - EMH is so long dead, buried and cold in the ground that I think that we all now know that pricing is inefficient. Naked shorting is a mechanism that helps to restore efficiency - ban it and you end up with The Emperor's new clothes - we all know the prices are wrong but no-one can do anything about that either for their own good or for the market.

I think that this is best illustrated by a simple example

Einhorn, Cornwall, Burry, Paulson, a few others and GS were all shorting sub-prime in '06 because they could see that it was nonsense. In 07 sub-prime started to correct and in '08 we had the banking crisis. Leaving aside GS (who weren't naked shorters and therefore would be the only ones that you would be happy with in terms of their actions in relation to the integrity of the markets but with whom I'm mightily unhappy) you wouldn't permit the actions of the others.

Let's just work this through -

Q. Did sub-prime collapse because of the actions of tehse guys or because of flaws in the assets themselves? (A. The assets)

Q. Therefore did the shorters make the situation better or worse? (A. Better because if they hadn't been shorting this phantasm could have run a couple of years longer and been a much more unwieldy bubble by then and its consequences devastating)

Refusing to let markets correct has never worked and I believe will never work. Look back at the The Great Depression (add Rothbard to your reading list if you haven't already read) and you'll see that interference in normal market adjustment mechanisms only makes matters worse

So I'm afraid that suddenly banning naked shorting is just unnatural, bad for the markets, morally indefensible and illogical. Regulate yes (but in a way that benefits the market as a whole and participants as a whole not just a few priviledged existing equity holders), interfere no. It's just wrong, wrong, wrong!

Yes that is the right download for Machlup - from what I remember not much (if at all) about naked shorting - the major concern of the day was stock margin accounts, but the general principles of capital formation would apply very well and should lead to the conclusion that naked shorting is a good thing with a clear reward and risk. My only concern about naked shorting is who should do it - the industry has such an appalling record of (not) explaining risk properly that it's hard to imagine that they would any better with this and therefore individual shorters might end up taking on too much risk. So my only worry os for the shorters themselves but that's really a regulatory issue.

Remember we are talking about naked, where the volume of shares in the market is increased beyond the number actualy issued versus normal shorting where there is no increase in the number of shares.

We are not going to agree on this, because, as I said before it is a bit of a religion. But in the States naked short selling is banned, and the Europeans have partially banned it. So there are clearly a number of influential people at the top, who have more insight in to this than I have, and they consider it is wrong, opening up the markets to manipulation and distortion.

Correct me if I am wrong, but the sub-prime shorters were not, in fact, putting huge tranches of counterfeit property into the market, or, taking it to the next level, selling counterfeit sub-prime bonds, what are they called, Structured Investment vehicles or something like that, but were taking out large bets, CDO, on the existing bonds. Similar to me insuring my drunkard neighbour's life. The fall in price occurred after the rest of the world found out about the toxic content of the bonds. This was a totally different mechanism to selling counterfeit shares into the market.

Q1 Yes, it collapsed due to the overpriced assets.

Q2. Yes, they made it a hel_l of a sight worse because if a load of shorters had not been betting on the same CDO's, basically meaning everybody in the entire street had also insured my drunken neighbour's life, then there would not have been the incredible explosion in the losses incurred through the Credit Default Swaps. Obviously the insurance companies had completely mis-priced the risk. I would argue that it should not be the case when say a 10,000 Dollar debt is defaulted on the insurance companies should have to pay out 1,000,000; taking down the whole banking system with it.

And you have contradicted yourself.

My only concern about naked shorting is who should do it

In a post above you stated that it was OK because everyone can do it, so it is a fair an essential part of the market. So if you restrict it to a few privileged users then surely that would refute your previous argument?

[12DrinkMore]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

With all respect I can make two suggestions

1. You can ignore the thread

or

2. You can provide us with some stimulating insights and information to liven up the discussion.

[lannarebirth]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

With all respect I can make two suggestions

1. You can ignore the thread

or

2. You can provide us with some stimulating insights and information to liven up the discussion.

The last word on Naked Short Selling is the "Deep Capture" site. While it sometimes reads like a financial conspiracy theory, I think for the most part it is pretty accurate about the market players and conduct it talks about.

Deep Capture Blog

[jcon]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

Agreed. We seem to be flogging a dead horse here.

I think VegasVic and bingobongo should return and resurrect the "Global Correction" thread. That thread was a good balance of entertainment and information(disinformation) while it lasted. There was much more imagery (skittles-pooping unicorns, etc.) in that thread and it was good for a laugh or two in between the name-calling. There were also some trading calls made (right or wrong) that were entertaining as opposed to the misery that is plaguing this thread.

12Drink I understand your point of "ignore or contribute." Let me ask you this (with all due respect): Are you still as angry as in your OP? What has changed since then? Has this 250+ page thread had an impact on your life? So you've learned that you're being lied to on a massive scale - did you not know that before? What is different now that you know? What have you done about it?

Me, I'm still waiting for the sky to fall and the downfall of civilization and bakeries on sale - in that order.

[lannarebirth]

Me, I'm still waiting for the sky to fall and the downfall of civilization and bakeries on sale - in that order.

I give it 3 weeks. Big move anyway. Not sure yet which way, so maybe a strangle is in order.

[jcon]

Me, I'm still waiting for the sky to fall and the downfall of civilization and bakeries on sale - in that order.

I give it 3 weeks. Big move anyway. Not sure yet which way, so maybe a strangle is in order.

Ok, a step in the right direction (for discussion purposes). Should a large move come, I'd wonder how the currency market would play out. Surely it can't be a repeat of '08? I tend to stick to things I know (and I don't know forex), but forex volatility just seems like a sweet play in big moves. Any calls, anybody? (paging VegasVic....)

[midas]

[

Good idea then we can all remember how people are prone to believing in conspiracy theories in blogs by 'unnamed scientists.'

The scientist who wrote the report included in that blog does have a name Abrak but sure I dont

know how credible his assertions are ? But i do know one thing for sure..........whatever

the US Government is telling the people - I would rather listen to the green goblins.

Then again i think Ronald Reagan said something along similar lines.

Flying was saying they are spraying Corexit in the night time.....I didnt

even know what Corexit was ( see the link ) ? So why on earth would they need to do it at night ?

US EPA Bans Corexit for the Oil Spill - What Is Corexit?

[midas]

This is why it is not inflationary (you have merely avoided deflation). Still the whole point is that with enough 'rainfall' you can flood a 'desert' and once the hole is plugged enough water will make the bucket 'overflow'.

yes but once the flood starts it becomes almost impossible to control in the real world (don't tell Ben)

I concur.

No signs of water yet.

Arid...

Drought conditions i would say

Major Miss In Initial Claims As Double Dip Takes Even Firmer Hold

[12DrinkMore]

12Drink I understand your point of "ignore or contribute." Let me ask you this (with all due respect): Are you still as angry as in your OP? What has changed since then? Has this 250+ page thread had an impact on your life? So you've learned that you're being lied to on a massive scale - did you not know that before? What is different now that you know? What have you done about it?

On and off, yes, I am still very angry and bitter. It is difficult to maintain a constant level of angriness, it would send me insane. On a person to person level I have always been very careful and cautious, and even then I have lost money. Unfortunately I did not project this onto the bastard Leaderz, or, maybe rather, I always supposed that there were adequate controls built into the system to stop the thieving, selfish, greedy gits from severing me from my hard earned assets. I have never doubted that they would always fiddle expenses and be optimising their own gains. But I never dreamed that they were prepared to bring down economies.

What has changed since the original post? That question is far too wide ranging to provide a brief answer.

Yes, this thread, through the many contributers, has had a very positive effect on my life. I have learnt a lot. And that is absolutely sufficient to justify the investment of time spent here.

And I admit it, I did not realise that there was this huge web of deception and lies being woven around me. And, indeed, I imagine that the majority of the world's population is still being deluded, stolen from and generally deceived, and they have no idea what is going on.

And what have I done?

Step 1, ensure that my future is financially secure as far as possible by diversifying across multiple countries, multiple banks and multiple asset classes.

Step 2 is to repeat step 1.

Step 3 is try and work out how it all fits together and then try and profit from it.

I am not sure that I will be successful at any of these steps, but I am certainly in a much better position that three years ago.

And once again I extend thanks to all those who have contributed to this thread.

Edited June 17, 2010 by 12DrinkMore

[midas]

12Drink I understand your point of "ignore or contribute." Let me ask you this (with all due respect): Are you still as angry as in your OP? What has changed since then? Has this 250+ page thread had an impact on your life? So you've learned that you're being lied to on a massive scale - did you not know that before? What is different now that you know? What have you done about it?

On and off, yes, I am still very angry and bitter. It is difficult to maintain a constant level of angriness, it would send me insane. On a person to person level I have always been very careful and cautious, and even then I have lost money. Unfortunately I did not project this onto the bastard Leaderz, or, maybe rather, I always supposed that there were adequate controls built into the system to stop the thieving, selfish, greedy gits from severing me from my hard earned assets. I have never doubted that they would always fiddle expenses and be optimising their own gains. But I never dreamed that they were prepared to bring down economies.

What has changed since the original post? That question is far too wide ranging to provide a brief answer.

Yes, this thread, through the many contributers, has had a very positive effect on my life. I have learnt a lot. And that is absolutely sufficient to justify the investment of time spent here.

And I admit it, I did not realise that there was this huge web of deception and lies being woven around me. And, indeed, I imagine that the majority of the world's population is still being deluded, stolen from and generally deceived, and they have no idea what is going on.

And what have I done?

Step 1, ensure that my future is financially secure as far as possible by diversifying across multiple countries, multiple banks and multiple asset classes.

Step 2 is to repeat step 1.

Step 3 is try and work out how it all fits together and then try and profit from it.

I am not sure that I will be successful at any of these steps, but I am certainly in a much better position that three years ago.

And once again I extend thanks to all those who have contributed to this thread.

Agreed 12D. I have also learnt a great deal but more than anything I was surprised at the extent to which

adults have engaged in the same fantasies as kids through their " extend and pretend " policies.

And jcon your posting seems to imply you were not surprised about the level of deception and lies in the

Financial system- so if you knew earlier than some of us, what have you done about it ?

[12DrinkMore]

It's all gone, gone up the chimney or gone down the tubes.

Conjured into existence, somehow takes on a real life and then cannot be conjured out of existence unless the tax payer pays up. Debt.

THE "lion's share" of the €22bn being pumped into state-owned Anglo Irish Bank will "never be seen again", the bank's chief executive Mike Aynsley admitted yesterday.

Jeeze, 22,000,000,000 fragile Euros, now owed by the Irish taxpayers have been sucked up into this institution and simply been vaporised.

Words fail me, is there no accountability?

Bring it on, just bring it on, things can only get worse from here on in.

[12DrinkMore]

I have absolutely no idea what I am talking about here, but...

1) If there are huge amounts of oil just waiting to break to the surface then it is rather strange that no similar event has happened in the past 1000 years what with all the earthquakes, fissures and tectonic movements.

We are looking at millions, not thousands of years.

Maybe

1. In areas which are subject to regular tectonic movements any oil has already been released over the last couple of million years

2. The creation of oil from biological bits and pieces requires immense pressure and stability in the layers above it, otherwise no oil is created.

2) The other is the simple physics of the concept. The Oil pipe is less than 1.5 metres wide but it extends 4300 metres below the sea bed and another 1500m to the surface. It is rather like a needle that is at least the height of a house. Given the maths imagine exactly how much pressure you need to actually get that oil to the surface.

At that tremendous depth the pressure from the solid material above the liquid oil deposits is far more than adequate to force the oil up to the surface with explosive force. The drillers use "mud" which is much denser than water to try and control the pressure release as the drill bit enters the oil deposits. The right selection of this "mud" is very important in preventing nasty blow outs.

Or more basically take a large tank of water on the top of a house attach a one inch hose to it and point it in the air. Maybe the water would shoot up 20m.

It would not shoot up further than the level of water in the tank. This is in no way comparable to oil under pressure several miles down.

"Then attach a 5 inch hose and the water wont go up very far and then will go up even less. So how a 1.5m drill hole could result in some sort of volcanic eruption of oil from 4 kilometres below the sea bed is totally beyond me.

Theoretically if you could increase the diameter of the drill hole, you could stop the oil reaching the surface. That is why they need to drill relief wells. It is also why there are 4,000 offshore wells in the gulf of Mexico.

"

The relief wells are being drilled to relieve the pressure in the oil deposit and therefore on the leaky hole so they can possibly plug it. Increasing the diameter of the hole would increase the volume of the oil reaching the surface dramatically by the square of the radius. There is no volcanic eruption, the problem is that as the oil under massive pressure forces its way up the small hole

a. it erodes the tube and

b. the collapsing layers above the oil deposit fracture, allowing the oil to escape in a massive release of pressure.

[12DrinkMore]

Aaah the promises of our Leaderz.

Lots of smiling faces.

How much longer?

[flying]

1) If there are huge amounts of oil just waiting to break to the surface then it is rather strange that no similar event has happened in the past 1000 years what with all the earthquakes, fissures and tectonic movements.

I dont know but,

I have lived through earthquakes & one that recorded 6.9 on the richter scale & near a minute in duration.I lived 1 mile from the epicenter.

The house I was in was literally thrown back 4 feet & sank 2 feet. Yet the neighbors house was fine. Near by the damage pattern looked the same for a mile some touched & some fine. Then of course miles away nothing at all damage wise.

The things you describe quakes are all similar.. like fingers that reach out & touch random spots.

This well was scientifically discovered & drilled in a precise spot. It was drilled over 30,000 feet deep into the earth at a depth of up to 8000' of water. The likely hood of a earthquake causing a crack all the way down to the oil in that exact spot is probably infinitesimal....Possible sure we have underwater volcanoes but that is magma.

So what you say could be applied to anything I guess. Pick a castle a few centuries old & ask why a earthquake has not knocked it down yet.

Aside from the obvious game changing damages this crisis could/is causing.....

One that fits well in this financial thread is BP's role in paying many pension dollars to many people.

From what I have read this could be a big problem if their liabilities continue at the pace they are now growing no?

I am watching BP CEO Hayward get roasted... seems like grandstanding in that they are treating him so badly right now on CNN coverage of hearings. Seems they have a miserable track record for violations & safety.

Aside from that I agree with Midas in that this is a major crisis. I said long ago it could go biblical & is a game changer for thousands already. I know you thought that was funny but I still see it as a possibility. Like the financial melt down there seems to be no real repair in sight.

The only difference here is the visible reminder of the crisis as the ocean turns black cannot be hidden by corrupt govt manipulation. Although they are trying by denying airspace & access. Also the way BP & others tried to hide the true extent of the damage current & future......Yep a few similarities eh?

Edited June 17, 2010 by flying

[Gambles]

Arid...

Yes it is and will remain so for a while but it is 'raining'.

I mean who would have thought it - those poor Germans - the Euro is struggling to survive and the concept is rapidly turning from changing the Greeks into Germans, to making the Germans into Greeks. Now that Greek Sovereign debt is turning into junk, the ECB is starting to monetize it. Who would have thought it?

Of course they are just 'plugging holes' in the banks balance sheets, not least the German banks. And with enough monetization, they might even be able to keep the Euro together. But at that point it wouldnt be worth having.

Totally agree

The defaults could easily now spread everywhere

[Naam]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

With all respect I can make two suggestions

1. You can ignore the thread

or

2. You can provide us with some stimulating insights and information to liven up the discussion.

1. i am trying hard.

2. discussion? what discussion? participants lamenting how the oil spill in the Gulf of Mexico affects the bad bank in which Anglo-Irish drops its shitty toxic papers, predicting the default of the estonian taxpayer because the country will adopt the €UR next year, sympathise with the Germans who have to learn greek and in future eat Feta and drink Ouzo daily, copying and pasting the latest gold price prediction of some bakery aficionados, advise BP how to plug a hole, presenting pages with quotes from unkown persons who [allegedly] had wisdom poured with a funnel into their brains, agree or disagree with predictions which sovereign debtor will default next, applaud various members when they [for the umpteenth time] call Benjamin Shalom Bernanke, ol' Keynes or Obama an idiot, trying [with my rather limited knowledge of English] to figure out what exactly Abrak or Gambles meant in their postings? thank you, but NO thank you.

my interest is focussed on how to shuffle and position my assets, protecting them and their proceeds from the claws of greedy politicians and further additional crises [which may arise or not] thus protecting my and my wife's present life style for the statistical remainder our life time.

[Abrak]

Re BP

It may be my peculiar English sense of humour BUT

As I recall the BP Execs came out of their meeting with Obama looking beaten up and depressed. Obama got on the TV and talked about the US$20bn fund and suspension of dividend payments until 4Q. He looked kind of chuffed and it seems everyone was impressed.

However, my guess is that when BP Execs got back to their hotel they cracked open a bottle of champagne and there were high fives all round.

You see to some extent this US$20bn fund is a bit of a farce. What BP have actually agreed is to put US$5bn into a fund by December. Then put an additional US$1.25bn a quarter into the fund for the following three years. If Obama had said that BP had agreed to put US$20bn into the fund by December 2013, would be people have been so impressed?

[BlackJack]

personal observation: this (formerly very interesting) thread has become as sexy as the unwashed armpit of an old woman

With all respect I can make two suggestions

1. You can ignore the thread

or

2. You can provide us with some stimulating insights and information to liven up the discussion.

1. i am trying hard.

2. discussion? what discussion? participants lamenting how the oil spill in the Gulf of Mexico affects the bad bank in which Anglo-Irish drops its shitty toxic papers, predicting the default of the estonian taxpayer because the country will adopt the €UR next year, sympathise with the Germans who have to learn greek and in future eat Feta and drink Ouzo daily, copying and pasting the latest gold price prediction of some bakery aficionados, advise BP how to plug a hole, presenting pages with quotes from unkown persons who [allegedly] had wisdom poured with a funnel into their brains, agree or disagree with predictions which sovereign debtor will default next, applaud various members when they [for the umpteenth time] call Benjamin Shalom Bernanke, ol' Keynes or Obama an idiot, trying [with my rather limited knowledge of English] to figure out what exactly Abrak or Gambles meant in their postings? thank you, but NO thank you.

my interest is focussed on how to shuffle and position my assets, protecting them and their proceeds from the claws of greedy politicians and further additional crises [which may arise or not] thus protecting my and my wife's present life style for the statistical remainder our life time.

100% agree

without being to mercenary this catastrophe combined with all the other shit going on is:

an ideal opportunity to make a play on gold silver food shares energy ???

a necessary time to look at our portfolios and make sure we dont get the bill ( as everyone else will be broke)

So when it all boils down what will be left? This is what we should be looking into.