Financial Crisis

[BEENTHEREDONETHAT]

To fix the problem is going to be painful and unpopular. No politician will do anything to make himself unpopular, even if it is the right thing to do.

The more money they throw at it the longer it will take to cure it.

[12DrinkMore]

Or perhaps the best way is just let the thing die.........Like any other sick beyond help infected mess.

http://www.arthurmag.com/2009/03/16/let-it...on-the-economy/

We do not live in an economy, we live in a Ponzi scheme.Using future tax dollars to give banks more money to lend out at interest is robbing from the poor to pay the rich to rob from the poor.

I thought the statement immediately before the above quote was more interesting

The fact that the speculative economy for cash and commodities accounts for over 95% of economic transactions, while people actually using money and consuming commodities constitute less than 5% tells us something important.

I do not know how true that is, but I have always suspected that a huge chunk of the transactions on the stock markets is due to

1. speculative bullshit with no regard to the real underlying supply and demand. The oil price last year is a good example. If the dam_n oil price had been based on the current supply and demand, then we would never have had the peak to USD 150 and then the fall to USD 40, based purely on speculative activity over the future demand. Absolute crap and market distortion.

2. the financial industry just earning money for itself simply by churning over stocks and commodities.

Doubtless all those with vested interests in keeping the markets running as they are will spout the usual bullshit that they provide the "necessary liquidity" to keep the trade going. I do not believe them, they are all liars and self-servers.

The markets should revolve around REAL supply and demand, and not some conjured up speculative roulette wheel, just so that an bloated and selfish financial industry can masturbate itself into a hideously over engorged organ of financial destruction.

I have no faith in the West, particularly the USA and the UK, which are now entwined in some suicidal orgasmic embrace to see who can ejaculate the most money before the almighty Organ turns flaccid.

[churchill]

"The markets should revolve around REAL supply and demand, and not some conjured up speculative roulette wheel, just so that an bloated and selfish financial industry can masturbate itself into a hideously over engorged organ of financial destruction."

Yes

And I think that computer trading distorts markets - People buy and sell in bands until there is a break out - up or down - and in my opinion that distorts the market

People want to trade on trends but I think it is taken too far and with too much money . So what people expect happens just because everyone else expects the same .

[12DrinkMore]

People want to trade on trends but I think it is taken too far and with too much money . So what people expect happens just because everyone else expects the same .

Not too much money, but way too much leverage

[12DrinkMore]

The Chinese are going to hate this

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

The dollar dropped the most against the currencies of six major U.S. trading partners since the Plaza Accord almost a quarter-century ago as the Federal Reserve’s plan to purchase Treasuries spurred speculation that it’s debasing the greenback.

I wonder how they are going to react?

And if you STILL think the THB should decline, well just read this

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

Thailand’s baht rose 1.6 percent this week to 35.40 versus the greenback, the strongest in three months. Foreign investors added Thai stocks to their holdings for a fifth day through March 19, the longest stretch since November.

A government report on March 18 showed trade surplus in Southeast Asia’s second-largest economy widened to $3.58 billion in February from $1.38 billion a month earlier, the highest in at least 18 years.

So the trade surplus is widening to the highest in 18 years!

Compare that excellent performance to the dire figures coming out of the West. And doubtless there will be the usual detractors around here in TV coming in with "it has to get much worse in Asia" and "the THB has to be devalued".

Sorry guys, but it looks like Asia will ride out this with pain but not the desperate terminal agony of the indebted West.

[lannarebirth]

"The markets should revolve around REAL supply and demand, and not some conjured up speculative roulette wheel, just so that an bloated and selfish financial industry can masturbate itself into a hideously over engorged organ of financial destruction."

Yes

And I think that computer trading distorts markets - People buy and sell in bands until there is a break out - up or down - and in my opinion that distorts the market

People want to trade on trends but I think it is taken too far and with too much money . So what people expect happens just because everyone else expects the same .

What you're describing is a mania and the madness of crowds. Those folks get their comeupance soon enough.

[lannarebirth]

Or perhaps the best way is just let the thing die.........Like any other sick beyond help infected mess.

http://www.arthurmag.com/2009/03/16/let-it...on-the-economy/

We do not live in an economy, we live in a Ponzi scheme.Using future tax dollars to give banks more money to lend out at interest is robbing from the poor to pay the rich to rob from the poor.

I thought the statement immediately before the above quote was more interesting

The fact that the speculative economy for cash and commodities accounts for over 95% of economic transactions, while people actually using money and consuming commodities constitute less than 5% tells us something important.

I do not know how true that is, but I have always suspected that a huge chunk of the transactions on the stock markets is due to

1. speculative bullshit with no regard to the real underlying supply and demand. The oil price last year is a good example. If the dam_n oil price had been based on the current supply and demand, then we would never have had the peak to USD 150 and then the fall to USD 40, based purely on speculative activity over the future demand. Absolute crap and market distortion.

2. the financial industry just earning money for itself simply by churning over stocks and commodities.

Doubtless all those with vested interests in keeping the markets running as they are will spout the usual bullshit that they provide the "necessary liquidity" to keep the trade going. I do not believe them, they are all liars and self-servers.

The markets should revolve around REAL supply and demand, and not some conjured up speculative roulette wheel, just so that an bloated and selfish financial industry can masturbate itself into a hideously over engorged organ of financial destruction.

I have no faith in the West, particularly the USA and the UK, which are now entwined in some suicidal orgasmic embrace to see who can ejaculate the most money before the almighty Organ turns flaccid.

There's a way to make all that go away. Slap a transaction tax on every purchase or sale of finacial instruments. The markets would slow to a crawl overnight. Only persons that really want to own will be in markets. Make sure broker-dealers and hedge funds are included.

[lannarebirth]

No Return to Normal

http://www.washingtonmonthly.com/features/....galbraith.html

Geithner’s banking plan would prolong the state of denial. It involves government guarantees of the bad assets, keeping current management in place and attempting to attract new private capital. (Conversion of preferred shares to equity, which may happen with Citigroup, conveys no powers that the government, as regulator, does not already have.) The idea is that one can fix the banks from the top down, by reestablishing markets for their bad securities. If the idea seems familiar, it is: Henry Paulson also pressed for this, to the point of winning congressional approval. But then he abandoned the idea. Why? He learned it could not work.

Paulson faced two insuperable problems. One was quantity: there were too many bad assets. The project of buying them back could be likened to "filling the Pacific Ocean with basketballs," as one observer said to me at the time. (When I tried to find out where the original request for $700 billion in the Troubled Asset Relief Program came from, a senior Senate aide replied, "Well, it’s a number between five hundred billion and one trillion.")

The other problem was price. The only price at which the assets could be disposed of, protecting the taxpayer, was of course the market price. In the collapse of the market for mortgage-backed securities and their associated credit default swaps, this price was too low to save the banks. But any higher price would have amounted to a gift of public funds, justifiable only if there was a good chance that the assets might recover value when "normal" conditions return.

That chance can be assessed, of course, only by doing what any reasonable private investor would do: due diligence, meaning a close inspection of the loan tapes. On the face of it, such inspections will reveal a very high proportion of missing documentation, inflated appraisals, and other evidence of fraud. (In late 2007 the ratings agency Fitch conducted this exercise on a small sample of loan files, and found indications of misrepresentation or fraud present in practically every one.) The reasonable inference would be that many more of the loans will default. Geithner’s plan to guarantee these so-called assets, therefore, is almost sure to overstate their value; it is only a way of delaying the ultimate public recognition of loss, while keeping the perpetrators afloat.

Delay is not innocuous. When a bank’s insolvency is ignored, the incentives for normal prudent banking collapse. Management has nothing to lose. It may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution—nomenklatura privatization, as the Russians would say—through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own.

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. Ultimately the losses fall on the public anyway, since deposits are largely insured. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place?

[Nouf]

No Return to Normal

http://www.washingtonmonthly.com/features/....galbraith.html

the behavior that caused the insolvency in the first place?

I have been thinking about this as well,

What is to stop BAC buying Citi, and Citi buying BAC, and then dumping the crap on to the Public when the bets are bad, and thus getting the crap of both balance sheets, so they can buy the junk at market price

Karl Denninger from the market Ticket highlights this:

http://market-ticker.org/

"The second point is the problem although it doesn't seem so at first blush. Why, after all, would a private party intentionally overpay .vs. what their analytics say is the true value over time of these securities?

The problem is that there is a perverse incentive for a bank to participate through some back channel if it can, given sufficient leverage.

Let's say I'm "Frobozz Bank" and have $100 billion of this trash (a lot!) on my balance sheet. Its mostly performing (for now) on a cash-flow basis, but I know what the deterioration in on-time payment flow looks like, and as a consequence I know in advance that eventually this paper is going to be worth much less than my "internal" marks (that I'm reporting every quarter on Level 3.)

So here comes Treasury. They offer 20:1 leverage (I put up 5%) and the "private parties" bid for the assets, with their maximum loss being capped at their contribution (that is, if there's more than a 5% loss the taxpayer eats it.)

Aha! Now if I can be the "private party" I can overpay on purpose, capping my losses at 5% of whatever I "buy" from myself! I am thus able to transfer the other 95% of the risk onto the taxpayer and I escape with a 5% penalty off the purchase price!

That, if it happens, is an enormous scam and Treasury and the FDIC must absolutely guarantee that it not occur. If it does, we the taxpayers are going to be violated to an insane degree while the true "risk money" (and there's a lot of it out there) won't go anywhere near this program, because they, being unwilling to overpay, will simply lose the bidding contests.

So in order to prevent intentional overpayment you must as a matter of policy (and even law) enforce strict separation of the funds that are doing the buying from anyone that has an interest in the sellers, and make clear that if you catch anyone cheating extremely severe sanctions - like 100 years with Bubba - will be the consequence.

If you do not the process will get gamed and the taxpayers will lose."

The more i look into this the more i can see the usual stooges screw this to there advantage and what happens if the banks simply say No way are there going to sell for 30 or 40c on the $ they only say they want full value or they refuse to sell???

Yet if they take the marks they are bankrupt, its only because the government is propping then up, yet they still have balls to dictate their own terms and give out the bonuses

sshhheeesshh who is really in control????

if you simply get a stalemate, then this plan goes no where, its essentially trying to get the paper trading on the back of the US tax payer as per my earlier piece

This ends badly if the tax payer takes the hit for this, they might as well nationalise the Banks and tell the bankers to piss off (I am beginning to think this is really the only option)

take the hit, throw it on the balance sheet (because it seems with all these schemes many are just trying to rape the treasury before they know their time is up) because the management have been shown to be corrupt and against ideas of reform

Yet the US government honours them.

you are still going to get pickers and choosers, anyone with common sense is only taking a low risk odds that they can savalge some of the toxic junk

its toxic for a reason, and that is from defaults, thats why there is no market today, maybe turbo timmy will finally get this and Obama will listen to common sense

(wow!!!!!! did you see that pig)

All this messing around i think is just delaying what is eventually going to come, just like Japan they were forced to write down this crap and take it on the Public balance sheet

Edited March 22, 2009 by Nouf

[VegasVic]

People want to trade on trends but I think it is taken too far and with too much money . So what people expect happens just because everyone else expects the same .

Not too much money, but way too much leverage

12Drink, You will have to forgive churchill, he is a gold bug and so he sees inflation where it doesn't exist, and he and his bretheren can't grasp the difference between reflation and inflation. The printing of money around the world right now is being done to REFLATE economies that are headed towards DEFLATION or are already experiencing DEFLATION. It is entirely possible that 12-18 months from now should the worlds major economies get back on track then inflationary trends could return, and of course central banks have the responsibility to put on the brakes (raise interest rates) should this occur. I understand the basics of the Geithner plan, and while I am not enthralled that the onus is largely placed on the U.S. taxpayer, I understand that this is necessary tactic to get the money off the sidelines (private equity, hedge funds, mutual funds, ect.) and back into the system. It comes down to a matter of confidence, as confidence in the markets returns so to will the capital and that capital will be loaned out to create commerce and businesses and jobs. If something along these lines were not to be done then the shorts would continue to depress the market to virtually 0, when there is no confidence in the system or markets then money seeks a safe haven like gold (hence the rise in gold from the $600's to the $900's) or U.S. treasueries (hence the reconrd low interest rates on u.S. treasuries). Its been a one way game for the short hedge funds especially in the financials, to see a company like Bank of America be shorted down from the mid $40's down to $2.50/sh is just insane and the past two weeks the shorts were taught a lesson that when confidence returns so to will the share prices of the financial and other equities. While I think that this bear market rally still has some legs, in the end it is just a bear market rally, and it may not be until late 09 or early 2010 until the market really turns for good.

[12DrinkMore]

Short sellers and the damage they do

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

Another total failure of the regulators to enforce the rules.

[lannarebirth]

Short sellers and the damage they do

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

Another total failure of the regulators to enforce the rules.

You really need to distinguish between short selling, which is a normal function in markets, and naked short selling which is a crime. No one is saying naked short selling is ok. It is just as criminal as bullshit upgrades of stock at price resistance.

You need to understand what kind of playing field you're on. Equity markets are almost wholly run on a fraudulant basis. Some of the fraud is legal and some of it isn't.

Edited March 23, 2009 by lannarebirth

[midas]

Short sellers and the damage they do

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

Another total failure of the regulators to enforce the rules.

You really need to distinguish between short selling, which is a normal function in markets, and naked short selling which is a crime. No one is saying naked short selling is ok. It is just as criminal as bullshit upgrades of stock at price resistance.

You need to understand what kind of playing field you're on. Equity markets are almost wholly run on a fraudulant basis. Some of the fraud is legal and some of it isn't.

Whether it is legal or illegal fraud - is it any more " civilised " than

any any other white collar crime just because it is made to look official and

scientific ? And this is now the future of our society ...................

never mind what lies you have to tell

to achieve it- just so long as the DJ goes up !

Edited March 23, 2009 by midas

[lannarebirth]

We simply cannot make these bad investments whole unless we are willing to hand the next 10-20 years of U.S. private savings over to the bondholders who financed reckless lending. Those bondholders should, and ultimately must, take a portion of these losses, and debt obligations will have to be restructured. Wall Street has become a bunch of Tooter Turtles crying “Help, Mr. Wizard!” because it got so used to Greenspan bailing everybody out. But that constant attempt to avoid inevitable private market losses is what allowed this problem to become so noxious. It will continue to do so until we collectively scream loud enough for Congress to say on our behalf, “Enough.”

http://www.hussman.net/wmc/wmc090323.htm

[AlexLah]

You know I almost cant's stop laughing about those people that, I must admit are very creative in inventing new names.

This 1 Trillion USD that they are going to use to try and get rid off a part of the "Toxic Assets"

Noooooooooooooooooooooooooooooo!!!!!!!

They are called different, as Toxic gives a bit of a bad feeling to the public, we now call them: "Legacy Assets"

Legacy, legacy, sounds like someone died and they are inherited?

Exactly!

Who will get them the US taxpayers?

You got it!

Muhaaahaaahaaaaaa!!!!!!!!!

[Naam]

You know I almost cant's stop laughing about those people that, I must admit are very creative in inventing new names.

This 1 Trillion USD that they are going to use to try and get rid off a part of the "Toxic Assets"

Noooooooooooooooooooooooooooooo!!!!!!!

They are called different, as Toxic gives a bit of a bad feeling to the public, we now call them: "Legacy Assets"

Legacy, legacy, sounds like someone died and they are inherited?

Exactly!

Who will get them the US taxpayers?

You got it!

Muhaaahaaahaaaaaa!!!!!!!!!

is

it

true

that

hitting

the

enter key

very

often

and

unnecessarily

makes

a

statement

important?

[AlexLah]

No lah, it's like the inside of my head, just empty space

But seriously, this whole crisis exercise is by far one of the biggest looting operations ever performed on this planet.

What a bunch of bull crap they are throwing at the people, don't you agree?

You know congress has the power to stop all of it, but apart from a few, not many are willing to take some serious action.

Visit C-Span and look at some of the hearings, it's just a big soap to give the public the idea that those in charge are seriously grilled and held accountable.

Remember they first said that the 350 Billion would be sufficient to solve all of this, then another 350 Billion, then Prince Obama's rescue plan another 800 Billion. Then Bernanke anothe 300 Billion. Now Geitner says well 1 Trillion for my plan is most likely not enough and I think I need another Trillion. It is really sad as in the end we all get shafted big time. Is there any more news about those freshly printed 125 Billion USD that was send to Iraq? How about the 2 Trillion that went missing as said by Rumsfeld on 10-09-01?

What a farce, and the people just keep bending over and grab their ankles and swallow it all in the end.

And you know why? Because those that still have a job are scared to death by the leaders telling them that if they don't do this a catastrophe will happen leaving Millions and many more Millions without a job, now you don't want that do you, so yes please pump in as much as you need as long as I do not loose my job.

Mass manipulation of the mind by showing those tent cities and that other propagandist named Glenn Beck sitting in the war room discussing total collapse scenario's. Pavlov comes to my mind, conditioning at his best.

And now Times magazine saying they want to nominate Ron Paul as one of the most influential people, where before they told the audience he was a loony basically, a "Thruther" a word that now equals being a possible terrorist. But now he is invited almost everyday on the big news networks.

Obama sending his pathetic video message to the people of Iran, I wonder if he remembers history, I wonder if he knows anything at all.

Sorry for the rant.

Edited March 24, 2009 by AlexLah

[Naam]

But seriously, this whole crisis exercise is by far one of the biggest looting operations ever performed on this planet. What a bunch of bull crap they are throwing at the people, don't you agree?

no i don't agree Alex. as much as i understand the common anger (i am f@cking angry too!) about wasting taxpayers' money and last not least everybody's money because of expected inflation and shoving the billions up the àsses of those who deserve that Sharia law for thieves is applied i still (think) i have the ability to weigh the shit we are presented vs. the shit² which we have to expect if the efforts fail.

[AlexLah]

OK Khun Naam then I ask you, the first time that Paulson informed congress about a pending collapse if they did not agree with the first 350 Billion bail out the whole financial system would collapse.

Nothing happened in the two weeks it took to get congress approve that bill, nothing!

Most of all the money promised went to counter parties that made a few good bets and banks used some of the money to buy some other banks, consolidation it is called.

Derivatives is now a bad word, same as toxic waste is now called Legacy assets.

People that created this mess are now asked to solve it and the only thing they do is introducing meassures that will enrich their buddies.

What do you think will happen if we just cancel all those derivative contracts? Nothing, we would just have a few counter parties that are angry, nothing more.

But no this Geitner guy and others insist those contracts have to be acknowledged and payed out as if not his friends will not recieve the money they counted on.

So he throws Trillions and Trillions of USD just to help his friends paying off these contracts, it is disgusting.

Tell me Naam, what would happed if all those contracts would be declared void?

[churchill]

We need a formula and Naam is working on it . Shit 1 - shit 2 + trillions /mortgages = ?

[BEENTHEREDONETHAT]

Naam is checking with his dog, no shit.

[Naam]

What do you think will happen if we just cancel all those derivative contracts? Nothing, we would just have a few counter parties that are angry, nothing more.

But no this Geitner guy and others insist those contracts have to be acknowledged and payed out as if not his friends will not recieve the money they counted on.

So he throws Trillions and Trillions of USD just to help his friends paying off these contracts, it is disgusting.

Tell me Naam, what would happed if all those contracts would be declared void?

your question is academic Alex because (unfortunately) it can't be done.

[Umpatan]

Special snip snip for 12

As Novembers article pointed out ( Bankrupt Britain Trending Towards Hyper-Inflation?) Britain is already on its way towards becoming a big version of Iceland as liabilities continue to soar, the greater the liabilities the greater the probability that the British economy will collapse into debt default and hyperinflation. Gordon Brown has already loaded the UK tax payer to the tune of £1.2 trillion of bankrupt bank liabilities, with the odds strong that this will pass above £2 trillion by the end of 2009. The amount of liabilities are truly staggering and really do risk the bankruptcy of the country, for example the total amount of revenue the government earns from taxation is just £550 billion AND CONTRACTING. Debt EXPLODING, Revenues CONTRACTING = Further sharp falls in the exchange rate towards parity to the US Dollar.

Well, the UK can just join the Euro now that it is close to parity. In fact the Euro will rise if that occurs, bringing 1 pound to equal 1 euro.

Now I want to ask, how about bringing money to Thailand? Would converting dollars into Bhat enable one to escape hyperinflation? People run to gold, silver, Chinese Yuan, but I want to know how will the Thai Bhat do? As an independent country, will it be immune from Hyperinflation? How would you feel if 1 dollar or 1 euro or 1 pound bought only 1 Thai Bhat?

[AlexLah]

I know Naam and it is sad, because 95% of people do not know their rights when confronted with a police officer.

Common law, law of the sea and land are in place as well as commercial law.

These contract are solid and have to be payed out.

[Umpatan]

But seriously, this whole crisis exercise is by far one of the biggest looting operations ever performed on this planet. What a bunch of bull crap they are throwing at the people, don't you agree?

no i don't agree Alex. as much as i understand the common anger (i am f@cking angry too!) about wasting taxpayers' money and last not least everybody's money because of expected inflation and shoving the billions up the àsses of those who deserve that Sharia law for thieves is applied i still (think) i have the ability to weigh the shit we are presented vs. the shit² which we have to expect if the efforts fail.

Also, banks raising interest rates also bring about economic disparity. The rich get interest, but most people have to pay that high interest, being in debt.

How will the Thais view the western expat after the Thai Bhat becomes stronger than the dollar?

[Naam]

Special snip snip for 12

As Novembers article pointed out ( Bankrupt Britain Trending Towards Hyper-Inflation?) Britain is already on its way towards becoming a big version of Iceland as liabilities continue to soar, the greater the liabilities the greater the probability that the British economy will collapse into debt default and hyperinflation. Gordon Brown has already loaded the UK tax payer to the tune of £1.2 trillion of bankrupt bank liabilities, with the odds strong that this will pass above £2 trillion by the end of 2009. The amount of liabilities are truly staggering and really do risk the bankruptcy of the country, for example the total amount of revenue the government earns from taxation is just £550 billion AND CONTRACTING. Debt EXPLODING, Revenues CONTRACTING = Further sharp falls in the exchange rate towards parity to the US Dollar.

Well, the UK can just join the Euro now that it is close to parity. In fact the Euro will rise if that occurs, bringing 1 pound to equal 1 euro.

Now I want to ask, how about bringing money to Thailand? Would converting dollars into Bhat enable one to escape hyperinflation? People run to gold, silver, Chinese Yuan, but I want to know how will the Thai Bhat do? As an independent country, will it be immune from Hyperinflation? How would you feel if 1 dollar or 1 euro or 1 pound bought only 1 Thai Bhat?

how would your Mommy feel if she knew you are using her computer?

[Naam]

How will the Thais view the western expat after the Thai Bhat becomes stronger than the dollar?

they'll view us a cheap imported labour and we will have to work in their rice fields and tend buffaloes

[churchill]

King's letter to Darling

http://www.bankofengland.co.uk/monetarypol...etter090324.pdf

What a load of cr--p

[12DrinkMore]

How will the Thais view the western expat after the Thai Bhat becomes stronger than the dollar?

they'll view us a cheap imported labour and we will have to work in their rice fields and tend buffaloes

And for some reason that I have not been able to fathom, the Thai men think that UK women are ATTRACTIVE! Maybe we'll see a few marrying Thai farmers for their MONEY

:D :D

[Umpatan]

How will the Thais view the western expat after the Thai Bhat becomes stronger than the dollar?

they'll view us a cheap imported labour and we will have to work in their rice fields and tend buffaloes

And for some reason that I have not been able to fathom, the Thai men think that UK women are ATTRACTIVE! Maybe we'll see a few marrying Thai farmers for their MONEY

But Thai men do not succeed very often in getting UK women, although UK men take away Thai women creating a shortage of women. They are hurt even more than the Polish men who see their women running to UK men but the Polish men do not get the UK women as often as the reverse. Even the western expat women who are left single would rather stay that way than take a Thai man. Why is that?