Second

You have become too optimistic and I wonder if politicians are placing pressure on you to be quiet.It is time to make it clear that those responsible for this disaster and have benefited from the debacle must accept responsibility and repent or be punished severely-without a restoration of fairness we will have social problems as well because trust has evaporated.

Not ! Thanks Dr. Roubini for your forum.

Strangely, from a symmetry point of view ( speaking as an ex mathematician ) , looking over my own post above it looks like the ‘inflation’ scenario should be classified somehow as ‘pain *YESTERDAY* ‘…. ie =>ONEDollar positive.Pain in the indefinite futureTWODollar neutral.Pain now.THREEDollar negative.( By symmetry, here, the pain appears as if it should arrive in the past..).It would be indeed be nice to shuffle off the burden onto generations long since dead. I’m sure Wall St can come up with something given enough ongoing bonusised incentivisation liquidity.frankx.

I am more pessimistic Dr. Roubini. I feel that a Depression is inevitable as Washington just does not seem to understand the fragility of the economy. If they did the Senate and House would not be leaving for 6 weeks for the Holidays. A lot can and will happen in the coming 6 weeks. Better to stay on the job 24/7 instead of rushing back once the next crisis hits.

Many stocks today, which are not directly and mostly not even indirectly associated with the under-capitalized financial industry, the over-leveraged and poorly managed automotive industry or the over-built retail industry, are now grossly over sold even under most realistic recession scenarios. There is no disputing the current recession, which is being exacerbated by the extreme risk aversion in the credit markets. However, the equity markets are being forced to the current extreme lows by the massive deleveraging of the hedge fund industry, which contracted by one trillion dollars in the first nine months of 2008 and may be in the process of shedding another trillion dollar in the current quarter. A great example of the non-fundamental damage that is occurring in many high quality equities is the Shaw Group (SGR). SGR engineers and builds power generation assets such as nuclear power plants for regulated utilities and state owned utilities around the world. Today SGR holds $11 per share in cash on its balance sheet with very little debt, while at the same time its stock is down over 75% at $13 per share. This is hedge fund deleveraging at it worst. This deleveraging is finite in nature and thus it is creating once in a lifetime buying opportunities in many equities such as SGR.

Currency and bank credits are the same thing, right? Even as Bernanke prints more dollars, or even as he tells banks to borrow US dollars cheap and buy treasuries with them (giving the banks free profits), yet the amount of credit loss due to failed mortgages and failed real estate ventures and failed corporate obligations, dwarfs the Bernanke printing press. Is it not correct that the money supply (including bank credits) is sinking fast even in the teeth of bailouts, government payments on indebtedness, Bernanke loan give-aways, etc.? Are we not falling into a very deep deflation? Not a stag-deflation, but a downward spiraling deflation.

Professor diz is way cool!!!, some of the coolest lines you have written. You ought to consider rapping as a second career. If not performing, selling lyrics about the bigo crash of 08:-)A cacophony of other luminaries – were spinning for the last month the fairy tale thatdelusional bulls – including allegedly savvy investors such as the Sage of Omaha and markets – especially equity markets – had fallen so much that a bottom had been reached and that this was the time to start buying equities. Some of us never believed this self-serving spin and warned repeatedly that both equity markets and credit markets had further severe downside risks (20% to 30% lower for equities).I had just posted something on Buffy under my BRKA watch. As usual, the last post in the previous thread so I repeat it here:-)BRKA watch. This puppy is coming down hard. The risk profile on this stock is terrible. My dad is WB’s age (1930). He is still in one piece but he isn’t even 1/4 of what he used to be. I know genetics play a big role; Buffet may be made out of oak, my dad out of pine; but BRKA is Buffet. You have got to be crazy to wager a significant bet behind the sanity and health of an 80 year old. Never mind what the recession is doing/will do to his privately held businesses like (jewelry, furniture, ice cream and chocolate) And the stock market is doing to his publicly traded stock holdings.http://www.google.com/search?sourceid=navclient&ie=UTF-8&rlz=1T4GGLL_en&q=brka84K/share down twice as hard as the market. I expect it to trade in the 70s soon

I’ll suggest a new mantra for the Oracle of Omaha:Rule Number 1: Don’t bet against Roubini!Rule Number 2: Don’t forget rule number 1!

We Are Headed Towards Stag-DeflationNR, with all due respect, I must disagree with your early and repetitive prediction of deflation.I think we can agree that banks are loaded with cash and not spending. Equity investors have fled the market holding onto cash or moving into Treasury notes; hedge funds are liquidating assets generating cash; and the carry trade has collapsed with a massive move into the USD. All of this put the dollar index near 90% reversing a downward trend that began in 2004 and matching high points that we have not been seen since 2006!So here we are. Commodity prices are lower, and the price of oil is 1/3 of its $145 high. Oh, and gold is down to $730, 27% drop off it high of $1,000/oz. It sure is looking, walking, and quacking like deflation, but then again…My grocery bill keeps going up; my electric rates jumped 25%; UPS will be increasing its non-fuel-surcharge rate but 8% in January; and my garbage collection fee just went up 11%. I was just charged $180 for a motorcycle tire and $150 each for my mid-priced Wal-Mart tires. A loaf of Wonder bread shrank from 24 to 20 oz and increased from %1.68 to $2.10 a loaf. So on the street this deflation duck is looking, walking, and quacking like inflation.Lower oil prices lowered inflation last month – the BLS 1980s method showed an annualized drop to 11.6% in October from 12.9% in September. (The gimmicked BLS CPI-U dropped to 3.28% in October from 4.34% in September.) But can oil prices reverse nine months of infaltion? I suspect we still end the year above 10% BLS 1980s method inflation.I ask again, how can one label this as deflation when real inflation beat most returns on investment – when real inflation beat a typical salary raise – when real inflation beat any cost-of-living increase?Worse yet, how can we call this deflation when the country is sitting on the largest cash hoard seen in modern history – when other countries are feverishly developing their own basket of gold-back currencies so they can move out of the dollar before the next Administration and Congress authorize more bailouts and are forced to visibly print money as opposed to the present follow-the-money shell game.So, yes it’s way too early to call long-term deflation when in fact there is a higher probably of long-term inflation looming with a dollar collapse.

The great Houbini!

OK, good one! I’ll modify my suggestion for the Oracle of Omaha:Rule Number 1: Don’t bet against The great Houbini!Rule Number 2: Don’t forget rule number 1!

Consistency and intellectual honesty is your motto Professor. Thanks for the giving. May I suggest for your page to develop a graph tool to map the risks and their impact ( I use in my company a boston matrix /bubble graph). My views are that a global recession would generate sooner than latter globally coordinated responses ( new land to be mapped,does not exist yet). Hopefully, no more global cop role for the US, taking care of its own ageing population and its future, rightfully, angry young through a more modern and humane (and thus sustainable, capitalism. A weaker but proud atomic Russia nation that has eaten up its savings on foolish monetary policies and suffered from lower real oil prices, and kgb authoritarism. More members in the nuclear club. And stronger, by comparation, China, India and to a lesser degree, Euro Zone and Brazil. Let´s hope we manage to come out of this hurricane stronger, wiser and without wars. Apologies for the grammar, English is my second language.

ptmI believe you already heard the argument that price increases of an egg by 15%, although very visible, does not compensate for a 20% decrease in home value or 40% drop in one’s retirement account, and you are not convinced.As I tried to argue many times in the past, price inflation is not a uniform phenomenon in width (capital, assets, finished products, commodities …) or depth (for finished products: discretionary, necessities, big ticket …) It is also a relative phenomenon; relative to what you consider as time 0 (basis); are you comparing today with 6 months ago or today with 60 years ago. Finally, inflation is dominated with “exogenous” factors that the occurrence and timing are not easily predictable as they are usually bureaucratic decisions (e.g. decision by some countries to stop buying UST or by US to monetize a portion of debt or devalue the USD).And remember, if everything fell in price by the same %, then there would be no deflation.The perception of inflation/deflation by a household, as opposed to any CPI measure, depends to what happens to cash inflows (i.e. income and income generating assets, disposable debt …) – which are falling (deflating) faster than cash outflows (i.e. discretionary and necessities spending …) which are, generally, falling much less (compared to a year earlier). Result: even though a CPI may show deflation, a typical household would be feeling like inflation (or any other term you may want to substitute)Whenever the US starts printing, that would be a totally different story.

Confused? I thought the 700 billion dollar bailout was to keep credit flowing so businesses and people could still get loans and people would keep their jobs. So if the credit crisis is acutely killing the auto companies because they’re completely credit dependent being they’re such big ticket items then not using part of the TARP money or approving a bailout defeats the original logic and reasoning used for issuing the bailout money in the first place? It’s as if they completely lied about what the bailout money was for it was supposed to save the economy save jobs keep credit flowing and now they’re saying those things aren’t important anymore but they got our 700 billion.

This week the markets are taking a beating because hedge funds needed to cope with redemptions, and are unwinding trades. Possible bankruptcy at the Detroit auto dealers may also be a contributing factor.I pointed out in an earlier post (previous blog) that the severity of the current decline makes it an on-going crash, rather than a standard decline that’s seen with recessions. Bear market rallies, if you can even call them that, have been very short-lived and weak on volume. There is tremendous negative sentiment in the market right now, and if anything it seems to be building.I find it difficult to beleive that Asia is going to spend a lot of money on UST’s this next year. They will need all the resoucers they’ve got to try to re-stimulate their own economies. So it’s difficult to see how US bonds can do anything but rise sharply in yields in 2009.This country still looks lime it’s headed for an explosion in unemployment and corporate bankruptcies. One thing that has been very noticeable is that unemployment has been lagging, in terms of where we are with the drop in the market. Based on the size of the market drop, it would be expected that we could be at higher unemployment. This would imply that very large layoffs are imminent.To end on a positive note … I noticed that one of the Fed members said recently that the Fed has pretty much done all that it can do. I sure hope they mean this. It would be nice to see an end for all the rescues, since large amounts of the bailout and recsue money are effectively wasted and not reaching the real economy. But we’ll see.PeteCA

Money (debt) was created and it is being destroyed. Asset values are falling everywhere. Excess capacity exists worldwide.Deflation: you can take it to the bank.http://www.shadowstats.com/alternate_data/money-supply?

Excellent advice. Not only now in this time of crisis, but always.

Nouriel, why are you so cautious to proclaim what we all know? Namely, we are going to have a depression in 2009 and we are going to see substantial increases in unemployment and decreases in GDP. Further the Dow may see lows substantially below 7000. We may see the DOW at 5000. Could you really be missing the eerie similarities between the current situation and the onset of the last depression? We are more likely to have one. As one of the best economists out there it is time your come clean, because I know you agree with this.

Good article from the Boston Globe:Depression 2009: What would it look like?Lines at the ER, a television boom, emptying suburbs. A catastrophic economic downturn would feel nothing like the last one. read link below…http://www.boston.com/bostonglobe/ideas/articles/2008/11/16/depression_2009_what_would_it_look_like/?page=full

Using the word depression will only amplify the fear and panic that has already gripped the market. Those who fear a depression ignore facts such as FDIC insurance of bank deposits, unemployment currently less than 7% and likely not to exceed 9% and as well as a Fed willing to stimulate. We are facing a severe consumer lead recession, a deflated housing bubble and a painful bear market in the stock market. On the other hand, fiscal stimulus is on its way, the housing market will likely bottom over the next six months and the stock market is likely to stabilize post the worst of the hedge fund deleveraging. Panic over a hyped up depression scenario is irresponsible and dangerous.

One more point, debt destruction and monetary policy are independent and its monetary policy that will lead us down the road to inflation.

Debt destruction, asset loss, and monetary policy are independent. It seems to me that if you want to deny inflation, rather argue the relative value of groceries, refute the documented inflation rates and show how they would not be a factor in assessing the value of return on investment, salary raises, and cost-of-living adjustments.The US has been printing money in the form of a shell game. Eventually banks will spend their new found wealth and that will accelerate the inflation rate.

The graphs indicate that the rate of money supply growth is slowing down, not that the money supply is shrinking.

On discussing Keynes, the New Deal, and the Federal Reserve during the Great Depression – a featured blog post on the previous thread — Guest summarizes that “it was regulation and transparency that brought the system back to some degree, allowing the weaker banks to fail, not throwing money around at everything.”I feel, however, that America’s banking system entered and exited from the Great Depression with different consequences than this description suggests.The bottom line is that thousands of important, well-respected small banks throughout America didn’t fail because of weakness. They were steamrolled out of existence; swept into the cartel. Today’s incestuous monopoly is a sorry result.The period from 1914 to the present, that period during which America’s money has been controlled by a private cartel of central bankers, has been a secret period in which many thousands of American banks went bankrupt, while the original purchasers of Federal Reserve Bank stock have not only survived but still are consolidating their power into monopoly. The same names encountered in 1914 are still managing the finances of the world, with profits for themselves and with disastrous results for everyone else.As long as the Federal Reserve system and its unseen manipulators continue their control of the money supply, working as usual on behalf of the international banking system, America and the world will encounter crippling problems.The Great Depression centralized nearly all power in this country in the hands of a few great trusts. The adoption of acceptances by American businessmen during the 1920s—set up under the leadership of Fed Founder Paul Warburg—facilitated the domination and swallowing up of small business into huge trusts, which accelerated the crash of 1929. These “large companies,” more accurately the great trusts, by then had gotten what they wanted — which was control of American business and industry.In a damning survey of the Federal Reserve System’s first fifteen years in the “North American Review” of May 1929, H. Parker Willis, First Secretary of the Federal Reserve Board from 1914 to 1920, wrote: “Since the inauguration of the Federal Reserve Act we have suffered one of the most serious financial depressions and revolutions ever known in history, that of 1920-21. We have seen our agriculture pass through a long period of suffering and even revolution, during which 1,000,000 farmers left their farms, due to difficulties with the price of land and the odd status of credit conditions. We have suffered the most extensive era of bank failures ever known to the country. Forty-five hundred (4,500) banks have closed their doors since the Reserve System began functioning.”According to Bill Ganzel of the Ganzel Group: “As the economic depression deepened in the early 30s, and as farmers had less and less money to spend in town, banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion disappear through bank failures.”The Wall Street Crash of 1929 was the beginning of a worldwide credit deflation which lasted through 1932, and from which the Western democracies did not recover until they began to rearm for the Second World War.The country now is experiencing unprecedented corruption in its financial/political sectors, but as the following example shows, corruption has been a feature of the system since its 1914 birthing.During the depression, the trust operators achieved further control by their backing of three international swindlers, The Van Sweringen brothers, Samuel Insull, and Ivar Kreuger. These men pyramided billions of dollars worth of securities to fantastic heights. The bankers who promoted them and floated their stock issue could have stopped them at any time by calling loans of less than a million dollars, but they let these men go on until they had incorporated many industrial and financial properties into holding companies, which the banks then took over for nothing. Insull piled up public utility holdings throughout the Middle West, which the banks got for a fraction of their worth. Ivar Kreuger was backed by Lee Higginson Company, supposedly one of the nation’s most reputable banking houses. The English review “Fortnightly” said in an article written December 1931: “It is as a financial irrigator that Kreuger has become of such vital importance to Europe.”“Financial irrigator” was the title bestowed upon Jacob Schiff by “Newsweek Magazine” when it described how Schiff had bought up American railroads with Rothschild’s money.“The New Republic” wrote on January 25, 1933, when it commented on the fact that Lee Higginson Company had handled Kreuger and Toll Securities on the American market:“Three-quarters of a billion dollars was made away with. Who was able to dictate to the French police to keep secret the news of this extremely important suicide for some hours, during which somebody sold Kreuger securities in large amounts, thus getting out of the market before the debacle!”The Federal Reserve Board could have checked the enormous credit expansion of Insull and Kreuger by investigating the security on which their loans were being made, but the Governors never made any examination.The modern bank with the credit facilities it affords, gives an opportunity that had not previously existed for such operations as Kreuger to make an appearance of abundant capital by the aid of borrowed capital…As the depression deepened, the trusts’ lock on the American economy strengthened, as shown by these examples, many published by the Bankers Research Institute. But it would take a library of books to even begin to unravel the financial control, manipulation, corruption and devastation that pervaded the Great Depression and continues today.http://www.livinghistoryfarm.org/farminginthe30s/money_08.html

The problem with the bailouts and the prevention has been the piling of debt onto the books of the government. This is the same government which will need to use its books to pay for people who are unemployed to eat. This is why it is MORE and not LESS responsible to discuss matters as if the recession train has left and the depression train is coming: given the dubious nature of the current bailouts, it is time for the government to husband its resources so that we the people can continue our habits of eating and having health care and education.The failure of imagination has left us naked. Having attempted to save a market bubble which we all thought we relied upon for basic neccesities we may have created a self fulfilling prophecy where intense devaluation of the dollar leads to the loss of those same neccesities.

Did you ever hear anything so lame as the Congress, which spends $2 billion a week in Iraq, can’t come up with $25 billion or 3 months of Iraq spending for the automakers, so that there is an orderly unwinding? Maliki has a silver-plated subway in Baghdad and Michigan doesn’t get a dime.

The problem is not $25b. Its that $25b is what they are asking for now. They will need more. A lot more. And the business model is completely and totally broken. What do you want the government to do? Continue to take money from taxpayers and give it to carmakers who are burning cash daily? So that autoworker can stay at work even though they are losing money? It didn’t work in England and it certainly cannot work in the US. Go into Chap11. Restructure the pension and the compensation scheme. Make sure the automakers can be profitable. Otherwise, its just spreading the disease across the healthy parts of the country.What do you want as an American?

strangely, in such turbulent times, it seems, people still believe in dollar as a hedge against chaos and risk. Dollar has been getting stronger against Euro when more bad news come. When things were much better than now, EUR/USD was almost 1.6 if you will remember. It is 1.25 now!I think in short term Dollar will continue to get stronger since what counts here is flight from risk not economic fundamentals. I don’t think there is any alternative against USD at the moment. A few days ago I was reading that Iran started buying gold with its reserves. So at least some chose gold instead of USD but I think that won’t be practical for everyone. Especially in EM markets people always see USD as the choice during economic crisis.So I am bullish on Dollars in short term.

Coming from the manufacturing industry in Asia – which was supposedly decoupled from the industrialized world, I can add that currently we are running below 50% of capacity. If that should be happening right now all over the world, then sometime next year, banks in Asia are going to be pumelled with a new round of bad debts from the industrial base. Add to that credit card defaults from the laid off workers plus housing loan defaults etc and it’s effects on the larger economy( in this part of the world these haven’t quite started yet), I can easily see this crisis spreading all over the world based on what I see here in Asia. If the cure seems to be to put more money into circulation, then ,given that not every country can sell debt, it seems the world will race to print ever more money . If that were to be, my question is : what happens when everyone starts to print money. How do you set up the exchange rate mechanism between currencies ? Will we come to a situation where certain currencies will no longer exist ? Just like a consolidation in the financial sector now happening in the US ?

“To end on a positive note … I noticed that one of the Fed members said recently that the Fed has pretty much done all that it can do. I”Me like your sense of humor:-)

Can’t invest in the future without first paying off debts (the BIGGEST of the big problems). As salves we’re hardly in a position to demand anything…

As GWD said to the crowd in one of his most powerful deliveries ever:GWB:Yesterday, we were at the edge of the precipice… Today, we have taken a step forward.AmeriKan public responds: Applause + standing ovation!(not an original. This is the translation of a joke in Spanish I heard about 20 years ago, that ridicules the nonsense in political speech and the fact that most of the time the audience is not even listening:-)

He did give us a warning, all the way back in 2002.”We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.” (2002 letter to Berkshire shareholders)In 2003, Buffett said derivatives contracts were like a “time bomb” ticking in global markets.

Anonymous guy: You’da originalk guy. Credit goes to you. Me, just a copycatz:-)

“unemployment currently less than 7% and likely not to exceed 9%”You are insane if you trust the official unemployment figures…the numbers are at least 15% nationwide and increasing all the time.In some areas (in some inner cities and rural areas) unemployment is often over 20%.

Professor: you on tv again this moygning? If you do, me, time to buy a bit more a cheaper prices!:-)

Do you remember how early in the year, every-time the DOW went down over 2% Benny got the shakes? He is to do all kind of “secret things” on weekends to prevent Asian/European markets from opening in the red. I guess he has gotten used to the daily -6% raping of the US markets so now he does nothing!Today is TH, Hanky’s scare the shorties day. Drive safely.

FDIC insurance covers only a fraction of deposits, and there is no fund, only IOU’s from the treasury.

Don’t worry! I took your comment as 100% positive. And I enjoyed writing the response.knocked down while behind the wheel of a 42 footerYou mean the weather or the boom knocked you down? I saw some pretty nasty stuff right there in the New England coast. The wind can do terrible things in shallow waters. I recall a low pressure system the fall of 1990 around Columbus day. We planned to sail to Privincetown and ended up in Gloucester! Winds clocked close to 200 MPH and water went over the boat, flooding the cockpit.My crew was a 40 year old Polish guy who used to sail the Baltic were things can get very nasty so he was having a ball. Me, not so much. The day we started our sail was a crisp fall morning. I made the stupid mistake of not checking the weather radio… It was so bad we were doing 10 knots with no main and the jib rolled out just a couple of feet INSIDE Boston harbor! It got a lot worse when we got out of the harbor.The polish guy was a refugee who had just gotten his greencard. It was a sad story. it turns out that they found out in his greenncard physical that he had skin cancer in his back. It was too late. He ended up passing away at 41 (I was 32 at the time).I had never seen a guy with so much energy, so much desire to live. He really wanted to make it in the USA. He fought to the last minute. So fair skin people (and dark skin people too:-) stay away from the sun! And enjoy life while it lasts!

Some people (not me) believe that life is much easier when you don’t have choices:-) Humm, let me see … what will I wear to work today?Easy! I forgot I don’t have to think as I always wear my Chinese, modified Sun Yat-sen grey suit:-)http://www.powerhousemuseum.com/hsc/evrev/mao_suit.htm

From a hedge fund manager friend:The key unmentioned by Roubini, which is critical to understanding the deflationary liquidity trap, is that it is created by massive debt and overleverage in the economy, something that is only possible under a fiat currency fractional reserve monetary system, and only existed really in the late 1920′s and from 1998-2007. When overleverage turns to deleveraging and deleveraging is not stopped to the point that deflation becomes entrenched, it is nearly impossible to stop a global depression from emerging. There is no incidence of a deflationary liquidity trap under a gold standard, or even under a fiat system in the absence of massive overleverage and debt. Positive deflation, the kind where productivity is exploding faster than money creation like when the computer price plummets, is a mainstay of a gold standard, and is most common in the fastest growth periods in history. Negative deflation can only happen when a bubble of debt unwinds. Adeflationary liquidity trap is a government construct therefore – it happens when a fiat currency produces long-term debt/GDP levels that are unsustainable and then something triggers asset price declines that knock the house of cards down.

Alwaleed Exceeds Buffett’s Loss as Citigroup Drops (Update1)By Ben Hollandhttp://www.bloomberg.com/apps/news?pid=20601109&sid=avtMgv5YOmtc&refer=home…Like Buffett, Alwaleed, 53, built his fortune by investing in brand-name companies he considered were undervalued, including Apple Inc., News Corp. and Time Warner Inc. Forbes magazine estimated he was worth $21 billion in March, ranking him 19th among the world’s billionaires.A Billionaire’s LifeA nephew of the late King Fahd bin Abdulaziz al-Saud, Alwaleed stands out among more than 2,000 Saudi princes because he’s made money. After earning a bachelor’s degree from Menlo College near San Francisco, he returned to the Persian Gulf and parlayed an inheritance of less than $1 million into a billion- dollar fortune in the 1980s, mostly through real estate investments, according to Riz Khan’s biography “Alwaleed: Businessman, Billionaire, Prince” (William Morrow, 2005.)Alwaleed’s arrival as a celebrity investor came with the Citicorp stake, for which he paid the equivalent of $2.98 a share after adjusting for stock splits, acquisitions and spinoffs, according to Bloomberg calculations. In the decade through 2007, the stock averaged $42. Today — after more than $13 billion of loan losses and subprime-related writedowns — it’s still trading at more than twice what Alwaleed paid.Unlike Buffett, who for years drove a 2001 Lincoln Town Car, Alwaleed enjoys the trappings of wealth. His garage contains two of everything — including a pair of Rolls Royce Phantoms — as the prince buys a matching model for his bodyguards whenever he picks a new car, according to Forbes. Buffett paid $31,500 for the home in Omaha where he’s lived for 30 years; Alwaleed spent $100 million on his 317-room Riyadh palace.$319 Million PlaneAnd when Airbus SAS put the world’s biggest aircraft, the A380 superjumbo, on sale last year, Alwaleed was the first private customer to order one. That cost him $319 million, and fitting out the plane’s interior may cost “several hundred million” more, Airbus said.Also in contrast to Buffett, Alwaleed’s investments are underperforming in the credit crunch. The prince’s reluctance to exit positions may be one reason. …U buy Diz?”Like Buffett, Alwaleed, 53, built his fortune by investing in brand-name companies he considered were undervalued..”Inherited less than a million???? Seems to me the basis for his fortune was robbing the people of Saudi-Arabia out of oil revenue that belongs to the people.Wonder why people or so mad in that neck of the woods?OK,OK Datz it! time for a bike ride!

I was a classmate at Menlo with Alwaleed. At the time he lived in a big spread in Atherton and had a stable of fancy cars. He often weekended in London. Definitely rich even by Menlo College standards. But he was a nice guy, always smiling.I think he must have started with way more than a million…

What have you done for me lately: Roubini has been more accurate of late that the Billionaire.Why would Buffet comment on the markets? Maybe to calm jittery markets at the request of the PTB?Why would the esteemed Professor pull his punches a little? To avoid roiling the markets and allow his voice to be heard.Anyone who wishes to be heard on a national stage must pay a little homage to expediency. Otherwise their voice goes unheard.

Why is Mark Cuban facing a fine when Martha Stewart faced the slammer?

Via CR: http://economistsview.typepad.com/economistsview/2008/11/fed-watch-polic.htmlTim Duy lets loose:Policy Adrift, by Tim Duy: I understand the Federal Reserve Chairman Ben Bernanke is considered something of a sacred cow, our one point of light in an uncertain world. An academic who cannot be questioned by other academics. A smart person who has mastered the Great Depression and therefore “knows” what to do, and is providing the leadership to do it.I am beginning to question all of these assumptions….http://www.uoregon.edu/~duy/Interesting article by Duy. He is not as prolific a “tree killer” at top economics journals as others in the profession, but, IMO, his analysis is right on target.Lots of good stuff at CR today:http://www.calculatedrisk.blogspot.com/

N.R. often refers to the lack of regulation ie. the derivative industry and loose Fed as being the culprit if you read his past articles. I believe his opinion is a lack of government that created the problem.

Come up to speed in your stag-deflation reading.http://www.haloscan.com/comments/calculatedrisk/7649924547335712451/#732460Great reading list from mp at CR.Professor: It looks like we are F^(*&^ed. Besides “US cash is king”; Do you have any ideas that are a bit more creative?:-)

If it gets that bad, the floating rate system will end as countries one by one impose capital controls and try to – somehow – peg their currencies for advantage. But that duck won’t hunt for long. To make a long story short, everyone will sit around a big table and a fixed peg with reference to either gold or a currency basket will be devised. Or at least they’ll go through the motions of working the enormous kinks out of the latter. Of course they could have done this five years ago if the US had some control over its deficits and the Chinese leadership and their relatives didn’t have a personal stake in the whole, collapsing export led strategy. But that would have required some unemployment in the PRC, a revalued Yuan which would have resulted in a huge increase in personal consumption, a rise in imports, and a relaxation of the still formidable barriers to entry in the domestic market. Let’s see how soon Mr. Hu changes his tune (and it better be soon). No pain, no gain.

I agree the product has improved greatly but they are paying for the sins of their fathers; and they likely aren’t squeaky clean themselves.As for Obi’s new age of unity, peace and prosperity let’s hope his actions match his words. It should be of some concern that his administration appears to be Clinton II.Perhaps some of Obi’s supporters could lead by example:Crisis? What crisis? Dubai hotel to throw 20 mln dlr party

You can legitimately argue that – in the complete absence of governmental fiscal discipline – a fiat system tends toward overleverage. But you must admit that Bretton Woods 1 was viable for more than twenty years and was the basis for a stunning period of growth. Talk to someone who came of age before WW II and they’ll tell you that it was an age of pre-prosperity, not some kind of economic paradise. Inconvenient as it is as well as anachronistic in the computer age, we all admit that the gold standard was associated with falling prices during a period of overall growth. It was also hell on debtors of every description and most notably farmers, who were 70% of the population during its heyday and who loathed the system.

Nourielno one writes about the psychology of the consumer in action-owners of foreclosures are renting them outrenting for $1200 what normally rents for $2,000not paying (or paying just few bucks to the bank) and pocketing the restand the banks are stalling on evicting and foreclosing, playing along…waiting for govt mortgage buyouts/reductionshomeowners are not paying their mortgages lining up for the mortgage reductionthe # of foreclosures is climbing, but the actual # is much largerthe attitude of the homeowner is “I (we) can get away with murder”what are the implications? -is this widespread? -can a survey be done to explore this?attitude and trust underlies behavior of the consumer-do many trust that the Obama govt will “take care of them”?

NOVEMBER 20, 2008 Before the Bust, These CEOs Took Money Off the Tablehttp://online.wsj.com/article/SB122713829045342487.html?mod=todays_us_page_oneSpeaking of sailing:http://s.wsj.net/public/resources/images/P1-AN684_Win_BO_G_20081119173030.jpgDaniel Meyers, First MarbleheadWall Street once had a voracious appetite for student-loan debt. Ten insiders at First Marblehead Corp. seized the opening, receiving a total of about $660 million, mostly through stock sales over five years.View Full ImageDan NerneyStudent-loan entrepreneur Daniel Meyers races his 66-foot sailing yacht.Based in Boston, First Marblehead specializes in “private student loans.” Students take out the loans if they’ve exhausted the cheaper government-backed variety. As with subprime mortgages, those with poor credit histories must pay higher interest rates.First Marblehead helped big banks, such as Bank of America and J.P. Morgan Chase & Co., put together student-loan programs. First Marblehead earned rich fees assembling and servicing packages of the debt sold to investors.Chief Executive Daniel Meyers, a 46-year-old former arbitrage and derivatives trader, received almost $96 million in cash compensation and proceeds from stock sales over five years. Lee Jacobson, a First Marblehead spokesman, notes that Mr. Meyers co-founded the company in 1991 and didn’t sell any shares until First Marblehead’s October 2003 initial public offering.In 2004, Mr. Meyers bought a Spanish-style villa in Newport, R.I., the summer retreat of industrialists a century ago. He paid $10.3 million for the estate, on 45 acres with sweeping views of the Atlantic. Mr. Meyers tore down the villa and is constructing a five-building, 38,000-square-foot compound called Seaward with a carriage house, a guest house and a caretaker’s cottage. Mr. Meyers also owns a 66-foot sailing yacht, which he recently raced to a win at the famed Newport Regatta. In 2004, Mr. Meyers made a $22 million gift to the University of Virginia’s Curry School of Education.Leslie Alexander, the 65-year-old owner of the Houston Rockets and until recently a First Marblehead director, cashed out $288 million in stock over the five-year period.In the credit crunch, First Marblehead’s business ground to a halt after investors abandoned private student loans, which are experiencing rising defaults. Shares recently sold for about 75 cents apiece, down 99% from their January 2007 peak. The company’s stock-market value is now roughly $75 million, about one-ninth of the amount that insiders cashed out of the company.Mr. Jacobson notes that Mr. Alexander still owns 18.5% of First Marblehead, and Mr. Meyers retains 7%. He adds: “Both men have suffered significant losses alongside other long-term holders of the stock.”

http://www.sail-the-net.com/marinas/north_america/usa/massachusetts/marblehead/boston-yacht-club.htmlLots of classy people at this joint.

In defaltion which I have been telling you about since I started posting in this blog, cash is king.Better keep your cash instead of wasting it on buying stuff such as stocks, non-government bonds, commodities, etc. Should start following my own advice:-)

‘derivatives of mass destruction,’ yet he sold billions of 15yr puts that will soon have a big enough delta for him to have to post margin

greetings from brazillllllllCUT THE LOSSES……..Ross Perot as GM CHAIRMAN……..Buffet as OBAMA special financial adviser………As for the financial assets…….an international auditing by pricerwaterhouse will be welcome……….And lots and lots of aspirin!Abraço Regards……..

Dow 7882 will be a number to watch today -

I felt the change happen about 2 months ago. It was like the throwing of a switch. NR will lose the credibility he gained making the doom call 2 years ago. I also feel he has been compromised by the powers that be.

It’s now at 7883. Is that close enough?

This is not deflation, it is massive de-leveraging. Deflation by definition is a decrease in the money supply. These price falls are temporary and will whipsaw the other direction when the firesales finally finish. Dollars will be a safe haven for 12 to 18 more months, imo. Then you better find something of real value to put those dollars in.

Didn’t have much time to watch that number as the Dow crashed right though it…

even the ppt running for the hills now

I am an NYU grad student but also a former senior IB and grad of ivy/oxbridgeI confess I saw this coming and placed my views on record.Making my views known has made me unpopular, increasingly so as the perspective unfolds into reality.My family are on Wall Street and really have come to resent me, subjecting me to ridicule and scorn.As to Buffett, he morphed into another AIG.I said 6 months ago that Buffett would come to a bad end, and it is inevitable.I see Dow 3000 as a 50% probability inside 18 months.

PS.There is an embedded assumption in almost all discourse concerning the credit crisis:”Government policy and conduct can resolve most if not all the problems”It is possible that government policy and conduct can have virtually no ameliorative effects.

GMAC Applies for Status as Bank, Begins Debt Swap (Update2)Nov. 20 (Bloomberg) — GMAC LLC, the largest lender to General Motors Corp. car dealers, has applied for status as a bank holding company so it can get access to the Treasury’s $700 billion rescue fund for the financial industry.The lender also began an exchange offer for $38 billion of debt issued by the company and its Residential Capital home lending unit, Detroit-based GMAC said today in a statement.Converting to a bank and swapping debt may help GMAC quell doubts about its survival. Losses at GMAC since mid-2007 reached $7.9 billion through last quarter, as home foreclosures pressured the mortgage unit and GM’s auto sales plummeted to the worst level since 1945.“As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses,” the statement said.GMAC has been shut out of some credit markets and last month said it might raise “significant amounts of capital” as part of an attempt to become a bank holding company and swap some of its debt. Standard & Poor’s said Nov. 7 that GMAC and ResCap were facing a “dire situation.”http://www.bloomberg.com/apps/news?pid=20601087&sid=a.n1OTYW68TA&refer=home

We appear to have bounced off of Oct 9/2002S&P Intra day Close9-Oct-02 775.80 776.76

Low on the S&P just a few minutes ago Low: 776.76 amazing!!

No one is really stepping up to the plate to answer my question. It is really not that hard, but one must be objective and void of fear to truly answer this question. I am a great admirer of Dr. Roubini and his work, however it is very easy to intellectually give in to the idea of a catastrophic economic spiral conclusion, but is that way of thinking too heavily influenced by today’s feeling of despair. There is little doubt that today’s economic conditions caused by systemic failure and a massive credit bubble being burst are severe, however one must ask what will be the extent of the collateral damage caused by today’s conditions once tomorrow arrives. Policy makers and market participants cannot prevent the deleveraging and transformation that is occurring, however they can see it for what it is and minimize collateral damage by trying to contain the financial crisis/credit crunch/deleveraging/mounting foreclosures/recession/depression/END OF THE WORLD AS WE KNOW IT spiral. The current crisis spiral will pass, the long-term impact of these short-term crisis’will depend on how well we minimize the collateral damage.

Motley Fool: Ron Paul for Treasury Secretary | November 19, 2008Writes the famed investment advisor:Ok, I’m just blue-skying here, but “what if” Prez-Elect Obama were to ask Ron Paul to act as Treasury Secretary?Some thoughts:–He’s a Republican. Not only that, but he’s a Republican primary candidate who the rest of the contenders basically hated, mostly for his repeated statements about where the economy was headed (which pretty much were dead on). You’ve got a win-win for the Obama camp: “Across the aisle” with a guy who’s been beaten up by the rest of the Republican establishment. Talking about having your cake and eating it too: Obama would be able to use the terms “Uniter” without becoming a caricature while lobbing a grenade into the middle of the RNC.–He’s a policy guy, not a banker. This is important because Paul wouldn’t have any “former associates” in the banking industry to cover for, sympathize with, or protect. Paulson, on the other hand, can’t escape the whiff of insider-ism in everything he’s doing. Questions like “Why isn’t the bailout being used as originally planned?” and “Why can’t we get a clear picture of who’s getting the money and who’s being turned down?” may have a reasonable answer, but the overall tone of Cover-Your-Buddy’s-Ass can’t be ignored.Forgive my ignorance, but I thought that the purpose of a senior executive-type was not to make every decision that came into the office, but to set and adjust policy. Maybe it’s just me, but it sounds like Paulson has been up to his elbows in the decisions about who get’s what and who doesn’t. In my humble opinion, Paulson has asked for carte-blanche for himself and has been using it. Perhaps his exerience is helpful, but having the top Treasury guy make all the decisions would explain why suddenly he’s having to justify past decisions instead of publishing the standards and reporting on how it did or did not work.–He’s a Republican. This is worth repeating for a different reason.If the Obama administration is going to get anything they want done (or do anything without screwing up the situation worse) they need something other than another member of the choir. I would like to believe that a Ron Paul Treasury department would not only tell the President he had no clothes, but how to get clothes for the best price and how long it would take to pay them off.–Convergent ideas. Iraq War: Obama against; Paul against. Economic disaster looming: Obama warned; Paul warned. Fix Bush/Cheney damage to foreign relations: Obama for, Paul for.I know, I know…this isn’t a political site. However, I would argue two things. First, politics affects economics, and economics affect politics. It doesn’t matter if you (personally) blame the banking industry, international relations, government oversite (or lack thereof), or the Iraq War. Almost every possible cause of the economic downturn has a political aspect, usually in why an action was or wasn’t taken.The second thing is that using the “fantasy football” method to discuss Paul as Treasury Secretary is a good way to start analyzing whoever Obama does pick.So let’s have it. The good, bad, and ugly on why (not) Ron Paul for Treasury.http://www.lewrockwell.com/blog/lewrw/archives/024082.html

Those $5.00 options on CITI are now in the moneyC $4.90

Wow! After that last post I had to go and check Citigroup. Sure enough. Stock plunging to $5. These guys are on the way out – without another bailout. But let’s face it … another big bailout for Wall Street??? Are they kidding?We really are seeing the collapse of the financial economy in the USA now. It’s a wonder there are any investment bankers still left in this country. They must be packing their bags – if they’re not on the next flight out of New York. And as for the hedge funds – anybody who’s not seriously planning to move their office to an intl. location just doesn’t get it.PeteCA

So is this a reversal off the multi year lows?? or a headfake

this is a great point, nyu grad student, and not one that enough people on this site made explicit (Mark, I think, being the glaring exception).the solutions to this are going to need to be home grown. Everything the “leadership” will do from this point forward will only be harmful to the average American, in the long run. Another thing that has gone unnoticed, in my opinion, is that the politicians are scared out of their wits right now. The “not on my watch” syndrome is in full swing -all decisions are being made out of fear that THE BIG ONE will happen during their term. Thus, short term, near-sighted policies are carrying the day. It might prop things up for awhile longer, but it will only make the inevitable crash that much more painful when the substructure crumbles. Only those who have prepared themselves ahead of time will escape this mess intact.On the bright side of things, however, Prof. Roubini seems to be enjoying himself these days. “Fugly & fuglier”?!? I had to pick myself up off the floor after reading that – my friends and I used to say that back in junior high! LOL

Technology is buit by people. The only problem is … too many of them happen to work and live overseas these days. America now faces the challenge of the century – how to reinvent itself.PeteCA

25 Grand for a BMW Mini is not economical.

Very few people build technology for every job it creates it kill 10 more and increasingly technology builds technology. The common rhetoric of we need more high tech jobs is a paradox, if those technological productive gains are not shared amongst the population there will be disastrous consequences. None of the old rules or our past experiences seem to apply going forward.

When that happens then we will know that the New Genesis Experiment has truly begun.RENEWAL

Opps,Wrong site.RENEWAL

The answer lies in anything Green Industry realted…including transportation, energy, education….

Sorry, but your argument is as old as the hills and untrue. Look up the word “Luddism” to find out what I mean.

Going to see a movie is a pleasure choice you make, watching a ball game is another pleasure choice however eating food finding shelter paying utilities etc. are necessities. You made my point exactly in the future we’ll all be ball players or artist or actors etc. Who said anything about getting fat and lazy in fact people will have more time to eat better and go to the gym, we’ll be less stressed because basic survival needs will be easily afforded. However if productive gains are not shared people will go hungry lose their homes can’t afford health care… kind of like what we’re seeing right now.

I’m all for it. Now let’s go over to change.gov and submit our recomendations…http://change.gov/page/s/yourvision

Thankfully the “monetary toolbox is empty”……everything they have done to date has made matters worse!

Wow, I didn’t know that. My mouth is now watering for some lobster!!!

“Luddism” doesn’t apply it ignores the fact that the industrial revolution enabled explosive population growth which in turn fed the productive machine. Plus it also ignores the fact the the industrialized world still fed itself through exploitive expansion either through exports to underdeveloped nations and or direct slavery and imperialistic acquisitions. Capitalism has a lot going against it besides the technology I just mentioned it constantly has to find new ways to exploit the environment to maintain constant growth. Absence of that growth and production gains must be shared or disaster/class warfare looms.

Many people can’t afford to keep health insurance benefits and be moved to part time-they have to kick in too much more for their own insurance. They might be better off taking unemployment and keeping COBRA whilst looking for a full time gig. It is a full time job to find a full time job and usually takes about 1 month per 10,000 of salary you try to replace. So a job hunt for a 50,000 a year position takes 5 months of steady looking. Paradoxically families with little kids might even do better not having to pay daycare while on unemployment.

Suzuki SX4 AWD : $15,27021 mpg city and 28 mpg highwayPower door locks, power windows, power mirrors, CD player with MP3 capability and keyless entry.

If we reached our limits in energy production?Not yet maybe, but we are closing in really fast.The global production of energy was 5 TW in 1965 and 15 TW in 2005, a yearly increase of 2,79% per year and we know the the 10 past years have been higher then the first 10 years of this period. The expansion of the global economy, the increase in China and India, the strive for “western standards”.2,79% does not sound to much but if you put this increase into a excel spreedsheet, accumulate the 2,79% increase per year you will get a exponential graph. Try it out, you will be amazed.Shortterm, the increase of 2,79% means that we will need to produce 30 TW by 2030 and 60 TW by 2055. Some argue that we have aready reached peakoil, some say in 10 years, 20 years but does it really matter?We can not build a sociaty(or economy) with the assumption that we will have a continuous energy growth as the earth has its physical limits.I know that there are people saying that the technology will solve the problem(solar,fusion etc) but short term, I would say the the energy production is a limitation and the way we produce it today is killing us(pollution, Co2).If we doesn´t come up with the technology to “bring down the sun” or such we might consider to define an economy based on limited energy production(and limited monetary base).But I guess it all comes down to philosofical discussions, rich/poor, justice, power, etc and maybe not a discussion in this forum./Toby

Rumor of bailout agreement for autos– F moved in advance and now the S&P

Spare me, Martha’s a crook.

FDIC Insurance of Bank Deposits = insolvency risk for USLow unemployment = wishful thinking and ‘official’ numbersPrediction of max unemployment = what crystal ball are you looking in to make such a prediction? Are you accounting for literally thousands of business failures looming on the horizon?’Deflated’ housing bubble = ignorance of history. Its only halfway deflated up to nowFiscal Stimulus: Take an any 10 situations where someone is at risk of losing their job, their home, their 401K is gone, etc. Tell me how ‘fiscal stimulus’ is going to help them in the next year, realistically.Stock Market: Why would it bottom? You don’t seem to realize that all the rules of the past are now changed. For one the banking ‘industry’ is literally gone. The US was a debt-driven consumer economy that is now bust.Let me give you an example. I live in Phoenix, at the heart of an area that has been decimated by mass foreclosure and housing bubble burst. Ours is not the worst area in town, by any stretch. I live on Bell Rd, in an area with massive retail outlets, restaurants, etc, that has traditionally had major retail traffic. It is now 35 days prior to Christmas, the week before Thanksgiving. The retail stores are literally empty. You can go in to a massive retailer in the evening and count the customers on one hand. There will be no retail Christmas this year. This started in earnest in October, when the TARP bailout was the big news. Not everywhere is ground zero like we are here, but it will proceed in waves across the country as the debt bubble bursts. The consumer has completely disappeared here.People, both engines have gone out here. I don’t think anyone can yet predict what the result will be, but optimism, in my view, is misplaced.

Won’t last. Buy the rumor, sell the news.

I drive a manual transmission Honda Civic, 2001. I get 45 mpg on the highway. My husband and I took my car to Chicago, we live 70 miles west of the Twin Cities, in May over Mother’s Day weekend, round trip about 1300 miles. We spent a total on gas round trip of $65. That’s ROUND TRIP.I love my Honda. The doors don’t lock automatically when I start it, so what? I can do that myself. It’s a decent car, and all I’ve had to do with it is get the oil changed. Until the Big 3 make cars that are fuel efficient , over 40 mpg, I am not impressed. I own a good basic car I bought used for 8,995 from my local auto dealer. When I told them I wanteda Honda they went into the Twin CIties and fetched me one I could afford.That’s service! All most Americans need is a good basic car that is well made without all the fancy gadgets, that functions well. Maybe this economy will see more of that.

I can understand power windows and door locks, but come on, complaining about no autolocking doors? Just push the little button after you get in. Geez.

But OBAMA is gonna fix the health insurance problem!

A 2:30 news conference from the bi-partisan group on bailout of the auto industry should be interesting. So far Dow +31.30, really bouncing around today. Wonder what the VIX is?

But who will buy the products they make (for less pay)? If demand drops, then you have to produce less, which requires less people making those products.

tomorrow afternoon being this afternoon (Thursday)

i,good question but the answer is not simple. “on the ground” everything will be different and that is unfathomable for everyone but especialy for those who have a current advantage or good possition. the collateral damage is a world view, the virtual world we live in, the rose in our rose colored glasses. as the glasses come off we will see what’s really out there. if you know, do tell.

Less pay vs No pay, which option allows for purchasing more product?

Nouriel, I’d like commentators to report that we are actually back to valuations of Spring 1997 … I guess we won’t acknowledge that until the S&P falls below the low of 2002 at 800.58 then all of a sudden we have reached not a 5+ year low but an 11+ year low.

As an American, and having recently visited dead cities such as Syracuse, Rochester, Buffalo and Cleveland, I don’t want a bunch of drunks and down-and-outers on the street. Not the fired autoworkers, mind you, but the those who now have unwanted jobs in the sub-economy that depends on autoworker paychecks.Yes I would like fuel efficient cars but not at the cost of regional financial devastation(yes, Buffalo looks like a Day After that can rival those dead Siberian cities).

How’s this for a bailout plan: Fix healthcare so that the big 3 don’t have to lay out huge amounts of cash each month for healthcare expenses promised to all their past and present workers.What a better investment than another 25 billion that will go nowhere.It’s past time that we catch up with the rest of the decent societies on the planet kids. I don’t know about all of you, but I work in a hospital and can’t afford the insurance plans offered. I just can’t put into words how much that pisses me off. I spend my professional life taking care of people, paying taxes to support a system of protection for many, but can’t protect my own family. Yeah. That makes sense.FIX HEALTHCARE AND YOU WILL HELP BUSINESS!!

No pay, less product supplied, less demand, less product bought. Less pay, the same amount of product supplied, still less demand (less credit), what do we do with the unsold products?

No pal. WE ARE.

“Accountability and viability, that’s all we ask!”I think it will be enough to keep some people busy over the next few days…

Something came up. Couldn’t make it AM time. Just woke up from ciesta. Biking will be next!

Leader REID: “No auto industry rescue plan can pass congress right now – CEOs flying in corporate jets sends the wrong message”Option expirations notwithstanding I think this market breaks lower

No deal yet on bailout for U.S. automakers, Sen. Harry Reid says !Hehehe

As of year 2007, the total world’s derivatives were $561 trillion and the total world’s stock market equity value was $100 trillion. US equity stock market was $21 trillion but today is about 9 trillion. US bond market was $4 trillion.Now deleveraging is going on for almost all the derivatives, which means the selling of the world stock market equities and bonds to “zero” will not be able to cover the deleveraing process. That means capital markets appear to be on the rope and perhaps the demise of capitalism itself.Am I correct in my calculation?

especially since they need to fly to their high tech factories in brazil

CNBC: “GM healthcare program is the single largest buyer of Viagra in the world.”

They are probably are all stocking up to, so they have somehting to do when the there is no more demand for thier cars…

October 9 2002 (876.76) is the line in the sand for the S&P bounced off that exact number once today – we’re trying again

FED meeting to last 2 days in December so they can explain to the public and world why nothing is working and what they are doing next… As Nouriel will soon be writing, its called a “liquidity trap” and they will probably spend thier time trying to understand that. they should just Read the Good Dr’s article when it comes out shorty…Also any guess when the Big 3 show up in early December if they come by private jet or commerical?Notice the use of the word Depression now all over main stream media… reminds me of how they used recession for the past year and wondering if we were in one…We

we are here almost778.39 -28.19 (-3.50%)

775.62 -30.96 (-3.84%)

Or sell them out if they lose jobs

I guess that’s the only thing “going up” at GM…

It’s broken

Burn baby burn… Freefall is now allowed…. CNBC talking heads have been beaten back…

This is an essential inducement to keep the Detrotians fit and keep coming back next morning for making and installing tin boxes on four wheels.

that is true but what if the rating agencies lower the outlook for U.S.?

AGAIN A REMINDERUSA. LED BY PRESIDENT OBAMA WILL GO TO WAR WITH IRAN AROUND FEB TO MARCH 2009 THE MOTHER OF THE ALL WARS GIVING BIRTH TO ALL THE BIG CONFLICTS AROUND THE WORLD.LET US PRAY FOR THE SAFETY OF THE ENTIRE WORLD WE ARE ALL ONE BIG FAMILY.From Times OnlineNovember 20, 2008Military analysts: Iran ‘has enough material for atomic bomb’The UN’s nuclear watchdog says its inquiry into the Iranian programme is in deadlockHannah StrangeIran has now accumulated enough nuclear material to make an atomic bomb, weapons experts said today.An analysis of the latest monitoring report on the country’s nuclear programme concluded Iran had amassed 630kg of low enriched uranium, enough for a single weapon.Iran denies allegations it is seeking to build a bomb and claims it is only developing a peaceful energy programme in its plant at Natanz. Non-proliferation rules allow for a domestic nuclear industry.But UN officials said they were unable to verify Iran’s claims.•“We had gridlock before but until September at least we were talking to each other. Now it’s worse. There is no communication whatsoever, no progress regarding possible military dimensions in their programme,” said a senior official from the UN’s nuclear watchdog, the International Atomic Energy Agency.The IAEA has struggled to get to the bottom of US intelligence suggesting that Iran has in the past melded projects to process uranium for atomic fuel, test high explosives at unusually high altitudes and revamp the cone of a long-range Shahab-3 missile in a way that would fit a nuclear warhead.Iran says such intelligence is forged, but monitors have said that unless Iran produces credible evidence for its denials or permitted inspections beyond declared atomic sites, the IAEA could not verify Iran’s enrichment was wholly peaceful.The last IAEA report, on September 15, detailed the Islamic Republic’s non-cooperation with requests for documents and access to sites and officials and physicists for interviews.UN officials said that the situation has not since improved.The only aspect of the inquiry that has continued are the routine inspections of the Natanz plant, the monitors said. These contacts had revealed Iranian plans to start installing another 3,000 centrifuges early next year, adding to 3,800 already enriching uranium and another 2,200 being gradually introduced.But monitors also found that Iran has not boosted the number of centrifuges regularly refining uranium since reaching the 3,800 level in September. The reason for Iran’s relatively slow progress was unclear, UN officials said.“Our questions are there and they need to be addressed. There is no point in writing them again every week. We are just awaiting their response,” one senior official said.“But we have a long vacuum of communication now.”Experts cautioned that although Tehran had enough material for a weapon, it was a largely symbolic milestone as Iran would have to convert the fuel into high enriched uranium and put it into a warhead design. Western analysts doubt Iran is technically capable building a functioning warhead.“They clearly have enough material for a bomb,” said Richard Garwin, a top nuclear physicist who helped invent the hydrogen bomb and has been a Washington adviser for many years.“They know how to do the enrichment. Whether they know how to design a bomb, well, that’s another matter.”Mohammad Saeedi, the deputy head of Iran’s Atomic Energy Organisation, insisted that the report showed Iran had “provided necessary access” for UN inspectors within the framework of the nuclear Non-Proliferation Treaty and IAEA safeguards.“Naturally in the future also the agency’s access and inspections within the same framework will continue,” he told reporters in Tehran.Iran says that IAEA inspectors do not have the right to inspect the sites it is requesting access to, as they are conventional military facilities which any nation would keep off limits on security grounds.It turned over more than 200 pages of documents to the IAEA in June and at the time insisted they answered all relevant questions, declaring: “The matter is over.”Diplomats say that despite Western refusal to accept such a stance, the Islamic Republic will face little pressure to change course before US President George Bush hands over to Barack Obama in January.

though then US Cash in the bank could be at negative 2 or 3 % interest rate like in Japan… so best would be US Cash in your mattress at that point…

the PPT have given up and run for the foothills…

S&P 500 projecting 550 from a descending triangle perspective…

I am wondering if the day when the rating agencies lowered the U.S. outlook or turned to negative would come… The growing debt and the fiscal deficit and trillions needed for the social security system after babyboomers start retiring! Vow!This would be the real armageddon!

I think “Ouch!” is the word that describes the current situation in the best possible way.

Either they are using it to sell their sperm to sperm banks, because they need the cash…or…because they are trying to propagate before perishing…;^)

Lol!

Speaking of the G20 – you know, that bunch of incompetents that agreed to meet again next April:http://solari.com/blog/?p=1823What else can I say these days except; Dow 5000 before Xmas?Well, nothing new here, so …Ho hum

@ JSOn November 3rd, I declared on this website in a post to OR that I was moving everything back to “safe”.In my original prediction on this new wave down (back on like October 14th) I stated we would see the market go through a triple bottom, ranging from 8-8500 up to 9500-10000. (I said this would happen over the course of 6 months. The speed was much quicker!!! 1 month!) Which is why I announce on the November 3rd about moving to safe)In addition, oil had just moved back from 65 range up to the 70… and I said on my Alt Energy blog that oil HAD TO retreat to the 40-45 range. (also, my timing of how quickly this downside came was waaaaaaaaaaaaaaaaaaaaaay off. I thought it would take years, but would no doubt go down significantly.)I also stated Gold (which I hate) would be the best wealth preservation at buying opportunities within the 700-750 range.I’m working on this weeks post and will hopefully be done by tonight.Miss America

The following post is mainly humor what is going on is pretty serious. However, I do hope that at the end, something good comes out of it. I (as the professor I am sure does) do not believe a single individual can affect the markets so broadly. As you have witnessed, not even the mighty US treasury can. You don’t believe in Santa right? So stop believing in the PPT as well:-)Trenque Lauquen, November 20. 2008Dear Professor Roudini, Houbini, or whatever,You are gonna have to stop showing up on tv, stop writing, etc. as the “stunts” you are “pulling” will drive all risky assets to zero (e.g., stocks, commodities,non-treasury bonds, etc.)Foiget the magic of the Great Houdini! Roubini magic is 1000x more powerful!If you stubbornly refuse to stop being a media man, the riots in NYC will be such that you are gonna have to go live in Congo, Iraq, Pakistan, or whatever, where life will be much safer:-)You are no longer a somewhat anonymous economics professor known mainly to the profession. Now, you are famous and a lot of people are quite mad so you should consider start walking around in a disguise:http://www.bigkidcollectables.com/catalog/disguisekit.jpghttp://www.lootlady.com/images/top%20secret%20spy%20kit.JPGPS: Couldn’t help it; went shopping again in the last 15 minutes of trading but I will stop giving details as: 1) this is not an investing blog; and 2) I will stop keeping short term score for a while as when you are buying stuff cheap it is very difficult to time a bottom. I will let you know when I get down to break even for the year:-) I was up about 6% as of yesterday.

2002 Stock Lows May Not Hold… A failure to hold near 768 would open the door to 716 and 605. A decline from 806 to 605 would mean an additional 25% hit to investors’ hard earned principal. We are not forecasting a decline to 605. We are simply stating 605 is in the realm of possibility based on both valuations and technical support. My sense is a decline to 605 would catch most investors unprepared since they assume “we must be close to a bottom” or “it is too late to sell now”…http://www.safehaven.com/article-11881.htm

p.s. The market did a triple bottom!Oct 10th we hit – 7,773Oct 14th we hit – 9,924Oct 26th we hit – 8,085Nov 4th we hit – 9,711Nov 12th we hit broke back through the 8,500 mark.I was not confident to go back in. The speed at which it came spelled of serious panic!Miss America

Didn’t get the ending: is the PS Octavia or the letter writer?

Citigroup Said to Urge SEC to Reinstitute Ban on Short-SellingNov. 20 (Bloomberg) — Citigroup Inc., which fell as much as 25 percent in New York trading today, is urging the Securities and Exchange Commission to revive a prohibition on short-selling financial stocks, according to a person familiar with the matter.The bank has also discussed with lawmakers its proposal to reinstitute the ban on bets that share prices will fall, said the person, who declined to be identified because the discussions weren’t public.Citigroup, down for eight of the past nine trading days, declined $1.22 to $5.18 on the New York Stock Exchange at 2:37 p.m.Buffeted by four straight quarterly losses, New York-based Citigroup has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury.SEC spokesman John Nester declined to comment. Citigroup spokesman Michael Hanretta didn’t return a phone call seeking comment.The short-sale ban lapsed Oct. 8. The SEC instituted the prohibition in September after Morgan Stanley Chief Executive Officer John Mack and lawmakers such as New York Senator Hillary Clinton blamed short sales for driving companies to the brink of collapse.http://www.bloomberg.com/apps/news?pid=20601087&sid=a0evCmtmGjLI&refer=home

That’s a good point pb. Thank you…I didn’t think of that.

We are already there.S&P500:52Wk High: 1,523.5752Wk Low: 747.78% from peak: 51

The level of support doesn’t mean anything in deleveraging process because the market is not working according to technicals but is plummeting due to indiscriminate selling of equities. You have noticed that the deleveraging process is chracterized by temporay pop-up in the morning and early afternoon by planned managers, and rapid decline by massive selling from deleveraging (LBOs, Hedge Funds, Bond managers, etc) just before the market close. As long as this process continues, there will be no importance of support of any index or stock. It is just bad!

Put buying in CITI similar to Pre MerrilHaving said that – a huge reversal (albeit temporary) is at hand – for the foolish and the brave, UYG, SSO etc would be a great way to play notwithstanding a C implosion — and don’t forget someone in DC is going to do something between now and Monday (especially if tomorrow turns out to be a bad day)I suspect tomorrow AM might be another October 10 and Dow hits 6xxx and ends at 8xxx

do you say this to hime b/c of fundamentals or the fund? important distinction to make

Been there done that (USMC). Had a superior tell me that that (the USMC/”service”) was the closest I was going to get to communism. Sadly I think that, even as wise that I thought him to be, he was wrong

We are at a bottom, we have capitulated… lol… Just who the heck would even play in this market…. this Sell Down today was on heavy volumne… different from past sell- offs… must mean even the big boys are bailing… watch the volumnes…

To JS, please try this link here http://www.rgemonitor.com/financemarkets-monitor/254482/where_are_we_in_the_crisis_where_are_we_going_what_is_to_be_doneRead and then decide if you want o buy citi or other bank. The banking system is kaput get it? There still mor cr..p to get out, short govtmt bonds for time being, regards

In USA TODAY yesterday, an ad — full-page drama from Harley-Davidson Motor Cycles with the Bar and Shield logo – close-up of the upper front-end of a cycle, leather gloved hands on the controls, in motion, in black and sepia, interposed on brushed stripes of Old Glory in orange and newspaper-white stripes. The message — in Big and BLACK and all CAPS, emphasis by size ~The other side of FeariS COURAGE.The other end of wall street connectswith MILLIONS OF BETTER ROADS, all leadingfar from the STINK of GREED & BILLLION-dollarBANKRUPTCIES. If it was all JUST A CASINO,where were the COMPLIMENTARY Cocktails?METAL is OUR CURRENCY. ITs VALUE IsOn the Rise, even as Wealth on PaperSPONTANEOUSLY COMBUSTS.so WE’LL still lend To Those Putting InLong Days. The American IDEAL of WORK& Reward DOES NOT DIMINISH with theStock Market……LET’S RiDE.(I liked it.)(P.S. This is my kind of hog.)

SORRY PTM, I’M ON DR ROUBINI’S SIDE TOOMy gut feel is the presidential candidates’ promises of tax cuts were all pipe dreams, when Paulson started throwing money at the banks like a “Witch Doctor”…..”We the People” will be stuck with the “Witch Doctor” interest payments, and if interest goes up [it could] almost all household incomes will see even more net pay decreases. Add in local government tax increases to bail their deficits out too, and the American household net pay is gonna take a huge downfall in 2009 [my wild guess is about 20-30%].What does it mean when those of us lucky enough to still have a job are taxed to death? Its easy to imagine….huge and massive depression style deflation.I’d start saving cash now if you haven’t yet.

Here’s the reality check:2/3rds of the world’s population lives on $3/day or less.You think that this is going to change?For more reality see http://www.dieoff.org/NOTE: “technology” is a process.

brings back the nightmares in 2000 when some of my internet stocks went to 0!!!

How about a ban on: market manipulation, bailouts for corporations, pay inequality, politicians who don’t represent the people’s interests….

Toby, more importantly it’s a “peak energy import” issue.The US has imported the maximum amount of energy/oil that it will EVER again import. Going forward the oil producers will turn into greater oil consumers (for local consumption), which will further reduce the amount of oil on the open market (less available for imports).If folks have been paying attention they will note that THIS has been the big chess game going on, it’s why Venezuela, Russia and Iran (Iraq used to be on the list) were demonized: the US, the western world, have to have access to that oil!The free-market types will argue that all oil should be on the open market; well, this is all fine and dandy in theory, but one would also have to apply this to EVERYTHING- care to apply that to water?In the end governments have to bow to their populace lest they be stormed (and the rich are eaten).So, the more pressing issue is “peak import.” This trumps “peak oil [production].”

WHERE’S RYSKAMP???HE DESERVES A COOKIE!!!!

Harley is going down too.

Trillions down and still bailing | by Bill Fleckenstein“A hodgepodge collection of efforts has put us all on the hook for piles of money, and what do we have to show for it? A still-terrible market and a recession.”November 17, 2008 — Unfortunately, despite some 12 financing facilities created by the Treasury and the Fed, massive interest rate cuts and various bailouts, the government has little to show for its attempts to dictate where markets should trade.The Fed’s own balance sheet has exploded from roughly $900 billion worth of debt in August to around $2 trillion as of last week. Knowledgeable sources expect that to reach $3 trillion by the end of the year.That means that it will have grown from approximately 6% of gross domestic product to more than 20% in the space of four months. (For perspective, Japan’s balance sheet grew from roughly 9% of GDP to 29% over the 10-year period from 1994 to 2004, as it pursued “quantitative easing,” which basically involves the central bank making more cash available to banks to ease lending.)These numbers and rates of growth are so enormous (and unprecedented) as to be utterly incomprehensible. Does anybody actually think the government has any idea what it’s doing?I think it’s certainly dawning on folks that when the government “does something,” it often creates more problems than it solves. In this case, as it props up poorly managed companies, it may only be allowing them to rain further havoc on the better ones in their industry. American International Group (AIG, news, msgs) is an example of this, and I’m sure many other financial entities will turn out to be as well. (As an aside, notice all the idiotic executives, across a wide range of industries, who have bought back hundreds of billions of dollars’ worth of shares at stupid prices — a classic example of blowing up their businesses in an attempt to manage the stock price.)Parched for work in arid timesThough the government hasn’t admitted it yet, we are in a recession, and in this particular instance, it seems to me that creating jobs will be an unusually severe problem. That’s because the economic expansion we saw from 2002 to 2007 was essentially just a function of speculation (as I have stated often — and I explain in my book “Greenspan’s Bubbles”). I just cannot stop worrying about where the jobs are going to come from prospectively.When I wrote that book, I pretty much exorcised my own demons regarding my revulsion and anger at the policies of former chief Alan Greenspan and his Federal Reserve. Recently, though, I couldn’t help but think how much better off everyone would be had the United States used the time after the equity bubble and the 9/11 attacks to pursue sound policies, as well as encourage folks to save money and prepare themselves for the demographic challenge of Social Security and rising health care costs.Instead, Greenspan created a multiple-GDP-sized housing bubble, during which folks took on huge amounts of debt instead of actually saving money. It was only ridiculous financing (which has since imploded the banking system) that allowed so many folks to pay absurd prices for houses — and take money out of them at the same time via home-equity loans.Of course, one of the most misguided government ideas was trying to prop up home prices. (Secretary Hank Paulson essentially conceded as much last Wednesday when he announced that the Treasury Department was abandoning its plan to purchase troubled mortgage assets.)House prices need to come down to where folks can afford them. And prices may have to fall even further than we might have thought in the first place, because there’s going to be high level unemployment and probably not a lot of wage growth…http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/trillions-down-and-still-bailing.aspx

What the heck-did the CIA just do water boarding on you? You just spilled all your financial beans! Let’s hope all those positions will pay off for you! Good Luck!

It astounds me how you cover so many economic and financial topics with such superior insight.He can! Hi is the Great Houbini!

Seneca,I’m aware we’re not at a bottom, however….the point of my post which I thought was clear (maybe it’s not) is to catch a fast and furious bear market rally which has already happened a couple times. Appreciate the link thoughthanks

I second that motion.

Hopefully today’s action will kill the daily PPT posts that are about as reliable as a coin flip.

No reason to say you’re sorry. We can only guess at the future and how to weigh visible deflation events against what appears to be invisible inflation. If monetary policy overwhelms deflationary events, then I think we will see a trend by the end of 2008 or 2nd quarter 2009, and have the answer about inflation in the 3rd or 4th quarter of 2009.Just so y’all can have a chuckle, John Williams moved up his prediction of hyperinflation from 2010-2011 to 2009. He does not have a specific trip point time; the prediction is based a continuation of the current bailout trend. (For example, the Fed predicts it’s balance sheet will be close to $3 trillion by the end of December.)We have seen this Fed graph before, but last time it was at $150 billion in borrowing, now it’s $600 billion and the variations from the last 100 years look like a straight line! (Sorry, I’ll post that URL when I get home, I cannot find it at the moment.)When Detroit goes bankrupt and unemployment heads towards 25%, what is the government going to do? My guess is borrow, borrow, borrow.

excellent videos, thanks

are you responding to yourself?In that case you should have commented about how you appreciate the deep insight and so on…

What the heck-did the CIA just do water boarding on you?wining post for humor! It certainly beats all the Houbini stuff I wrote:-)

Ah, but since all the major players got short, the PPT shorts the market in an effort to get more taxpayer dollars approved for bailouts… and to drum up demand for treasuries.Double secret reverse psychology my friend.

g, in the jungle. or maybe a cow pasture. or maybe a suburb??? maybe a desert? under ice?

Thanks for searching the archives for these benchmarks and for your comments – Schiff says the US currency is the next disaster – I do think we are due for a big and tradeable reversal in the equity markets but come Spring Time in North America the only joy may be the flowers coming into bloom …

The numbers of homeless are growing but many of these people can afford to rent because alot of them were speculators who have other houses, many of them were in houses that were just too expensive so they move down when they get apartments, or they move in with someone like a roomie or a relative.My guess (and I used to work with homeless alcohol and drug abusers) is that we’ll see large tent cities before this is over. Southern California, Arizona and South Fl especially will be hit hard as people migrate looking for work from expensive northern cities. At least in those places you can be outside without freezing in winter. I am intrigued whether this will drive the epidemic of homeless drug users and alcoholics up. I suspect it will. Homeless have alot time on their hands and the depressed and poor performers will be first to be sacked from their positions.

What do you think?How can re-inflating the banks do a darn thing to fix this?This started on the margins and has moved into Main Street. At some point the mountians of debt holding up all the strip malls and big box stores is going to collapse too. When there isn’t enough income on the fringes, it works its way toward the center and collapses the foundations… Do you see any other possible scenario?Only one I see is that they send us all about $20,000 and then a couple thousand a month until the crisis has turned into hyper inflation. Then they can slam on the brakes and raise interest rates up to say 15% or so and try and remain on the road and not slide off into the ditch…

“If EPS fall – as most likely – to a level of $60 then with a multiple (P/E ratio) of 12 the S&P500 index could fall to 720, i.e. 20% below current levels; if the P/E falls to 10 – as possible in a severe recession, the S&P could be down to 600 or 35% below current levels. And in a very severe recession one cannot exclude that the EPS could fall as low as $50 in 2009 dragging the S&P500 index to as low as 500. So, even based on fundamentals and valuations, there are significant downside risks to U.S. equities.”I’m wondering why Nouriel picked 10 as the lowest P/E we might expect. S&P 500 P/Es were 7 back 1979-80. Couldn’t things get at least that bad? Also he says “based on fundamentals and valuations” the S&P 500 could go as low as 500. But we’re not talking today about “fundamentals and valuations.” We’re talking about an environment where, among other crises, there are 10,000 hedge funds all scrambling to close down funds by selling the holdings into a distressed market. This is not business as usual! 500 seems a high estimate for what’s coming.Steve

But we’re not talking today about “fundamentals and valuations.” 100% on the money. Datz why my two post above are more voodoo than anything else. We are not talking valuations anymore there is too much uncertainly about the future that venture any kind of discounted cash flow exercise at this point is as much voodoo as my stuff above.The Great Roubini picks 10 because it is a round nice number that seems to center around a reasonable bearish level.so10*50 bucks also gives you 600.

In this world that we live in, do you ever have the feeling that the majority of the people around you seem to actively ignore truth when it stares them in the face, not just because it suits them in order to maintain the ‘reality’ that they wish to exist in, but because they have spent most of their lives existing in a perpetual state of falsehood and misconception?I know that this post does nothing to add to the intelligence of the discussion here, but I am becoming increasingly frustrated at being shut out of other conversations around me, simply because no one else wishes to acknowledge the true reality of where we’re at and what is most likely ahead of us.It is almost as if they thrive on the helplessness of ignorance. They seek the headlines for the drama of discussion, but it’s an empty discussion. They don’t leave the conversation with a desire for action, either to help themselves or to help others. They only participate in the conversation to begin with in order to hear others agree with them, or to berate those who disagree with them.I feel like I’m going a little crazy here. I just don’t get it. You have no power if you have no truth; why wouldn’t you actively and eagerly seek it, even if it’s not convenient or what you want to hear?This blog is one of my few sources of sanity, so thanks to those who post here and help make it what it is.

If I were you, I would run to the city, to see if my little bitty citi bank account was still looking pretty!

Priceless comment at end of Yamada video:Better teach your kids to be hobos. Better show them how to grift!

OR: discounted cash flow is out – discounted cRRRRRRRRRRRRash flow is in.

http://www.infiniteunknown.net/2008/11/20/us-seeks-300-billion-from-gulf-states-report/<p>The US has asked four oil-rich Gulf states for close to US$300 billion to help it curb the global financial meltdown, Kuwait’s daily Al-Seyassah has reported.<p>(AFP/File/Hassan Ammar) <p>KUWAIT CITY (AFP) – The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait’s daily Al-Seyassah reported Thursday.<p>Quoting “highly informed” sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.<p>Al-Seyassah said Washington sought the amount as “financial aid” to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.<p>The daily said the United States plans to use the funds to help the ailing automobile industry , banks and other companies suffering from the global financial turmoil.<p>The four nations, all members of OPEC, produce together 14 million barrels of oil per day, around half of the cartel’s production and about 17 percent of world supplies.<p>The four states are estimated to have amassed close to 1.5 trillion dollars in surplus in the past six years due to high oil prices that rocketed above 147 dollars in July before sliding to just above 50 dollars.<p>The daily also said that the United States has asked Kuwait to forgive its Iraqi debt estimated at around 16 billion dollars.<p>Thu Nov 20, 2:29 am ET<p>Source: AFP

Oops, misspelled Zimbawbwe. My bad.

I’ve heard of the word ‘grifter’ before, but didn’t know exactly what it meant. According to Merriam-Webster, ‘grift’ means to acquire or obtain money or property illicitly. Isn’t that the true occupation of TPTB? So if we all learn to grift, is that the same as fighting fire with fire?

agree, too early to talk about Dow 3000, let’s get to the end of the year first! as far as USD, it is still the currency of choice for most of the world because we still have the biggest printing presses and guns! And finally, probable bounce to Dow 7700 range Friday and then we’ll see!

Well guys, that’s the price of U.S. military protection!

Asian markets down:http://www.bloomberg.com/markets/stocks/wei_region3.htmlDatz what happens when you start taking actions at the fed and treasury to “defend” equity markets. When you stop, the baby starts crying!Hanky is gone! He is cleaning up his desk. He said F^%^&* it! Why do I have to take all this SH*t; all this criticism! I am a rich guy! I am goooone! Let Obi deal with the mess!So he asks for an urgent 700 billion USD pass because the otherwise the US economy colapses and then he drops the ball!

g,does anyone remember the meaning of the term “the great gimmick”? money is nothing but funny.

It is not that the majority ignores truth; it is that they cannot perceive it.

I am also a NYU student 25 years ago. Then was a bad time for NYC but still you could feel the vitality there and people are working diligently. What we learnt in business school was perfectly logical and it seems that we can handle all the business issues in the world with models and analyses. Over the last 25 years, there came the de-regulation, the Junk bond and derivatives on derivatives which make intelligent physicists no long interested in finding the truth of our universe but only the truth of money. Many of theses derivatives were built upon complicated models originated for rocket science. Regulators’ knowledge seem to be lag behind and our world is really too small for these institutions to spread their portfolio and diversify their risks around. If G20 cannot save us from this crisis, we may turn to “The Earth minus G20″ for their insight. These countries, despite they only contribute 10% of the world’s GDP, some of them (except those in war and famine) are living peacefully with simple life and no worry of tomorrow.

Does anyone recall the DOW 3000 call back in the very early 80s by Sir John Templeton? I remember it as I was an investor in two of his funds (Templeton world and Templeton growth) and he wrote that in one of his letters. I tried to nail the precise year he said that but got nowhere with google. I think the dow was about 1000 at the time.http://en.wikipedia.org/wiki/John_Templeton

Based on analysis and history, I knew days like this in the stock market where possible and would have to come. I waited patiently for 11 years. We got there! Now, it is a matter of how low we go and how long we keep bouncing around the bottom. Sometimes faith and knowledge go hand in hand. I kept the faith because of the knowledge.

There is no such thing as the PPT – conspiracy wacos and nutcases – just ask that bastion of excellence of journalism CNBC: CNBC refutes myth of the PPT (once and for all) and they would know

So true!

m, go to your former employee at the treasury.

Depends entirely on energy/transportation costs and security would be my guess. In a severe downturn it seems logical that fewer products will be available since there will be fewer people to buy them. But there will be a market of some kind, a market which may be scattered across the country, and so would be served better by Amazon’s business model than by a B&M model. Amazon will sell whatever there is a demand for. They already sell food and household products in bulk.

A quick local observation on employment:I’m in DFW, a metro area of 6 Million+ people, and an area that has been mentioned in the news as doing better than most of the country. I now know two admins looking for jobs and I thought I would check out Monster. Since Sept. 29 there have been about 80 jobs posted, of which 3 looked to be ads for good positions. I didn’t count, but some were recruiting ads for the Navy, direct selling “opportunities” and other such dross. This was across all industries with a 20 mile radius – 3 honest to pete full time professional admin positions. If this is a good market then what the hell is the rest of the country like?

I want option C. Fire an exec and hire 300 workers to do his/her job.

I was thinking exactly the same thing. Paulson is probably cleaning out his desk today, and taking pictures down from the walls of his office. Wonder what souvenir’s he’ll be keeping from the Bush administration?PeteCA

Don’t look now … but it seems as if gold is starting to diverge from the US dollar. Dollar moving up, but gold also moving up. One day is rally too early to call a trend. So things could change. But a divergence would be an important development.PeteCA

Mission Accomplished!!u know,the pic where Bush stands on the aircraft carrierhe could superimposed himself

Pete,I’m on board with your thoughts. Let’s not forget that as the dollar grows in strength, the price of gold rises for other currencies. So, while gold had traded in the 700-750 range for dollar holders, it has been rising in value for euro holders. This is an ambiguous signal.PKB

Sorry this is long – it is therapy… I work for a first generation family of wealth in their accounting department of all places. I had charts of the 29 and 87 crashes on my wall for the last 2 years along with pages of the quotes from the day after the 87 crash. I placed the Kindelberger book Panics, Manias and Crashes on the trustees desk BEFORE subprime and told him the exact conditions existed in the US as in every other crisis spanning hundreds of years. One day about 10 months early and from the top to be fair I showed him a 25 year chart of the us dollar and dow and why i thought we were going to crash – I told him I know this is going to happen and I don’t know what to do about it. I told him I went to church that morning as I did to pray about what I should do and then I decided to tell him. He refused to insure their equity porfolio. At one point I told our investment analyst it was breach of his fiduciary responsibility to not have some form of protection on the equity portfolio. Last one – sorry if this is boring and long, but I too stuggle immensely with this situation you have described. One day in the break room I gave the old fellow a parable or analogy to try to teach him in another way. Jim, if you get in a car accident are you happy you have insurance? That is what the puts are insurance. Well, tens of millions later and a meaninful percentage of their net worth gone. Not a single fucking word. Not hey what do you think is next? In fact, they actively push me away from the conversation. It is pure twi light zone folks… So Tuesday or Wednesday was 401K day ! I boycotted it and each and every single one of them knows why and we are down 10% since the meeting ! Today the trustee popped his head in to a meeting and told our investment analyst “keep an eye on those markets for me” or something to effect of they are not acting well and walked away. I said is he surprised we are down and they all looked at me basically not your department Jeff shut the hell up more or less. Well, whose department is it because millions are leaving the door and each of the 3 families are “only” worth 60 million and now probably low 40s? Morons! I lied one more. The investment analyst told me that their asset consultant came and told the trustee don’t worry it will be all right and calmed him down. She said that is good, he-the trustee feels better now. This is the same asset advisor that allowed them to get pummeled in 2000-2003 and now again. Simply unbelievable stuff and VERY VERY hard to live with. I really want and need to get out of there. Shoot, that is not that easy these days is it…

@Guest:Hoping this wasn’t intended to be an insult, but since you’re hiding behind an ubiquitous name, I’ll assume it is such.

As I was reading what you wrote about those whom you had tried to speak to and warn, I wanted to personally smack each one of them upside the head. You’re right, it is like the twilight zone–like we’re coexisting in an alternate reality. And you recognize that sooner or later, your reality is going to trump their ‘reality’, and then you can’t even feel satisfaction at being right, because it’s so awful.But I still can’t get past the ‘why’ part. Is it some kind of human failing? That we can’t learn from the past, we must always learn from our own experience? If it hasn’t happened to us personally, then it somehow has no validity? Is it ego? Pride? Fear? Sorry, I’m just ranting now. The frustration has been building for awhile, as I’m sure you completely understand.

Just heard Citigroup is looking for a merger, a sale of its assets, or even an outright sale to another bank. Is this cazy or what??? Very little mention of thi anywhere…

As part of my ongoing quest for a new (well – old…) boat, I am going to look at a Cal 36 in the next couple of days, though I really want a keel-stepped mast…

Sounds like another attempt bythe Bush administration to keep the dam from breaking until they’ve high-tailed it out of town. Not tidings of joy the people would have been bringing, pitch forks, pitch forks…

OR, are you factoring in the massive concentration of money in the various funds? Much greater than in 1997. We have less diversity. With this concentration shifting it presents even greater swings such that one big swing may push the tipping point.Growth has been insidiously programmed/built in to the system. It, system, can’t resolve itself without growth.

Do better with respect to which aspect. I remember reading somewhere that there may be large amount of people moving to Texas because of their favorable laws for the debtor regarding wage garnishment (the fact that collectors cannot)with regard to debt repayment. Perhaps when they said doing better they meant the real estate market?

new thread

This world is absolutely f*cked up!Lockheed’s Stevens Doubles Margins, Targets Further WideningNeed to drop those bombs when the populations get too big:Keidanren Tells Japan’s Salarymen to Work Less, Have More Kids

NEW THREAD

Buffett specifically said he did not know when a stock bottom would be reached and he was not trying to call one. He did say there were many stocks out there selling at a substantial discount to their true or intrinsic value and the long-term investor would do well selectively buying. He was very clear in distinguishing between these two points. I am surprised NR misquoted him so badly.

To be clear Buffet isn’t the only self-made billionaire buying. I think Roubini has been crying wolf for years and years. Today, he’s right hurray! He’s been saying this will last 2 years for 3 or 4 years now. When is his “2 years” up?

that’s plain wrong. he must be at least around 10 billion dollars in red at current prices. no bank or investors gives anyone such a free ride.

He went through a four-month battle to get onto the site before, sending Facebook it his passport, driver’s license, bar number and other forms of identification to prove he is who he says he is. He had to send Facebook a threatening letter before it let him on. And things were fine for two years, until he was suddenly barred again on Monday.

I really enjoy this template you have got going on in your site. What is the name of the design by the way? I was thinking of using this style for the blog I am going to put together for my class project.