FYI – (from the other day)“Sorry I can’t give you much more on the “flow”, but the fact is there’s nothing to report. If the DOW does drop to 8,000 with Gold at 850+, I would likely advise a flip flop on assets. – By MA on 2009-01-08 14:24:16”All the best, Miss Americap.s. There are new rules on US-T fails that have come into play. This will severely handcuff lenders. (as to not impair secondary market liquidity) My initial reaction is to expect demand to go through the roof!To read more: http://www.newyorkfed.org/tmpg/pr090105c.pdf

MA,sorry, I have a hard time understanding your comment. May be I did not read some of your posts. When you say flip flop, is it flip to long or neutral/short? Thanks.

From a teacher in the Nashville area:We are worried about “the cow” when it is all about the “Ice Cream.”The most eye-opening civics lesson I ever had was while teaching thirdgradethis year. The presidential election was heating up and some of thechildren showed an interest. I decided we would have an election for aclass president.We would choose our nominees. They would make a campaign speech and theclass would vote.To simplify the process, candidates were nominated by other class members.We discussed what kinds of characteristics these students should have. Wegot many nominations and from those, Jamie and Olivia were picked to runforthe top spot.The class had done a great job in their selections. Both candidates weregood kids. I thought Jamie might have an advantage because he got lots ofparental support. I had never seen Olivia’s mother.The day arrived when they were to make their speeches Jamie went first. Hehad specific ideas about how to make our class a better place. He ended bypromising to do his very best. Every one applauded. He sat down andOliviacame to the podium.Her speech was concise. She said, “If you will vote for me, I will giveyouice cream.” She sat down. The class went wild. “Yes! Yes! We want icecream.”She surely would say more. She did not have to. A discussion followed.How did she plan to pay for the ice cream? She wasn’t sure. Would herparents buy it or would the class pay for it. She didn’t know. The classreally didn’t care. All they were thinking about was ice cream.Jamie was forgotten. Olivia won by a land slide.Every time Barack Obama opens his mouth he offers ice cream and sixtypercent of the people react like nine year olds. They want ice cream. Theother forty percent know they’re going to have to feed the cow and clean upthe mess.

MA, why are you willing to expose your 401K given Nouriels analysis above? Is this a long-term play now or are you just “managing” your 401K?

How big of a prop-job are you looking for MA?

How long will it be before columnist Bob Scheer admits that the Obama money team (Summers, Rubin, Geithner) that he routinely criticizes, doesn’t really work for this shining new head of state? Instead, they all represent the banker power brokers behind the curtain. Anyway, here’s Scheer’s latest:“A bailout run by those got us in” | by Robert Scheer (SF Chronicle)January 14, 2009 — Why rush to throw another $350 billion of taxpayer money at the Wall Street bandits and their political cronies who created the biggest financial mess since the Great Depression? And why should we taxpayers be expected to double our debt exposure when the 10 still-secret bailout contracts made in the first round are being kept from the public?We don’t have time, President-elect Barack Obama’s key economic adviser Lawrence Summers insisted in a letter to Congress on Monday, promising that the new infusion would not be squandered as was the first installment. But given that Summers is personally as responsible for this meltdown as anyone, why should we trust him on this? Yes, it sounds wonderfully bipartisan that Obama is backing President Bush’s request for spending the money now, short-circuiting congressional inquiry, but it was just that sort of bipartisan politics that created this nightmare.How insulting that we must now accept Summers’ assurance that the Obama administration will “move quickly to reform a weak and outdated regulatory system to better protect consumers, investors and businesses.” This from the guy who, as President Bill Clinton’s Treasury secretary, pushed the deregulation legislation making the subsequent financial crimes of Wall Street legal. The “toxic derivatives” that we taxpayers are now forced to purchase from the Wall Street hustlers were deliberately shielded from all government regulation, thanks to the Commodity Futures Modernization Act, which Summers got Congress to pass in the closing days of the Clinton administration with the same urgency that he now pushes for the new Wall Street handout.Back then, Summers was a disciple of Robert Rubin, who just last week resigned from his director’s position at Citigroup, the financial conglomerate that grew to unmanageable and corrupt proportions thanks to the empowering legislation that Rubin initiated when he was Clinton’s first treasury secretary. Rubin has been paid more than $115 million plus stock options at Citigroup, and despite his horrid record is still a close Obama adviser. It is one of the great swindles of U.S. financial history that Citigroup was bailed out with $45 billion in a deal that could eventually cost taxpayers an additional $269 billion to guarantee those toxic assets that would have been illegal if not for the legislation backed by Rubin and Summers.How did Obama allow himself to become ensnared with the very same folks who are the most culpable? His Treasury secretary nominee, Timothy Geithner, is another Rubin protégé who, as head of the New York Fed, worked tirelessly with Rubin to concoct the Citigroup bailout. When candidate Obama gave his major economic address on March 27, he couldn’t have been clearer in condemning the deregulation that Rubin and Summers had engineered:”Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one – aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy.”He was referring to the deregulation legislation that Summers hailed on the day that Clinton signed it into law as “a major step forward to the 21st century.” Now he is relying on Summers to reverse a disaster of his own creation. It’s like returning to the same surgeon who almost killed the patient in the first operation to once again cut open the body to repair the damage.What we need is a second opinion.Where is the openness and accountability that Obama promised? Why not pause for a few weeks for congressional hearings on how to spend the new money? We don’t even know where the last batch went. On Monday, the Treasury Department finally agreed, only after a subpoena threat, to turn over to Sen. Carl Levin and his Permanent Subcommittee on Investigations the 10 secret contracts that it had signed with top Wall Street firms in the first round of the bailout. Unfortunately, an aide to Levin was quoted in the New York Times as saying the subcommittee has no plans to make those contracts public.That is outrageous. This is our money we’re talking about. Why don’t we get to read the fine print in what will end up being trillions of dollars in our future obligations? Because we are suckers, that’s why, and the folks who swindled us into this disaster can count on it.http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/14/EDBL159HQ4.DTL&feed=rss.opinion

Seattle FHLB Likely Short of Capital on Mortgage Debt (Update4)Email | Print | A A ABy Jody ShennJan. 13 (Bloomberg) — The Federal Home Loan Bank of Seattle said it will suspend dividends and “excess” stock repurchases, becoming the second of the government-chartered lending cooperatives to say its capital may be running low.The likely capital shortfall as of Dec. 31 was caused by “unrealized market value losses” on residential mortgage bonds without government backing, the bank said in a U.S. Securities and Exchange Commission filing today. Washington Mutual Inc. and Merrill Lynch & Co. had been the biggest stakeholders and borrowers in the Seattle Federal Home Loan Bank, or FHLB.Seattle joins the San Francisco FHLB in taking steps to guard its reserves after the U.S. housing market collapse sent mortgage-backed bonds tumbling. The declines may leave as many as eight of the 12 FHLBs below capital requirements, Moody’s Investors Service has said, eroding a below-market rate source of about $1 trillion in financing for Citigroup Inc., JPMorgan Chase & Co. and other companies that participate in the cooperatives.“Systemic weakness in the FHLBs, which may require federal action, could have a number of implications for U.S. banks and thrifts, including: higher costs of FHLB borrowings, reduced value of FHLB stock, and increased demand for alternative sources of liquidity,” Frederick Cannon, an analyst at Keefe, Bruyette & Woods in San Francisco, wrote in the report to clients yesterday.

CNBC covering Madoff’s car ride to bail appeal with all the fanfare of the OJ car chase. CNBC has lost what little respect I had. They should make a deal with Geraldo Rivera to cover this.Did not renew my WSJ subscription. Terminating my cable TV service (didn’t deliver Bloomberg) and switching to Dish.In fact, this RGE blog has provided me with a much broader and insightful analysis of current financial events.

What Obama is offering is a REASONED approach to survival. That will make a welcome change from the wilful ignorance of the past eight years. Will he succeed? We had better hope so. It was Bush who gave us nothing but ice cream, and now we are ill from malnutrition.

Not going to happen as the residential deflation isn’t over and they are just starting to face the CRE collapsing. And they have a lot of unsecuritized loans too… Student, auto, credit card…They need much more to stay afloat and with everyone else in the world in decline and or deficits, the dollars will just have to be printed (monetized).Few have real cash… most have debt which they thought was as good as cash.ORInterest rates need to go up a lot…Both will have devastating affects.

To Prof’ Roubini:I find one important issue not being sufficiently detailed in your ‘best of breed’ reasoning and insightful analysis and comprehension of this historic crisis, and this is the deleveraging process the financial system is undergoing. There needs to be, in my opinion, a constant watch and a QUANTIFIED ASSESSMENT of where are we standing in this long and painful process. Like the housing bottoming this is of paramount importance in assessing the flow of money in the economy, the depth and the time span of the recession, as well as the quality and pace of the recovery.With all my gratefulness and appreciation for Prof’ Roubini.Shalom HoffmanIsrael

Yeah, welcome to the new DIY media. Everyone brings their virtual clippings to show-and-tell with commentary on the significance. Using decades of experience as reality filter, participants quickly toss distractors and focus on relevant issues.Now if only the Obama dream team would read NR’s blog and learn.

Nouriel’s posts have nothing to do with my views. His posts aren’t meant as investment guides for timing the market. They are broad macro views. (which I tend to agree with) In the world of RvR, following the flow, or timing the market, I see 8,000 as the typical buying line for long termers. (if you’re day trading, the short term has potential to get ugly, but i tend to say that all assets have a similar “ugly” look. …and if that’s the case, where do you think “support” will flow to?)Just my opinion.MA

This was the largest YOY drop in retail sales since my data began in January 1965. This moves my Q4 GDP estimate to a drop of 8%!!!! This also moves my earnings growth estimate for 2009 over 2008 to DROP of 16% in S&P earnings YOY. This puts fair value today on the S&P500 at 673. MissAmerica, you still wanna go long here?

Whoa, shocking graph. Retail sales off a cliff.

The Professor has been far more accurate and reliable in calling the market than the WS pundits (This is usually not the case for the dismal scientists who usually have a dismal record of forecasting the market short/medium term – e.g., Shiller, Shilling. Take for instance the “Knights” of the Barron’s Round Table. I read the score card for their 2008 recommendations last Saturday. What can I tell you? If their lives depended on it, these fellows would all be dead by now, including Faber and Gross. Go ahead and take a look it is a public link:http://online.barrons.com/public/article/SB123156273219070849.html?mod=b_hps_article-outset-boxWhy does such a mediocre level of performance commands such a high pay?On the current market, I have no idea how long the market rout will last, whether we may have a dead cat bounce; but if I had to pick a scenario, I would say that the action today is still VERY FAR from reflecting the information conveyed by the dismal Xmas retail sales and that we are headed even lower. I almost sold my SPY 88 feb puts at a 26% gain but decided to wait.

Well, this oughta turn stocks North!!! AHAHAHAHAHAHAHALOLOLOLOL2:00 p.m.No signs of upturn through early Jan.: Fed Beige Book2:00 p.m.Overall activity ‘continues to weaken,’ Beige Book2:00 p.m.Layoffs and hiring freezes are common: Beige Book2:00 p.m.Lending activity continues to decline: Beige Book2:00 p.m.Fed sees weak residential and commercial real estate

WOW!! BOOM is right!

@MAYour calls are counterintuitive but often right. I just have trouble throwing money into this market.

MA,Given that you are an analyst on this web site, I find it disconcerting that you would state an opinion as a fact, with your rationale for stating it as such being your “past accuracy” (also known as “hindsight bias”). Insofar as the equity markets are concerned, it’s doubtful they could truly be manipulated on anything more than the shortest of terms, if even that. They are too vast and complex to be truly manipulated.

“They” have to reverse this. You can’t have markets melting down and near the lows on the Presidents inauguration…can you???

If MA is going long equities today – we have already seen the lows (for now) -

I’m big on equities in the 401k world. This is money that’s locked in.In the world of straight up investing… I’d rather have cash.For those gold bugs, I’d do the swap I spoke of (especially where I had set a $850 sell line a while ago on the website.)

@ disbelief,I’d like you to prove that markets can’t be manipulated through access to credit.You’re welcome to your own opinion.I believe I have validated mine over the past few years here. …and as I stated: “if it were my money” and “I’m not 100% accurate”Take my words as nothing more than 1 person’s “OPINION”.

GuestThe reason is the same as that which convinces us to put various noxious chemicals on our heads even though it is only a few millimeters from our brains – advertising/ brainwashing.

Dear Professor,Looking ahead, I fear you are too optimistic. The GOA’s recent report is that the economy will not recover it’s robustness until 2015. That’s not to say we will be in a no-growth period until then, just lower than average growth that will feel like no growth. Productivity is declining and will remain weak as we slowly pull out of this serious recession.

alan greenspan was very experienced and look at the good that did.

i thought fear / “risk” got Mr. bush elected then they went back to eating ice cream …

I’m with ya Jimmy. MA does some great work, but I just don’t see things pulling up, even in the long-term. The above graph in the CR posting tells it all- retail, which, along with finance is the backbone of the US economy (never should have been, but that’s the hand that we’re currently staring at) is heading toward the big abyss.The current system is dead. The goods being produced are too expensive, on top of being worthless (for sure in the future)! The equalizing of wages around the globe are forcing all this crap out, and what we’ll find is that the system only exists because of this crap!Mark

@ ALNB: “What Obama is offering is a REASONED approach to survival. That will make a welcome change from the wilful ignorance of the past eight years. Will he succeed? We had better hope so. It was Bush who gave us nothing but ice cream, and now we are ill from malnutrition.”but…@ Guest: “You don’t get it do you? ALL politicians throughout history have fed us all ice cream…”however…@ Anonymous: “And since the new administration hasn’t even started yet, maybe you should put down that crystal ball and start rubbing your eyes.”to which I reply….Au contraire. The new administration HAS started. An Obama financial team representing the people responsible for the current financial mess has already announced its bailout thievery to wide enthusiasm from the great agent of change. President-elect Obama, not allowing the slightest mumble to escape his lips concerning the Gaza War, has had press conferences, threats, promises, details, and unusual enthusiasm for a financial program not unlike the failed economic programs of the great Keynesians of yore. And as the same robbers come back into office, Obama warns of the same to continue while demanding more sacrifice from the people.Anyone who is still fighting the demise of America along the same old partisan lines is a part of the problem. And, at this moment in history, with the debauched Bush team lying and leaving and the debauched Clinton team almost to the last man and woman reinstated in the White House, this is hardly the moment to start praising politicians.

Roubini’s saying (possibly) a 1% growth rate in 2010-2011. If historical average is 2.75% then there’s a 1.75% margin to spread out over another 3 to 4 years (2015). If under 2.75% the economy is stated as being under-performing, recessionary. I don’t believe, then, that Roubini’s forecast can be said to differ significantly from the GAO’s.Mark

Bingo!Mark

MA,I have no interest in going through all your archives and I don’t need to to know that neither you nor anyone else can predict the market, i.e., predict the future. It’s just not possible. Warren Buffet can’t do it; Nassim Nicholas Taleb can’t do it; you can’t do it.Surely you get something from this, perhaps ego satisfaction if nothing else.

If they are effective at manipulating markets, why are we in this mess?Two points:1. No method of manipulation is foolproof (actually, very few things in life are foolproof). This is the only thing that gives me hope, though–that they cannot win out against the forces of the market forever.2. Also, your question assumes that this current ‘mess’ was something ‘they’ wanted to avoid. However, sometimes, people purposefully create situations in order to introduce ‘solutions’ which benefit them in some way. Do I have proof that this is what is happening? No. But neither do I know for certain that this is not happening. I do, however, feel that if this is the case (and we will never know for sure), that it developed faster and deeper than was intended.

The setup for the bext back-room bailout I am predicting: TARP Funds likely to be releasedEquities down, banks in increasingly serious trouble. New infusion of capital to banks on the way. More lip service on a ‘bailout for Main St’. Pols talking about how credit flow is the lifeblood of the economy.The last handouts to the crooks are being set up, before they blow town and leave the ‘real economy’ with an unmitigated disaster in their wake. The men and the crew are taking the lifeboats. The women and children are being shoved aside. And we sit here and debate the market direction and how to make money from it.

The politicians are not the problem. The corporatism behind them that has perfected a system of manipulating the policies of the governmental apparatus is.Make corporations non-persons, and watch what happens.

Gannett’s Dubow, Most Workers to Take Unpaid LeaveJan. 14 (Bloomberg) — Gannett Co., the largest U.S. newspaper publisher, said it will make most of its U.S. employees, including Chief Executive Officer Craig Dubow, take one week of unpaid leave this quarter to help save money.The McLean, Virginia-based company is asking its union workers to participate in the unpaid-leave program, Dubow, 54, said today in a memo to employees.“A furlough program would be the fairest and least intrusive way to meet these fiscal challenges in the first quarter,” Dubow, who had a salary of $1.2 million in 2007, said in the memo. “We sincerely hope this minimizes the need for any layoffs going forward.”The company, publisher of USA Today, the largest-circulation U.S. newspaper, has cut jobs and trimmed print editions after publishing revenue slipped 14 percent in October and November. Gannett said on Dec. 10 that 2008 sales probably plunged 8.1 percent…Gannett fell 45 cents, or 5.6 percent, to $7.62 at 12:44 p.m. in New York Stock Exchange composite trading. The shares had declined 76 percent in the past 12 months before today.http://www.bloomberg.com/apps/news?pid=20601087&sid=ablMag.Tf4TM&refer=home

Well said MA.

Just a note about one of our trading partners and funder of our Treasury auctions…It was Rubin and Summers who got us on the variable interest marry-go-round with our national debt.And of course it is that team who is helping the new Pres with the help of FED insider Tim G who doesn’t think he has to pay the same taxes as you do nor does he think there is any thing wrong hiring undocumented workers… That way he can keep his income up and his expenses down…Good kind of people to be running the monetay system… Don’t you think!

More firms go bankrupt in Japan Company bankruptcies in Japan jumped 24.7% in December from a year earlier, as the financial crisis pummelled the world’s second-largest economy.Data from research firm Tokyo Shoko showed that 1,362 companies filed for bankruptcy last month.A total of 33 publicly traded companies went out of business in 2008, the most in the post-war period, it said.For 2008 as a whole, corporate bankruptcies rose 11% – the most in eight years.Japanese companies, like their competitors in many parts of the world, have struggled as the recession has hit sales and made it harder to raise funds.Property firms, such as apartment builder Dia Kensetsu Co, have been particularly hard hit by the downturn. They account for about half of all the failures of listed companies.Japan’s economy slipped into its first recession in seven years in the third quarter of last year.Exports have fallen sharply as demand for Japanese products, such as cars, has fallen sharply.

@ markI’m with you on the doom and gloom. I’ve been in the “it’s really bad camp” for a while. A month ago I stated that it was set to get much worse in a very short amount of time. (what I was focus in on with the point of an arrow was primarily retail) It actually hasn’t been as bad as I suspected. With that in mind, you need to take into serious consideration that worldwide stimulus efforts.They prop the markets. Thus causing the “disconnect” they I talk about so much. It’s a “gutting” of the economy… and the disconnect between the real (retail/wage/jobs economy) and the fake (DOW/S&P) is necessary or otherwise your MF, Pension, Institutional will be forced to massively restructure. (which in turn really disrupts the market further)I’m only promoting equities for 401k (locked money) and over gold (which was at my $850 sell line)….otherwise, I’d say stay away with your liquid assets. …unless you’re “long term” investing.Miss America

I wonder, I wonder, what the Bilderbergers are doing these days…

@MAYes, I kind of caught your more recent swing and felt that you’ve just about arrived I actually think that retail did much worse than I thought given that it was the pinnacle point of the season- who wants to disappoint little Johnny?Seems that there’s a clear pattern and it’s indicating a really steep decline. Unlike the GD I think in this one the general economy is going to absolutely crash equities: in a way, the GD was the other way round. At any rate, the real economy is toast.I’ve got my 401k in CDs: have had for some time. I figure that I’ll pull completely out as/when my income drops out: avoid being jacked up to another tax bracket. I’d worked hard for what I have and I don’t have enough to gamble on the short term )

where is outerbeltway gone?

I was wondering that too

Bank of Americaid

Jack Bogle speaks. Worth listening to. 2 possible outcomes-high taxes or high inflation.http://www.howestreet.com/index.php?pl=/goldradio/index.php/mediaplayer/1080

Ridiculous. 600 FOR S and P is the likely bottom, and given the chance of an over-correction, 0 is not completely impossible. Why would you rather not buy at 600 than now? And, suppose, the small probability that 8000 on the dow is indeed the bottom, then what is wong with buying at 8300, 8400 knowing that it is a bull rally rather than buying at 8000 knowing that its likely to go around 6000, 6500

Now is the time to pull the plug. No more bail-outs, no more stimulus packages, let all the excesses weed out and this country will emerge a lot stronger because of it. Let the banks fail and, come long-term, industry prevail. If the whole banking system is bankrupt, so be it. Let all the private stakeholders come together and sort their problems out, and if they don’t, too bad for all of them individually. This is also an opportunity to end the concentration of power in the few.

The funny thing is that Obama centered his whole campaign against what he called “trickle-down” economics, that bolstering the rich and thereby making the underprevileged better-off style capitalism had failed. Right now, he seems even more clueless than Bush, trying to assuage everyone– at the expense of whom?– and more importantly, demonstates an unconditional love for wall street. What I find ridiculous is the hypocrisy in his speeches, he proposes outright lies such as how different he would be from Bush and company, yet he is pursuing Bush-style capitalism more forcefully than even Bush perhaps even ever envisaged. Although I don’t doubt Obama’s intentions, but what bothers me is his insecurity in the sense that he feels compelled to satisfy everyone after all the promises he has made and he feels he would be letting segments of society down if he didn’t live up to their expectations. In fact I have come out with a lot more respect for Republicans after all is said and done, at least they have shown more principle and character. Moreover, it seems to me that the neoconservative base among republicans is actually much more “commune”-oriented, fascist than even the most liberal democrats, or even socialists, whereas normal and saner republucanism as espoused by people like Ron Paul has been totally sidelined from the mainstream republican thought by the neoconservatives. What we really need is more republicans like Ron Paul to come forward and stop this wall-street–goverment orgy.

Michael Shaoul and Timothy Brackett, analysts at New York- based institutional brokerage Oscar Gruss & Son Inc., warned that investors might be misinterpreting the scope for Fed bond purchases, based on Bernanke’s phrasing in 2002.“He advocated purchasing longer-term Treasuries which he defined as notes of up to two-year maturity,” they wrote in a research note last week. “We would therefore judge the possibility of the Fed jumping into the current long-term Treasury market as practically zero and would expect market participants to realize this sooner or later.”As a cautionary tale, they point out that bondholders last got overexcited about the prospect of Fed Treasury purchases in the first half of 2003. In July of that year, then Chairman Alan Greenspan said the situation was “most unlikely to arise,” prompting the biggest one-day jump in the 10-year bond yield in more than seven years.Virtual WorldsThere’s an odd mismatch between investor appetite for lending to governments at ever-decreasing interest rates and what prices in the credit-default swap market are suggesting about the consequences of economic pump-priming and ballooning deficits.The cost of buying protection against deteriorating government creditworthiness is surging for every nation; five- year swaps on the U.S., for example, trade at about 66 basis points, a sixfold increase in six months. Corresponding swaps on the U.K. have leaped to 120 basis points from about 17 basis points in August, while Italy traded at 200 basis points last week, up from 40 basis points three months ago.It may be that the market is so broken that default swaps can’t distinguish noise from signal. Still, record skepticism about government creditworthiness is incongruous with all-time lows for yields. Until that discrepancy with the virtual world of derivatives is explained, maybe investors should avoid driving yields on cash bonds lower.http://www.bloomberg.com/apps/news?pid=20601039&sid=ayWr6HwZq0FY&refer=columnist_gilbert

“The equalizing of wages around the globe” didn’t really happen, but the multinational elites and their lobbyists and their paid henchmen in Congress blindly thought they could pull this off. In their dreamland, they saw all kinds of smiling middle class consumers in China and India gobbling up their stuff. But, just as has been happening in the U.S. for the last 25 years, the alpha elites and the corrupt in China and India power-grabbed the loaf of bread and only a few dried out crumbs trickled down to the masses. Now, they don’t have any neo-consumer class over there and they bled the consumer class dry here. They cooked the golden goose and now the coop is empty. In their ignorance and arrogance, they thought they could control the world economy and now they know they can’t.

Does anyone believe the national debt will ever be paid down?DOES ANYONE KNOW WHERE THE MONEY HAS GONE?

As far as I know, they may know but that information isn’t public info.Those are some of the complaints about the TARP, no transparency.. Hanky Panky said that it disclosing it might harm some of the institutions. People might go after them as short opportunities I guess.

@ORYour take on APOL was appreciated. A new seeking alpha article might interest you:http://seekingalpha.com/article/114648-apollo-group-s-strong-earnings-are-misleading?source=yahooAlso note yesterday’s insider selling.

From your mouth..

Locked in a closet. The geek squad slides pizzas & ramen noodles under the door twice a day.

Senate to Vote Tomorrow on Releasing TARP Funds, Reid SaysJan. 14 (Bloomberg) — The U.S. Senate will vote tomorrow on whether to block the release of the second half of the $700 billion financial-bailout plan, Majority Leader Harry Reid said.Reid said yesterday he was “confident” the Senate would not bar use of the $350 billion requested by President George W. Bush on behalf of President-elect Barack Obama.http://www.bloomberg.com/apps/news?pid=20601087&sid=aH27VLMb58Ic&refer=home

g,that is the problem and why they are printing new money. what was spent was not money, it was credit..to go from near infinite velocity to zero velocitygenerates a lot of heat, not so much light..and to collapse?g,i agree. if not now, very soon. weeks rather than months. we will see. either way, bailouts or not, the thing won’t work going forward. they made the money funny and as such i really don’t see its over riding significance?.3 options . one, attempt to maintain system, bailout banks.etc. result, sacrifice value of currency. etc.. 2. preserve currency value. result, insolvent system collapse. 3. revamp system, top to bottom. “globally” coordinated..everyone agrees and it is the root of the thing, a great transfer of wealth has taken place. it was created out of thin air by the soul of labor and ingenuity, projecting and promising perhaps a future that became improbable or nearly impossible. fraud and theft will do that. and now a shift is taking place and that glacial wealth transfer may be shifting, moving in a direction no one could for see. or has that great wealth sublimated, puff , gone and left a bill that is being passed around. maybe the actual cost hasn’t been calculated yet and that is what all this printing is about? the masters of finance have no idea what they are doing.? shocking and dismaying.but i think they know. greatly rewarded for being such powerful blowhards while inflating they would now like to double bill the public before fleecing them and robbing their graves, in the name of systemic stability.and did i mention this is the root of why you can’t do anything creative or really productive in these united states. because the fed ( read international bankers ) will only allow profitability to flow in one direction, theirs. it is the law.perhaps i’m bitter and frustrated. and in debt forever, every 6 years seeing my savings cut in half. and i don’t even shop.??perhaps iv’e seen too many Alzheimerelders uncomprehendingly and blankly stare atbank statements that communicated nothing. perhaps it was best that they never realized their shares were destroyed by lying blowhards with no shame or decency in spite of the expensive watches and optimistic forecasts.perhaps i’ve talked to too many twenty somethings who have nothing to their names but a debt they will never be able to honestly repay.i’d like to thank all of you honest people, no matter how cynical or jaded. you make it possible for a person to continue to feel somewhat human. that’s still a good thing..it takes a few generations to fleece a people with the debt ideology. it’s been going on longer in the u.s. than in china or india. the system of law and order, property rights and inflation don’t happen overnight, it wouldn’t have that air of legitimacy. parents have to teach their children this to some extent and we all know how inefficient this mechanism is, but orphans don’t have this problem and that can be a blessing. that’s where the money went..and what is with the statistic that 18 american veterans commit suicide every day. now a days.

LS: meant to call you out, in particular. Drop me a line, whydontcha.

THE CENTRAL BUBBLE – US TREASURIES The central most important global fact over this past year is that the deflation which has swept across the world has destroyed an enormous amount of the financial wealth which people thought existed. The worldwide price and valuation crashes in stock markets, real estate and across commodities has now wiped out more than $US 70 TRILLION.The Hard Data Shows It:In the US, data from the Federal Reserve shows that the net worth of US households plunged by $US 2.8 TRILLION in the third quarter, the fourth consecutive quarterly decline. Over the past year, Americans’ net worth has contracted by $US 7 TRILLION. Americans have started to do something they haven’t done since 1952. They have reduced their debts! Reducing debts, repaying loans, is deadly to a credit money system since it contracts – DEFLATES – the quantity of credit money in circulation.American household borrowing, mortgage and consumer credit combined, literally declined at a $US 117.4 Billion annual rate over the third quarter.The so-called authorities panicked and hauled official interest rates down to absurd levels in the vain hope of reigniting a credit expansion. When no such expansion occurred, governments across the West stepped into the vacuum, borrowing what the public now refuses to borrow, in a global orgy of deficit spending. The civil economy has deflated at an unprecedented speed. People are now repaying past debts while not borrowing more. To try to “offset” this, the public or political economy which lives off taxes paid by the civil economy, is piling up its own debts.Something has to give soon. That something will be US Treasury debts.A Future U-Turn In A One Way Street:The Federal Reserve has boxed itself into a corner. With official US rates at (effectively) zero, they have only one way to go in future – UP! As a direct consequence of this, US Treasuries are standing on a trap door. The mad stampede over the past two months into Treasuries for “safety” simply means that these holders of US official debt now stand on that trap door. US Treasuries are the main assets held by the rest of the world’s central banks as reserves behind their own national currencies. US yields are certain to climb as the US Treasury tries to borrow more than $US 2 TRILLION this year. When yields climb, bonds – ALL bonds including US Treasury bonds – fall in value.US Treasuries are the last bubble, following after stocks, real estate and commodities which have already deflated. When the US Treasury bubble bursts, the carnage on the global bond markets will be awesome.

when you have idiotic politicians talking this way. dollar is sure to become zembawe status. William Proxmire is a democrat, why am i not supprised?” Senator William Proxmire: “…there are 37 million people, is that right, that get Social Security benefits?”Social Security Commissioner James Cardwell: “Today between 32 and 34 million.”Proxmire: “I am a little high; 32 to 34 million people. Almost all of them, or many of them, are voters. In my state, I figure there are 600,000 voters that receive Social Security. Can you imagine a senator or congressman under those circumstances saying, ‘We are going to repudiate that high a proportion of the electorate?’ No.Furthermore, we have the capacity under the Constitution, the Congress does, to coin money, as well as to regulate the value thereof. And therefore we have the power to provide that money. And we are going to do it. It may not be worth anything when the recipient gets it, but he is going to get his benefits paid.”Cardwell: “I tend to agree.”My point here is that benefits may get paid in dollars that aren’t worth that much. The cost of living adjustments will be limited or eliminated.”

U.S. military report warns ‘sudden collapse’ of Mexico is possible“The Mexican possibility may seem less likely, but the government, its politicians, police and judicial infrastructure are all under sustained assault and press by criminal gangs and drug cartels.”http://www.elpasotimes.com/newupdated/ci_11444354So I have to ask – How is this any different from the USA?

g,ah, but they have arrived too late.

p,i’ve been wondering if you paint on canvas at all?and if not , why not. i would think you could make some good art judging from you comments and unique perspective.you sound more like an artist than a painter.

@ DisbeliefI don’t always agree with MA, but I have found him rather willing to “make the call” and provide his reasoning. He has been very open to listen to my alternate reasons and either adjust his, or toss mine out the window so to speak. This tells me he not so ego driven as you implied, but rather truth/results driven.That said, I haven’t seen this much pee in one box here since RYSKAMP left! The floor is all wet!

Where are your recommendations of upmove which you were making in September, guess you have turned bearish. Hope you are not in SHOCK

but they have gun wielding, guitar playing, rocket launching “desperados”if i were you, i’ll be afraid,the least they can do is steal our women.. ohh the horror

Also wondering…I have been inspired by the spark of hope and real courage to try and effect change in the face of all of this. I hope he’s not suffering some kind of burnout after being so involved. Also, what ever happened to StocksGoinGreen, a.k.a. SSG ? I don’t know if he annoyed people, but he provided me with some much needed comic relief a few times.

The PPT was not designed as a long term solution. It was never meant to sustain the market it was designed to avoid a single day drop of massive proportions (15-25%). The PPT CAN NOT fix the economy, it was created solely to manipulate the market.

HooRah for OuterBeltway et al. Thank you for providing some hope in the midst of this mess, you were missed!

Try incompetence and corruption.

hear that, you Europeans? There is work leave in America as well.

Credit Crisis part deux:We are now at the 2nd stage of the credit crisis. Overcapacity, demand destruction and overleverage will now lead to corporate and retail defaults. There will be massive layoffs, capacity idling, investment pullback, and further bank capital destruction. The impact will be global. Final good demand destruction will cause severe recessions/depression and unemployment. The 2nd leg of this crisis will hit the banks in these countries.The initial impact of the phase 1 of the credit crisis is on the financials. Phase 2 will affect both financials and corporates. From the technical timebomb perspective, the big risk item is Corporate CDOs. If there is systemic default due to the recession/depression, we would see that severe stress in that space, further destroying bank capital and the lending capacity. We are firmly in the negative credit cycle. Unfortunately, governments and central banks are still in denial and so far, attempts to keep the financial sector afloat has been nothing more that throwing good money after bad. And I suspect we are pass the stage where the negative credit cycle can be avoided. Expect to see more frauds appear, as well as more corporate defaults to hit the headlines. Already, we have had a Korean auto company, a Canadian telecommunications company in default, and an Indian fraud. All in the first 2 weeks of January. Expect this trend to accelerate.I will touch on Phase 3 tomorrow.

As I have always believed, the real data is much worse that publicly known or acknowledged. In fact, I note NR is now awarding a significantly higher chance to an L shaped recession, something which I have been commenting for over 6 months now.My sense is that NR himself is seeing in his forecasts a more dire economic scenario than he would rather reveal because of the (well earned) promotion of his reputation for economic predictions.Frankly, this is going to be the worst economic period any of us have ever known or thought could be possible.I would like to see more commentary from NR on how he believes people should best protect their finances during this very diificult period.

Speaking of the United Nations and such like organizations and their claimed “integrity”:http://wikileaks.org/wiki/United_Nations_confidential_reportsArrogance is directly proportional to incompetence and stupidity and the ensuing levels of criminal behaviour arising therefrom.It is sheer lunacy to prop up bankrupt organization in favour of a healthy socio-economic driver community especially when, to add insult to the ensuing injury, the propping is done with the funds of the latter.Professor: It is obvious from your evolving predictions that you will soon see the future according to my predictions of 2006. Soon you will be politically correct and a fashionable association.Heart Attack AlertFrom Shadowstats: Alternative DataCPI – Inflation (SGS): 9%Unemployment: Off the chart at 18%+GDP: Heading to -3% and beyond ‘-x’Dollar: In “extremis”Citi and BoA on their respective deathbeds.Emergency Alert: There are some that expect President Obama to kiss it all better…Expect Gaza to be cleansed 100%. This would make Genghis Khan look like a quiet studious type.Is this what we call civilization building?Ho hum

w,”.. and then he went to the sun. and when he got there the sun was a wilted sunflower.”

Going into Iraq was not moronic … staying there was moronic.

European banks shed Indian shares MUMBAI: The tumble in equities on Thursday is believed to have been precipitated by selling from some European financial institutions.According to people familiar with the development, Swiss financial major UBS has been a notable seller in the market today.Their selling has resulted in fresh speculation cropping up about the health of Europe’s financial institutions, though this could not be substantiated. Though there are no official figures about the quantum of UBS’s investments in India, market participants estimate them at roughly $1.0-1.5 billion.This talk comes at a time when a larger section of the market participants thought that the worst impact of the subprime crisis on global financial institutions was over.

Obama=University of Chicago=Milton Friedman

Marx was one of the greatest thinkers of the 19th century, agree with him or not (I don’t). To understand why he came to his beliefs you need to understand the excesses of capitalism and the exploitation of workers during that period.

MA: diz 1 4 U! (A devil’s advocate post designed to keep the conversation flowing. I hope, once again, that the blog police picks diz one as one of the better posts is this thread:-)Let’s start by recognizing that ALL talk about short-term market movements (including my own) is no more than pure conjecturing/speculating. This being said, here you have some more!If you look at the chart of past and current market crashes (dshort via CR)http://dshort.com/charts/bears/four-bears-extended-large.gifYou will note that if you are going to compare the current crash to past crashes the one to use is clearly the 1929-1932 crash. This is because the economic conditions we have now a days resemble most those of the depression.Using historical price movements in stocks, including: market tops, bottoms, statistics on frequency of event such as as January goes goes the year, etc., may be a fun exercise but not a very reliable one. However, one can use such historical information to note that rare price movements such as huge drops are indeed possible. Thus, what the 1929-32 chart is telling me is that the market may drop quite a bit more from here. By this I don’t mean it will, but that such an event is clearly an event with a POSITIVE PROBABILITY.The economic fundamentals outlined by the Professor, which of course may not be of much use in forecasting the market short term, also indicate that much lower valuations are indeed possible even though “for the long run” as Jeremy Siegel says(now Joined by Hussman who in his latest reiterates stocks are about fairly valued now and should produce attractive long term returns) stocks are a sure(?) bet.I use (?) because there have been 20 year periods in the past in which stocks have not done much: http://www.investmentu.com/IUEL/2005/20050509.htmlScroll down to the chart that looks at 20 year average returns for the 86 20-year periods contained in 1919-2004. You will note that for periods with average beginning PE of 19 such as, e.g., 1998,1999,2000 the average return for the next 20 years was on average about the same as inflation (i.e., 3%). What does this mean? if you take 1998 and add 20 to it you get 2018. So, I am not saying it will happen but it may be that for the 1998-2018 period, or for instance the 2007-2027, for which the starting PE is also above 19, the average market return may be only 3%. An interesting exercise is the following: assume you will end up with a 3% average return for the 2007-2027 period; since we know the returns for 2007, 5.49%, and 2008, -37% (from http://en.wikipedia.org/wiki/S&P_500 ), we can calculate the average return for the 18 years we have left to get to an average of 3% for the 20 years:(1+0.0549)*(1-0.37)*[(1+x)]^18=(1.03)^20Solving for x we get: x={(1.03)^20/[(1+0.0549)*(1-0.37)]}^(1/18) – 1 = 3.64%Thus, we see that despite the 37% drop in 2008 and the relatively low return in 2007 of 5.49%. An average return for the coming 18 years of only 3.7% is a distinct possibility!So we see that, both, on the short term (1929-1932 crash chart above) as well as the long term (my analysis above), there are significant downside risks to holding stocks.MA’s argument at the beginning of the thread seem to be based on the argument “GEE man!, 8000 on the DOW is low enough, we can’t go much lower than that”.That may be what most market participants may be thinking, it may be that we do get the bounce for diz reason or just by chance and MA is “proven” right.However let me give an alternate interpretation which is just as valid: The market action in the last few days shows that, once again, Goldilocks are facing reality and the turmoil we saw last October and November may be revisited. IMO, the possibility of this interpretation being right is high so I am playing it safe, I am staying out of the market to protect myself from downside risk even though I may miss the upside.

I agree; Faber did best. Still, with such an illustrious crowd, my expectation was to see at least one guy to deserve a grade of A in investing for 2008. IMO, Faber deserves at most a B. Almost all the others deserve an F.

One of the more prudent things I could do would be to somehow hedge my risk to the dollar. So, here come the gold salesmen. Right? But even the amount of gold I might buy would never offset a significant part of my dollar exposure.Where do you turn? Euros? That’s hardly better. CHF? That’s a charade. Those banks are in the dollar business themselves. Not a hedge. In fact, as our professor has said, in an economy as interdependent as ours there is no place to turn.A year ago I was asking what the world would look like without a reserve currency. London Banker said I was nuts. At the time it was a thought experiment. It’s more than a negligible probability now. Benny’s at the wheel of the money machine and he’s lost his mind. What I would think the least probable is a long flat bottom L shaped recession. If things don’t get fixed reasonably soon the world economy splinters. Europe goes its way. Asia by itself. The global economy comes apart like Pangaea.

IMO you will not see bankruptcy of any large US companies. Because of CDS risks, the government just won’t allow it, and will choose to bailout instead. Until all of these bailouts cause the dollar to crash and the music stops.

Princeton

Deep Capture Blog to win “Best Business Blog” award.If you are not fully aware of the entrenched corruption in the System yet, I suggest you check out http://www.deepcapture.com and then decide if you can ever “win” in a system that smells so foul. How the DTCC and SEC are still in existence beats me!

Thank you for this. It’s been a while since I laughed so hard.

Trade defines homo sapiens. We traded as hunter-gatherers. It is the one ecological adaptation that separates us from everything else. What can be lost is that efficiency that we call today comparative advantage. The ability to supply ourselves from far and wide. Restructuring our economies to survive without global trade is unthinkable – inconceivable. But there are certain necessary but artificial constructs that make that possible. Money. Confidence. When that’s lost…

sound like today

Dr. Roubini:Are you considering making your 2009 Global Economic Outlook freely available, as you did last year?Thanks,SWK

totally agree! All of the lenders and brokers I have contact with say similar things about BofA, Citi and others when they hold the 2nd mortgage: they are doing everything they can to impede settlements on short sales of homes even after the lst lender has approved the offer! This makes their balance sheets look even more negative and makes it far easier to claim hardship for more bailout money: they continue to milk the system at taxpayer’s expense!

Obamanomic and Democrasocialonmic will doom USA. 800Billion+ stimulus blew on health care, education, and highway construction? Is this a screw up NEW DEAL? whatever about real job that benefit USA economy? Read my lip, Obama and his people will doom USA.http://finance.yahoo.com/news/Dems-unveil-825-billion-apf-14070097.html” WASHINGTON (AP) — House Democrats are circulating an $825 billion economic stimulus measure that emphasizes health care, education and highway construction as well as tax cuts for individuals and businesses.A summary of the measure shows spending totaling roughly $550 billion and tax cuts of $275 billion, although the totals are expected to shift considerably as Congress works on the bill.Democratic leaders plan to unveil the legislation later today. The Associated Press obtained a copy in advance.Democratic leaders have pledged to have a bill ready for President-elect Barack Obama to sign by mid-February.”

SSO my a** – only people buying stocks are the FED and the banks… this puppy belongs at 5000 dow and 500 S&P … get it reset and start over…. actually who cares – Wall street and the Stock markets have effectively made themselves irrevelant going forward to 99.99% of the American population….

Depression ahead, prepare for stock rout-SocGenLONDON, Jan 15 (Reuters) – Societe Generale said on Thursday that the United States’ economy looks likely to enter a depression and China’s could implode.In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout.He predicted that the S&P 500 index of U.S. stocks could be set for a fall of nearly 70 percent from recent levels.Edwards also raised the danger of a global trade war with China.”While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere,” Edwards wrote.”It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression.”Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen.But he called in October for clients to increase their exposure to equities, which he said were due a rebound.”We believe that the market is (now) set to quickly slide sharply towards our 500 target for the S&P,” he said.The S&P 500 <.SPX> stock index is currently at 842, up about 14 percent since hitting a low in November.(Editing by Ron Askew)http://www.guardian.co.uk/business/feedarticle/8260101

MA – I appreciate your comments and thinking – Gold at 800 and DOW at 8000 – what’s your thought on the recent correlation?

New Thread

1. 1500 banks go away- in progress- Citi in trouble- BOFA too2. 200,000 store closings – in progress- Gottshcalks Bankrupt3. Dow at 5000 possibly 4000 -stays propped up by continued Govt purchases of shares and preferred shares- do not use as gauge of how economy is doing- http://www.guardian.co.uk/business/feedarticle/82601014. S&P at 500 possibly 400- http://www.guardian.co.uk/business/feedarticle/82601015. Mortgage rates for new homes go to 3% and resale’s/refi’s at 3.75% – pushed by Obama6. Tax credit of at least 25k for home buyers7. Chrysler is gone by March.8. GM goes under by Sept.9. GE files bankruptcy – http://clusterstock.alleyinsider.com/2009/1/gm-gm-we-still-cant-rule-out-bankruptcy10. Calf state budget deficit hits 50 Billion- presently 41B11. All states and local gov’ts approach 300 billion deficits combined12. Massive state and local gov’t layoffs nationwide13. official unemployment hits 13%, unofficial unemployment hits 25% – current: http://clusterstock.alleyinsider.com/2009/1/jobs-numbers-much-worse-than-you-think14. Gas prices hover around 1.50 gallon unless there is major Mideast/Pakistani/Indian crisis then it goes to 5.00 quickly15. GDP shrinks at 6-8% for 200916. Deflation takes strong hold until sept 2009, at which point hyperinflation is roaring by dec 2009. – http://clusterstock.alleyinsider.com/2009/1/full-text-of-bernankes-speech17. US Dollar continues slow decline against Yen, Euro, Pound and Yuan – losses 50% by Dec 200918. 2009 Federal deficit hits 2 Trillion – Update: 1st qtr almost 500 Billion19. total Bailout and govt assistance programs approach 15 trillion from when it started in summer of 2008- currently at 8 trillion – http://www.bloomberg.com/apps/news?pid=20601087&sid=at6cYfv8wFJw&refer=home20. Total US liability approaches 60 Trillion by 200921. bond market collapses22. US treasuries become almost worthless23. China pulls the trigger and demands we pay back what we owe or they stop shipping goods to us or cut prices dramtically -(LONDON, Jan 15 (Reuters) – Societe Generale said on Thursday that the United States’ economy looks likely to enter a depression and China’s could implode.In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout.He predicted that the S&P 500 index of U.S. stocks could be set for a fall of nearly 70 percent from recent levels.Edwards also raised the danger of a global trade war with China.”While economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere,” Edwards wrote.”It is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression.”Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen.But he called in October for clients to increase their exposure to equities, which he said were due a rebound.”We believe that the market is (now) set to quickly slide sharply towards our 500 target for the S&P,” he said.The S&P 500 <.SPX> stock index is currently at 842, up about 14 percent since hitting a low in November.)24. Housing values decline another 15-25% from Nov 2008 levels- Calif, Fla, AZ, Nevada see even steeper declines – http://www.housingwire.com/2009/01/14/foreclosure-activity-fires-back-up-in-california-report/25. States and local govts raise taxes on everything, unless Federal govt gives them help… this is going to be ugly26. Obama starts giving states and companies relief on Medical insurance premiums and costs.. possible full nationalization of Health care system gets underway in 200927. Fed possibly nationalizes entire banking system28. More Madoffs and ponzi scams totaling 1 trillion may happen, unless they hide the losses29. approx 2 Trillion in more bad Res mortgages/losses to be absorbed by banks and govt – http://www.bloomberg.com/apps/news?pid=20601213&sid=aTtVEJqx_S2w&refer=home30. 1 in 3or4 mortgages fail. Prime and Alt A pool problem is actually worse and larger than sub prime problem – http://www.housingwire.com/2009/01/14/foreclosure-activity-fires-back-up-in-california-report/31. commercial real estate and rents fall off a cliff, 50% drop in values and 1.5 Trillion in losses.32. Obama polls on effectiveness of handling job fall to Bush levels by end of 2009 – not his fault.33. US possibly gets involved in much larger ground war somewhere to stimulate economy and jobs and deal with crisis in mid east/India/Pakistan/Russia/Korea34. Credit card Debt approaches 2 trillion in losses for banks and lenders35. the Yankees with their new 3 players they paid 1/2 billion dollars to, win the world Series, but Yankee Revenue and profit implodes and Team gets in finaiancial trouble.36. 5-10 or more major sports teams go bankrupt in 200937. something happens in later part of year to unite the country… could be good or bad..38. Govt deals with civil unrest in parts of the country…..39. people will think things are better for 1-2 months at times during the year, only to be hit over the head with more bad economic news and problems40. these problems will last until at least 2012 as Americas struggle with all the resetting going on in the economy, from wages, to housing, to buying, to energy, to living simpler… – http://clusterstock.alleyinsider.com/2009/1/depression-odds-above-5041. Entire Govt and private Corp pension system is underwater by at least 2 trillion dollars and will be huge issue for Govt to deal with in 2009 – http://www.bloomberg.com/apps/news?pid=20601087&sid=aw9HrY21Ynno&refer=home42. Noretl goes bankrupt- I called this one in Nov.

@ptm Thanks, that’s a good succinct outline of the (visible) transaction paths, and I get what you’re saying about a “debt-based economy”.So, at the lowest level in the chain, a house-seller was paid real cash by Joe6pack’s bank and the worthless loan was sliced & diced into cloud-cookoo-land. But then this tower of ice-cream sticks was brought down when Joe started missing his payments. Is that right?If so, wasn’t there still a great deal of real cash (on the barrel head) going into the house-seller’s pocket? (Which now has to come back out as a taxpayer footing the $10T.)

Thanks

A remark like that from someone who cannot properly format a sentence? LOL Anytime that you’re ready to come out from hiding behind “Guest” and want to engage in a serious debate I’ll be ready…Mark

I find it interesting that everyone is making comparisons to 1929-1932 crash. Although some of the financial problems are similar from a stock market perspective, I see this as a 1937-1942 comparison. The Dow of 1929 was primarily high-tech (radio, telephone) stocks that crashed 90%. Our 2000-2002 dotcom crash was 80% and had a 50% recovery like the Dow of 1929. 1937 bear followed 1929 by 8 years, just like 2000 and 2008.There is an interesting chart here (http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html). If valid this means we bottom in the S&P 500-600 range as NR forecasts, but that it may be drawn out to 2012 (alt-A, option arm tsunami?).

No, our foreign debt holders )Mark

I understand his beliefs and in a perfect world the man would be 100% right but it’s not a perfect world and his beliefs have lead to much worse treatment of the people than the excesses of capitalism did at that time. And I’m not trying to defend the excesses then or now they are evil.

In EARLY MAY, I called for oil to peak at $145. and in that same call, I said it would “rapidly” decrease to the $90-105 range.Oil hit did exactly what I said, with a high close of 145.29, and then rapidly dropped to $90… where it then climbed back to $110.I then called for another oil drop, (not specifying any price) About 2 months later, (While oil was hovering around 70, i said Oil would have to find its home in the $40-45 price range. (my only real error was thinking it would take years to get there… but none the less, I believe that the 40-45 range is that next median average level that we see in hindsight.)Please, don’t misquote me….and thanks, for the acknowledgement.I’m really hoping people can make some money (or save some money) with my “advice”.Miss America

The S&P 500 P/E got down to 6 in 1949 (http://www.lowrisk.com/sp500pe.htm). Surely things will get at least as bad as 1949 so why does Nouriel only expect the P/E to fall to 10-12?

I agree…this all sounds far too plausible for comfort

I was wondering, he just hasn’t used that trademark “BOOM BABY!!’”. I kind of miss it .

“the excesses of capitalism and the exploitation of workers during that period.” excess to Capitalism???? “This “great thinker” could not decipher the difference between failure of human nature, and failure of capitolism. Thus he put more power in a group which led to far more human failure, and millions slaughtered.

Setting aside my doubts that this anecdote is actually true, I have to disagree with its premise.All politicians are offering ice cream to their target (be it business, labor, wooden arrow makers, defense contractors or environmentalists.) And there’s been plenty of ice cream, in a variety of flavors, doled out by presidents from both major parties to their supporters. To suggest that Obama’s supporters are wide-eyed, sugar-starved children is rather simple-minded.Obama’s tax plan (the one he ran on) will not help me personally, and will likely hurt me. Yet I voted for him anyway, passing up the ice cream that McCain was offering. I voted not out of narrow self-interest, but with the belief that Obama’s vision for the country and the way he promised to lead (which he so far has) would benefit us all in the long term.If Olivia does in fact exist, please pass along my congratulations, and maybe spend a little more time guiding her in her presidential duties than exploiting her story for cheap political points.

MA,Do you still believe 8000 is a reasonable buying range given the fact that now the XLF has broken Nov 21 lows? The financials have the led the downturn, so if they made a new low, that signals the market may have not made its low either? Also, there are several technical factors indicating we need a strong finish to Januar or we’re screwed both short and LONG term, do you consider any of this to be of importance? The only positive I see with regard to this bottom test OR break is that volume is relatively low. Its kinda like walking up to a cliff, if you tip toe(low volume), you can look over the edge and walk away. If you sprint up to the cliff(high volume), you more then likely go flying off!