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Thread: Oh what a weekend

  1. #1
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    Default Oh what a weekend

    Terrible, but not as terrible as predicted so the shares went up
    July 17 (Bloomberg) -- JPMorgan Chase & Co., the largest U.S. bank by market value, said profit fell 53 percent, a smaller drop than analysts estimated, on mortgage-related writedowns and costs from the takeover of Bear Stearns Cos.
    http://www.bloomberg.com/apps/news?p...qxs&refer=home

    The covert bail out of JP Morgan continues unabated along with those of Fannie Mae, Freddie Mac and the rest of the finical sector, all partially cloaked under the fog of Morgans fiscal second quarter 2008 earnings report.
    J.P. Morgan Chase said on Thursday that losses on its $47 billion portfolio of prime mortgages could triple in coming quarters
    http://bankimplode.com/blog/2008/07/...-at-jp-morgan/

    I got this far in the Wall Street Journal article, "Capitol Hill Storm Envelops Fannie-Freddie Rescue" and started seeing red:
    This cost estimate is a fraud. The so-called rescue plan is merely a first installment on whatever the cost of shoring up Fannie and Freddie will ultimately be.
    http://www.nakedcapitalism.com/2008/...e-freddie.html

    JP Morgan's Dimon: Prime Mortgages Look "Terrible"
    http://www.housingwire.com/2008/07/1...look-terrible/

    NEW YORK (CNNMoney.com) -- Merrill Lynch booked its fourth-straight quarterly loss Thursday, this time losing nearly $5 billion, as the nation's largest brokerage was forced to once again take massive writedowns.
    http://money.cnn.com/2008/07/17/news...ion=2008071716

    The IMF released an update to it's World Economic Outlook yesterday.
    IMF Gloomy on Growth, Sees Rising Inflation Threat
    http://www.econbrowser.com/archives/..._the_glob.html

    The financials continue to bleed but the short squeeze continues.
    http://globaleconomicanalysis.blogsp...continues.html

    Risk analysis statistics fail Makes a good soundbite though
    It was a rally for the ages. In fact, according to Doug Kass, Tuesday's 13% move in the financial services exchange traded fund, the XLF, was an 11-standard deviation event. Kass pointed out the odds of such an occurrence are roughly the same as the world ending - three or four times.
    http://www.minyanville.com/articles/index.php?a=18101

    Massive Freddie Dilution Coming Right Up
    http://globaleconomicanalysis.blogsp...ing-right.html

    Freddie commits to raising $5.5 bln in capital
    http://www.marketwatch.com/news/stor...%7D&dist=msr_9

    Short selling restrictions just mean that the market will be less efficient for a little time. Some people are fine with that The buyers are paying up, it'll crash shortly - win.
    Looking one step ahead, think what happens to the bid after everyone else is squeezed out and the market makers hold all the financial shorts.
    http://globaleconomicanalysis.blogsp...hose-most.html

    Many banks are bitching about the new SEC rules on shorting. On the off chance you are new to the story, it's time for a full recap from the beginning.
    http://globaleconomicanalysis.blogsp...ing-about.html

    Less today
    Zimbabwe introduces the $100 Billon Dollar Bill. With it, you can buy four oranges.
    http://edition.cnn.com/2008/WORLD/af...tes/index.html

    Very strange confluence of media coverage this morning on the banking sector. All three major financial papers (WSJ, NYT, Barron's) have stories on the bottom of the banking sector:
    http://bigpicture.typepad.com/commen...animous-b.html

    Through history, outrageous financial behavior has been met with outrage. But today Wall Street's damaging recklessness has been met with near-silence, from a too-tolerant populace, argues James Grant
    http://online.wsj.com/article_email/...TQxMjkzWj.html


    So what else has been going on over in the land of the free?
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Oh what a weekend

    All that can really be said about the actions of the US markets over the past few days is two words ... 'options expiry'.

    (snip)"Citigroup Spoils Options Expiry Antics With a Simple Statement of the Obvious

    The usual suspects were walking up the XLF to squeeze the short interest in financials when this little truth-bomb from Citigroup hit the wire, spoiling their traditional quad witching option expiry market manipulation.

    It is not over yet. The worst is yet to come. They have taken the easiest writedowns first.

    You don't like to hear this do you? Well, how many times does someone have to lie to you about something important before you realize they are a liar? That they view the truth as something to convenient bend to their will to get their way, to skin you from your money? To take away your family's wellbeing?

    We are in for some hard times. Don't believe much of what you hear because the lies and scams and propaganda are coming hot and heavy, and it is not designed to help you. Try to use your critical judgement, or at least your common sense. A useful step is to get your information from sources beside CNBC and Fox. Reading is a useful habit to acquire.

    There is a list of interesting internet sites over on the left under the title Divertissement Éducatif. Read some. Get some other viewpoints, some other sets of facts, some other interpretations. If you are not doing so well, maybe, just maybe, you are being used badly, and you are allowing it to happen.

    Gold and silver are not contingent on anyone else's word, but can be slammed by the same short term forces that make stocks go up against all reason. Now might be a good time to have some at hand."(snip)

    from

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    Banned Melonie's Avatar
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    Default Re: Oh what a weekend

    and your link story 'Why No Outrage' bears 'must' reading status ...

    (snip)"If by "we," Mr. Poole meant his employer, he was off the mark, for the Fed has burnished Wall Street's hide more than skinned it. The shareholders of Bear Stearns were ruined, it's true, but Wall Street called the loss a bargain in view of the risks that an insolvent Bear would have presented to the derivatives-laced financial system. To facilitate the rescue of that system, the Fed has sacrificed the quality of its own balance sheet. In June 2007, Treasury securities constituted 92% of the Fed's earning assets. Nowadays, they amount to just 54%. In their place are, among other things, loans to the nation's banks and brokerage firms, the very institutions whose share prices have been in a tailspin. Such lending has risen from no part of the Fed's assets on the eve of the crisis to 22% today. Once upon a time, economists taught that a currency draws its strength from the balance sheet of the central bank that issues it. I expect that this doctrine, which went out with the gold standard, will have its day again.

    Wall Street is off the political agenda in 2008 for reasons we may only guess about. Possibly, in this time of widespread public participation in the stock market, "Wall Street" is really "Main Street." Or maybe Wall Street, its old self, owns both major political parties and their candidates. Or, possibly, the $4.50 gasoline price has absorbed every available erg of populist anger, or -- yet another possibility -- today's financial failures are too complex to stick in everyman's craw.

    I have another theory, and that is that the old populists actually won. This is their financial system. They had demanded paper money, federally insured bank deposits and a heavy governmental hand in the distribution of credit, and now they have them. The Populist Party might have lost the elections in the hard times of the 1890s. But it won the future.

    Before the Great Depression of the 1930s, there was the Great Depression of the 1880s and 1890s. Then the price level sagged and the value of the gold-backed dollar increased. Debts denominated in dollars likewise appreciated. Historians still debate the source of deflation of that era, but human progress seems the likeliest culprit. Advances in communication, transportation and productive technology had made the world a cornucopia. Abundance drove down prices, hurting some but helping many others.

    The winners and losers conducted a spirited debate about the character of the dollar and the nature of the monetary system. "We want the abolition of the national banks, and we want the power to make loans direct from the government," Mary Lease -- "Mary Yellin" to her fans -- said. "We want the accursed foreclosure system wiped out.... We will stand by our homes and stay by our firesides by force if necessary, and we will not pay our debts to the loan-shark companies until the government pays its debts to us."

    By and by, the lefties carried the day. They got their government-controlled money (the Federal Reserve opened for business in 1914), and their government-directed credit (Fannie Mae and the Federal Home Loan Banks were creatures of Great Depression No. 2; Freddie Mac came along in 1970). In 1971, they got their pure paper dollar. So today, the Fed can print all the dollars it deems expedient and the unwell federal mortgage giants, Fannie Mae and Freddie Mac, combine for $1.5 trillion in on-balance sheet mortgage assets and dominate the business of mortgage origination (in the fourth quarter of last year, private lenders garnered all of a 19% market share).

    Thus, the Wall Street of the Morgans and the Astors and the bloated bondholders is today an institution of the mixed economy. It is hand-in-glove with the government, while the government is, of course -- in theory -- by and for the people. But that does not quite explain the lack of popular anger at the well-paid people who seem not to be very good at their jobs.

    Since the credit crisis burst out into the open in June 2007, inflation has risen and economic growth has faltered. The dollar exchange rate has weakened, the unemployment rate has increased and commodity prices have soared. The gold price, that running straw poll of the world's confidence in paper money, has jumped. House prices have dropped, mortgage foreclosures spiked and share prices of America's biggest financial institutions tumbled.

    One might infer from the lack of popular anger that the credit crisis was God's fault rather than the doing of the bankers and the rating agencies and the government's snoozing watchdogs. And though greed and error bear much of the blame, so, once more, does human progress. At the turn of the 21st century, just as at the close of the 19th, the global supply curve prosperously shifted. Hundreds of millions of new hands and minds made the world a cornucopia again. And, once again, prices tended to weaken. This time around, however, the Fed intervened to prop them up. In 2002 and 2003, Ben S. Bernanke, then a Fed governor under Chairman Alan Greenspan, led a campaign to make dollars more plentiful. The object, he said, was to forestall any tendency toward what Wal-Mart shoppers call everyday low prices. Rather, the Fed would engineer a decent minimum of inflation.

    In that vein, the central bank pushed the interest rate it controls, the so-called federal funds rate, all the way down to 1% and held it there for the 12 months ended June 2004. House prices levitated as mortgage underwriting standards collapsed. The credit markets went into speculative orbit, and an idea took hold. Risk, the bankers and brokers and professional investors decided, was yesteryear's problem.

    Now began one of the wildest chapters in the history of lending and borrowing. In flush times, our financiers seemingly compete to do the craziest deal. They borrow to the eyes and pay themselves lordly bonuses. Naturally -- eventually -- they drive themselves, and the economy, into a crisis. And to the scene of this inevitable accident rush the government's first responders -- the Fed, the Treasury or the government-sponsored enterprises -- bearing the people's money. One might suppose that such a recurrent chain of blunders would gall a politically potent segment of the population. That it has evidently failed to do so in 2008 may be the only important unreported fact of this otherwise compulsively documented election season."(snip)

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    Default Re: Oh what a weekend

    I would also add that the general acceptance of 'trend changes' rather than 'real numbers' now appears to be spreading from government to wall street. By this, I'm referring to the fact that JP Morgan Chase's stock price rose significantly based on the fact that they ONLY lost 53 billion dollars last quarter, as opposed to the much larger loss that analysts had predicted.

    This is exactly the same sort of 'trend change' logic the gov't uses in regard to announcing budget 'cuts' ... where a gov't branch is supposedly doing well by 'cutting' it's budget to a mere 3-4% spending INCREASE as compared to last year, but a spending increase that is less than the 5-6-7% projected by gov't analysts in the new federal budget.

    In point of fact, JP Morgan is still losing money at a rapid pace ... and the gov't department is still spending 3-4% MORE money than it did last year !

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    Default Re: Oh what a weekend

    You guys... You are just being pessimistic. The credit crunch is nearly over, I saw politicians say so on the BBC.

    You know someone - a friend of the family at a family meal - asked me about this a few days ago. How long will it last? How bad will it get? What is coming? Etc.

    I answered honestly, because I think family and friends deserve to know - if they ask. You guys know my thoughts by now I presume.

    I might not get invited to dinner again for a while...

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    Default Re: Oh what a weekend

    I answered honestly, because I think family and friends deserve to know - if they ask. You guys know my thoughts by now I presume.

    I might not get invited to dinner again for a while...

    I hear you on THIS subject. In America at least, the vast majority of 'average people' are still having difficulty accepting the fact that real estate market prices can actually decline ... and are still associating the doubling in price of gasoline / heating oil with 'greed' on the part of the oil companies and speculators rather than a decline in the international purchasing power of their US dollars. Speculation on the possibility of Zimbabwe-esque future inflation, or the possibility of 1930's Great Depression unemployment and bankruptcies happening in America, is well beyond their present absorption capacity.

    So, as you discovered, 'average people's first reaction to any such discussions is to 'write off' the messenger as being a gloom and doom 'tin foil hat' nutcase.

    But for a fact people in every country whose currency is 'financial debt based', and the US and the UK in particular, could be in for some rude awakenings as other countries become more and more reluctant to continue 'loaning' us money to allow a continuation of our debt financed consumption. When that happens, the average US / UK standard of living made possible by assuming ever increasing levels of indebtedness over the past 20 years or so will have no choice but to decline.

    The bigger question of course is, with the capacity of the US / UK to create real new economic 'value added' having been exported to the 3rd world for the most part (i.e. manufacturing, mining / pumping, refining, and other non-service related activities that actually create instead of merely exchange), will the US / UK have any 'economic engine' to eventually pull us back up ? Will those countries that DO create 'value added' i.e. Asia via cheap labor input, Russia / Saudi etc. via raw material extraction etc. be willing to help the US and UK dig out of a depression via continuing to loan us money AFTER we have burned them badly by currency devaluation or outright future default on gov't debt payments a la Argentina ?

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    Default Re: Oh what a weekend

    Quote Originally Posted by StuartL View Post
    You guys... You are just being pessimistic.
    Or long vega I kid.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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