Rolling US Economy Into The Shitbin Thread

x-post

Well historical antecedents can at least give us an idea, a reference points, a mental framework of either the underlying causes or the possible solutions that exist. Otherwise why study history? If nothing, all the talk of Bernanke being "ooh deep txtbook expert on Gr8 Depression" will be irrelevant

Also economic crises and wars are not a good analogy

thanks ned! I still face potentially losing my job but at least I didn't wipe out on my retirement account too.

sweet goodbye letter from a retiring hedge fund manager who made huge profits betting against mortgages

http://www.portfolio.com/views/blogs/daily-brief/2008/10/17/hedge-fund-manager-goodbye-and-f-you

A nice sensible letter.

made like $20m - now i get high - c u fools l8r

i like the hemp part best - dude left college as a sophomore, right?

how do you bet on the subprime collapse? will the answer involve several paragraphs that i wont understand anyway?

prob some type of shorting - tho im sure theres endless complexities

Max:

credit default swap:

basically you purchase "insurance" on a monetary device that you might not even own a part of. In exchange for the fees you pay for the "insurance," you get the full value of the monetary device if it defaults. "Insurance" is in quotation marks because it is un-regulated. The idea of "betting on the collapse" means that if you have no real stake in the instrument in the form of ownership, you're basically HOPING that the instrument defaults.

http://en.wikipedia.org/wiki/Credit_default_swap

man all this shit just makes me wish i had a time machine

its unlikely this guy made his money through credit default swaps tho as those insuring the defaults never had the money to pay up in the 1st place - hence their primacy in our current crisis

prob did it by shorting securities w/a lot of exposure to the mortgage market ie bear sterns stock

the way people were making crazy money through cds was being on the insuring end and collecting the payments - which on its face isnt v profitable - but when u leverage yr investment x100 the yr looking good

thats how these big hedge fund made such crazy profits - safe bets hugely leveraged

and when you think abt it betting that the biggest insurance company in the world wont default does seem like a ridiculously safe bet - but then when they do not only do you not have a fraction of the money to payout that insurance you were supplying - you cant even pay back all that money you borrowed to amplify yr supposedly safe bet

one can see how this became a dicey propitiation for the whole industry real quick

blaming ivy legacies is always 100% cool with me

http://www.nytimes.com/2008/10/20/business/media/20carr.html?_r=1&hp&oref=login
I wonder if Cramer will even stay on the air much longer -- his philosophy and style seem like they'll be out of step with our new leaner times. I already feel like he's a relic, in a way.

that anyone ever watched that guy for anything more than lolz is pretty terrifying

-514 Dow

does Obama really need this much help?

Yeah, someone tell Soros he can stop shorting the market to hell now. Obama's got it locked up.

they should change the name to the Down Jones

I love how the misery has become totally routinized now

Dow falls 500 points and it's like what else ya got

Vic, i wouldn't quote a 130 year old analogy.

2008 is an unprecedented worry and there ain't shit you can do to predict much of what will happen. sorry

When I look at the volatility of the stock market lately, the word "teetering" comes unbidden to mind.

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

EAT IT, GRAMPS

that quote.

he looks like a melting wax figure or something blech

http://www.cnn.com/2008/US/10/23/bank.letters/index.html

I work in one of these buildings (small US treasury outpost on the 5th floor), tuesday was fun

One of the weirdest aspects of the whole campaign has been seeing the Weathermen become a household name again. Smearing Obama with Ayers was unconscionable, given the more-than-likely chance that domestic terrorism is about to make a huge comeback -- stirring this garbage into the air right before a small storm starts breaking from below is going to confuse an awful lot of people.

KING BLOOMBERG

o man remember when the whole world was on greenspans nuts

!!!

What?!

Dow futures fall 550. Omg!

greenspanznuts

I always knew Greeenspansnuts fans were nuts.

It's a whole new level when NPR sez in the a.m., "well the Dow is gonna have maybe it's worst day ever."

at least your dollar can now buy lots of useless pounds to buy worthless shares on the FTSE

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. It seems that greedy people will act delusionally in their own self-interest. I did not see that one coming, and it was like... whoah.”

My graph way up there ^ is showing the dow down a mere 7 points. What's all the fuss?

ah, there we go

looooool

more-than-likely chance that domestic terrorism is about to make a huge comeback

???

Greenspan naivete = that of an Oklahoma church youth-group member

One problem with predicting the Dow is that the Federal Reserve is empowered to purchase whatever assets it wishes. Under Greenspan it formed something they called the Plunge Protection Team, with a brief to enter the stock market as a buyer when other buyers were staying out of the market. Its activites are not announced.

One way or another, there seems to be resistance whenever the Dow heads for 8000 territory. It is noteworthy that, if sellers were overwhelming the market, no amount of artificial demand could stop the descent. So, I'd say the resistance has at least some validity.

Chase admits that they'll be using their bailout money to buy other banks, not loosen up the loan market: http://www.nytimes.com/2008/10/25/business/25nocera.html?_r=2&oref=slogin&ref=business&pagewanted=all

Has anyone mentioned the Planey Money podcast from NPR? They spun the show off of a recent Mortgage crisis episode of This American Life. New episodes during the week; good mix of news, interviews and whatnots.

http://www.npr.org/blogs/money/

I'd also recommend Peter Schiff's Wall Street Unspun. Him and the other Euro Pac guys are very bearish, calling for a huge run on the dollar (which obviously has yet to happen) and for China to bounceback quickly even with the US economy tanking (I'm skeptical of how this could work). Weekly shows updated on Wednesday night.

http://www.europac.net/radioshow.asp

Schiff is often good and has been broadly correct over the last six or seven years, but has he overstated the decoupling scenario? and 'emerging markets'? and overestimated the ability of non-US economies?..looking at whats happening to the rand, real, pound, won, euro etc? Still seems the US has major leeway with currency that the others dont have

China is the interesting one, I still think China has a major demographic timebomb on its hands.

Or is Schiff right - and the dollar (temporary bubble) will follow others down after acting as safe haven?

If my understanding of currency trading is correct, it would be impossible for all currencies to devalue against all other currencies. There must be winners and losers. Monetary policy, overall money supply, economic and political strength are generally the major market movers for currency.

Right now the US dollar is moving up more on perceived political(& military) strength than any other factor. There are too many unknowns in the market for traders to quantify the other factors with any confidence that is my guess, at least.

China doesn't have the track record they need to be a safe haven, yet.

Isn't it partly that some of the others (won, pound, rand) are falling due to their own malstructure and exposure

As for a winner, isn't that the yen?