Investment

» Normxxx - Financial WMDs

WMDs in Financial Markets

Complex Financial Trades Worry Economy Watchers
Rise of Bets Called Swaps Could Worsen Subprime Damage

http://normxxx.blogspot.com/2008/01/wmds...

-- posted by Normxxx

» Jas_Jain - Re: FWC: US slides into dangerous 1930s 'liquidity trap'

In response to FWC: US slides into dangerous 1930s 'liquidity trap' posted by Normxxx:

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"Stagflation, yes; a "liquidity trap," you're dreaming!"

It remains to be seen, XXX, as to who is dreaming and who is not. Also, who called the turn of the "Big One" more accurately.

2008-09 will be the years of the Slaughter House Rules! Beginning of the outright Deflation in the US during 2008Q4-2009Q1 (once the Stimulus Plan has worked thru the system) will go a long way in settling the argument.

Jas

Jas

-- posted by Jas_Jain

» Normxxx - Stocks: Classic Bear Signals?

Stocks Show Classic Bear Signals,
And This Time, Impact Is Global

http://normxxx.blogspot.com/2008/01/stoc...

-- posted by Normxxx

» permabear - Doug Nolan: always a good read

http://safehaven.com/article-9321.htm

Fundamentally, the Greenspan/Bernanke "doctrine" totally misconstrued the various risks inherent in their strategy of disregarding Bubbles as they expanded - choosing instead the aggressive implementation of post-Bubble "mopping up" measures as required. They were almost as oblivious to the nature of escalating Bubble risk as they were to present-day complexities incident to implementing "mop up" reflationary policies. "Mopping up" the technology Bubble created a greatly more problematic Mortgage Finance Bubble. Aggressively "mopping up" after the mortgage/housing carnage in an age of a debased and vulnerable dollar, $90 oil, $900 gold, surging commodities and food costs, massive unwieldy pools of speculative global finance, myriad global Bubbles, and a runaway Chinese boom is fraught with extraordinary risk. Furthermore, the Fed's previously most potent reflationary mechanism - Wall Street-backed finance - is today largely inoperable.

I'm not going to jump on the criticism bandwagon and excoriate Dr. Bernanke for his panicked 75 basis point inter-meeting rate cut. From my vantage point, the "wheels were coming off" and I would expect nothing less from our increasingly impotent central bank. Yet it is silly to blame today's mess on recent indecisiveness. The Fed has not been "behind the curve," unless one is referring to the "learning curve." The unfolding financial and economic crisis has been More than 20 Years in the Making. It's a creation of flawed monetary management; egregious lending, leveraging and speculating excess; unprecedented economic distortions and imbalances on a global basis. And I find it rather ironic that Wall Street is so fervidly lambasting the Fed. For twenty years now the Fed has basically done everything that Wall Street requested and more.

It is also as ironic as it is predictable that Alan Greenspan - Ayn Rand "disciple" and free-market ideologue - championed monetary policies and a financial apparatus that will ensure the greatest government intrusion into our Nation's financial and economic affairs since the New Deal. Articles berating contemporary Capitalism are becoming commonplace. I fear that the most important lesson from this experience may fail to resonate: that to promote sustainable free-market Capitalism for the real economy requires considerable general resolve to protect the soundness and stability of the underlying Credit system.

And, speaking of the Credit system, some brief market comments are in order. Stocks generally rallied this week, yet it was a backdrop that provided little comfort that the system is beginning to stabilize. Sure, the banks rallied 10%, the homebuilders 20%, the retailers 7%, the transports almost 7%, and the restaurants 5%. One could easily assume that the bears were squeezed and leave it at that. There are, however, surely more complex and problematic dynamics at work. Notably, many of the favorite sectors were hit this week - the utilities, technology and biotechs all posted notable weakness. Coupled with this week's extreme volatility, I will assume that the huge "market-neutral" and "quant" components of the leveraged speculating community have suffered even greater losses so far this month than those from last August. It is also worth noting that some important Credit spreads have diverged markedly, most notably many corporate, junk and commercial MBS spreads have widened as dollar swap spreads have narrowed. The spectacular Treasury melt-up must also be causing havoc for various strategies, ditto the recently strong yen and Swiss franc.

I'll stick with the view that an unfolding breakdown in various trading models and hedging strategies is at risk of precipitating a crisis of confidence for the leveraged speculating community. I suspect hedge fund trading was much more responsible for chaotic global securities markets this week than a rogue French equities trader. There is, unfortunately, little prospect for markets to calm down anytime soon. There is no quick or easy fix to any of the myriad current problems - seized up securitization markets, sinking housing markets, faltering bond insurers, counterparty issues, a crisis in confidence for "Wall Street finance", or acute economic vulnerability - to name only the most obvious. Again, they've been More than 20 Years in the Making.

-- posted by permabear

» Normxxx - $7.2 billion French Fraud?

$7.2 billion French Fraud?
How many more Jerome Kerviel's are out there, especially among those mysterious hedge funds?

http://normxxx.blogspot.com/2008/01/72-b...

-- posted by Normxxx

» Jas_Jain - Re: Doug Nolan: always a good read

In response to Doug Nolan: always a good read posted by permabear:

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He is a Broken Record for twenty years! Only cranks like you and I value a Broken Record.

People like XXX have no clue about the real long-term forces and talk about "5-year bull market" when the Scams, S&P500, are where they were 9 years ago!! The tech Scams that I used to warn against during late 1990s are even worse.

My UST STRIP has out-performed Scams for more than ten years. When did that happen before? During the Great Depression. People like Kirk and XXX have no clue about how to judge performance of Scams -- against T-Bills and long-term USTs. If Scams can't pot-perform USTs for ten years what kind of bull market we had from 2003Q2-2007Q2? A rabbit! There are too many lazy people who don't do their homework about the Scam Market.

The USTs have had a bull market for 26 years and four months! And when was the last time that happened before?

Jas

-- posted by Jas_Jain

» Inya Ivkovic - The WSJ - "Lawmakers Offer Plans For Homeowner Refinancing"

http://online.wsj.com/article/SB12016622...

» permabear - The Sixty Year Storm- George Soros

http://www.silverbearcafe.com/private/1....

-- posted by permabear

» Normxxx - Bank Reserves Go Negative

Bank Reserves Go Negative

http://normxxx.blogspot.com/2008/01/bank...

-- posted by Normxxx

» Inya Ivkovic - The WSJ - "Bond Insurers' Bad News Reverses a Rate-Cut Rally"

http://online.wsj.com/article/SB12017504...