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About LinkBacksbailout is rejected because it's planning to buy some very bad shit (derivative mortgage shit, etc. from elite mafia homeboys) rather than preferred shares in banks like the U.K. is doing.Originally Posted by Cyrille
bailout is rejected because it's planning to buy some very bad shit (derivative mortgage shit, etc. from elite mafia homeboys) rather than preferred shares in banks like the U.K. is doing.
.The Woman Who Could Have Prevented This Financial Mess Was Silenced by Greenspan, Rubin and Summers | Corporate Accountability and WorkPlace | AlterNet
But more than a decade ago, a woman you're likely never to have heard of, Brooksley Born, head of the Commodity Futures Trading Commission -- a federal agency that regulates options and futures trading -- was the oracle whose warnings about the dangerous boom in derivatives trading just might have averted the calamitous bust now engulfing the US and global markets. Instead she was met with scorn, condescension and outright anger by former Federal Reserve Chair Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers. In fact, Greenspan, the man some affectionately called "The Oracle," spent his political capital cheerleading these disastrous financial instruments.
On Thursday, the New York Times ran a masterful and revealing front page article exposing the culpability of Greenspan, Rubin and Summers for the era of dangerous turbulence we live in.
What these "three marketeers" -- as they were called in a 1999 Time magazine cover story -- were adept at was peddling the timebombs at the heart of this complex crisis: exotic and opaque financial instruments known as derivatives -- contracts intended to hedge against risk and whose values are derived from underlying assets. To cut to the quick, Greenspan, Rubin and Summers opposed regulating them. "Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalls Alan Blinder, a former Federal Reserve board member and economist at Princeton University, in the Times article.
^ It's been very interesting to me during all this carnage, that in all the "mainstream news" coverage I've heard, the name Robert Rubin has not been mentioned once.
Here's a nice article one of the analyst at freetradingvideos.com posted:
Hi,
The Newswire below gets at the heart at the current financial crisis. The commercial paper market seized up last week and painted the windows black. Money market funds were unable to sell their commercial paper holdings to raise cash in an effort to cover investor's demands for cash withdrawals. Corporations were unable to roll over maturing commercial paper and/or borrow cash from banks. There was a collapse of confidence. ETF trading was curtailed. The markets were shutting down. The T-Bill rate went to zero or below, which means that people with cash were paying the government to hold their cash. This happened in the panics in Japan in the 1980s and America in the 1930s. Both instances preceded zero economic growth and high unemployment for a decade. The financial markets absolutely need continuous cash liquidity to function and restore confidence, so that banks can willingly provide loans, and the public can confidently borrow at reasonable rates. Corporations need cash for payrolls, debt and materials. Banks need cash for customer's withdrawals and to lend. There are two ways that government can provide cash to banks. 1) The Treasury can buy frozen securities from the banks for later resale at a profit with cash raised from new Treasury bond issues, as is being proposed. 2) Alternately, the Fed can provide cash by buying securities from banks via banks reserve accounts at the Fed. However, that approach (called printing money) is undesirable because it creates additional money supply unnecessarily, and that is inflationary. That is what happened in the 1970s when the Fed "monetized" the Viet Nam guns and butter debt in an effort to hold down rising interest rates and created the gr eat inflation of the 1970-1980s. The result was stagflation that followed for a decade. What happened in the 1930s was just the opposite. The Fed mistakenly reduced money supply growth on the assumption that higher interest rates would stimulate investment. Wrong. The great depression followed. I was saddened by the senators and representatives questions during two days of hearings yesterday and today. It appears that the politicians do not understand basic financial economics and how financial markets work. The talking heads on the evening news tonight used the word "bail-out" in every other sentence. But that is not true. Hopefully, our free-market political system will work its magic by the weekend and prevent the U.S. financial and psychological panic from spreading rapidly around the world.
Bob
.
Commercial Paper Selling, Rates High
By Dow Jones Newswires
September 24, 2008
NEW YORK (Dow Jones) -- Money continued to flow into the U.S. commercial paper market Wednesday, with more investors venturing to buy debt with maturities beyond one day in a tentative sign of improving sentiment.
But companies still have to pay elevated rates to attract new investors, which could weigh on their finances over time. The financing from commercial paper market allows companies to manage their short-term obligations like payrolls or rent.
"We've seen $5 (billion) to $6 billion of orders," said one trader at a primary dealer in early New York trade. While most of the activity continues to be concentrated in the overnight market where investors buy paper with one-day maturities, roughly $100 million of orders came in for longer-term paper with 60-day or longer maturities, the trader said.
"Things are starting to improve," he said, adding that rates have also come down.
"Weaker" names, or companies that have less-than-stellar ratings are paying 5% on overnight paper. This is lower than the 7% seen last week at the height of the turmoil in short-term markets, but it's still well above the federal funds target rate of 2%.
This could weigh heavily on companies that want to refinance their debt in the commercial paper market.
Companies have to pay higher rates just to keep their commercial paper debt with investors rather than on their own balance sheets, said Kevin Giddis, managing director and head of fixed income, sales and research at Morgan Keegan in Memphis, Tenn.
"We are putting a band-aid on a bigger problem," Giddis said. "I would say we are seeing a minimal improvement in the market at this point in time."
John Bowman, vice president and chief financial officer of the Cooperative Association of Tractor Dealers in Memphis, which issues commercial paper for Caterpillar tractor dealers, said he is "concerned" about the commercial paper market.
"The main issue is going to be liquidity at a competitive price," he said.
Though the company wasn't forced to raise funds that mature in one-day like others have been, Bowman said, "each day is a bit different, it's very volatile."
Bowman said his company has found the best rates in debt that matures in one-week.
This volatility makes the commercial paper market a non-competitive source of funding for corporations that are then forced to go to other sources and draw on revolving loans and lines of credit.
Companies may also find it inconvenient and time consuming to borrow overnight funds, Bowman pointed out.
The commercial paper market has seen a huge increase in investors' appetite for these debt issues compared to last week, when money market funds hoarded cash as they anticipated a spate of redemptions from investors worried about the safety of their money after one fund said its shares had fallen below par. This virtually froze the $1.7 trillion commercial paper market.
On Monday, investors were net buyers of money market funds for the first time since Sept. 9. Assets in money-market funds increased by nearly $5.5 billion Monday, after decreasing by $5.2 billion on Friday, according to the Money Fund Report, published by iMoneyNet.
The buying came as news spread that the government will insure money-market funds for a year.
"If the inflow of money into money funds becomes a trend," the trader said, "rates will improve."
Federal Reserve data released last week showed that the size of the commercial paper market declined by $52 billion in the week ended Wednesday, Sept. 17.
New data for the current week will be released Thursday.
-- Anusha Shrivastava, Dow Jones Newswires
(Daisy Maxey and Prabha Natarajan contributed to this report.)
yep, though on Bloomerg last night, Lawrence Summers was interviewed and asked about the N.Y. Times article and he deflected blame saying the investment banks should have policed themselves better.
nonsense!
gotta agree with Warren Buffet who for quite some time has said that derivatives were and are "weapons of financial destruction"
regarding where the stock market goes from here for the next decade, hard to say, the American consumer has tapped out it's credit card and mortgage equity and the American government has a 10-50 trillion dollar debt.
compare that to Japan which had economic problems starting in 1990. Japan went into the crisis with a high consumer savings rate and not much of a national debt. Their stock market peaked at about 40,000 in 1990 and is now below 10,000 18 years later. Though, their economy, the second largest in the world has done much better than the stock market would indicate.
Last edited by Farangrakthai; 13th October 2008 at 21:12. Reason: Automerged Doublepost
Biggest one day rise in the Dow ever and nobody on here even commenting.
Yes folks, the ogre has been slain and it's happy day fom here on in. Time to break open the bottle of vintage, light up an expensive cigar and maybe finally go and buy that new pleasure craft you've been eying up.
Or so the attention starved reporters and dry alcoholics who populate the floor of the exchange would have us believe.What a bunch of nonsense. This is tanatamount to a shit baseball team being on a thirty game loosing streak , finally winning a game and now being proclaimed as the possible division or even World Champions.
Now, where or where did I put my barf bag?
Last night for me was a night for the cherry pickers. And why shouldn't they be picking with billions of dollars of government money providing them unlimited discretionary liquidity to just go shopping for big time bargains. My guess is that many future billionaires were created last night and all on the back on Joseph E. Taxpayer. Who, incidentially still may find his ass on the curb in a short while.
And I'll bet you Soros and crew are having multiple "comings" in their pants. This market as of last night is a currency speculators best wetdream.
Is the crisis over. Not by a very, very long shot in my opininion. Will things get better for your ordinary stiff struggling with a morgage. Again, not so IMO. Will fewer folks be losing their jobs. No. Will more real jobs be created. Absolutely no. Will G.W. try to get in front of the cameras as much as possible over the next few days to pat himself on the back. That's a done deal. Will the incompetant Brown finally appear as a financial wizard. For sure, especially with the presses help.
Was last night the beginning of the end in terms of the financial crisis?
And that's my positive commentary for the day.
If you're being run out of town, get in front of the crowd and make it look like a parade.
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"You're doing a heckuva job Hank!"
I wish it would have held off for one more day, as I had some more buy orders in for Monday's close...dammit I knew I should have done those Friday!
Last edited by esoteric1; 14th October 2008 at 16:48. Reason: Automerged Doublepost
Seems that you can't really make a decision about buying or selling until the last 30 minutes for those of us trading in IRS, Mutual Funds, 401ks. Good luck.
"I do not think about things I don't think about." said William Jennings Bryan.
To which Clarence Darrow responded, "Do you think about the things you do think about?"
Tennessee vs. John Scopes, 1925.
^Thanks.......with my 401k, buying on the close is my only choice.I can place the order anytime during the day, but with a fund the closing price is all that matters. With my company stock I do get an average of open, noon, and closing prices.
Friday I was on the road with no computer to access my account, so I was SOL.
MIne too. What I am saying is that at 10 am we have no idea what the close will be. So up until I sold nearly everything two weeks ago, I would put Bloomberg on, watch the market, log into my account, wait until the last minute to make a decision. Also I can cancel any order placed until the market closes. Of course everything could freeze up on the internet, but so far I have been able to make all my trades. I think Monday was a rebound in what is still a very big bear market.
A look at a chart from the Great Depression is worth a second peak.
[IMG]file:///C:/DOCUME%7E1/user/LOCALS%7E1/Temp/moz-screenshot-9.jpg[/IMG]http://panzner.typepad.com/.a/6a00d83451591e69e201053566f21b970b-pi
Note the cycling of the fall. It was not a straight line down. With electronic trading these things can happen much faster. But anyone playing should do so as a day trader. Pretty hard with mutual funds. Also the buy and hold strategy is out for the time being, at least with me. Still have decided to keep the USIFX shares that I have. (As stocks now represent less than 15% of my personal net worth now.)
(Note non-standard scale to the right on the chart. )
(Note non-standard scale to the right on the chart. )
Last edited by Killing Me Softly 101; 15th October 2008 at 06:28. Reason: Automerged Doublepost
"I do not think about things I don't think about." said William Jennings Bryan.
To which Clarence Darrow responded, "Do you think about the things you do think about?"
Tennessee vs. John Scopes, 1925.
I think I have to have an order in at least 2 hours before the market closes for it to be processsed that same day.
And I don't have a cancel option once I pull the trigger.
Yeah I agree, I'll probably sell everything I've bought this week and last by the end of this week or maybe Thursday.....I'm up about $1200 right now. Not much I know, but every little bit helps.
Over the weekend we got a good helping of shit.
Monday, everyone dug in and agreed that though it might be shit it was not bad shit at that.
By Tuesday, folks began to realize that chewing on shit was only good for a day. Market flat yesterday.
Didn't take long for folks to figure this bill of sale just ain't going to cut it.
Look for huge equity drops tonight, possibly even led by the financials. Certainly commodities. The Libor should be retreating to the attic early.
I figure they've got to be running out of rabbits real quick like.
Tonight flat would be a miracle. More huge bloodletting a strong possibility.
Hey, maybe we'll get to see Ugly George's face again.
I figure instead of the traditional opening tonight we get Paulson, Bernanke and bair on their knees, at the opening rostrum praying to the good lord for salvation.
Sort of like the Tricky Dick /Kissinger display the night before the resignation.
If you're being run out of town, get in front of the crowd and make it look like a parade.
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I believe I would pay money to see a performance like that: maybe the Moron-in-Chief and Karl Rove.
...majestically enthroned amid the vulgar herd...
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn't make money running a whore house and selling booze? "
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