$200 billion here. $200 billion there. Another massive rate cut. A short-term Bear Stearns bailout. A dollar emergency. Wild times in the stock markets. And more bank failures and hedge fund blowups on the way.
Get ready HP'ers. It's unraveling fast now.
The Great Unwinding is here. Ready or not.
March 16, 2008
It's gonna start coming at us fast and furious now. Are you ready? Do you think Bernanke is too?
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We are moving out of the realm of national political-economy and into the realm of geopolitics and the transition between historical epochs.
1) Transitions between historical epochs are never clean and pretty
2) We have been forestalling the transition since the late 60s
3) American preeminence forged in war has now been sufficiently eroded world-wide and foreign combinations are free to act
4) So-called democracy has been jettisoned world wide (even in the EU) because elites know that the center cannot hold and a fight is brewing
5) Technology moves forward like a juggernaut (a Hindi word meaning "Lord of the World" by the way)
In sum; All bets are off, compare HP to the popular blogs; which of them are even discussing this?
Kudos.
P.S. I recommend the computer game Deus Ex for a artistic exposition of the world we are moving towards.
The financial leaderhsip in the US CANNOT be trusted.
The events that are now unfolding are indeed scary!
Rumor on the Internets, CNBC said Friday another bank could go down next week.
Goldman Sachs needs a bail out on Tuesday, and on Wednesday both Morgan Stanley and Lehman Brothers. Word on the street is that European bankers and Credit Suisse will anty up the money. Wells Fargo, Washington Mutual, and Us Bank are rumored to need bailout on Friday. To meet margin calls, banks will make redemption from hedge funds, and most cant, and will be shut down or go BK
Sounds like Mad Max
didn't you say it was here a year ago? and 6 months ago? you sound like Larry Yun, calling a bottom every month.
Keep an eye on things Monday, we could be seeing a historical day in the making. JPM knew they would go down with BSC just like BofA knew they would go down with CFC. What bothers me is that the Fed made an unlimited committment to BSC, that means they think this is a potentially catastrophic situation.
Bernanke's only alternative now
will be to continue cutting the
interest rate .... it still won't work.
Our entire financial system has now
been exposed for what it is, both here and abroad, there is no more trust.
Once trust is gone, customers are also gone.
We're all in for some nast weather ahead.
"Sir, there's a Mr. Margin on line two."
Burn, baby, burn.
And with Peak Oil bearing down on us, the Great Unwinding is unlikely ever to stop. God help us all.
http://bdrube-rubenation.blogspot.com/
Keith,
Do you see that this is not a "bail" out. Why would Bear go bankrupt if it's being "bailed" out. The Fed gave them a temporary loan, that will have to be repaid in at most 28 days. I'm hearing they are either going bankrupt tomorrow, or JP Morgan will buy them out.
Personally, I think JP Morgan will buy them out and pay back the Fed back it's loan. Remember, it was JPM that took the loan, not Bear. (Funny, don't you think - why would JPM take the loan on behalf of Bear) Reason, Bear is a NON-BANK entity and JP Morgan has over 60% of outstanding derivatives out there. I think it's something to the tune of 90 Trillions. You got that right TRILLIONS. I suspect JPM does not want the derivatives house of cards to fall. JPM will go bankrupt over night if that happens. Get ready folks, this is not looking pretty. This is where shit hits the fan here.
It's kind of weird though, but Mish put an article on Thursday about extreme caution for Global equities, based on technicals, and law and behold, the market took a sharp nose dive on Friday morning on the Bear news. I can't believe his giving out all this great money making advise for free. Take advantage folks, this is worth money.
http://globaleconomicanalysis.blogspot.com/2008/03/global-equity-charts-urge-extreme.html
Dny
Keith,
The sinking of the financial markets will last as long as those responsible for the mess remain in their positions of power. In other words, until people are jailed or fired, the financial markets will stay unstable.
The wire fraud was/is so astoundingly wide and deep, that most of our American financial markets are simply toxic. Who are you going to believe? Not our idiot commander-in-chief.
Money will continue to go elsewhere for the time being, with severe consequences for all of us here.
And where is the American public? With it's collective consciousness firmly up it's as@! Our leadership, across the board, is in the toilet.
Throughout the brief history of this country, America has been extraordinarily lucky to have the right kind of leadership at a moment of national crisis. That luck ran out in 2000. But it turns out Bush was just the most outstanding example of the collapse of American culture. It's obvious we are no longer the brave and intrepid souls that once defined American character. We have become craven fools, easily seduced by power, corruption and trickery.
We are woefully unprepared for the future.
Good god people, grab your pitch forks and take to the streets. Really. Where's the anger in what's going on? Does anyone care?
Schools in poor communities don't have the money to buy the basic supplies needed to educate children, yet the taxpayers will be bailing out Bear Stearns. Chit. When these firms were making billions, I don't remember them saying they had too much money and wanted to give some back to the people. But now they need help and the average citizen needs to help back them up.
Others coming soon.
Yup, it's not going to be pretty if S&P 500 penetrates it's major resistance level: stand by for a good ol' fashioned market crash!
That's great - it starts with an earthquake.
WORD ON STREET: Lehman is likely the next Bear Stearns in forum
I mean, I HATE to post this.
It gives me NO joy to watch American Companies go through tough times, and what happened to Bear makes me truly sad. Thousands of jobs, millions of 401K plans, millions of IRA's and all kinds of possible added debt on the balance sheet of the USA...
And the truth is that it didn't even have to happen.
However....
There are an awful lot of people right now talking about Lehman being the next Bear Stearns. I'm not sure exactly how all the dots connect, but what seems to be the dominant motif on the flood of Lehman rumors is that:
1. Lehman is on the other side to a lot of transactions where Bear is the counter-party, and the main worry here is that if Bear does have to stiff other firms, even for a day, Lehman will probably fall below required capital ratios.
2. I personally tend to believe that this is likely more true than not, since Lehman stock price actually fell 14% on Friday. Most of us overlooked Lehman's drop in share price but the drop on Friday IS real and it DID happen and that's a lot of smart money looking to get out of Lehman.
3. Supposedly there are also dozens of FED & Treasury people now at Lehman Brothers, doing God-knows-what. Lights on all night, lots of people with Treasury badges, same thing as Bear is dealing with. I have no idea if this is true. I hope it is NOT true. I hope I am 100% WRONG. If Bear & Lehman start stiffing their counter-parties, you will see a chain of dominos up and down all of Wall Street where every-other address falls below capital ratio requirements and BY LAW becomes restricted from even allowing a new customer to open a new account.
In all honesty, Gen was right about getting to cash. We are looking at a series of possible events where the Government could very easily find it necessary to shut down the exchanges for a time.
Let's hope I'm wrong and we all look back on this post a few months down the road and laugh about how ridiculous I sound.
It would make me very happy here to be 100% WRONG.
Bear Stearns has notional/contract derivatives of 13.4 and 8.74 trillion. That's trillion!
If they go belly up then that will set off a systemic worldwide financial collapse.
I have seen stories of people making a gold rush and gathering up old jewelry to sell to gold exchanges all over America.
GAWD...PEOPLE ARE TOTAL IDIOTS!!!!
Hmmm...keep a commodity that will double in value before the end of the year (IMHO) or trade to get menaingless dollars that will decline on Monday.
Keith,
I am pretty sure you don't want to get into trouble here and none of us do either; but I think it's our dutty to wake up and let our leaders know that we're here and that we know what is going on. Let's get together and do something guys. Keith, I am asking you to organize all of us here and lets take to either NY or DC to make our voices heard.
Enough is enough.
Dny
Anon 6:42,
That's exactly what JPM is trying to avoid. I have a feeling that they will be the first to go if that happens.
I am getting worried here guys, this is not even f*cking funny anymore.
We got it right, and I'm afraid we will keep getting it right. As I mentioned on my previous post, we should organize and make our voices heard guys and girls. We need to make sure they know we are here and we will not take it anymore.
Dny
It occurs to me that lowering interest rates yet again will not have an effect because there is nothing underlying the cut to spur activity....
e.g. unemployment will chip away at the pent-up demand to the point that supply will continue to grow out of control.
(It's always easier to think in terms of smaller items) - would you buy a car worth $20,000 for $30,000 if you got a good rate (even 0%) ? - of course not - would it help if you knew that a recession was coming/here and you may not have a job ? - probably not.... If your money was losing value and the price of daily goods was spiraling out of control, what rate would help then ?
It occurs to me that lowering interest rates yet again will not have an effect because there is nothing underlying the cut to spur activity....
e.g. unemployment will chip away at the pent-up demand to the point that supply will continue to grow out of control.
(It's always easier to think in terms of smaller items) - would you buy a car worth $20,000 for $30,000 if you got a good rate (even 0%) ? - of course not - would it help if you knew that a recession was coming/here and you may not have a job ? - probably not.... If your money was losing value and the price of daily goods was spiraling out of control, what rate would help then ?
All,
Bear is now racing against the clock to strike a deal and be brought out by JPM. It's all over the news now. They are trying to complete it before Asia opens. WSJ, FT. JPM is trying to notify investors of their terrible LOOSE/LOOSE strategy. If they dont buy they loose, and if they buy they loose.
This is looking ugly guys. Ugly.
Dny
I will only say this folks. When I worked for Citi, and they merged with Salomon, the Citibank side got screwed. Not only did they take over the whole company even though they were making shit money for the company, they got the company in trouble with the Enron and AT&T scandal. Well if that was not enough, here they are again loosing money like there is no tomorrow. Citi is also gasping for air here folks. Gasping.
Citibank, a great company got screwed.
It took Ben to turn an ugly rumor into a verifiable fact. When Bear Sterns collapses, it is with the help of the Fed.
Sure, you can sell a car, and then re-sell it again and again, and add all of that money to the economy. But when you deliver a service, it is gone immediately. So now that we are a service economy, we are going to see how fast it all disappears when our services are no longer required.
Bear Stearns is not 'too big to fail.'
They deserve to fail and should, but they know where the bodies are buried.
Wall Street's 'loose cannon' just got $200 billion in taxpayer-backed 'hush money'...
I told you all during the 400 pt DJIA rally, and every couple of weeks before that. SHORT ALL RALLIES. If you want to be safe and just make a bit of money (like 10-50%) in the next 1-2 dozen months, buy 2010 LEAPS puts on DIA or SPY. Don't buy all at once, buy 10% of your total every time the DJIA goes up 100-250pts. Then sell 10% every time it goes down 200-400pts. Don't get scared by fake rallies, they will last at most 1-8 weeks. If we do get a 2 month rally, start shorting the beejebus out of it after Dow up 1000+. If you buy puts all the way up, don't freak out, just hold for the big crash.
Or, if you have the margin and don't want to be limited to 2010 and subject to time value depreciation, just do old-fashioned (non-option) shorts.
The idiot bulls who have no clue (which is most of the market) will be doing the opposite (buying the dips). You will clean their clocks (as will the wall street fast money) as each rally will fizzle.
USE THIS COMMENTARY AT YOUR OWN RISK. This is what I am doing, though (but even more aggressively). Good luck! Buy & Hold is DEAD! Good riddance.
Paulson was making his media rounds, and you can tell that he is scared shitless. He tries to put that brave face on, but he knows...........
With Fed policy being dictated from the White House and Wall Street, and Bernanke as a pathetic figurehead, why not cut out the BS(pun intended) and abolish the Fed. My goodness, the stars are falling leaving only the stripes! Americans wake up, your country is falling apart.
Helicopter has about 8 .5% cuts left in his "gun".....but at this point Ben is shooting "blanks".
Alas, a small Jew shooting blanks....sounds like a Woody Allen movie.
Prediction: Britney will be on Yahoo front page news EVERY DAY next week. And the MSM will fall all over themselves trying to keep attention focused on what "really matters".
To meet margin calls, banks will make redemption from hedge funds, and most cant, and will be shut down or go BK
No problem. Rich people can afford to lose a few billion. We all know there wil lbe massive losses, so let the millionaires take the brunt of it.
Bear Stearns has notional/contract derivatives of 13.4 and 8.74 trillion. That's trillion!
If they go belly up then that will set off a systemic worldwide financial collapse.
They will be bought out or nationalized.
Wall Street banksters played the Fed for saps. They used all the easy credit the Fed gave them to create a huge dungheap that Bernanke's buried in.
Good way to blow off steam: tell the Fed morons what you really think!
http://www.federalreserve.gov/feedback.cfm
"All,
Bear is now racing against the clock to strike a deal and be brought out by JPM. It's all over the news now. They are trying to complete it before Asia opens. WSJ, FT. JPM is trying to notify investors of their terrible LOOSE/LOOSE strategy. If they dont buy they loose, and if they buy they loose.
This is looking ugly guys. Ugly.
Dny"
Dude, please.
"LOSE" is how you spell lose; "LOOSE" means "not tight."
Although "loose" hardly begins to describe the situation!
Partay on...
If the feds keep bailing out banks/brokerage firms, and Benny boy keeps slashing interest rates, then we can forget about buying tissue paper for a while, because we will be better off using dollar bills, instead.
Man, this is getting ugly.
Dny,
Th U.S. State Dept. has been monitoring this site for over 3 yrs.
All you need to do, is post here and your voice will be heard by the people who write reports for the powers that be.
Standing outside holding signs in front of Gov't buildings is something that the MSM uses as a prop for TV propaganda.
P.S. In Aug of 2001, members of GATA were being invited to a FREE gold conference in NYC.
At the time I asked my wife, who grew up in NYC if she would like to go with me to this conference. She asked me where it was being held and when. I looked it up and told her it was being held on the eleventh day of September in the World Trade Center.
She thought about it and said that our children would be back in School by September and did not want to leave them with her mother.
As a result, I decided not to attend as half the reason I wanted to go was to take a mini-vacation with my wife in NYC.
The fact that my kids were back in School during this conference saved my life as we all know what the powers that be did to the WTC on that fateful day.
FOLKS, some of our posts have been shaking up the establishment. It would be foolish to assemble together and become a tempting target.
didn't you say it was here a year ago? and 6 months ago? you sound like Larry Yun, calling a bottom every month.
-------------------
LMAO!!! Your right he does sound like Larry Yun. The boy calls a bottom everyday. His up there with the dooms day folks.
It's spelled LOSE not LOOSE..jackass
Speaking of counterparty risk, I'm thinking it may be time to close all my equity option positions. Puts on CFC etc. are great but if the counterparty to many of these(such as Bear Stearns) goes BK, we could have big problems. True, all option contracts traded on U.S. securities exchanges are issued,
guaranteed and cleared by The Options Clearing Corporation (OCC). But how many counterparty defaults can it tolerate before it runs out of cash?
Asian markets are down 4%. Has the shyt finally hit the fan? Scary!
JPM buys BS, $2/share.
Whew, that was close, I'll sleep better now that the financial turmoil is over.
Shoot straight, and keep your powder dry.
Ok, the government prints money to cover a loan for these Wall Street firms that must survive in order for the system not the collapse .
(I question if they are really needed )
The losses are spread out over about 10 to 15 years into the future and these firms have to put a lot of money earned in the future toward debt service that cured their losses .
Just at the time when real estate starts to go up again ,(about 10 to 15 years from now )the lenders will have paid off their debt that was the result of their losses.
For the next decade the Americas will also have to pay off their debt and will not get ahead during this time period . It will be a time of extreme social changes and a return to a productive America .No longer can the Americans live off selling houses to each other . Americans will need real jobs and will need to put effort toward correcting anything that is standing in the way of a fair and balanced economy ,especially concerning employment relations .
Corporations will be forced into compromise that they have not had to make for decades ,just for survival .
Other problems that the Americans have been avoiding for decades will need to be addressed .
America will have to realize that the dream of making the world a democracy at this time is not obtainable .
The transitions the Americans need to make are going to be painful and more-so because we have avoided painful decisions for years . The politicians will have no choice in the future but to go for the out-right survival of America ,no matter how many toes are stepped on. It's to bad it had to come to this .
I hope that people will remain kind and extend a helping hand to their fellow man and women during those troubled times coming up . If the Nation works together at curing the problems ,instead of falling into dog eat dog ,than it will not be as painful . God help us all
It WILL BE Lehman because they made a ton of subprime commercial loans as well, some at very high LTVs that they called SBA-Lite, which basically means they didn't have the assurance of the SBA behind it
SoCal Banker
Yeah, the massive sh|tst*rm of which I continually spoke in times past has arrived. I was mocked months ago for saying "buy gold and silver on dips, the top has not arrived yet..."
Those who thought they knew what they were doing flipping houses and buying US stocks and such, aren't feeling so smart any more, are they?
Now WellsFargo, Wamu and USBank are in trouble, which bank do the HPers recommend?
In my area, virtually all local banks participated in the lending orgy.
Oh yeah, The Great Unwinding, you HP'ers are a bunch of losers. Even if the economy does enter into a serious depression then are you folks immune to it? It doesn't matter that you have hoarded gold, cash and live in mothers' basement. You will end up suffering with the rest of us.
I saw on Housing Doom that Cavuto sort of ate crow tonight and had Peter Schiff on for a one on one.
I guess he's no longer bored.
Hey you fucking losers. Get a life. Stop wishing for a Great Depression. Don't you get it? Investors from around the world look towards America. We are the shining city on top of a hill. We are still the world's number one economy and capital flows to our land. We have nothing to worry about. We may hit a soft patch, perhaps even a recession, but we will be ok. Sit back, relax and invest for the long term.
Please learn the difference between lose and loose.
Thank you
I am pretty sure you don't want to get into trouble here and none of us do either; but I think it's our dutty to wake up and let our leaders know that we're here and that we know what is going on. Let's get together and do something guys. Keith, I am asking you to organize all of us here and lets take to either NY or DC to make our voices heard.
Let's settle this once and for all. NY and DC don't give a damn about you or I or any other Americans. They're getting fat and siphoning off the rest of us from either stupidity or greed.
Also, they are not our "Leaders". Leaders come from fascist countries. Let's at least get the terminology right and call them our public servants so they at least know their place. This is something that REALLY bugs me when I hear a Hitlery or McCain saying how they are going to be such strong *leaders*. Get lost you fascist scum we want public servants that obey the freakin CONSTITUTION and get out of our BLEEDING wallets!!!!
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