October 11, 2008

The world just witnessed the worst week ever in the stock markets. The worst week ever. Any questions?

Did you all survive, while others were in total and complete panic?

Were you all ready, while others were totally unprepared and over-leveraged?

Were you sitting on cash, while others went on a desperate orgy of cash-raising liquidation?

And now that we've seen the worst week in history, what do you think next week, and the rest of 2008 has in store?

And oh, thank you realtors. Thank you mortgage brokers. Thank you Congress. Thank you bankers. Thank you housing gamblers and mortgage fraudsters.

You f*cked America. You f*cked the world. And you f*cked yourselves.

The Dow lost 128 points, giving the blue chips an eight-day loss of just under 2,400, or 22.1 percent. The average had its worst week on record in both point and percentage terms.

"Fear has been running rampant all over the Street. Fear and greed, that's what rules the Street. I think the carcass has been stripped to the bone," said Dave Henderson, a floor trader on the New York Stock Exchange for Raven Securities Corp.


Anonymous said...

I never thought I'd cry when looking at my portfolio

Tracy Coenen
Oct 10th 2008 at 7:00PM

Filed under: Retire
The unthinkable has happened. The sight of my portfolio of investments has reduced me to tears. Who wouldn't be crying when looking at 40% of their value gone this year? Even worse than the sheer magnitude of my losses... what those losses mean to me and to others.

I'm lucky. I don't need my retirement funds for at least 20 years or more. There is no doubt in my mind that I will have recovered all the lost value well before that. I worry about those who don't have years to wait, though. They're the big losers in all of this. Think about all the Baby Boomers who scrimped and saved to get to retirement, only to see their hard earned dollars massively reduced in a period of a few weeks.

Some Boomer friends of mine who were invested more conservatively have seen their portfolio drop "only" 15%. Imagine the impact of that over 20 years of retirement. These retirees need to draw on their accounts now, and can't wait to recover value. The portfolios of all retirees are going to be depleted much quicker than they thought.

Who would have thought that the people with all their money in certificates of deposit earning 3% or 4% would now look like geniuses? They were missing out on stock market gains, but now are feeling pretty good about the fact that their principal investment was protected.

This is depressing. And each day I tell myself that the bottom has to be near; that my investments can't go down much further than they already have. And each day Wall Street surprises me with a hefty drop in my value. There's not much to be done about my ailing retirement fund, other than to work hard and keep saving for the retirement that will hopefully still be funded when I get there.


www.slycapital.com said...

I was short.
Not massively so as frankly I feel the fear as much as anyone but enough to make it a very good week.

Anonymous said...

Thats what happens when we have idiots running our country and idiots who vote for them.

keith said...

Here's Schiff:

The Party is Over

More than just a mere liquidity or credit crisis, the current financial storm represents the death throes of the old global economic order, and perhaps the birth pains of a new one. The sun is setting on the borrow and spend culture that has all but defined us for a generation. Our long ride on the global gravy train is finally coming to an end, and once it does nothing will be the same. The sooner we come to grips with this the better.

Despite the myriad of proposals that are coming from Washington and other world capitals, we must understand that this crisis cannot be cured by governments. In the United States, credit is gone because savings are gone. Our shallow pool of savings has been depleted through bad loans, and we can no longer entice foreigners into lending us their available savings. Given that we are already too loaded up on existing debt that we cannot realistically repay, who can blame them for not wanting to lend us more?

As a result, the free market is trying to put an end to our spending spree. Without savings or home equity to fall back on, Americans struggling with rising prices are finally being forced to curtail their spending. This has terrified our leaders and is causing them to dismantle the remaining structure of our free enterprise-based economic system.

The intention of all these daily federal interventions is to keep the credit spigots open so Americans can go even deeper into debt to buy more stuff they can’t actually afford. This should be clear enough to anyone who listens to what our leaders are actually saying. When speaking about the need for an even larger fiscal stimulus package, Barney Frank, chairman of the House Financial Services Committee, said, “We have to prop up consumption.” He has it backwards. The government has been propping up consumption for far too long, and the best thing they can do now is remove the props so spending can be replaced by savings.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can’t be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

Were the government to allow market forces to work, Americans would now have to pay cash for their consumption. That would mean no instant credit for new cars, plasma TVs, appliances, consumer electronics, clothing, furniture, etc. Unless buyers actually had the cash in their checking accounts these purchases would have to be deferred. From an economic perspective this is precisely what the doctor ordered. But for an economy based 72 percent on consumer spending, the medicine will go down hard.

Ultimately, a serious reduction in consumer and mortgage credit, combined with an increase in personal savings, would again provide a pool of needed capital for businesses to produce products and provide employment opportunities. However, the danger is that this potential credit could be completely crowded out by massive borrowing by the Federal Government. In addition, prices for such things as houses and college tuition will fall sharply, as the credit artificially propping them up disappears. People would still be able to buy houses and send their kids to college only they would pay much lower prices when they do.

However, if the government keeps creating inflation to artificially sustain consumer borrowing and spending, there will be no savings left to fund anything and prices will be so high that despite massive consumer spending there will be few goods that Americans could actually afford to buy.


keith said...

If this market keeps crashing next week folks, with a Dow close below 8,000, I think Mr Market will be telling us what is to come - a new great depression. Period.

However, if the market rallies here, and breaks above 10,000, I think the market will be telling us the opposite - that this was a cash-raising liquidation, and that we'll recover.

This upcoming week is important. And I think it could go either way.

Regardless, it will be wild.

Get some popcorn, be safe, keep your powder dry, and enjoy the movie.

french toast w/side of bacon said...

Keith, if you add in all the massive job cuts, I would say the 8,000 level is much more "realistic"

= The domino effect.

= The fallen house of cards.

= Lower paying jobs.

= Higher living expences.

a.creampuff said...

We'll recover, but recover to what, and how long will it take?

The System is broken - do we fix it or replace it?

I question the opinion that the stock market will "bounce back". Because of the complex, global nature of the problem, the volume of the unwinding and reconciliation (e.g. credit default swaps), and the need for new oversight, how could there be a fast recovery? Schiff's lowered consumption, which seems to have started already, will further put the brakes on. That said, HPers do have some cash...we knew it was coming...it was the worst week in stock market history...

p.s. - houses are still overpriced where I live.

keith said...

These markets are selling off not due to fundamentals folks, but due to a repeating cycle of margin calls and hedge fund investor withdrawals.

Got it?

This could go on and on, but the crazed drop in share prices isn't about the fundamentals of McDonalds or Conoco or Microsoft or P&G. It's about margin calls and forced sales and selling to raise cash to pay off withdrawal requests.

Here's a story on Summer Redstone being forced to sell $400 million of viacom/cbs


And here's a story about the ceo of Chesapeake having to dump 30 millions shares of his company - everything he owned, involuntarily.


Got it?

Now get out there and look at balance sheets and income statements and P/E's and management and insider buying and forward earnings and 200 day moving averages and recession-proof offerings, and pick some winners.

This cycle of forced sales will eventually end. And when the dust settles, and great companies are trading for a fraction of their true value, you'll want to be in a position to buy. Smartly.

Report back soldiers.

It's time for HP'ers.

We've waited for this.

Don't blow it.

eric in vegas said...

I think there will be a temporary rise in stock markets as governments around the world start to buy stocks to keep markets from heading into the abyss. But don't think for a second that we're going to see 14,000 any time soon. Also, the upcoming holiday numbers are going to be important. They're expected to be the worst in 20 years.

Anonymous said...

Yes, one question...so what?

I'm 29 years old. I have about $75K saved up. It's all in cash, earning a respectable 3.5% in an FDIC insured savings account. So dow could be up 1000 or down 1000 and I really don't care.

I work for military contractor so I know my job is safe for a good long time. Even in O'Bama wins by the time he's done surrendering in Iraq, a new war will break out somewhere and the products my employer makes will be in high demand yet again.

Last night I went out for dinner at a swanky downtown restaurant. Kind of place where a vodka/tonic is $12 and a $15 appetizer is three bites worth of food. Place was absolutely packed with people. Even the parking lot was overflowing with people, to the point where I thought someone was going to get hit.

Some depression out there.

les said...

Watch those earnings. A company with negative earnings is usually worth less than $5 a share. Look at Ford and GM.

Without a credit bubble, past earning levels may not be sustainable. Every industry (even utilities) are lowering expectations.

Only the Fast Food industry is predicting higher earnings in the coming quarters. CKR and JBX was up 10%+ today.

Anonymous said...

I'm up over 100% this week on SGCP and GSEN

now it's time to take those profits and buy BB bargains....thank you panicking monkeys

Anonymous said...

Does this mean we're not going back to the moon like uncle GWB promised us ?

bo yah said...

I would not be surprised to see the US close our markets next week if this chaos continues.If you are you you shouls be buying quailty comapanies on the cheap here.

Americans will continue to spend erratically as long as they have the credit.It is business as usual for most.Sorry for the people who have to liquidate at a loss.should of done their homework.

Anonymous said...

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

What if we cant get a loan to save all the banks?

Anonymous said...

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

China threatens 'nuclear option' of dollar sales

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Anonymous said...

Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Anonymous said...

US central bank has run out of reserves, our government is very deep in debt. So the AAA ratings are as false as all those Moody ratings that turned out to be total fictions.

Anonymous said...

92% Losses In Lehman CDS Auction Explained

Elaine Meinel Supkis


Afterthought said...

There was support at 8,000; whether PPT or both PPT and real investors. The market gained 10% in one hour.


Capitulation means you overshoot to the downside.

Did the markets ever close mid-session?

Are we retesting 9/11 lows at DOW 7200?

Sorry Keith, they are still only in desperation phase. Capitulation is when you have NO HOPE!

Like drunks at an AA meeting, we can only get better when we admit we have a drinking problem.

People are still talking some kind of plan or gimmickry to avoid a "severe recession". Has the government reported even 1 quarter of negative GDP?

I've been saying that "this hasn't even begun". I probably have to revise that to say "it has begun, but we are still fighting to prevent a great depression from turning into a Dark Age. The outcome is not certain; but we can hope for a mere depression.

man whore said...

Was out patying last night and lots of people out.Looks like the girls skirts are getting longer though.Going to walmart this morning to check out plasmas and toothless people.There is no depression folks.there is a ton of money on the sidelines.

Anonymous said...


The soup lines were terrible!

I had to actually wait ten minutes for my favorite table at Del Monaco's

Got everything I needed when I needed it!

Even the ATM worked

I deposited money at the Bank

Yes, compared to 1929 it was a real Sonofabitch!


keyser soze said...

I'm loving it!
Separating the men from the boys.
Gimme more knives.
I gotta fever.

Anonymous said...

The government does not need to spend money propping up the stock market or housing prices ,this is absurd. The government needs to spent money on job creation .

It was a misfortune the Paulson was at the helm when this baby blew up .
With the exception of saving banks for basic commerce ,bill paying ,money storing ,etc. ,investment
banks aren't really needed. How many people are going to have extra money for investments in the coming days ?

Just like real estate Companies had to close up because of the lack of volume ,so shall investment banks
need to scale down to recession levels .

Any business that depends on bubble money to survive is history and whole sectors will be scaled down .New business can be created however but the luxury business will die or be scaled backed .

People who were trying to live the lifestyle of the rich and famous on credit is history and any government intervention to try to
prop industries ,including investment banks, is money down a rat-hole .It survival mode now and pay off debt mode now , and de-leverage now mode . Banks can't loan to flakes now ,so that business has to contract .
Its time to re-build bridges ,energy systems ,roads ,drill oil,get rid of debt .
No we can't continue building houses so people can buy 4 houses and live beyond their means .

The stock market was inflated , housing was inflated , you name it was inflated .
One has to ask why income didn't go up during this period of asset inflation . Fake debt buying was the cause .The government should do everything they can to bring back industry and jobs to the United States .

Companies thought they could live on emerging markets wile they sold American workers down the tubes .
Yes , I agree Unions went to far with the demands ,but American Companies went to far with the out-souring of labor and production .So where did it get Wall Street and Big Business to bankrupt the American worker ? Where did it get American Companies to create a fake credit market while they took their manufacturing and to slave labor countries ? A balance need to be achieved in the near future .

I will say it a hundred times , you can't have slave world labor markets without creating a monopoly that goes down to the lowest wage levels,and lowest standard of production . Good by all the years of product safety .

Emerging countries should be raising the standard of living of their Countries by wage increases to increase buying power . American Companies cannot screw American workers with slave labor and expect Americans to have buying power by debt . The problems the USA has cannot be solved until the wage-production issue has been addressed . The Global experiment did not work because all Countries don't play by the same rules . Does anybody really want the cheap crap from China that wears out in 3 years anyway or might be poisonous .Let China start uplifting its country by raising the wage of its workers ,not this downgrading of American so China workers can get 75 cent a hour . In fact screw China ,its not our problem that China has so many people . American Companies pulled a fast one on Americans and laws should be changed to enhance the return of American Corporations to America. Unions have to be more reasonable with Corporations to strike a fair contract ,or the Middle class and the American worker is doomed .Bring back the factories to America .

Anonymous said...

I happened to save only 2 people from the stock market crash . I don't know why those 2 people listened to me . In one case the person saved 50 thousand ,in the second case the savings was 35
thousand .I tried to save a lot more ,but they thought I was nuts .

I couldn't save anyone but one of my kids from buying a piece of overpriced real estate . I talked one person into withdrawing a offer of a second home .

I could not believe how these commissioned sales people were trying to get my poor retired old
lady neighbor to buy MBS's that were not insured . Thank God this lady brought me the paper work so
I could stop the transaction .
My other neighbor is eating it on stock loss . I tried , but don't blame people for not believing someone who was contrary to what the media and cheerleaders were telling people .It's a real crime really
how the cheerleaders were trying to pass the bag to innocent
people .
When I told my neighbor lady that she had to revert to cash and accept low yields until this mess was over, she gave me a dirty look ,but she did it .This ladies family lost their farm during the Great Depression ,so that might of helped me convince her that bad stuff was on the horizon .At least the nice old lady can live her remaining days without eating dog food and she does so much for people with medical problems (she drives people who do not have transportation to Doctors for free) .Maybe God spared her .

Anonymous said...


Schiff is Insane?

I don't think so.

The only good news would be... we have successfully pushed the total collapse of the financial system to our great great grandchildren. They will hate you.. Who cares Bush said we will all be dead by then. Like that evil dead devil Ronald Reagan Who's brilliant economic plan the trickle down has destroyed the entire world banking system. I know if we can just go deeper into debt we all will be well DOW 10000.

eric in vegas said...

You can make some short term money if you really know your stuff, but any blip will be short lived and will only happen due to government intervention.

Anonymous said...

I took my money out of the market years ago. Back them I bought into the hype of the stock market. But after years of pumping weekly contributions into my 401k and seeing a SLOW increase, I knew I was being had. So I when the low interest bond fund route. Yea 3% a year is painfully slow. But after the losses suffered by the DOW. I am glad I made the switch!

Some of the people I know at work have made up there minds to ride it out!! So if you do decide to ride it out and go long. Just remember you are not alone. As for me I'm sorry I can handle that roller coaster.

keith said...

It's strange to see EVERYONE talking about PANIC now isn't it? I mean, it was only a few months ago that people were camping out in Phoenix in order to be one of the lucky ones to 'buy' a new home

Silly humans.


keith said...

So Bush had the G7 finance ministers in for a really important meeting yesterday

It lasted 30 minutes.

Oh, let me repeat that again.

It lasted 30 minutes.

Oh, dear god, we have a monkey leading us. 30 minutes. Enough time to grab some tea and cookies and then out the door.

During the biggest global economic implosion of the past 100 years.

30 minutes.


John S said...

"Think about all the Baby Boomers who scrimped and saved to get to retirement, only to see their hard earned dollars massively reduced in a period of a few weeks."

Wait until a year or two of triple-digit inflation destroys what's left.

"The portfolios of all retirees are going to be depleted much quicker than they thought..."

On the plus side, life expectancies will grow much shorter once the government "fixes" healthcare. I had dinner with my Dad last weekend. He was griping about the Medicare "donut" (the government's 2003 disaster), which meant he'd have to pay full price for insulin for the rest of the year. My thought: in 20 years insulin won't be available at any price. You'll be sent home to die. If you're lucky you can afford government-issued cynanide pills.

Anonymous said...

Fri Oct 10

Went looking at boats

20-26ft open decks

Plenty out there!

Are they blowing them out?


No Deals to be had!



area 51 said...

And you know what the most sickening thing of all is?

What's the fix?

Is it austerity?
Is it save, then buy when you've saved enough?
Is it fiscal prudence, rainy day funds?
Is it living within your means?


Borrow more money and buy more crap! Borrow and buy a house, borrow and buy a car, borrow and put your kids through college.

And when we pile up even more mountains of bad debt, no problem!
Just unload it all onto the taxpayers.


Then happy days will be here again!

Wash rinse repeat.

F-ing sickening.

Anonymous said...

"...I'm 29...work for military contractor...Place was absolutely packed...Some depression..."

Have you considered what the rest of the country is like in terms of average wage, industry trends, etc...?

Hoorah for us, but never forget where the economic basis of our industry comes from>>>all the other industry in the country.

Because that is in decline, we will prop up ours with a printing press.

Better hope your boss can match that percentage on your reviews.

hp fan said...

And now that we've seen the worst week in history, what do you think next week, and the rest of 2008 has in store?

What is a bubble?

Stock market corrections take around 2 years which means the stock bubble won't hit bottom for another year.

Housing market corrections take around 5 years which means houses won't hit bottom for another 2 years.

Q: What should you buy now?

A: 1-2 years worth of popcorn!

Anonymous said...

I agree with Afterthought. We are not in panic yet. I really don't even know if we are solidly in desperation. I think most of the country is in Denial still. They are trying desperately to drink the koolaid the talking heads are putting out- that all will be well leave your money where it is. People with 401k's don't realize that ALL YOUR MONEY CAN DISAPPEAR IF the market drops enough.
In the Midwest everything is still humming along. No panic here. My cousin who lives in San Jose said her house value hasn't dropped, and all is well in San Jose. She said that real estate around the Bay Area hasn't been affected. I don't think this is possible, but what do I know?

SeattleMoose said...

As a HP'er I knew this was coming 3 years ago and as such, put 3/4 of my investments in "whimpy" low yield instruments like money markets/CDs/ etc. and moved my banking to a credit union. The other 1/4 I left in stock knowing full well this was going to happen. I am in those stocks for the long haul and they are still both significantly above where I bought them in 2002, even with the big drop.

My bigger worry is the destruction of the dollar, but now that the Euro is also going to hell, that worry has been diminished a bit. Also, job security as everyone's business (except for body bag manufactures) is going to take a hit.

It is gonna be a rough ride for a few years....but I have hope that those who helped cause this mess learn some hard lessons and that we as a country will end up stronger for it. Of course, if the same crooks and con men continue the game "as usual" then we will quickly revert back to the old and dangerous ways of gaming and we will simply repeat. I am hoping that some REAL change will come out of all of this along with some life jail sentences for both financial executives and members of Bushco/govt. And "shorting" should be illegal...not only is it morally wrong, it provides an incentive for volatility and for gaming the market. It is pure Vegas....

Anonymous said...

I was looking for a rental, called a real estate agent in nj.
He said the market is going to go up...He said right now RENTALS are going up, they are hot..because of peoples credit and so on.
I said you know what? Doesn't it come down to WHAT PEOPLE CAN AFFORD AND RIGHT NOW NO ONE CAN AFFORD ANYTHING.

SeattleMoose said...

One last thing:

In case "the worst" happens:

1) Keep 30 days worth of soup/canned goods/nuts and other non-perishable foods
2) Keep 30 days water
3) Keep at least $1000 cash

You may not need it but when a panic sets in, things happen so quick that you can be caught off-guard. Why risk it?

uscitizen said...

Just 15 minutes ago I saw Remax ad that siad proudly, "It's a great time to buy a house!" I can't believe it.

I paid cash for my house and last summer I moved my 401K into cash. I lost about 16% in it prior to that. But I have been doing othing but save for the last year. However, I'm a self-employed consultant and I anticipate that I will lose my current clients.

Anonymous said...

For those of you talking about packed restaurants meaning we're not repeating 1929, you may want to revisit the history of the Great Depression. In December 1929, things weren't really nasty on Main Street yet. The ones most heavily invested in the market were hurting and the rest of the public knew that something was going terribly wrong. However, factory workers and other middle class Americans could generally still put a roof over their heads, food on the table, and even some Christmas gifts under the tree that year. Only in the middle of 1930 did unemployment begin to rise in earnest and Joe Public's wallet begin to get squeezed hard. And the worst effects weren't seen until 1932-33 in urban America and the mid 1930s for the areas affected by the Dust Bowl.

Our ship has hit an iceberg, and we know something's gone wrong. However, we don't know if two compartments below have flooded, or four, or more. If the damage is near the more optimistic estimates, it can be feasibly repaired by the tools governments have at hand and life will go on after a couple of lean years. If new parts of the economy that we don't know about now are found to be taking on water, then Bush is right about something for once during his presidency: "this sucker could go down."

Keith's right, next week will be a very telling week on how this situation plays out. However, if the market does decline further and foretells another Great Depression, don't use long lines at the Capital Grille to rebut those predictions. On the Titanic, the band played on until just before she foundered.

miner_tom said...

WHAT IS WRONG WITH LETTING HOUSING CRASH?? Gee, if that happened then people would not need as much money to live on and then, LO!, products that we build would be cheaper and more competitive. We might actually be able to rebuild some of the industries that made this country great in the first place. Oh, wait a minute, we can't do that becuase building factories and mines and schools (yes, schools) would bring down the value of real estate nearby.


I will paraphase Thomas Jefferson "a nation that wants an economy based upon constantly rising home equity values, wants what never was and never will be".

As for all ideas based on the taxpayer purchasing mortgages at their face value,"I could never eat as much as I would like to throw up".

And for those worried about their precious 401k's (while they were not worred at all about starting needless and expensive wars and killing people by the hundreds of thousads) , all I have to say to you is "F*ck you AND your 401k"!
We are ALL on the food chain at some level. What made you think that God gave you the right to 8% per year with no risk?


Anonymous said...


Sorry, just had to say it.

Anonymous said...

Bush is a trusted bold leader that only needs 30 minutes to solve this global financial meltdown.

Watch the markets respond to his effective, bold and decisive leadership.

DOW 10000

Anonymous said...

now i know what kind of moron eats in a place where apetizers are 15 bucks and two bites

Anonymous said...

Thank You
Area 51

Borrow more money and buy more crap! Borrow and buy a house, borrow and buy a car, borrow and put your kids through college.

F-ing sickening.

This has to stop at some point not if when.

When could be now.....

hp fan said...

Wait until a year or two of triple-digit inflation destroys what's left.

Can someone explain to me how these idiots still believe there will be triple-digit inflation in the future?

The inflation occurred 2-3 years ago when 5 million illegals got ninja teaser loans for overpriced houses from shady realtors and bankers making fat commissions.

Take a look around you. There is Deflation everywhere you look and prices will only get lower, not higher, until incomes rise.

Oil is back to the mid-$70s if you haven't noticed and will fall shockingly low if this really does turn out to be a depression. In fact, you could see oil fall below $10 a barrel if Asia grinds to a halt. OPEC is already in Panic mode with the housing and stock corrections only half way through.

Anonymous said...

There is no depression folks.there is a ton of money on the sidelines.

October 11, 2008 3:05 PM


Agree with that 100%.

Anonymous said...

Oh boy was I ready. I doubled my investments in a week and a half. I still can't believe it. I'm starting to fall in love with this thing.


Anonymous said...


I like your analysis. I agree with you 100%. Based on technicals, I believe that the next HUGE drop is coming soon. So boys, be patient and slide into one of those shorts right before the next crash.

We will see total loss of hope at that point, and the gains can be huge.


Anonymous said...

Area 51,

What a great laugh you have given me. Sure, just keep unloading the debt on the ta payers. For sure that that will work for ever.


Anonymous said...

Guys, let's discuss the G7 actions of this weekend.

Coming into the weekend, I was expecting significant specific action to be announced.

Instead what I am hearing are more vague announcements that the Govt. will "take all necessary steps".

Without SIGNIFICANT, and SPECIFIC action, I expect the stock market continues its decline this week.

Opinions on this?

Anonymous said...

People do not understand that the ALT-A and Option Loans have not recast yet.

If this economic downturn can be compare to a football game then you are at the end of the second quarter of this economic game.


For today's would-be retirees, from 50-somethings counting on robust stock portfolios to 60-somethings looking to Social Security checks and 401(k) allotments, it's a choice that would have been unthinkable even five years ago. Home values were approaching their zenith and stocks were riding steady gains to new heights, pushing aside dark memories of the high-tech bust.

But, oh, how times have changed. Home sales have slowed, interest rates on CDs and money-market accounts have atrophied, food and energy prices have jumped — and the stock markets, buffeted by bailouts and bank takeovers, have dropped about 40 percent this year.

"I'm freaked out by this whole thing,'' said Chuck, who spent his 50s moving his finances out of the red and into the black and then saving — and investing — hundreds of thousands of dollars a year. "If you drop another 40 percent from where we are now, I've got a problem."

"You'd need to keep working or you'll have to retire into another career that pays you something,'' she said. Of course, "if you've got $1.3 million in assets and your house is paid off, that's somebody I can tell, 'This is one of the market dips we planned for, and you're probably going to be OK.' "

In between those two scenarios is someone like Chuck, a retired semiconductor executive from Los Gatos who didn't want his last name used. He's lost $500,000, split evenly between his 401(k) and other investments, but still had the wherewithal to retire, um, this week. (Yikes!)

Budvar said...

Copied from elsewhere.

The Stockmarket Explained.

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for £10 each. The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them.

The man bought thousands at £10 and as supply started to diminish, the villagers stopped their effort. He then announced that he would now buy at £20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to £25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

The man now announced that he would buy monkeys at £50. However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers, “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at £35 and when the man returns from the city, you can sell them to him for £50 each.”

The villagers hurried round with their savings and bought all the monkeys.

Then they never saw the man nor his assistant again, only bloody monkeys everywhere!

Now you have a better understanding of how the stock market works.

The OC said...

HP'ers -- When do you suppose it'll be time to pull our all cash from banks and Credit Unions? I liquidated everything last year and have it all in CDs -- way above the FDIC limits, in a local credit union in Southern CA. When is it time to withdraw? Thanks -

Scott said...

Actually, some rudimentary knowledge of thermodynamics and evolutionary biology would dispel 95% of the analysis on this board.
Everyone is assuming the suicide economy will continue on, and the russian roulette game will continue firing empty chambers.
Superstition based economic systems always must eventually confront reality.
Assuming that "retirement funds will exist in any current form in the future is contrary to the observable reality.

Anonymous said...

Has there been a circuit breaker yet on the dow? No.

Paul E. Math said...

I agree with afterthought. There are still too many signs of optimism - many people believe this will just be a few months of 'difficulty' and then sometime next year we get a recovery.

I had lunch with the CEO and President of my employer on Thursday. They are both bright guys and know how to run a company.

However, their understanding of this crisis is elementary at best. They still think this whole thing is about the illiquidity of subprime mortgage backed securities. They told me that lending excesses occurred only in residential real estate, only in subprime.

But they told everyone that, while things are going to get worse before they get better, this bailout is the right medicine and we will be back to normal by the middle of next year.

I looked around the room. Everyone looked relieved: if CEO said it then it must be true.

Flirting with career suicide, I began to challenge some of my CEO's assumptions. With 20 other people in the room of various levels of seniority, the casual lunch meeting became a 3-way conversation between myself, the President and the CEO.

They said when inventories of homes for sale subside next year the real estate market will recover and things can get back to normal. I had to explain to them about the ratio of home prices to incomes and of home prices to rents - I explained that without a rise in incomes there can be no recovery in home prices and no reduction in inventories. We all agreed that incomes had no chance of rising anytime soon.

I'll give these guys credit though - there's a reason they were both highly successful salesmen before joining the executive ranks. They changed the subject and did some happy talk about how we're well-positioned to gain market share when our competitors go under.

So as not to completely alienate these guys I nodded my head emphatically and gave them a relieved smile, pretending I totally believed them. Which, of course, I don't.

But there's another reason I don't think we're at the bottom: the crash preceding the great depression. Stock prices peaked on sept. 3, 1929 and then fell 17% over the rest of that month. Prices then recovered about half their losses over the next couple weeks leading into Black Thursday Oct. 24th.

By April of 1930, stock prices had recovered to their early 1929 levels and financiers and politicians declared the problem solved. Stock prices did not reach their ultimate bottom until July of 1932, almost 3 years after Black Thursday, Friday and Monday.

(Man, wikipedia makes me look smart, huh?)

Yes, we're likely to get some sustained rallies, probably soon. But this decline is not over, not by a long shot.

Aleks said...

Any ideas about gold, especially GDX?

Paper gold goes down but real one is more and more difficult to get.
Shouldn't gold mining companies start going up finally?

I am thinking about buying march GDX calls.
Any comments ?

Aleks said...

Any ideas about gold, especially GDX?

Paper gold goes down but real one is more and more difficult to get.
Shouldn't gold mining companies start going up finally?

I am thinking about buying march GDX calls.
Any comments ?

Anonymous said...

Some of my favorite things now are old 401K statements from Merrill Lynch; they always had a gentle reminder that a 100% principle preservation fund contribution was very unlikely to satisfy my retirement goals. Everyone loves when a long shot pays off big. Come to think of it, I might just take their advice now...

Anonymous said...


Where is that little fucker every time we need him.

Anonymous said...

There's not much to be done about my ailing retirement fund, other than to work hard and keep saving for the retirement that will hopefully still be funded when I get there.

Nothing to be done? You could get furious about it and take to the streets, write, phone & fax Congress. I am astounded that America is just sitting back allowing their savings to be STOLEN from them by the U.S. gubmint and accept this as they do bad weather. Would you just stand there with your thumb up your arse if you had your purse snatched on the street?


I can't wait for it to finally dawn on everyone that they have been fleeced. Think everyone will get mad then? Or will they all just quietly get in line at the Soup Kitchen?

Oh yea, we are going to reinvent ourselves at that point right? We will just wish ourselves rich again.

Get your money out of the 401k. They have every intention of stealing every last dime. Take your hit and hide your money or they will goddamn steal every last dime you have.


i've had it said...

Anon 5:17pm is absolutely correct on the history of the Great Depression. The brunt of the problems did not start until a year or more after the 1929 crash. It was between 1930 and 1933 that there were over 4,800 bank failures.

There are those on this board who look around and say "everything's fine now", "people are spending now", "places are packed now", "can't get a reservation now", etc. etc. etc. That is all true, but it's not the "now" that I and others are talking about but rather the not-to-distant future.

It's not a done deal that the worst is going to happen to our economy or to the world's, but you can see from what is happening in the credit markets, the institutional runs on banks, the silent consumer runs on banks, bankrupt banks...huge banks, the destruction of wall street firms, the global financial problems, the panic responses by govt., the PPT injecting itself into the market, the crash of the market, etc. that this situation we are in could lead to economic ruin for us down the road.

Go read your financial history, such as Kindleberger's "Manias, Panics, and Crashes". It's all in there. It's the only book you need to read to understand how financial calamities arise, unfold, and end.

Some choice quotes from the book (softcover version):

page 101: "Real estate loans in default, not failed stockbrokers' accounts, were the largest single element in the failure of 4800 banks in the years from 1930 to 1933."

page 101: "In the ruin of all collapsed booms is to be found the work of men who bought property at prices they knew perfectly well were fictitious, but who were willing to pay such prices simply because they knew that some still greater fool could be depended on to take the property off their hands and leave them with a profit."

page 102: (referring to the japan crash in the 90s): "the increase in the price of real estate fed the boom in stock prices."

page 103: (in Japan) "Stock prices peaked on the last trading day of 1989 and then declined by 3 percent in 1990. The trough for stock prices occurred in 2002 at a level that was a bit more than 20% of their peak values. Real estate prices fell more slowly but almost as extensively."

And of course, the Dow reached a high in Sept. 1929 and did not hit its low until July 1932...three years later. By then it had lost 90% of its value.

Kindleberger's book is a must read; chapters 2 thru 7 are really all you need to get through to understand everything.

In the words of Keith, "you'll be glad you did".

Lost Cause said...

Personally, I have been living a financial downturn for almost five years now. I lost my house long ago. Low wages, spending savings, eating beans and rice are nothing new to this family. I am with Schiff in welcoming a new economy. This other one sucks. Thank God I saved because I knew this was coming. Sucks sucks sucks!

Frank@Scottsdale-Sucks.com said...

Yep, I survived. I'm with Trump, who said on Friday, "Umm, I'm not in stocks."

Anonymous said...

It's amazing to me that you guys don't expect this ponzi scheme to overshoot the DOW passed 7,000. Are you insane?

I'm still all cash and waiting for the DOW to be below 7,000. It's coming...f•ck you.

Anonymous said...

Personally, I have been living a financial downturn for almost five years now. I lost my house long ago. Low wages, spending savings, eating beans and rice are nothing new to this family. I am with Schiff in welcoming a new economy. This other one sucks. Thank God I saved because I knew this was coming. Sucks sucks sucks!

We, single people, are paying property taxes to the nose for community colleges and state colleges and someone else's kid education, so we would like you to show a bit of gratitude by getting a freaking bachelor's degree or MBA to make more money. It won''t hurt and you won't die, I promise you.

Anonymous said...


401(k) and MBA are the biggest ponzi schemes ever invented to fleece the sheeple. Growth in energy prices during the last 5 years = 150%. Growth of tuition during the same period = 450%. Welcome to the Marxist union parasites at our educational system.

Those are the stats that you won't get from colleges, Pelosi, Olbermann, NY Times, LA Times, Newsweek, NBC, ABC, Chris Matthews, Obama...Just be the obedient sheep as you've ever been. Everything will be fine.