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Old 05-20-2010, 05:40 PM   #241
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And then, even as we agree that something is bad, such as the recent housing bubble, very few could predict how severe the outcome would turn out to be. We had housing bubbles in the past, but only a few knew the potential damaging effect of all those CDOs and CDS's. Maybe those of you in the financial world knew, but I certainly didn't.
Most of us didn't realize how extremely leveraged these big financial companies had become. It's the leverage that usually turns a burst bubble into a full-blown financial crisis. There are good reasons why rules limiting leverage are instituted from time to time. Unfortunately, they keep getting lifted when people get complacent and then greedy for that extra "push".

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Old 05-20-2010, 05:57 PM   #242
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Most of us didn't realize how extremely leveraged these big financial companies had become. It's the leverage that usually turns a burst bubble into a full-blown financial crisis...
Hence, the public furor over the bailing out of these institutional investors. But we have been over this soo many times here in this forum.

Back to the present, I am down a tad more than 10%, so officially in a correction, which matches the Dow and S&P500. I am not 100% invested, but holding high-beta stocks got its risks (and rewards too ).

Just yesterday, my wife called out to me from her PC: "Look at this cheap airfare to Copenhagen". Good thing I told her to forget that, as we already planned to travel by RV this year. A trip of more than 10,000 mi and at 10mpg, it is not cheap! Gas is also more expensive in Canada. Hope we do not have to bring along several cases of Ramen to eat on the trip, the way the market is headed.
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Old 05-20-2010, 06:46 PM   #243
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Most of us didn't realize how extremely leveraged these big financial companies had become. It's the leverage that usually turns a burst bubble into a full-blown financial crisis. There are good reasons why rules limiting leverage are instituted from time to time. Unfortunately, they keep getting lifted when people get complacent and then greedy for that extra "push".

Audrey
Most of the leverage wasn't a secret (well, except for some of the SIV stuff). The reasons they were allowed to lever themselves that much is that they were supposed to be using the securitization process to shed most of their lending risk. Only they didn't do that.

I also don't think the housing bubble was much of a surprise to anyone who was breathing in 2006. What surprised me was how exposed our financial system was to the crash. I figured most of the losses would be born by mutual funds, pension funds, hedge funds, etc. I thought our banks were insulating themselves . . . silly me.

As far as lessons learned go, I'm going to assume that any future bubble will have a major downside. There was a lot of collateral damage in the tech bubble too . . . another bubble that wasn't hard to spot. Of course you never know when they will pop, but there was pretty blatant silliness going on in the last two bubbles. Maybe when we see this stuff happening the next time, it might be wise to move to the sidelines even if it takes a couple of years to all come undone.
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Old 05-20-2010, 07:37 PM   #244
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This guy lays it out pretty good...

Free-market forces hound politicians David Callaway - MarketWatch

The one world progressives are working hard on the plan for "The new world order"...

Foil Hattery

I donno I used to dismiss all that, but the more TSHTF the better their case looks...

Scary thing is the fan is running on low speed and it can still be turned way up...

At least gas might be cheaper in a month or so maybe for a while
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Old 05-20-2010, 08:49 PM   #245
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I didn't write this. Im not very good at typing...

I do agree with this guy though, I couldn't have said it better...




Far-Fetched, But This Is A War of Bulls and Bears… Economics of Countries and Debts and The Decay of Mans Choices…

THE HEADLINES COULD BE READING:

IS THIS THE DAWN OF THE GREAT DEPRESSION II

The World is Asking So Many Questions that has brought about a market on the abyss of true change for the better and/or could be far worse. This could be the signal of the Double-Dip Recession or we may sneak out of all this with just a few bumps and empty bank accounts.

It will remain a question for many trying to make sense of when does this new word “Austerity” start to affect me and my families if I am still employed or a public worker as a fireman or law enforcement that are seen in Greece being the first affected by Austerity measures.

I think the Egg management fee has well exceeded its limits. Its much too much now and Oil is the the theme as it will continue going lower due to the deflationary fears.

The theme for the dollar and the other currencies along with the hedge of the precious metals of GOLD will be a play of making still a stronger dollar emerge due to U.S. holding a lions share of the Gold Reserves. China along with some of the very few players that can hold a bluff at the worlds poker table is no longer able to trump as it once had the leverage before. They will need to be able to keep Yen equal to or near pegged to the Dollar and allow the slow or ease to the EUR and buoy to the EUR and not allow for the YUAN to over heat to over run any of the other currencies to cause their already delicate economic recovery teeters to a full declining recession due to real estate bubble debt collapse.

The idea becomes plausible to hold this as the current theme for the moment that China may equalize dollar and peg yen to Dollar maintain YUAN…

Oil will be balanced to lower $45-$55 range being the most likely as the path of least resistance you might see. Why comes from most likely the concerns from oil nations and the Arab Economy as agreed to behind closed doors.

Why is this really all being done, it is clearly to divert a double-dip recession or that of another depression that would be greater than the one so long ago.

Reading so many journalist throughout the day, one stuck out and came to the top,. He has a way with words and has made his way and tells it like it is. As Todd Harrison had said, “That last dynamic is perhaps the most daunting. Between the bear market in China, uncertainty in Europe, stateside budget gaps, upward taxation, and austerity measures, it would appear as if we’re on a collision course with an inevitable destination. To that end, I will draw from three of my past columns with hopes of providing some context”. And he also had another good comment that stuck in my head when he wrote;

“He is Deflation. Painful, all-consuming, watershed Deflation. While the mainstream media continues to monitor inflationary pressures — and yes, this exists in some corners of the economy — this particular Phantom won’t discriminate between victims. The weakness we’ve seen is the probability of this demon being priced into the collective mindset.”

To be sure, after that column posted and following an additional 15% haircut for commodity prices, asset classes across the board enjoyed a spirited sprint higher. We know now that was the “blow off” phase of the rally, the “panic” portion of the denial-migration-panic continuum that defines all market moves, and we know what happened next.

In February 2008, we offered that policymakers were navigating Our Wishbone World in a manner that would further crush the middle class. And I quote:

“Let’s look at both sides of the great debate. To the left is the socialization of markets, nationalization by governments, and a road to hyperinflation. To the right, we have asset class deflation, risk aversion, and the unwinding of the debt bubble.

If the Northern Rock nationalization is the first in series of similar steps, we could conceivably see the stateside assumption of mortgage debt by the US government. This would hit the dollar and spike equities, at least until interest rates rose to levels deemed attractive as an alternative investment.

That is the hyperinflation scenario, one that is presumably preferred by the powers that be as an alternative to watershed deflation. The “haves” would fare better than the “have not’s,” which would include the former middle class that suffers as a result of moral hazard as the costs of goods and services skyrocket.

The other scenario is the draining of liquidity from the system, which would ignite the fuse for a higher greenback as currency becomes scarcer. Asset classes across the board, from commodities to equities, would deflate and impact the top tier of our societal structure that is tied to the marketplace.

This is, quite obviously, problematic for many policy makers and the constituencies that bankroll them. Deflation in a fractional reserve banking system means that they have, for all intents and purposes, lost control of the economy. It is an admission of defeat, albeit one that may be unavoidable” (Harrison, Minyanville 2010, 19).

I will still continue the theme that we all need to get the idea that we have gotten off track with our spending habits. The way we look at our friends and our neighbors. How we have pushed the creator out of our daily lives, if you have a religion or faith of belief in the creator of “I am” also know as “GOD” for those that did not know those connected names as he is also known by others.

To end this article post, you really need to bring this to focus on what made it all happen. This is all about moral, ethical, and morales with the loss of virtues that continue to erode our nation and many other nations around our world. This is the time to stand up and make a change individually first, then within your family, to invite back a calmness of knowing a creator that can be part of your daily life and bring yourself and the ones you love to live within their means.

It is that simple, it starts first from there; and it goes forward. I call it as certainly a few before me have, “paying it forward”, mentality. A paying forward of helping your neighbor as this builds a village to a nation to a global world of sustainable growth as I think we all seek. As far as investing and winning in the stock market, just try to take risk and make it a smaller portion of what is considered a manageable risk. What is a manageable risk. Great question? Risk is when you feel you are no longer afraid that anything can ever be taken away from you and the house always wins. Its the end of the story in the Bible if its a book you have ever read. The bet has already been set and the hedge is set.

WE ALREADY KNOW THE WINNER… Best way I know of explaining of being on the side of risk when it comes to the ultimate side of risk. Eternal risks.

Far-fetched, Not Anymore…

Peace for now I am out of here…

James G.
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Old 05-21-2010, 07:17 AM   #246
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I do agree with this guy though, I couldn't have said it better...
The syntax makes me think Sarah Palin wrote this (and the call to God at the end, too).

I'd comment on the substance but I don't have a clue what he (or she ) is saying.
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Old 05-21-2010, 07:36 AM   #247
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The syntax makes me think Sarah Palin wrote this (and the call to God at the end, too).

I'd comment on the substance but I don't have a clue what he (or she ) is saying.
I was too lazy to read it. Is it noon yet?
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Old 05-21-2010, 07:47 AM   #248
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The syntax makes me think Sarah Palin wrote this (and the call to God at the end, too).

I'd comment on the substance but I don't have a clue what he (or she ) is saying.
I agree..not clue what he's on about..
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Old 05-21-2010, 08:30 AM   #249
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What surprised me was how exposed our financial system was to the crash. I figured most of the losses would be born by mutual funds, pension funds, hedge funds, etc. I thought our banks were insulating themselves . . . silly me.
Yep - that seems to be the general key. If exposure had been limited, things wouldn't have gotten nearly so scary.

Clearly the ability of these large financial institutions to limit their own risk is nonexistent. The quick buck/bonus/fee trumps long-term prudence every time.*

I think at one time nearing the bubble peak, one institution was begging the feds/regulators - "Can't you stop this?" because they felt forced to engage in the same extremely risky behavior as their competitors.

So "we know this is risky, we know the outcome could be catastrophic, but our competition is doing it so we have to"....

Audrey

* Ultimately this is why limits are put in place such as 10% down for buying stocks on margin and the Glass-Steagall Act - because without some sensible constraints, ultimately many of the players will be pushing the envelope and courting disaster. It would be OK if the disaster only resulted in self-destruction and was thus contained, but it usually results in hurting a lot of other people too and spiraling out of control.
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Old 05-21-2010, 09:40 AM   #250
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The syntax makes me think Sarah Palin wrote this (and the call to God at the end, too).

I'd comment on the substance but I don't have a clue what he (or she ) is saying.
The substance is stating that governments of the world are at a crossroads of chosing between hyperinflation or deflation. Either assume all bad debts which will need to be hyperinflated to offset them or let them implode and all commodities will go down in value dragging the economy with it. The whole God thing is a cover for saying that individuals cannot long foist their responsibilities onto government forever and the growth of government in the lives of citizens has defereed individuals of personal responsibility till now where the responsibliities are too great for even governments to hold.

Myself I think it is a shortage of money and an inability to maintain the means of growth by continuing to expand government for the last 100 years which is being recognized. I don't know how long the government can continue a system relying on having mortgage rates it's citizens can borrow for 30 years cheaper than most governments of the world, despite record levels of defaults.
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Old 05-21-2010, 12:34 PM   #251
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I agree..not clue what he's on about..
It's pretty simple. We're in for a period of massive deflation, or hyperinflation, or a currency crunch and deflation, or maybe just the End Times.

I'm looking for the following leading indicators:

* Fire and brimstone coming down from the skies! Rivers and seas boiling!
* Forty years of darkness! Earthquakes, volcanoes...
* The dead rising from the grave!
* Human sacrifice, dogs and cats living together... mass hysteria!

Once I see this particular combination of indicators, I'll move to 100% in marshmallow futures.
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Old 05-21-2010, 02:13 PM   #252
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I'm looking for the following leading indicators:

* Fire and brimstone coming down from the skies! Rivers and seas boiling!
* Forty years of darkness! Earthquakes, volcanoes...
* The dead rising from the grave!
* Human sacrifice, dogs and cats living together... mass hysteria!

Once I see this particular combination of indicators, I'll move to 100% in marshmallow futures.
That would be stay puft, right?

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Old 05-21-2010, 03:00 PM   #253
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The substance is stating that governments of the world are at a crossroads of chosing between hyperinflation or deflation.
Right, because we live in a binomial world where there are only two potential paths. And in this telling those mutually exclusive paths happen to be extreme polar opposites . . . crushing deflation or hyperinflation. Makes sense.
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Old 05-21-2010, 03:03 PM   #254
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It's pretty simple. We're in for a period of massive deflation, or hyperinflation, or a currency crunch and deflation, or maybe just the End Times.

I'm looking for the following leading indicators:

* Fire and brimstone coming down from the skies! Rivers and seas boiling!
* Forty years of darkness! Earthquakes, volcanoes...
* The dead rising from the grave!
* Human sacrifice, dogs and cats living together... mass hysteria!

Once I see this particular combination of indicators, I'll move to 100% in marshmallow futures.
Those are the signs I am looking for also. However, I am pretty sure that I'll make more money (even if it is a worthless) by going long MRE, gun, and ammo futures than marshmallows. The great thing about guns and ammo is I can take your marshmallows,and the MRE have those cool chemical heaters and chocolates to turn the marshmallows into smores
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Old 05-21-2010, 03:05 PM   #255
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I think at one time nearing the bubble peak, one institution was begging the feds/regulators - "Can't you stop this?" because they felt forced to engage in the same extremely risky behavior as their competitors.
Yup. That was Citigroup CEO, Chuck Prince, who reportedly asked Hank Paulson before the crisis "Can you force us to stop?"

Nothing like those self-regulating market forces to keep everyone in line.
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Old 05-21-2010, 08:28 PM   #256
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That would be stay puft, right?

Absolutely! I'd also make related plays in Hershey's chocolate and graham crackers, though.
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Old 05-21-2010, 08:33 PM   #257
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It's pretty simple. We're in for a period of massive deflation, or hyperinflation, or a currency crunch and deflation, or maybe just the End Times.

I'm looking for the following leading indicators:

* Fire and brimstone coming down from the skies! Rivers and seas boiling!
* Forty years of darkness! Earthquakes, volcanoes...
* The dead rising from the grave!
* Human sacrifice, dogs and cats living together... mass hysteria!

Once I see this particular combination of indicators, I'll move to 100% in marshmallow futures.
Since I joined this forum I've seen sh!t that will turn you white!
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Old 05-21-2010, 10:42 PM   #258
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Okay, I made it halfway through the article before I tired out. I still operate with some allegiance to my IPS but at <50 with a hormone problem I still float the AA some and my lead indicator is the emotion I feel from friends, family, cnbc, all sources. When there is absolutely no hope and we are screwed forever I buy. Things are so bad I have moved all the way to 50/50 and if things totally hit the fan there are always marshmallow futures.
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Old 05-24-2010, 03:36 PM   #259
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How about 8500 by the end of the month...
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Awesome! Eight trading days left to drop a touch over 2000 points. An average drop of 250 points a day for eight days straight. It COULD happen...
Well, we are down to four trading days left this month. Still a loooooong way to go to get to 8500. Maybe we will see a drop of 400 points a day for the remaining four days. It COULD happen...

Perhaps it is time to start making June predictions in case the May predictions don't come true.
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Old 05-24-2010, 03:45 PM   #260
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Eh, do not jinx it!
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