How to Fix the Financial System
Hey, put a BandAid on that, or it might get infected!
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The Committee on Capital Markets Regulation has a proposal to fix the financial. I only gave it a quick look through, but what I saw was pretty milquetoast:
Here’s the highlights — a list of obvious fixes — via Real Time Economics:
-Keep two or three regulators for the financial system – the Fed, a new U.S. Financial Services Authority, and an investor and consumer protection agency. The USFSA “would regulate all aspects of the financial system, including market structure and activities and safety and soundness for all financial institutions.”
-Mandate centralized clearing of credit default swaps. To the extent that some CDSs stay outside a centralized clearing process, the committee calls for higher capital requirements to “compensate for increased systemic risk of these contracts.”
-Don’t make a hasty decision to raise capital requirements across the financial sector until more analysis is done. But the committee does recommend higher capital requirements for megabanks, such as those with more than $250 billion in assets.
-Strengthen the “leverage” capital ratio, and debate whether the leverage ratio should be based on common equity rather than total Tier 1 capital.
-Give the Fed temporary authority to evaluate confidential information supplied by hedge funds.
-Relax acquisition rules to make it easier for private equity firms to pump money into the banking sector.
-Create a comprehensive policy called the Financial Company Resolution Act, that would be allowed to put any financial company into receivership, not just “systemically” important ones.
-Ban or limit high-risk mortgages from being securitized.
Nothing about beefing up the SEC, or anything remotely controversial.
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Sources:
The Global Financial Crisis: A Plan for Regulatory Reform
The Committee on Capital Markets Regulation, 5/26/09
http://www.capmktsreg.org/
http://www.capmktsreg.org/pdfs/TGFC-CCMR_Report_(5-26-09).pdf
How to Fix the Financial System
Damian Paletta
Real Time Economics, May 26, 2009, 12:01 AM ET
http://blogs.wsj.com/economics/2009/05/26/recommendations-for-the-supervision-of-financial-markets/
May 26th, 2009 at 11:49 am
AND. It does more to give companies all the freedoms and trap doors they might want, than to offer restrictions with teeth. Kind of like HIPPA.
The gall of it all.
May 26th, 2009 at 11:54 am
“Keep two or three regulators for the financial system – the Fed, a new U.S. Financial Services Authority, and an investor and consumer protection agency.”
Uh, this committee just lost any and all credibility.
May 26th, 2009 at 12:00 pm
So there is no thought is that we need to bring back Glass-Steagal separation of commercial and investment banking?
May 26th, 2009 at 12:01 pm
This fixes nothing. Resolves nothing. Just another PR Whitewash for the Sheeple’s benefit.
Let’s create another toothless bureaucratic agency along with all the other toothless ones, and say “talk amongst yourselves”. That’ll fix things.
May 26th, 2009 at 12:17 pm
Quite humorous. I especially liked:
“Ban or limit high-risk mortgages from being securitized.”
Let’s put some definitions on “high-risk”:
1) mortgages whose balance is more than 75% of the current market value
2) mortgages whose payments are being made by homeowners in jeopardy of losing their incomes, and who lack the capital to immediately pay off the outstanding balance
Seems to me that would brand nearly all mortgages as “high-risk”
May 26th, 2009 at 12:22 pm
the financial engineering racket is simply the best organized white collar crime organization ever !
May 26th, 2009 at 12:23 pm
@ PastTense 12:00p
“So there is no thought is that we need to bring back Glass-Steagal separation of commercial and investment banking?”
Not yet. We need to lose a LOT more blood and be screaming in agony before our dim-witted Congress will perceive a threat to their re-elections. Give it another year of foreclosures and bankster follies.
Glass-Steagall didn’t come about right away. There had to be a lot of serious hurt before they decided that Something Needed To Be Done.
I figure we have at least a handful of too-little, too-late bandaids before they figure it out that when the limb turns dark and smelly it means gangrene has set in, and band-aids are no longer appropriate.
May 26th, 2009 at 12:27 pm
Forget the “surge” in consumer confidence #’s, this rampage is all about the looming GM BK.
http://www.marketwatch.com/story/gm-bankruptcy-might-spell-relief-for-stocks
“My feeling is that the market will welcome a bankruptcy filing by GM,” said David Joy, chief market strategist at Minneapolis-based RiverSource Investments, which manages $128 billion.
Now why didn’t I think of that…all we would need for the DOW to get back to 14K is for each of the components to file BK.
May 26th, 2009 at 12:40 pm
Hey bubba,
David Joy also recommended a 25-30% portfolio allocation to emerging markets last spring as well as stating that there were opps in mortgage backed securities. It’s online if you look hard enough.
My favorite potrait of him however, was during a bloomberg interview in late 2007 which included him and Bob Prechter from Eilliot Wave International. He looked like a complete fool. Prechter is going on a about a deflationary depression and Joy asked him what opportunities he saw in stocks.
Further, David Joy is helping oversee the launch of an infrastructure and american recovery mutual fund currently, it’s almost as smart as what they did (old American Express funds) back at the top of the tech bubble, when they of course put out a tech fund.
Last, they hired a quant to run some prop funds, they all got destroyed last year. The best part about the quant models is that it had been “backtested” starting with data in 1991. LOL.
Is it any wonder he would say this?
May 26th, 2009 at 12:48 pm
@ben22
thanks for that little background on this character. I think the whole thing is a farce. but what I wanna know is who the hell gave him 128 billion to run. LOL.
@all
anyone else fading this pop here?
May 26th, 2009 at 1:07 pm
Banker walks into a doctor’s office and says, “Hey Doc, every time I exceed prudent leverage ratios and fail to properly ascertain risk in complex derivative investments my arm hurts . . .”
May 26th, 2009 at 1:30 pm
@bubba: Here at Schadenfreude we live to fade pops.
May 26th, 2009 at 1:43 pm
@LB
That’s what I love about LB…Those “animal” trading instincts…BTW, congrats, you called this move back last Thursday…But I think you’re waiting until about 3:45 to fade, if my memory serves me…
Me bubba…I’m not a TRADER to the extent others may be…
I “shorted” the S&P at 1007 (on November 4, 2008)…Never bothered “covering” in March, never was particularly interested in doing so…I’m still in ben22’s camp that we could see 965 – 1k sometime this summer…
Even more specifically…June 9, 2009 would be the day that if this market wanted to keep up its pace it could top out around 1008-1010…But then it meets “Mr. 2/26/07 line” (which is one I hold dear to my heart for those of you with crayons that are interested in drawing lines)…
So I’m standing pat here…HOPING for Ben to be right…HOPING for LB to get a good trade out of this…& HOPING I’ll keep getting jucier & jucier prices to short
May 26th, 2009 at 1:50 pm
@cvienne: It’s not 3.45 yet. Another massive squeeze in the IYR today. Those stocks are total crapola. UFB.
May 26th, 2009 at 1:51 pm
@Lefty
credit where it’s due…nice call the last few (trading) days. having said that, I reserved the right to call you a “pretentious arse” should future need arise. heh heh
May 26th, 2009 at 1:58 pm
@bubba: One simply must do one’s best to keep one’s audience entertained, old sport.
May 26th, 2009 at 1:59 pm
John Bogle: The Free Market’s Moral Crisis
http://bit.ly/alPKL
One of the few honest and high integrity people left in the financial engineering racket !
May 26th, 2009 at 2:02 pm
Fade on the manic, cover on the panic.
May 26th, 2009 at 2:13 pm
@Andy T
Andy…Read my (1:43)…
I’m not a JEDI of EW like you are…In fact, I barely know anything about it except for a few fundamentals…
But I’ve always held that the ACTUAL TOP in the S&P was not October ‘07, it was February 26th, ‘07…
Forget about all the noise thereafter…February 27th, ‘07 was a major cataclysmic day…To many, it came suddenly out of the blue…BUT NOT ME…The VIX was back in single digits and there had been hardly a challenge to the market since ‘03…
The market managed to recover (and even print higher in July, then, of course, October)…
But think about it…The only “effing” way it managed to do so was because traders felt it was so close to taking out the highs of the previous TOP, they were bound and determined to call it up there…
So July was a fake…then the famous Cramer “they’re nuts…they know nothing” rant…in August…followed by the start of QE by BB in September…Those fumes were the only thing that took the S&P to higher highs than in ‘00…
For all intents and purposes, the market was TOAST on February 27, 2007 (and THAT should be considered the HIGH)…
It changes a lot of things…If the market had NEVER REACHED a new high, then the BEAR MARKET started in 2000 would still be in tact based on EW (wave #2 not higher than wave #1)…
Also, look at what happened afterwards…The PEAK of the May ‘08 rally never exceeded Feb 26, ‘07….(I call that May ‘08 period the beginning of the “Obama put”…as it was a series of PEAKS in the market that coincided with Obama doing something significant in the media which got people like Franklin411 all hot and bothered, but that traders just used to PUMP & DUMP)…Look at the charts…
May’08…Obama wins NC primary (which sealed the nomination)…PUMP & DUMP
Beginning of September…Obama “Roman columns” speech at DNC…PUMP & DUMP
Election Day…PUMP & DUMP
Inauguration…PUMP & DUMP
Anyway, Andy…
Look at how all the lines “fan” perfectly from the HIGH on February 26th, ‘07 (8/16/07 ‘Cramer they know nothing’, 1/23/08 European panic, followed by finally taking out that line HARD after the Lehman collapse & subsequent fiasco)…
That’s the line my friend…And that’s the line that keeps ben22’s 965-1k call on the table until further notice…
May 26th, 2009 at 2:21 pm
some thing to take note of. this mess would have never happened if Born’s advice had not been ignored
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/25/AR2009052502108_pf.html
May 26th, 2009 at 2:27 pm
If my mom had ignored my dad’s suggestive winks on that hot August night back in the 60’s…
None of you would be enjoying these pearls of humor now…:-)
May 26th, 2009 at 2:31 pm
@LB
LB! Hey…LB…
Remember? I called out 910 at 3:30…
You gave it a flyer to 920…It’s gettin’ tight
May 26th, 2009 at 2:35 pm
This intra-day stuff is all noise. Wake me at 3.45pm…. don’t forget day trader short covering.
May 26th, 2009 at 2:42 pm
I’d sure like the dollar to show some get up and go for a while.
May 26th, 2009 at 2:48 pm
@LB
DTSC…You got me there!
Those effin’ chumps!…OK, I’ll set the alarm & wake you at 3:44 so you can see your 15 minute blast from 912-920 and set yourself up 4 tomorrow…
You’re too good for me…Your kung-fu is too strong
May 26th, 2009 at 2:53 pm
“but what I saw was pretty milquetoast”
What would you expect from a panel chaired by Glenn Hubbard? We don’t need more regulations. What we need is companies to fail based on their executives’ incompetencies and then for those executives to be prosecuted to the fullest extent of the law when criminality in their actions is proven. This attempt at new regulation is nothing more than a smoke screen for our benefit. Well, some of us.. a minority at best are not that gullible.
May 26th, 2009 at 3:04 pm
Bubba Says:
@ben22
thanks for that little background on this character. I think the whole thing is a farce. but what I wanna know is who the hell gave him 128 billion to run. LOL.
Bubba, the answer of course is simple, most of that 128 billion, which btw used to be a lot more, is poor retail investors blindly throwing cash into the funds, though they don’t know what they own. It’s that simple. If you want a really ugly picture, go learn more about Rich Pzena at John Hancock. Talk about no risk management.
To all:
I’m telling you this thing moves to 965-1k. Watch for many more bullish comments on here as it presses up there and also watch for some flipping from some bears here. Look for the federal govt, the treasury and the Fed to say the plan is working towards the top. Watch the banksters reassure us that they are well capitlized and prepared for any losses. Watch the MSM push harder and harder the idea of taking risk again and most important, soon enough everyone will believe we have inflation already. They will push hard, very hard, bs like this consumer confidence report and then when people realize credit deflation has already taken hold, and that things are not in fact getting better, people will flip and it will be pain. Even if the market doesn’t make a lower low than it did in March, we all know when the InvesTools will be getting into this thing… yep, right at the top and they will quickly lose ~40%, again. Volatility should also continue to trend down towards the top, and the media will discuss the volatility as being low like it was during other bull markets. Cramer, of course, will claim he got the whole thing correct and Kudlow will be screaming about Goldilocks again. Roubini and the like will be treated like fools and be accused of missing the turn.
Also look for:
Lot’s more franklins or this guy Ned that has been here lately posting under his blog link (if you are listening Ned, I went to your blog, you called a bottom last September, and also, this is funny, predicted the stock market would react favorably to McCain’s victory, though what should I expect from blogger with pics of Greenspan and GW Bush on his page, now you claim the S&P to be at 1,500 within 2-3 years and that any bears are fools.) will come to the board.
All these things will be present at the top much like these were in March:
Tea party protestes on 3/1
Geithner shredded on SNL on 3/7
Warren Buffett downgraded on 3/11
Jim Cramer on The Daily Show on 3/13
90% tax on AIG bonus 3/19
Brazil’s leader blames the crises on “white people” 3/27
Just like the pessimism at the bottom the optimism will be everywhere at the end of this countertrend rally.
May 26th, 2009 at 3:08 pm
If I hear “bottoming process” one more time…
May 26th, 2009 at 3:11 pm
“You’re too good for me…Your kung-fu is too strong “. No wonder the Swedish twins are crazy about LB.
Ben22: InvesTools are certainly buying today. Small caps are going crazy – look at the IWM.
May 26th, 2009 at 3:12 pm
AmenRa,
we both know this is NOT what a bottoming process looks like. All part of the countertrend rally.
I heard someone yesterday call for a check mark recovery. Ha! That was a new one.
May 26th, 2009 at 3:16 pm
@b22 3:04
Are you seeing Ned on here? I see his spam all over Zero Hedge. Haven’t seen him here. BTW, I don’t think we can break the 200SMA which has fallen to about 934. But, what do I know, I didn’t think we’d break 875.
May 26th, 2009 at 3:22 pm
Cursive,
I’m expecting an overchute at this point. To borrow from other people on here, things can’t happen, until they do. The push above the 200 day will be the confirmation the MSM is looking for. This would be especially important if we have no significant pullback from the March low. From a wave perspective it would look perfect.
As for this tool Ned.
Yeah, he’s on here, I saw his shit over the weekend. His blog is pretty funny. Ned knows everything according to the site. I think he knows nothing.
May 26th, 2009 at 3:23 pm
@ben22
“check mark recovery”…that’s good!
round the BOTTOM of that check mark and you also have a F-I-S-H-O-O-K…
reel ‘em in…
May 26th, 2009 at 3:24 pm
http://www.cnbc.com/id/30942223
US Economy at Risk for Double-Dip Recession
“The U.S. economy appears destined for several years of weak growth and high unemployment that leave it vulnerable to a recession relapse after the massive dose of government stimulus wears off.
While tepid growth looks likely to resume late this year and build modestly into 2010, the credit bust has left households and businesses unable or unwilling to borrow and spend as freely as they did before the crisis.”
and….
“If that’s what you’re able to generate, that economy is not generating the job growth required to bring the unemployment rate down,” Rosenberg said.
This is a much darker outlook than the one put forward by President Barack Obama’s administration in its latest budget projections, which show economic growth bouncing back to 3.2 percent next year and hitting 4.6 percent by 2012.
May 26th, 2009 at 3:27 pm
@ben22
once again I agree with ben…(200 day MA)…
If that breaks to upside, the momentum up to 1k would be incredible and would SURELY bring about all the prophecies he laid out at 3:04…
In any case, DISCLOSURE…I’m not playing any of this potential upside…I’m just watching with amusement…and meanwhile, waiting for opportunities to give Franklin the BEAT DOWN if and when the fumes of that part of the rally ignite
May 26th, 2009 at 3:27 pm
Wow
Somebody just put the new Barron’s in my office.
Did anyone else see the cover?
May 26th, 2009 at 3:29 pm
No… but its a sure bet that if you do the opposite, you will make a windfall.
May 26th, 2009 at 3:29 pm
Cvienne,
Those are just my guesses, no prophecy man, I’m just a regular dude. I’ve been saying that stuff for 2 months now.
May 26th, 2009 at 3:31 pm
I-man,
The cover is:
Luxury Real Estate
BUY NOW!
Prices of some high-end summer homes are 30% below their peak. Why they should bottom soon.
This should go right up there with the Buy AIG from them last year.
But hell, what do I know, everyone wants a jumbo loan these days and the banks are handing them out like candy, er…. wait.
May 26th, 2009 at 3:31 pm
@ben22
So tell us…what’s on the cover?
A photo or illustration?
or was it the Prechter interview?
May 26th, 2009 at 3:32 pm
yup. i subscribe to it. : ) you wouldn’t believe the conversations i’ve had this weekend. : ) wait for srs in the teens.. low 19s… maybe 17.. and since FAZ is such a piece of work.. skf may be under consideration again…
May 26th, 2009 at 3:33 pm
@b22 3:27
Stop the suspense! Please tell me it’s got Cramer lying in a pool of cash and says, “Don’t be Late to this Bull $ession – The Five Financial and Commercial Real Estate Stocks You MUST Own NOW!”
May 26th, 2009 at 3:35 pm
@LB
RRRRRRRRRRRIIIIIIIIIIIIIIINNNNNNNNNNNNNNNGGGGGGGGGGGG…
It’s the alarm…It’s 3;35…you can hit the snooze for 10 minutes and wake up at 3:45
May 26th, 2009 at 3:37 pm
@LB
well I got MY part of it right…
I’d said 908-910 at 3:30
May 26th, 2009 at 3:38 pm
@ karen:
What? That XLF chart aint looking as strong to you now? Or is that just a tentative “under consideration” for ole SKF?
And I must confess, after trying my short of USO via SCO last week and clipping myself out early, you can bet I-Man spent some time looking at crude charts over the holiday.
I’ve kinda changed my mind on crude… whereas I believe it will get taken down a bit, I’m actually a buyer of the WTI uptrend, and a seller of the SPY/XLF/QQQQ uptrends. Compare the two sets off the lows, and tell me which of those is a more sustainable, healthy, uptrend.
May 26th, 2009 at 3:39 pm
but that was only AFTER you’d convinced me that Friday would be a yawner and Monday would rally…
i still defer to your KUNG-FU
May 26th, 2009 at 3:39 pm
There are 3 homes on my street of 15 properties for sale priced from 5.9 to 12.5. If any one of them sells for over 5 million, I will choke. There is also a lot for sale that has been reduced from 7 million to 2.75 over the last couple of years. I doubt it’s worth 1 million. So you can imagine how I smiled at the Barron’s cover.
May 26th, 2009 at 3:40 pm
There’s probably some Barron’s people living in Luxury Real Estate who want to unload before the prices fall any further. Sold to you… LOL
May 26th, 2009 at 3:45 pm
Maybe the editor of Barron’s lives in the Hamptons…
May 26th, 2009 at 3:45 pm
I-man, no i’m still waiting for FAZ in the 2s and 3s.. but it’s such a funky ETF.. maybe skf at 36?
May 26th, 2009 at 3:45 pm
@karen
I wouldn’t even trade my acres in WVA at the most discounted price your neighborhood is trying to exit with…
The soil content isn’t as loamy…Hard to grow good EATS that way…Plus, I have my own water…i don’t need the NOCAL snowpack
May 26th, 2009 at 3:48 pm
Whoa. LB, did you start selling/shorting? SPX just dropped 2 pts in a sec.
May 26th, 2009 at 3:50 pm
Re: Barron’s
the cover is a sweet looking home overlooking some nice water, big rocks that the waves can crash up against.
Now run out and buy before you miss the move up in the luxury homes. he he.
Karen,
Please share a convo or two. I’m thinking you roll with a crowd that’s got a little change in the pocket.
May 26th, 2009 at 3:50 pm
I guess the PPT didn’t feel the need to intervene after the Consumer Confidence came in much higher than expected. Plus they need to use their influence on the Treasury auctions. So they’re saving their money for the 5yr tomorrow and the 7yr on Thursday.
May 26th, 2009 at 3:55 pm
@cvienne
I agree. Who would pay a discounted price of $2.75M for a lot? Unless of course, it comes with a gold mine.
May 26th, 2009 at 3:56 pm
@ben22
Didn’t you read?…7m – 2.75m median…
Unless they bought 15 years ago and paid cash for it…there ain’t no change in those pockets…
May 26th, 2009 at 3:57 pm
@AmenRa
The Consumer Confidence Survey involves a sampling of 5K U.S. households. Now that’s representative?
May 26th, 2009 at 4:00 pm
Now that…according to Barron’s…people are BACK ON to buy luxury homes, and the stock market is rip roaring…
Hell, the June meeting is coming up…
Why doesn’t the Fed BofGov’s take rates right back up to 5-6%…
We’re out of the woods…All is clear!
May 26th, 2009 at 4:01 pm
ben22, the biggest pocketbook was whispering to me, of all people, about the coming inflation and buying gold for protection. (he’s now decided I was right about gold after meeting with John Paulson.)
May 26th, 2009 at 4:01 pm
This market is the Energizer Bunny on Viagra. Guess we touch the 200SMA this week.
May 26th, 2009 at 4:01 pm
Well played, PPT.
May 26th, 2009 at 4:03 pm
cvienne,
I wasn’t thinking Karen was hanging out with her neighbors. Sounds like she thinks they aren’t real smart based on the sale prices of the homes. Typically people with money, hang out with other people with money.
AmenRa,
The PPT has no power btw. If they did, we would have never gotten this far. The bags of credit they hold are not enough to stop the credit deflation. I’m now officially a broken record
May 26th, 2009 at 4:05 pm
fwiw, my records show the owner of the lot paid $525K in 02/98. Sorry, I shouldn’t have opened this can of worms..
May 26th, 2009 at 4:06 pm
Karen,
Isn’t that interesting…..
Is JP really worried about inflation in the near term???
If that’s what big money is whispering about now I should be one wealthy SOB by the time I reach 50, damn these people are slow.
May 26th, 2009 at 4:07 pm
karen,
that’s about what I expected, you don’t run in hoods like that without a little scratch outside of the home.
May 26th, 2009 at 4:07 pm
Back in the saddle here in Minny. I can see not much has changed in the la-la land that is the markets after a brief respite last week. Business as usual. Everyone’s gotta recoup those losses by pumping this thing higher. Will be interesting to see what happens when everyone runs for the exits at once like the other bubbles we’ve just seen. And, no, we clearly haven’t learned anything. DOW 14,000 and S&P 1,500 here we come baby!
May 26th, 2009 at 4:08 pm
Wonder how big the HELOCs were for those peep with the $7m homes? Everyone was doing it, I hear… over on the right hand side of the map there are a lot of $2M-5M sales in Fraudfield County, CT as well. No takers….
Karen, you are surely right about FAZ, but I do like it for 24-36 hour swing trades. We entered some short positions at 3.57pm, more or less as planned last week. Added to our short of crude oil with inventories upcoming. The long $, short oil trade may not work tomorrow or this week, but the turn-around is coming. I agree with David Rosenberg that eventually even Treasuries will be more appealing than Green Shoots.
SPX 910-915 was sticky today. Lower highs still in effect for the time being. Playing this as a range-bound market between SPX 875-930 for now. If the bottom falls out of it, I’ll be surprised.. but wealthier.
May 26th, 2009 at 4:11 pm
“he’s now decided I was right about gold after meeting with John Paulson”
Ah, one of those Tools who only believes humans with a Y chromosome. That can be hazardous to your wealth.
May 26th, 2009 at 4:11 pm
@Pat G.
No it itsn’t. But it gave the MSM and the market enough of a push to move the market higher. Currently fundamentals mean nothing. It’s all about sentiment.
@ben22
The Fed, US Treasury, and primary dealers are out of money. They’re praying they don’t get margin calls.
May 26th, 2009 at 4:14 pm
ben22, i have no idea what paulsen is thinking about inflation.. it’s been widely publicized in my internet circles that paulsen had gone long gold… here’s an article i found on a quick search right now:
http://www.fiercefinance.com/story/praise-john-paulson/2009-05-25
but i originally read about it at mineweb.co.za/
while long gold, i still have a small short position on.
May 26th, 2009 at 4:16 pm
@karen@ben
ben…you’ve heard me a million times (now I’M a broken record), on gold…I’ve owned it since 2004…the bullion, NOT the paper…
But I think it doesn’t break out just yet…I’m in the pullback camp (despite all the THREATS last week to break out)…
I gave BOTH OF YOU my “holiday” thesis…If they can’t break gold out (up or down) over a holiday weekend on light volume, it gives up and goes the other way…NEXT STOP – JULY 4th…we’ll see where we are then…
Anyway, another thing about GOLD keeps nagging at me…If we are indeed heading for INFLATION (after the DEFLATION that we all agree about)…Then why wouldn’t Obama just do an FDR and confiscate everyone’s gold at the point in time that the country needed it to offer as a balance of payments…
So get this…the USG engineers a lid on gold prices for awhile, INFLATIONISTAS get tired or bored and give up…Then the USG takes it all off their hands for a fixed price & pays off the Chinese who want it…
I’m starting to think SLV might be the play…
May 26th, 2009 at 4:20 pm
ben22, there are 3 or 4 recent sales that may or must be underwater from the purchase price. 1 of those is for sale, now, again. another of those sales was cash, so they do not care. and, a third, i do know is heavily mortgaged… but not for sale at this time : )
i have an entire file of data on my street : )
May 26th, 2009 at 4:21 pm
Karen,
thanks for the link. A position in SGP, gee, that was smart. He has gold and financials.
Cleary he (JP) is a killer and ultra competitive. He’s made enough money in the last two years to last 20 lifetimes. I think he enjoys making others look dumb.
This is enough to make me wonder about credit deflation. Always looking for holes to poke.
May 26th, 2009 at 4:21 pm
cvienne: Your thought processes are too complex at times. Think about all the OTHER useless currencies out there. Competitive devaluation will delay the inevitable moon rocket in gold. They WILL take it down soon, BTW.
May 26th, 2009 at 4:23 pm
Karen,
have you ever seen the move The ‘burbs, with Tom Hanks.
Stalker.
May 26th, 2009 at 4:26 pm
@AmenRa
And what about the sentiment of all those U.S. home owners who saw their property values plummet by 19% in Q1? We are comparing 5K people to several million.
May 26th, 2009 at 4:26 pm
another great link! I didn’t know the my love, David Einhorn, was into gold too.
Hedge funds are turning to gold to mitigate potential inflation as governments around the world increase spending to stimulate their recession-bound economies. David Einhorn, founder of New York-based Greenlight Capital Inc., told investors in January that he is buying gold for the first time. Hayman Advisors LP’s Kyle Bass said investors are seeking precious metals as central banks print more money.
http://www.fundmymutualfund.com/2009/03/john-paulson-joins-david-einhorn-as.html
May 26th, 2009 at 4:28 pm
ben22! no! and the reason i have the darn file is because i was doing research before buying a lot on the street…
May 26th, 2009 at 4:30 pm
@cvienne
“Then why wouldn’t Obama just do an FDR and confiscate everyone’s gold at the point in time that the country needed it to offer as a balance of payments…”
That’s why I own substantially more silver than gold. Fool me once, shame on me…..etc, etc.
May 26th, 2009 at 4:31 pm
Here is a problem that is coming to the initial claims numbers any day now:
http://globaleconomicanalysis.blogspot.com/2009/05/jobless-graduates-face-dismal-jobs.html
@karen: You love David Einhorn AS WELL as California surfer boys? DL will be quite jealous.
May 26th, 2009 at 4:35 pm
I meant movie above. The ‘burbs is funny, at least I think it is.
Re: Gold,
If I owned a lot of physical I wouldn’t store it in the US.
I wonder how many other hedge funds bought/are buying gold. I wonder how many bought up near the peak in Feb.
May 26th, 2009 at 4:36 pm
leftback,
better not show that to franklin.
May 26th, 2009 at 4:37 pm
Things that make you go…. hmm…
http://www.nakedcapitalism.com/2009/05/fall-in-libor-may-overstate-improvement.html
May 26th, 2009 at 4:39 pm
@LB
It (the timeframe) doesn’t bother me in the least UP or DOWN…
I’m simply relating my past experiences as I’ve been a holder of the bullion since 2004 @ $375 (so I watch all the crazy gyrations here and there and try to make some “micro” sense)…
At the moment I’m neither a buyer or a seller…
My last major BUY on gold bullion was right when I sold my house in early 2006…I’d gotten a nice 250% run up in that from when I sold my NASDAQ stocks in 2000 to buy it…The “kicker” on that was that I got it for .79 cents on the dollar because I was converting dollars to Euros…When I sold it, the Euro was 1.34 to the dollar so there was near a 50% improvement on that too…
I’m just a hack…
I knew nothing about NASDAQ in 1991 (when I bought)
I knew nothing about real estate in 2000
I knew nothing about gold in 2004
Hell, I got the idea to BUY gold from watching Hugh Hendry on CNBC Europe in 2004…
I’m just a hack…
May 26th, 2009 at 4:40 pm
Re: consumer confidence: http://econompicdata.blogspot.com/2009/05/consumer-confidence-spike.html
Check out how the expectations skews the data! All the other components were actually worse than April, but since the propaganda campaign, the rising stock market, and – well – spring, lifts the people’s spirits it must all be getting better. Rally on.
May 26th, 2009 at 4:40 pm
ben22, u make a good point. they are keeping it in zurich. no one makes more typos than I do : ) i didn’t even notice your move/movie.
lb, do not get me going about david einhorn. not all his investments have been as hot as he is, though. lol.
May 26th, 2009 at 4:47 pm
cvienne,
I remember that holiday bit you put out there. That was pretty interesting. I actually wrote that down. Still just watching gold, no positions long or short.
Take note of what Karen just said about where smart money is keeping the gold since i’m thinking you have all yours in WV or MD.
I know Faber has advised in his letters to get your physical the hell outta here and to look at Canada or Australia.
I like Faber, I typically find it good advice when he says stuff like that.
May 26th, 2009 at 4:50 pm
@Onlooker from Troy Says:
Yep, that just about encapsulates the whole consumer confidence spin. It’s really not about sentiment anymore but more about propaganda. Since the vast majority of Americans get their news from the TV and either don’t read, can’t read or comprehend for themselves they are utterly clueless.
May 26th, 2009 at 4:53 pm
Believe it or not, the 10-year and the US$ is not going to sell off day after day after day. The stock market is not going to SPX 1100. Gold is not going to $2500. Not yet anyway. It just feels that way:
http://zerohedge.blogspot.com/2009/05/10-year-hits-350.html
Anyone got a guess on where buyers come in? 3.50% and US$ 80 was my guess, so that’s right here, right now….
May 26th, 2009 at 4:54 pm
seriously, i do not believe the gold confiscation stories.. and i think the very wealthy like to keep money in varied physical locations, because they can and because they have residences there. I’m trying to avoid talking about how i like to KISS, but there i go, anyway.
May 26th, 2009 at 4:59 pm
@ben22
Do you really think I’m going to tell you where my 5 kilos of gold are stashed cowboy?
May 26th, 2009 at 5:01 pm
@karen
Bingo…
Not that I’m VERY WEALTHY…But let me tell you…VARIED LOCATIONS is the key term here…
May 26th, 2009 at 5:02 pm
karen,
I thought about that myself because I will eventually begin to accumulate some physical. Really though, do you trust that it can’t happen here? Why take the risk, I see getting it out of here as being like putting a stop loss. We’ve already all been robbed blind via TARP, etc.
Leftback,
I don’t know what to make of the dollar yet, but I’m a dollar bull over the next $12. I read some links for some larger money managers over the weekend and I think a lot of them were looking at 79-80. As for the long bonds, who knows, I actually commented that going into the summer here I was thinking of taking a position in TLT.
I aslo don’t think 1,110 is in the cards, though, I suppose I wouldn’t be shocked by that madness. The overchute is now my target from months ago 965-1k. Just my best guess at this time.
May 26th, 2009 at 5:02 pm
karen,
I thought about that myself because I will eventually begin to accumulate some physical. Really though, do you trust that it can’t happen here? Why take the risk, I see getting it out of here as being like putting a stop loss. We’ve already all been robbed blind via TARP, etc.
Leftback,
I don’t know what to make of the dollar yet, but I’m a dollar bull over the next 12 months. I read some links for some larger money managers over the weekend and I think a lot of them were looking at 79-80. As for the long bonds, who knows, I actually commented that going into the summer here I was thinking of taking a position in TLT.
I aslo don’t think 1,110 is in the cards, though, I suppose I wouldn’t be shocked by that madness. The overchute is now my target from months ago 965-1k. Just my best guess at this time.
May 26th, 2009 at 5:02 pm
Oh Gold…
Your potential Inverse Head and Shoulders consolidation is so hot… I think you have nice legs… to 1300 anyway, despite what all your haters say.
May 26th, 2009 at 5:03 pm
@karen
“i do not believe the gold confiscation stories”
If it happened once, which it did, why couldn’t it happen again? There are bills in Congress to reinstate the gold standard in one form or another. And to do that, without confiscation first, would cost the USD dearly. It would be a real boon
May 26th, 2009 at 5:05 pm
+3% on the 10-year was bad news, 3 1/2%, worse..
there’s something totally different going on..
as ben22 was asking, a while ago, whither the 10-yr?
looks like ~116 is going to pay a visit, afterall..if lb isn’t correct about the ‘right here, right now’..
http://quotes.ino.com/chart/?s=CBOT_TY.M09&v=dmax
the only + is that it’s somewhat extended to the d-side..
http://quotes.ino.com/chart/?s=NYMEX_SI.N09.E&v=dmax
lb, the Time is neigh..
what’s the alt. scenario?
May 26th, 2009 at 5:05 pm
sorry about the double post, was trying to fix the $12 to 12 months. typing way to fast. all these green shoots are making me crazy.
May 26th, 2009 at 5:06 pm
I hit the submit button too early.
It would be a real boon to precious metal holders if they didn’t confiscate first. So who do you think they’re going to protect first, holders of the USD or holders of precious metals?
May 26th, 2009 at 5:07 pm
@I-Man: I suspect that Karen has nicer legs than gold. All that walking on the beach…
May 26th, 2009 at 5:08 pm
cvienne,
thinking back to some of your posts I’m thinking you’ve probably got some bunker in Peru where you keep it all.
May 26th, 2009 at 5:13 pm
@ben22
My favorite are the 1k ingots…a little bigger & fatter than a Snickers bar…
If you believe, as karen says…that the USG will not confiscate them…you can keep them near and polish them up…If you’re “worried” about confiscation (like I am to a ‘certain’ degree, but that’s just my CAUTIOUS nature), keep ‘em abroad like Faber says…
When I bought the stuff, the ‘confiscation’ thing was the furthest thing from my mind…It’s only recently when I saw this country elect a President who jacked up $2 trillion in spending in 60 days that my radar screen went up…
But I’m just a hack…
May 26th, 2009 at 5:15 pm
based on logistics and feasibility alone, i consider gold confiscation by the government an impossibility. add to that, the retaliatory effects.. and i say, no way. everyone is entitled to their own opinion, however.
that’s not to say i wouldn’t love to have gold in a zurich vault; but my reasons would be different.
May 26th, 2009 at 5:20 pm
@ben22
I’ll need a bunker in Peru if i go the SILVER route…
5 k’s of gold is like 5 Snickers bars…
I keep my silver closer to home…
And people…DON’T JUST BRUSH ME OFF AS A QUACK IF I TALK ABOUT SILVER VERSUS GOLD UNDER THE “CONFISCATION” SCENARIO…
I’ll cite two simple examples and let superior minds debate the virtues:
1. Technically, silver is UNDERPRICED versus GOLD at the moment
2. SILVER price increases tend to have a higher correlation on INFLATION scenarios versus GOLD price increases which also do well, but tend to be more of an ARMAGEDDON trade…Do your own research…
Moreover…If OIL prices get back down to $40 or below (I’ll forget the SILVER trade altogether and buy CRUDE)…
Bottom line: I’m neither a buyer or seller today of any of the three
May 26th, 2009 at 5:21 pm
well, it’s never “easy”
but
DSX mid month after the capital raise announcement. That was about the easiest trade ever in the low $14’s
May 26th, 2009 at 5:23 pm
@karen
Don’t trust the Swiss…It took Hitler about 3 seconds to everybody’s gold outta there…
May 26th, 2009 at 5:26 pm
Leftback that was way too easy… you took the bait hook line and sinker. That was a “setup Leftback to flirt with Karen post” if I’ve ever dropped one.
Seriously though… Gold is looking damn fine here to my eyes… at worst, its making a big box pattern… but I’d say that Inverse H and S is gonna be the way she plays out.
Kinda like I’m too chicken to short crude because of the Ahmadinejad Call (TM) I could argue that I’m a sucker to get long gold for the same reason… call it the Geopolitical Gold/Oil Punt Trade. (TM) Could be some money in that badboy if the Koreans keep testing nukes, the Iranians keep launching warhead capable missiles and dispatching warships to the Gulf of Aden, and Netanyahu grows any more chest hair.
I gotta learn how to type up that TM if I’m gonna keep tagging these…
May 26th, 2009 at 5:27 pm
@cvienne: I never brush anyone off as a quack who spends a lot of time discussing physical Au/Ag. Smirk…. No, not being sarcastic, but with all of the massive intervention out there, it’s hard to commit that fully to ANYTHING.
May 26th, 2009 at 5:29 pm
leftback @ 4:31
Funny guy.
May 26th, 2009 at 5:30 pm
@cviene 4:16
“Then why wouldn’t Obama just do an FDR and confiscate everyone’s gold at the point in time that the country needed it to offer as a balance of payments…”
He’s no dummy — why confiscate it, when you can impose a special tax on gold sales? Gold is already treated as a collectible, denying it long-term capital gains, is it such a short step to taxing the bejesus out of it?
May 26th, 2009 at 5:33 pm
I-Man: Thanks, man. Nice pass. I was just standing at the far post waiting to tap it in. I never miss those.
Shall I reveal the secret of how to code the Leftback Trademark™ ? You need an old guy to teach you something about computers? (It’s option-2 on my Mac).
May 26th, 2009 at 5:34 pm
@Pat G.
Well the Case Schiller isn’t a survey of all home prices but a select group. Same thing applies to consumer confidence. The only question is how representative of the populace are the survey participants.
May 26th, 2009 at 5:35 pm
LMAO…
That was my best cross.
InI must disclose that I was a “rightback” in my soccer days…
And computers are babylon…
May 26th, 2009 at 5:38 pm
@constantnormal
I’m with you on such creative notions (which is why, despite my HOLDINGS of the bullion stashed in various places, I have ‘hedges’ set in my mind as to what might eventually occur)…Obama doesn’t even have to pull and FDR…Witness government actions “further back”
The Sherman Silver Purchase Act
was enacted in July 14, 1890[1] as a United States federal law. While not authorizing the free and unlimited coinage of silver that the Free Silver supporters wanted, it increased the amount of silver the government was required to purchase every month. The Sherman Silver Purchase Act had been passed in response to the growing complaints of farmers and mining interests. Farmers had immense debts that could not be paid off due to a series of droughts, and they urged the government to pass the Sherman Silver Purchase Act in order to boost the economy and cause inflation, allowing them to pay their debts with cheaper dollars.[2] Mining companies, meanwhile, had extracted vast quantities of silver from western mines; the resulting oversupply drove down the price of their product, often to below the point where it was profitable to mine it. They hoped to enlist the government to artificially increase demand for, and thus the price of, silver.
Under the Act, the federal government purchased millions of ounces of silver (it became the second-largest buyer in the world, after the government of India); this eventually led to inflation and contributed to the Panic of 1893. In addition to the $2-4 million dollars that had been required by the Bland-Allison Act of 1878, the US government was now required to purchase an additional 4.5 million ounces of silver bullion every month. The law required the Treasury to buy the silver with notes that could be redeemed for either silver or gold. That plan backfired, as people (mostly investors) turned in their silver Treasury notes for gold dollars, thus depleting the government’s gold reserves. After the Panic of 1893 broke, President Grover Cleveland oversaw the repeal of the Act in 1893 to prevent the depletion of the country’s gold reserves. The repeal of the Act is sometimes blamed for the Panic, but the Panic was already well underway.[3]
After the FINAL PANIC in 1893…It ended up all to be a big wash and a bunch of nonsense…
In a way, that’s why I keep my gold overseas…It will most likely be more valuable THERE than HERE…
May 26th, 2009 at 5:39 pm
“Same thing applies to consumer confidence. The only question is how representative of the populace are the survey participants.”
They are highly representative – of guests on Kudlow smoking crack and green shoots, baby !!
May 26th, 2009 at 5:40 pm
@cvienne
You are well schooled in precious metal technicalities. Certainly, no quack.
@karen
“the retaliatory effects”
Like how all of us have retaliated as our 401Ks lost half their value? Or like, how they punish savers versus spenders with a 0% Fed funds rate? Or like, how they broke the buck on money markets funds? Or like, how they are now mortgaging our children’s future with Treasuries to pay for the greed of their campaign contributors? Or like, how the CBO is calling for NO COLA increases over the next three years. And what about those SS trust funds, where’s the money? All been spent. Our government is like Robin Hood in reverse. Steal from the masses and give to the already wealthy.
May 26th, 2009 at 5:44 pm
@Pat G
Now if I could only get those “detectors” at the airports to stop going off when my skull passes under them…:-)
May 26th, 2009 at 5:46 pm
…from my lobotomy…
May 26th, 2009 at 5:46 pm
But as they say…
“I’d rather have a BOTTLE IN FRONT OF ME…then to have a FRONTAL LOBOTOMY”…
May 26th, 2009 at 5:47 pm
“Like how all of us have retaliated as our 401Ks lost half their value? ”
Good post, Pat: with the “green shoots”, sheeple still think “the market always comes back”, so it’s OK. I’m thinking that the next big crash might really set off a firestorm of protest from hapless buy -and-holders.
What will it take? A 75% haircut? 85% drop, Nikkei style?? Or do people now accept it’s a casino? (which it is)
May 26th, 2009 at 5:47 pm
well, i didn’t know about option 2, either, and i’m wowed by it… what other tricks can you teach us, leftback? : )
May 26th, 2009 at 5:49 pm
Certainly you are no quack. But there are a lot of ducks out there.
May 26th, 2009 at 5:49 pm
@leftback
LMAO
May 26th, 2009 at 5:50 pm
@LB
Mathematically it’s a 1 in 3 proposition, but I was always the GOOSE in DUCK, DUCK, GOOSE
May 26th, 2009 at 5:53 pm
@karen: option-2 is just the beginning. We can now discuss the £ as well as the $. Smooth, eh?
May 26th, 2009 at 5:53 pm
@AmenRa
By representative, I mean numbers. The Case/Schiller Index is a compilation of numbers from twenty metropolitan regions across the United States. While the Consumer Confidence Survey polls just 5K households. Which has greater depth/meaning? Especially, when it relates to the economy.
@ cvienne
That’s too funny…
May 26th, 2009 at 5:53 pm
@karen
cmd-opt-t on the mac will open the character palette. You can find all of the symbols in there.
May 26th, 2009 at 5:57 pm
hey, i just found the currency symbols; that is fun. wonder how many more will be extinct before long. i actually have the international keyboard viewers on my safari bar (or whatever it’s called.)
May 26th, 2009 at 6:00 pm
@karen
cmd-opt-”f” +”c” is the character palette that displays a the back of a tightly clenched fist with the middle finger pointing upwards if you ever desire to say…
“EFF you Chet”…:-)
May 26th, 2009 at 7:04 pm
I guess people think a GM BK ignites a new bull market after a day wake? All the worker income losses, closed dealerships. People just can’t imagine all the fallout. What happens to PBGC? Set their premiums high enough and bye-bye to private pensions in the US of A at the same time 401Ks are being gutted.