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  • Eighteen months on, there has been no real explanation for what caused the "flash crash" and no evidence that the fundamental problems behind it have been fixed, which means 2012 could bring another, potentially more damaging freefall in the markets.  [View news story]
    I have been watching Fox Business, Bloomberg Business,
    CNBC, reading SA, and Real Clear Markets for almost two years now, and I have seen multiple "explanations" for the Flash Crash. In all of the explanations I have seen there are two common themes, a utter lack of confidence in the institutions that were central to the crash, and a lack of confidence in the ability of government to sit aside party politics and legislate common sense, eaisly implemented, regulatory schemes to prevent it from happening again.
    Do I expect a repeat of the Flash Crash ( lasting 18 months from crash to recovery) ,,,,,,no,,,,,I expect it to be much, much worse.
    Jan 2 10:01 AM | 1 Like Like |Link to Comment
  • How the tides have turned. U.S. financial firms are taking advantage of the eurozone's debt crisis to pick up assets owned by cash-strapped regional banks. European financial institutions may shed as much as $3T in assets over the next 18 months. Deals are likely to spike ahead of the June deadline for European banks to raise more than €114B in new capital.  [View news story]
    I have an asset that is worth 10 billion in todays current book value, I sell it to you for 10 Billion dollars, but economic collapse results in that asset devaluing by 50%, you now have an asset worth 5 billion and I still have 10 billion of your dollars, and you get to take the hit and also explain to the "Board" why your stock just tanked.

    Also accounting 101.

    In addition to the EU banks selling off assets, they are also walking up to the Federal Reserve Currency Exchange Window and trading for US dollars. I sure hope they are using Franc's, Marks, or Pounds, or gold, and not swapping us Euro's for dollars, as they could trade at current rates, they buy them back after the fall of the Euro and keep the difference,,,,,,,That is if they WILL want to buy them back.
    Dec 26 05:26 PM | 1 Like Like |Link to Comment
  • MC poll: What are your predictions for 2012? Which way will stocks go? What about oil and gold? What will happen with the eurozone crisis, or U.S. unemployment? Any under-the-radar stocks or ETFs worth keeping an eye on?  [View news story]
    I wish I could share in the optimism of many on here, but I do not.

    A continuing series of geo-political crisis in the middle east, and a possible pre-emptive strike against Iran's nuclear facilities by Israel will keep oil prices volatile .

    Complicating this will be the realization that the EU has failed to address the financial crisis. The EU banks are dumping assets at fire-sale prices, and converting Euros into dollars at the Federal Reserve Exchange Window, which leaves the Federal Reserve holding currencies that have the potential to be utterly worthless in an EU collapse. The real race is which nation will be first to default.
    Sovereign debt interest rates ( Italy 7%, with what I ask) will increase. The political "will of the people" will dictate limits to the national leaderships on available courses of action, and the populist opinion ( UK and Germany) will boil down to protectionist policies and an unwillingness to act against domestic political self interests. The EU will fall, the only question is when.

    Domestically 2012 will focus on the election and it will be a "dog fight" that would make even Mike Vick vomit in disgust. Obama will suffer from several more "stimulus loan" Crony capitalism scandals lurking over the horizon, including Light Squared, and several more "green companies" will fail. No tax reform deal or entitlement reforms will happen, and the Republicans will continue to be tarred with the brush of "obstructionist" all the while Harry Reid will continue to do his best to make sure no House republican bills will reach the Presidents desk. The race for the Republican nomination will boil down to Romney or Newt, regardless of which wins, the question of the day will be if they so savage each other in the primaries,that offering the VP slot to the other would be out of the question. Together they are a ticket that would be tough to beat, apart they hinge the election on the VP selection, with Romney needing someone with strong conservative creds, and Newt needing someone more moderate,,,and organized. Ron Paul will continue to be a lightning rod for conservative critics who will paint this libertarian, isolationist, racist, neo-Nazi endorsed, lunatic as representative of conservative policies and values.Two possible independent candidates will emerge, Ron Paul, and the "Donald", and the long knives of the opposition researchers are already digging into both. I am certain there are new chapters being written in the DSM-IV about both.

    The combination of global uncertainty, multiple geo-political crisis, a possible strike by Israel against Iran leading to a US Iranian military confrontation in the Gulf, the certain collapse of the EU, and our own domestic political belligerence should be great for those who can read the signs and know when to get in, and when to get out, but if we are not careful in our decision making, 500 to 1000 point swings may become the new normal for a market that has proved conclusively it will react and frequently over-react to such stimulus.

    Obama can still win reelection, but an unstable economy will not appeal to moderates who Obama can not win without. A continued growing US debt, a reactionary market, the unwillingness of business to hire in the face of a regulatory burden and taxation scheme that retards growth, and Obama may very well assist the hangman in slipping the noose over his own head, in contrast if he moves to appease and win back the support of moderates, those policies may result in a proportionate loss of support from his base who grow more disillusioned with the lack of leadership. Even if Obama wins reelection, it is unlikely that the House will change hands, leaving him with two choices, cut deals with the Republican house to get anything done, or continue the legislative dead lock earning him the well deserved title of the most ineffective President this nation has ever had.

    If Obama had correctly responded to the 2010 election result, there is a lot of good he could have done in negotiated compromises with the Republican House, but his desire to appease the left wing and his inability to temper his own self rightousness and radical ideology, with politically practical actions, prevent him from functioning rationally. Obama has no Clinton in him.

    Substantial market correction in the works, unemployment will rise, and we will play out the Federal Reserves doomsday scenario they are testing the banks for as we eat the leftovers.
    Dec 26 04:41 PM | 4 Likes Like |Link to Comment
  • While some believe the ECB's new collateral and loan rules amount to a backdoor QE, allowing banks massive firepower to purchase sovereign debt, the banks themselves think differently. "When investors are constantly asking what you have on your books, and the board is asking you to reduce your exposure, it doesn't really matter," says the treasurer of a major EU bank. "Am I going to buy Italian bonds? No." (see also i, ii, iii)  [View news story]
    I read in Market Currents last week where in the first weeks of Dec., EU banks "swapped" for 58 Billion at the Federal Reserve "exchange window". Now what on earth did they "exchange", Euro's to dollars, that sounds like a US TARP like finance of the EU bailout to me. Now what happens when the Euro falls flat through the floor and we are holding ( God and Ben Only knows) perhaps as much as 200 to 300 Billion Euros, and the EU banks have spread our dollars out on deposit withdrawls,,,,,or perhaps even buying more EU debt bonds just to head off an "un-orderly " default by Italy......Watch out for the downgrades that are being stacked to go out after the close next week, and the ones that went out on Friday after the close that may not have been discounted by the markets yet.. Merry Freaking Chirstmas.
    Dec 18 09:08 PM | 1 Like Like |Link to Comment
  • George Soros' family fund purchased $2B of the European debt formerly owned by MF Global in the days following its collapse, according to sources. The buy includes a large amount of Italian paper set to mature in Dec. 2012, so it's safe to say Soros and his CIO Scott Bessent have faith there will be no default before then.  [View news story]
    Would not surprise me if this was Soros covering his "position" or his ass.
    Dec 8 11:56 PM | Likes Like |Link to Comment
  • Gold may be losing some of its luster, says Dennis Gartman. We've reached a point of uncertainty here, and with many portfolio managers behind versus their benchmarks we may be facing an end-of-year long liquidation in the yellow metal as hedge managers move out of the metals towards an overweight in stocks. (video)  [View news story]
    You really want to see the "end of the world" value of gold?

    I bought IShares Gold trust. needless to say the price of gold has fallen since I bought, and I am holding it looking for a getting out point.

    One day I see an article where Gold is supposed to hit 2200, then I see a article or comment where it is supposed to correct down,,,again.

    On Friday, the market soared, as did Gold, on good news in the EU. Today it was going up again and gold was down even though the Euro gained against the dollar.....Heck I thought a weak dollar made the price of gold go up.

    I am done with gold, and as soon as I see the next upswing, I am out.

    PS if you really want to know what the "end of the world" currency is going to be, trust me, it will be lead, little round balls of it.
    Dec 5 11:24 PM | 2 Likes Like |Link to Comment
  • Rich people don’t create jobs - demand does - millionaire entrepreneur Nick Hanauer writes. “When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution... it’s the other way around.” The rich should be taxed more, he says, so their money can be used to improve the purchasing power of the middle class.  [View news story]
    You know I got a Masters Degree around here somewhere, I have run my own business for almost 20 years, and for the life of me I can not fathom how taxing the rich "improves the purchasing power of the middle class" as Nick wishes us to think.

    Note to Nick: If you feel so strongly about it, go to the ATM, withdraw your daily limit on your gold card, then go to the local market and find somone who is middle class and give them the money, then repeat each day until you are satisfied you have given your fair share. I can assure you, you will feel better about yourself, and you will certainly be more efficient than the US Government ever could be.
    Dec 2 07:55 PM | 6 Likes Like |Link to Comment
  • "The Fed has the authority to buy foreign government debt," said Ben Bernanke in 2002. "Potentially, this class of asset offers huge scope for Fed operations." With the ECB's hands apparently tied as the eurozone crisis threatens to spiral out of control, has the time come for the Chairman to step in? "The Fed needs to buy up every single European bond owned by every single American financial institution for cash," says Brad DeLong.  [View news story]
    Isn't it funny how just last week the FED announced a new and expanded stress test for US banks that centers around the scenario of a total EU banking collapse, GDP loss of 6.5%, and US unemplyment rates of 13% or higher lasting for over three years.

    If Brother Ben's plan is to become the buyer of last resort for not only US bad debt, but also EU bad debts, he does not need a "window" at the FED, he needs a G20 lane drive through.

    There is a song that keeps playing in my head, a Billy Joel tune that had a chorus line in it that said " and we will all go down together, yes we will all go down together".
    Nov 27 07:18 PM | 1 Like Like |Link to Comment
  • The Jefferson County, Alabama County Commission votes 4-1 to file for Chapter 9 bankruptcy protection. Coming at the end of a back and forth process that's been going on as long as Greece, it would be the largest municipal filing in history, stemming from billions in debt taken on for the Taj Mahal of sewer treatment plants.  [View news story]
    I live in Alabama and I own some of that Sewer bond. The deal was as crooked as they come, and given how the corruption occurred I can not see how someone at JPM did not at least suspect what was going on, if not actually look the other way.
    For those interested, here is a time line from the start fo this fiasco, right up to todays vote for Chapter nine.
    Nov 9 08:18 PM | 1 Like Like |Link to Comment
  • The Jefferson County, Alabama County Commission votes 4-1 to file for Chapter 9 bankruptcy protection. Coming at the end of a back and forth process that's been going on as long as Greece, it would be the largest municipal filing in history, stemming from billions in debt taken on for the Taj Mahal of sewer treatment plants.  [View news story]
    I got 10K in that "sewer bond", it was supposed to mature in I think Aug of next year......Thank God it is insured, but I am guessing it will be a long wait to get paid out. There is a long and very sorted story behind this bond deal, and folks did manage to go to prison over it. SO I guess between waiting for the insurance to pay off the bond holders, and knowing that some jerks are wearing orange jump-suits behind it, life does still manage to have its little compensations.
    Nov 9 07:56 PM | 3 Likes Like |Link to Comment
  • The Greek referendum on continuing within the eurozone looks to be set for December 4. Earlier, Sarkozy and Merkel said Greece will be cut off from any further aid until after the vote. Merkel made clear that stabilizing the eurozone is goal number one, rescuing Greece the lower priority.  [View news story]
    I get it, this is like when the Titanic was sinking and the band played right up until they got water in their horn section. The Communist control the unions, the anarcheist want the entire government to collapse, and the rest of the EU is fending off public opinion to cut the PIIGS out of the EU, but the governments know that most of their banks are drowning in debt from the very people they are now willing to save, even if they have a gun pointed at their head to convince them it is right. You know at some point when "rome was burning" I am certain someone, at some point, stopped pissing on the fire, and reached for a bag of marshmellows. To bad the OWS does not get CNN, they might learn something from what comes next. The real question is just how much exposure do US investment banks and investors have to this fiasco, and will the socialist "crack heads" figure out that there are worse things than going cold turkey.
    Nov 3 12:46 AM | 2 Likes Like |Link to Comment
  • European leaders say that Greece will receive no more bailout aid from Europe until it agrees to meet its commitments to the euro zone. Speaking after talks concluded between senior EU leaders and Greek Prime Minister George Papandreou, French President Nicolas Sarkozy told a news conference: "Our Greek friends must decide whether they want to continue the journey with us."  [View news story]
    Look, neither the anarchist nor the communist in Greece want to take the EU deal with the austerity package it involves. The anarchist don't want it,,,well because they are anarchist,,,and the communists still want a free lunch. This portends bad news for not only many of the Euro banks, but also here in the states. We still have no freaking idea what our exposure is to the debt of the PIIGS, and one has to ask what a 70 to 100% haircut will do to many of the investment banks here in the states. In essence, with this vote, the Greek PM is asking a bunch of crack heads if they want to go cold turkey while handing them a freshly loaded crack pipe. What I would like to do is send a bunch of the OWS crowd over there to watch it all fall down, then ask them if all this socialism they support is such a great idea when the collapse is now a certainty.
    Nov 3 12:46 AM | 1 Like Like |Link to Comment