Reinko

Where's the Bottom? Still Anybody's Guess

A fiat money system like we can can survive a long time if the money supply is under control. There even are some simple laws that guide what money growth should be:

M3 money growth = GDP growth + inflation growth.

But the US Federal Reserve stopped publishing M3 money growths years ago with the weird argument 'This number gives no additional economical insight' (or words like that).

Of course a fiat money system can blow itself up if it is too far in the debt, this is called a Ponzi financial unit.
In a Ponzi financial unit the debt is so high that even for the interest more borrowing is needed.

As soon as the debtors find this out, the plug will be pulled.

An example of such a Ponzi unit is the combined US financial sector;

Even this last year when the credit crisis started they borrowed over 1500 billion more, now the total debt is over 16,500 billion US$ and is growing 10% a year.

The whole problem only emerges when the speed of borrowing is far above GDP growth, this is the case for many years in the USA.

And that is simple to explain: Alan Greenspan never did see the dangers coming with entire sectors borrowing themselves to death...

Why's Bear Trading at Nearly 3x JPMorgan's Buyout Price?

And hup hup hup, I have read a few dozens of articles of the (former) Bear bank but nowhere is just anybody explaining why the (former) Bear bank would need about 13 trillion in derivative positions...

That is compareable to the entire US GDP of 2007 but it is peanuts when you study the files of the Bank for International Settlements in Basel, Swiss.

How can you tell is the stock stuff is more or less than 2 US$ a share when you have no insight in these utterly weird derivatives positions?

And why are there no news articles found around that US GDP size of news? Only peanut stuff like the employees can vest or not?

Bear Stearns Deal Should Happen at $2 - MS

This is just another article with some Bear Stern stuff in it, bun none of the articles are about the question why the (former) Bear bank would need up to 13 trillion US$ of derivate contracts...

13 trillion is just 13 thousand billion and about the size of the US GDP of 2007. Likely even the FED does not know what this means exactly...

Bear Stearns: Why It's Safe to Bet Against Joe Lewis

Before anything can be said about a higher or lower 2 US$ for every Bear share those folks have to explain why they need about 13 trillion in derivate positions.

Without that knowledge we can may be say: Wow in fact it is 2000 US$ or (more likely) minus 2000 US$ a share.

Nobody explains why the Bear bank needed positions like that...

Why Bear for $5 May Make Sense

To Derek Dizhi Huang:

Very informal, of course every household will be hit via this one way or the other. Wait for the rest of this year, much more beatings will be there.

To User 166164: If you can go short on stock you do not have in your portfolio your 77% of stock holded by institutinal stuff argument does not make much sense. In this financial environment elephants can fly...

To the author of this article: smart calculations, but do they bear fruit?

At last: Why is nobody reporting on the fact that the Bear bank had about 13 trillion in derivate contracts? Why should they need an entire US GDP size postition in this?
For a long time I am studying the absurd position of derivatives at the International Bank for Settlements from Basel.

It is very simple: The positions are so huge that no one will pay the stuff reported over there and 13 trillion is just peanuts I can tell you...

Yes it is peanuts, an entire US GDP is just peanuts over there!

Bear Gets Bullish on Bank Stocks

It is hard to imagine that the so called 'professionals' never look at the Federal Reserve flow of funds sheet.

If you do that you arrive at the conclusion that the entire US financial sector will try to pick up debt in 2008 in the order of magnitude of 2500 billion US$.

Don't believe me?

This is easy to proof:

Go to the Federal Reserve flow of funds sheet, here is the link:

federalreserve.gov/rel...

Go to the one before last column (total domestic financial sector debt) and scroll down until you get the last two numbers.
They say, total debt is

2007 Q2 = 14855.0
2007 Q3 = 15435.3 billions of US$.

Since 15435.3/14835 = 1.039 we have 3.9% Q on Q.

Thus a yearly estimate of 1.039^4 = 1.166 thus 16.6% Y on Y.

And 16.6% of the latest known 15435.3 billion is a rough 2500 billion US$.

Thus with letting this detail out Bear Stearns is just as crazy as that Chicago school of economists that are more an advertisement agency for the US economy.

No, the likelihood of a severe crash is climbing by the month and very likely it will start with a tidal wave of bankruptcies in the US financial sector. I mean: What can possibly stop this?

The Danger from Bear Stearns' New CEO

Well Barry, you still refuse to do your homework so let me give it once more to you:

Go to the Federal Reserve 'flow of funds' page and here is the link:

www.federalreserve.gov...

Go to the one last column (total debt of the US financial sector) and observe we have Q on Q the next:

Total debt Q2 = 14855.0
Total debt Q3 = 15435.3 billions of dollars...

Well Barry, since you are only in the denial stage, let me do the simple to understand calculations for you:

15435.3 /14855.0 = 3.9% more debt in just one quarter.

If economical conditions stay the same in 2008 (and there is nothing that points to something else) we have for the full year 2008:

1.039^4 = 16.6% more debt needed.

This amounts to something like 2500 billion more debt needed and I only wonder when you will leave your state of denial...

If Presidential Candidates Were Stocks

Correction:

The phrase (Dubya visit to Israel is guided by just 40 thousand of high explosives via air power today, thus relating politics and killing effeciently)

Is replaced by:

(Dubya visit to Israel is guided by just 40 thousand pounds of high explosives via air power today, thus relating politics and killing effeciently)

In this regard a pound is about 450 grams so we have about 18 thousand of kilo's of high explosives while there was no monitoring of the thing known as 'collateral damage' on the 43 targets of today...

If Presidential Candidates Were Stocks

This is funny because I am arguing for a lot of years already the the US military should get a Nasdaq stock listing so the 'going for oil' thing in Iraq finally made some sense...

Why not? They are technically highly advanced (just look at their air wing), they are highly innovative (Dubya visit to Israel is guided by just 40 thousand of high explosives via air power today, thus relating politics and killing effeciently) and most of all: They are the Power and the Glory.

Now this is better than gold, gold is just a stupid metal that is not highly innovative and in the future there are lots of other nations that need to be freed and, just by the way, have some commodities.

All these idiots that say it should not be Nasdaq listed, well they are just so pre 9/11.