Asbytec

The Coming Consequences of Banking Fraud

Warm Paw, I'd argue the housing crisis was the trigger, not necessarily the root cause or the problem, setting our over extended financial system into a tail spin. Being over extended, making too much money than can be supported by our economy or consumer debt, is the problem.

Too much synthetic liquidity floating around the globe fueling unsustainable growth, especially in China. Now that the liquidity bubble has burst, we are in real trouble. The central banks simply cannot reinflate to keep up with the deflation.

I am not really a conspiracy theorist, but there does seem to be some collusion between the powerful people in the world to save the banking system. It is a source of great wealth for the oligarchs, as long as folks are employed and pay off their debt. Now that the worker can't pay off debt because of high interest rates or unemployment, the money well dries up fast, doesn't it? That's because the wealth effect is nothing like real wealth. With real wealth, the consumer doesn't need to borrow from those who really are wealthy.

Right on, Jason...I am proud of our constitution and declaration of independence. The Federal reserve act is unconstitutional, in my view. So is a fiat dollar.

A Bear in Bull's Clothing: We're Not Buying This Rally

Good on ya, old trader! :) It is an interesting gold/dollar correlation. I keep reading gold will be near $1300 by year's end. Or did I read it was set for a fall? I think I read both...about gold and the dollar.

Yea, guys, I suspect the credit markets are key. You can track all the green shoots you wish, but the financial sector is still stagnate. Once they start functioning, however, look out for inflation and a sustainable rally maybe back to 14000 rather rapidly. I'm an L shaped recovery guy, but having second thoughts.

The real question for me is what then? I am still dollar bullish as we begin to recover. I am sure excess liquidity will be rapidly mopped up...and 4 to 6 months before a EU recovery.

Someone mentioned oil. Yes, probably a good bet oil will boom within 6 months...peak oil, increased demand, etc. Gold? Anyone know for sure? I'm not sure, yet, why it fell.

Mutual Fund, 8000 a bottom? Maybe. It appears to be the top end of a forming flat formation...we'll bounce between 7-8000 until the bull market takes hold longer term.

So, technically, you could be right. We'll love the price at 7000 then think it's overbought at 8000, especially when some billionaire get's on Bloomberg. Meanwhile, the dollar, gold, oil, and everything else will bounce around, too.

Speaking of oil, again, what's more confusing? Reading reserves are up and seeing oil drop in price as the dollar rallies or reading demand is expected to increase while the market rallies and OPEC cuts production during a dollar sell off? LOL It's gotta be speculation...someone looking for black gold. Probably not a bad bet.

A Bear in Bull's Clothing: We're Not Buying This Rally

While I agree the fundamentals are far from sound, I don't think buying into this rally was a mistake. It may well end soon and we might realize some losses. But, the price was good, if you're in long.

The price might even get better in time. If anything kills this rally, it might be that prices are not so attractive...based on the above argument and other data.

What's up with gold? Is it the anti equity or the anti dollar?

The Risk Biggest Source: Government

Biggest Risk Source: unregulated AIG Financial Products Division. Any questions?

Do Paulson and Bernanke Really Understand What's Going On?

I was so angry when I posted I forgot to complement the author on an interesting take on the crisis. I came back to re read it.

I just haven't bought into the solvency argument. I see it as a liquidity problem. Money created through mortgage backed derivatives is now fast disappearing. Most of the money floating around the world is fiat money. Imagine if the entire derivative market failed.

I get the feeling Paulson wants to buy up he bad debt to pump money into the banking system so we can continue down the road of excess consumption. Get back to business as usual. I think that's a mistake to rebuild the house of cards.

The "alternative" Paulson speaks about is depression. I think congress understands this but just won't use the "D" word.

Do Paulson and Bernanke Really Understand What's Going On?

It seems to me Bernanke has been the lone dog in this fight for a long time. He's increased liquidity and argued banks should work with mortgage holders to keep folks in their homes. He's been doing this for over a year. It was urgent then, why does it take a market shake down to get congress' attention?

I also get the feeling Secretary Paulson, a long time Wall Street insider, is asking for $700bn to rescue his friends and is fighting to keep any of that bail out money from reaching hands of ordinary Americans. A financial bail out might be necessary, but it stinks.

And if he does manage to funnel that money into the hands of his Harvard buddies, we'll soon get back to business as usual. As soon as home values recover, you can bet they'll succumb to greed and stack debt on debt to make money and loan it back to us with interest.

I support what I hear coming out of congress. We need to keep folks in their homes and rescue the housing market, specifically. And, almost as an after thought, we can help bail out the financials. They need it, and they need oversight.

Speaking of oversight, I heard it called archaic and out dated. It might be, but we have oversight folks, and I include everyone's pal Mr. Greenspan among them, actively turning a blind eye to the phenomenal money created. What is not outdated is the obligation our oversight has to prevent such crisis. As long as times are good, no one raises any red flags.

So, rebuild some insight, keep tax payers in their homes and toss a little money at the financials. But more importantly, we need a structural change to get away from the excessive greed that got us here to begin with. We need to get back to fundamental money supply and stop creating paper promises based on asset values.

And no golden parachutes funded with tax payer money for folks who are already rich. In fact this problem is so great, they have staggered not only the US economy but the world economy, their actions boarder on treason. Jail time would be appropriate for some.

And to hear Obama blame Bush is simply idiotic political rhetoric. This problem has been in the works through many administrations and legislatures, both Rep and Dems, for a great long time. Decades.