GKM

The Coming Crash of 2008: A Result of Overleveraging

drmlaka I think you've nailed. it.

This is what's going to happen today (in about 40 min). The Fed will cut 100 bps. The market will explode higher, especially crude and gold. The dollar will absolutely crater. This will look great. For a while. Then folks will wake up and see what they have done and the party will be all over but for the hangover. The Fed is going to throw the party for Wall Street and Joe Public will get to deal with the aftermath.

Bear markets do not finish like this and its been that way since the beginning of time. Bull markets in oil, gold, and Euro do finish like this as time will shortly show.

Now Presenting: Deflation!

Interesting points. The Fed is printing but by any measure it should look like an implosion of money supply since when you take the multiplier out they simply can't print enough to keep up. That doesn't mean less dollars aren't chasing higher priced items though, hence inflation by my definition of inflation.

This all brings up an interesting question. Should a new term be created to capture what is going on? We are de-leveraging with pressure on the currency creating inflation and there's stagnation at the same time. What word could possibly combine all these elements. Let's see de-press-ion. I think I just coined a new term!

More Questions Than Answers on Bear

So is opening the discount window to brokers a carte blanche for those brokers to go and take the near worthless debt to the Fed to exchange for t-bills so they can go and lever up a bunch of trades which probably equate to long oil short financials (since that is what is working)?

More Thoughts on the Fed & JPM's BSC Liquidation

I wonder what the Fed will do tomorrow. Will they shoot the last of their load in one fell swoop? If they do and the Dow isn't up by 800 points what then? Will they honestly cut interest rates to zero at some point once we actually hit bottom? Will the American dollar supplant the Mexican peso as North Amercia's most derisive currency?

Don't bother to answer that last one as that one was just rhetorical.

People keep saying that foreign interests will eventually come in and prop up American asset values. I would venture that the only things they'll be buying will be those which they can repatriate to their home turf. Why carry currency exposure when there is no bottom.

SWF: 'Here's a bunch of worthless t-bills. Give me something I can leave with.' 'Oh, you want to be protectionist? Then I'll just dump my t-bills on the open market and watch you sweat US$200/bbl oil (which will be about 50 EUR).'

The road to ruin is fraught with the best intentions.

Bad News for Bear Shareholders Is Good News for the Markets

The Fed is doing what they think is best to keep panic from spilling into the streets. I would bet that history won't look too favorably on the prudence of their actions regardless of what they do. It's like they're fighting an unstoppable monster but keep mowing down the innocent bystanders. They are running out of bullets and they need to save one - for you know where.

What's In Store for Bear on Monday?

Wow, makes me want to run in and buy a bunch of financials tomorrow. If BSC is worth $2 (in paper not cash), what then are the other brokers or banks worth? What then are the values on the financial instruments held by the insurance companies? Not sure about anyone else but this doesn't exactly instill confidence in me.

How to Trade This 'Bear' Market - Barron's

So Kass covered in some of his shorts - and left on his shorts for the key institutions that make up America's financing empire. A ringing endorsement for the soundness of the American banking system that is not.

Implications of the Bear Stearns Bailout

People have been playing the contrarian card all the way down. Guess what. In a bear market, the tendency is to get oversold before a pullback just as it is to get overbought in a bull market. That doesn't change the direction.

The Fed covered the market's face with a kleenex. That doesn't change the fact the market has caught a cold. That is the real "broad theme".

Bear Stearns Gets Emergency Funding From NY Fed, JP Morgan

Well put sammyg123. You can deny the obvious, that we are in a bear market, and close your eyes or you can get with the trend. Otherwise just sell me your shares at the bottom because I'll be there waiting. I'll be more than happy to be a bull then.

A bull market never resolves without capitulation and a bear market never resolves without one as well. When there were those (Kramer) who was saying that Google had to go to $1000 that was a sure sign the bull market's end was near. His reasoning wasn't that it deserved $1000 but just because it was there. Similarly when people stop trying to pick a bottom in financial stocks, that's when we'll know we're there. As they say financials lead us into this mess and they'll have to lead us out.

However, I've long expected that there will be runs on banks before we see a true test of the system and so far, but for one major bank, there haven't really been any. I think a few of the other banks will be tested in the next little while and we'll see how the market and Fed react.

Barry talks about the socialist system and why the Fed didn't just let BSC fail. The Fed knows that if they let BSC fail, the test of the other weak banks would have come almost immediately. They are hoping that staging an orderly unwind in BSC will restore some confidence in the system and keep the test from being performed. The Fed will fail.

To add an analogy to the pile, the CEO of BSC had to go on CNBC and talk up the fact that they had enough liquidity and capitalization wasn't a problem. A few days later they failed. The smart money knew the very fact that the CEO had to do that was evidence that failure was imminent. (Does no one remember Angelo Mozillo's words on CNBC?) The fact that the Fed had to step up and stem the immediate collapse of a major i-bank should, in and of itself, be telling to the smart money here.

There should be a pop up every time you go to make a trade/investment. It would say "Abandon all hope, he who enters" because if you have to hope in this market then you are doomed to fail. If you know you are right and have the fortitude of your convictions, this market is where you want to be.