Owen

VIX Spikes - But It's Been Worse

I doubt anyone is still checking this old article, but the VIX just hit 75, as of 13:50 EDT.

New Treasury Supply: Did It Already Cost Taxpayers $240 Million Today?

No probabilities involved here. A practical truism: as long as they can print money, they can pay their bills. Simple.

So you believe the government of China, on the long side of your short US bond, won't be able to pay for the settlement of the futures contract? Do you even understand how futures clearing works?


On Oct 08 05:10 PM westwest888 wrote:

> Owen - lemme guess, default is impossible because it's a 10 standard
> deviation event in your model. I would short treasuries, except
> the counterparty won't be able to pay when I'm right because they
> have no money.

New Treasury Supply: Did It Already Cost Taxpayers $240 Million Today?

Good move, Friendly.

Shorting through CBOT futures is more efficient, though.


On Oct 08 04:52 PM Friendly wrote:

> Actually, I am short via TBT and earned a years interest today with
> more to come! Bond holders are expected to "contribute" to the survival
> of the economy too.

The Beginning of the Endgame for Monetary Policy, Redux

The 'Total debt' figure is fictitious, as it double and triple-counts each loan. Whenever a mortgage is securitized, sold to another investor who then repackages and resells it, it counts as three separate loans, despite the fact that it is just one. What we see in the chart is the move towards more intermediaries, as debt becomes more securitized and traded more often. The net debt burden in the US has not increased in decades, but the number of intermediaries has. The government (as opposed to Total) debt as a percentage of GDP has actually decreased for most of the period in the chart.

New Treasury Supply: Did It Already Cost Taxpayers $240 Million Today?

Here we go again. As long as the US government can issue securities denominated in US dollars, it cannot default, period.

Inflation may rise, along with bond yields, but we're not seeing any sign of that now. In fact, investors are climbing over each other to lend money to the US government at 4.1% for 30 years! A dramatic 200 basis point rise in long rates would only bring us to the long-term average. But of course, who wants to listen to reason these days. Unless you predict the imminent demise of western civilization, everyone accuses you of being a dreamer.

Here's a thought: stop whining and short some Treasuries if you're so sure of yourself.


On Oct 08 03:31 PM westwest888 wrote:

> You make a very good point. This bond issue had to compensate buyers
> an extra 40 basis points or it would have failed. This will ramp
> the cost of rolling over all existing US debt (11 trillion) which
> has an average maturity of 3 years. That increases the interest
> portion of the Congressional budget and inches us closer to the end
> game - DEFAULT.

New Treasury Supply: Did It Already Cost Taxpayers $240 Million Today?

The US Federal budget is $3 Trillion a year. This works out to $8.2 billion a day, or $340 million an hour. During the time it took you to write this article, the government spent more than the $240 million you write about. So yes, today the government spent $8.4 billion instead of $8.2 billion. Wow! Yawn.

It's easy to scare people with seemingly big numbers, but I'm amazed how a self-appointed 'bond expert' has no sense of scale. Last month you said the $85B AIG buyout will require the largest funds raising in the world's history. Anyone in the bond industry knows the US raises more than that each month, and has done so for decades. Basic numeracy is a key requirement for a financial analyst.

Five Common-Sense Confidence Builders

As I've said before, the comments here (except for JasonC's) make it clear that Americans are more interested in exacting revenge than in living comfortably. Given the choice, most would gladly forego getting their property back, in return for the pleasure of seeing the thief who stole it get hanged.

How Low Can Google Go?

SmartStops,

Just eleven hours ago, on the GE discussion thread, you were telling readers that 'One can only pick the bottom in hindsight'. Now you are telling people they should have picked the top on GOOG using your wonderful hindsight. Can you spell Hypocrisy?

Getting Ready for... Anything

The market is down 28% year-to-date as of close today, after being down over 31% at the low of the day.

In August I told a friend of mine to prepare a plan of what she should do when the index hits 1000, because when that happens she may not have the presence of mind to act rationally. Well, today we came within 8 points of that milestone.

Paraphrasing the old ad: It's now 1057. Do you know where your money is?

Monday Outlook: Ascendant Fear

JasonC,

You seem to be under the impression that the American public wants to solve this problem. I don't see that being the case. I believe Americans are more interested in revenge and punishing the guilty than in seeing the problem fixed profitably. After all, if everyone wins, it means the evil-doers also win. Cutting off your nose to spite your face is much more satisfying.

The Die Is Cast

Read the whole thread, Russian Bull. I wasn't praising the virtues of age or experience. I was responding to some old fool who felt he can talk down to me just because he was born a couple of years before me.

The ability to think rationally and analyze data carefully in times of panic is much more important than age or experience. Both Warren Buffett and John Bogle were much younger than I am now when they got started in their career.


On Oct 05 07:03 AM Russian Bull wrote:

> dear owen, turkeys usually live very nice lives full of experience
> and wisdom and valuable life experiences.
>
> and then thanksgiving rolls around and they get their heads chopped
> off before they know what is coming.
>
> i'm just saying experience and history aren't always worth the value
> people put into them.
>
> typing from iphone so mea culpa on lowercase

Ongoing Market Sell-Off: It's Not The Short Sellers

The whole notion that stock prices goes up when people are buying and down when they're selling is a myth. Think about it: on any given day, exactly the same number of shares are bought as are sold. Even when the market is soaring upwards, each share bought is actually sold by someone, and when the market tanked this week, each share sold was bought by someone else.

So why do prices move? They move down when buyers are not willing to pay as much for it as they did before, and move up when sellers are not willing to part with their stock for the price they did before. The whole concept that sellers (short or otherwise) move prices down is based on a misconception and poor understanding of the market.

Are you willing to pay $20 a share for Citigroup? No. That's why it's trading at $18. Even if no one was willing to sell a single share of Citi, your perception of its value has just determined its price.

The Die Is Cast

Curbs-In,

I'm not interested one bit in whether or not you are confident in the US government or Wall Street. For all I care you can place your trust in the AARP and Donald Duck. Yes, there are obviously more people like you in the stock market than people like me, thankfully, which is why people like me can make money betting against people like you. Thank you!

I have lived through three wars in my country before coming here, fought in one, and went through my first recession in the 1960s, so please don't pull the age card on me. When age doesn't come with wisdom, all that's left is one old fool.

Your condescending, patronizing tone is a pathetic attempt to hide your own ignorance. Don't lecture me, please. It is highly unlikely that I or any of the other veteran investors on this site has something useful to learn from you.


On Oct 03 05:26 PM Curbs-In wrote:

> Owen,
>
> Sorry I'm short on confidence in the U.S. Government and Wall Street
> since this seems to bother you. Looking at the performance of the
> markets for the past few weeks I'd guess that there are more of people
> like me in the world than people like you.
>
> But let's make the point about your comment that my input is somehow
> "off topic"... Perhaps you need to reread the content contained
> in this article again... So... One of the "bright spots" is oil...
> And why is that a bright spot Owen? I think they call it no demand
> because the world' economy will be so screwed-up, be it recession
> or depression, (the topic of the article), that nobody will be driving
> anywhere and industries will not be using petrochemicals. Real bright
> spot, eh Owen?
>
> Owen, thanks for your bio on the various crisis you've survived...
> I'm impressed... Owen, I'm an old man and not far removed from the
> "big one." You haven't seen anything yet, young man. Back then
> most of America was still rural and those in urban or near urban
> areas still had family roots on the farm. When this, as George Bush
> puts it, "sucker goes down", most Americans won't have a family farm
> to run to for the basics. You Wall Street types will be wondering
> what to do with yourselves at the corner Starbucks...
>
> This time Owen, all of the Madison Avenue magic will not create an
> illusion of wealth that isn't there... It's been mirros and smoke
> for almost 15 years... The smoke is clearing...

The Die Is Cast

Moses and Curbs-In,

I survived the last few recessions--both the real and the imaginary ones--very well, but thank you both for your concern.

Curbs-In, I realize that short sellers like you provide an important function in the market, increasing the liquidity and all that. However, your kind of trash talk ("Ya! We're all gonna die!") is more suitable for places like the Yahoo Message Boards than here. Please try to keep discussion here civilized and on topic. Thank you.


On Oct 03 04:35 PM Moses wrote:

> Owen if you don't think we are in a recession then you are probably
> one of those people who believe the GDP Deflator was 1.2% last quarter.
> When this is all said and down you and people like you will be known
> as "bagholders.&quot.... Congratulations.

The Die Is Cast

You've been saying we're in a recession since March, and you've been wrong each month since then. Sure, at some point you'll probably be correct, just like a stopped clock is correct twice a day.

I was looking for new information, interpretation or insight in your article, but all I found was speculation without any facts on which to base it.