irisatrx

8 Charts for Trading Financials

Goldman Sachs has done extremely well in the rebound category; then again the First National Bank of Zimbabwe could have done the same thing if the Fed had quietly pumped a trillion dollars through its coffers as it did for GS and AIG.

As I recall, it was GS that created the rumor mill that created the run on Bear Stearns and Lehman Bros, driving them out of business and creating the financial panic on Wall Street.

That's not to say any of these "banks" is operating above board; but I find the connection between the psychological collapse of the financial community, with its connections to the Fed [.e.g,, Paulson] and its unexplained Fed deposits worth a second look, and maybe a few indictments.

Two Phases of Recovery for the Economy

I'd hoped to find some meat in the article. There's far more, unfortunately, in the comments.
We have a chart with no reference to its origin or validity, a vague comment about excess capacity, a firm statement that says "some excess capacity will not come back, a statement that the housing construction industry capacity is "gone" and will take years to rebuild, and we need to rebuild "capacity in something else."

Wow. Talk about enlightening! Reminds me of some of the blather of my undergraduate econ instructors dribbled to make us feel undereducated.

Bottom line, the economy is cyclical. We will emerge from this downturn just as we have from every previous one. A percentage [specifically vague] of investors and the population at large will be severely damaged, but the economy at large will survive.

The financial system consists of smoke and mirrors, and is, in a sense, a giant Ponzi scheme. So long as everyone has confidence in it, it works. Greenspan began destroying it in 1999 with his concern over inflation because investors in the dotcom industry were generating cash exponentially, thus the money supply grew -- exponentially. Greenspan interpreted [incorrectly] this growth in the money supply as inflationary, and tightene credit to the point that small businesses [employer to 90% of US labor] could no longer function -- causing the first of a series of economic downturns. By 2001, we were in a downward spiral that made the current one look like a gust of wind.

The ONLY thing that helped us recover from that was 9/11 and the subsequent infusion of cash into a war-driven economy.

Well, we don't have a war to spend money on now [Afghanistan isn't expensive enough, and we've commited to exiting Iraq], so what's left? "Shovel ready" minimum wage contracts to fix roads and bridges? Not much distribution of wealth or business building there other than cement, structural steel, etc. Food and seed? Same answer. Health? Well, we now have the Swine Flu panic [hmmm, 30 cases reported in Mexico -- gots to be a pandemic!]; pharmaceuticals might be a good buy.

Space -- the New Frontier! Now there's a place we can spend big bucks, create all kinds of home grown industry, and we can start building our construction colonies on the Moon, like we should have 20 years ago.

Was the Global Equities Crash Related to Obama's Election?

Curse those Republicans!
They failed!
They allowed the Democrats to be elected and take over Congress.
They failed to keep Chuck Schumer from shooting off his mouth and causing a national loss of confidence and a subsequent run on Lehman Brothers -- with the subsequent domino effect wiping out the financial houses.
They allowed Barney Frank to block monitoring measures by Treasury over the parastatels Freddie Mac and Fannie Mae give millions in campaign contributions to Democrats to ensure they were unmonitored.

Worse, they allowed the media to run their campaign for the Presidential nomination, so capable leaders like Romney got derailed, and we ended up with a boring, cranky old guy with the charisma of a brick as a candidate.

No question about it; this is all the Republicans' fault.

Ben Stein Watch: December 28, 2008

I've always found Stein's remarks to fall into the "common sense" realm. So far, I've found nothing hokey in his columns, and I tend to agree with his observations.

Having discussed the financial situation with a number of astute investors and analaysts, I doubt there are any folks out there who have a firm grasp of what the future will bring. So, I won't be taking investment advice from anyone, to include Ben Stein.

As for why we're in the mess we are, my darts go to such luminaries as Senator Schumer whose public pronouncement that Lehman Bros was insolvent led to a "run on the bank", a sell-off of its shares, and its sudden collapse -- setting off the falling of the dominos like Bear Stearns et al. Then again, we have Barney Frank who was taking his campaign contributions from Freddie Mac and Fannie Mae to prevent Treasury from exacting any oversight; he succeeded in helping them fail, with the subsequent collapse of the financial market -- which is an intricate system of smoke and mirrors and the ultimate con game now. A collapse in confidence there is akin to pulling the curtain on the Wizard of Oz..

We now have the Goldman Sachs team of Paulson and his understudy running Treasury, passing hundreds of billions of dollars to the financial community so they can buy each other out rather than lending to businesses which need the credit to continue operating. The Democrats are pushing for a bail-out of the car industry -- highlighted last week by a furlough of the workers for 45 days at nearly full pay. Now there's an incentive!

Getting back to Ben; leave him alone. Probability is that he did invest with Madoff; so did a lot of supposedly smart people. Then again, a majority of supposedly smart folks cast their vote for a complete unknown for President of the United States who is about to re-enact the FDR Socialist Manifesto which has burdened this country with countless welfare programs and unproductive taxes.

First Obama order of the day is to attack the transportation infrastructure with a convoluted tiered usage tax on companies, individuals, etc for a fair distribution of the cost [quick translation: massive bureaucracy], rather than simply tacking on 50 cents to the federal gasoline user tax -- which would raise $500 billion per year..

Hold on to your wallet;

Plummeting Oil Prices Increases Hedging for 2009 Contracts

"If one could get a sense of timing...."
If that were possible, none of us would ever have lost a cent in the Market

Follow the advice of my grandfather, a stockbroker in the 1920s:
"Buy Low; Sell High"

I'll guarantee it, you can't go wrong.


On Dec 24 07:03 PM L Boyd wrote:

> I wonder at what point most ETFs/ETNs start to get out of front month
> contracts? If one could get a sense of the timing of this, there
> may be a way to profit off of these by going short a few days before
> and then obviously selling before the delivery date.

SEC Staff Told Not to Destroy Docs

They should just wander the aisles of the Enforcement Division and start handing out subpoenas.

A few months ago, well into the financial meltdown, the Washington Post carried a paragraph noting that one of the top officials in the Enforcement Division got nailed for feeding her former employer [Goldman Sachs, I believe] information on the SEC investigation.

She wasn't fired or indicted; simply warned that she shouldn't get caught again.

I wasn't a supporter of Obama, but maybe with his new crew at Justice, they'll round up some of these worthless jerks and put them in jail.

I'm afraid it's just one episode after another of the senior bureaucrats covering their butts.

Obama's Treasury Nominee Should Signal Policy Direction

Workers of the world, UNITE!

This drivel about Nelson Mandela's remedies for South Africa should be tossed in the garbage. South Africa -- pre-Mandela, had one of the strongest economies in the world, and stood as a guidepost for import substitution and self reliance. Corporations from around the world flocked there because it represented a dynamic economy, with unlimited potential.

And then, the NYT gave us Mandela.

South Africa has now plunged to the depths of economic despair, with an unruly population and one of the highest crime rates in the world. International investment has pretty much ceased, and corporations have reduced their presence significantl


But, Apartheid has been obliterated, so, all the residents are now equal, though some are more equal than others.

Can we look forward to similar developments with Obama at the helm?
If the post-election stock market is any indicator, I'd say we might have a problem.

We're now politically correct -- just like South Africa. Will our economy follow South Africa's example?

Following Buffett's Railroad Tracks

Buffet makes his money now by purchasing a stock, then announcing that it is a great stock. The lemmings jump on the bandwagon and run up the price; Buffet sells and makes a bundle.

It's all in the name.