User 265729

Oversold and Melting Up

This so-called rally is what $3 trillion will buy you -- the generally accepted figure that central banks threw in over the weekend. All of these efforts have shelf-lives of minutes to a few days. Libor is down, but awash in market of central banks' cash...

It is my personal feeling that the latest crisis with the banks is a question of solvency, not liquidity. I doubt any of the major banks, if they are really examined, are solvent. (Local/regional banks may be a different story...) I think the U.S. Government knows that the banks are insolvent and they are doing everything they can, along with central banks throughout the world, to cover-up the mess they got themselves into.

I saw another posting where someone stated that the derivatives that were floating around may be as high as $100 trillion. Actually, during a conference of the IMF, it was described as $100's of trillions... Much higher than many people think... In any case, if I what I suspect is true, none of these major players are solvent and central banks will be unable to shore-up the charade without bankrupting their own governments.

Savor the moment of today's rally. It is floating on air and currently being made by impoverishing large numbers of people throughout the globe.

Some have accused me of being a short-seller -- I am not. In fact, I would like to believe that we are turning the corner and Humpty Dumpty is back together again. But I know too many businesses that are leveraged with perhaps one percent of tangible assets on the loans. All of my training in economics tells me to beware...

Having lived in places like West Africa where systems have fallen apart, I wish that many countries will be spared this agony. I think something similar is coming to developed nations throughout the world, but I hope I'm totally wrong.