Thinker771

What Happened to Demand?

Excellent and accurate analysis.
Governments wants to get back to credit-based economies.
It may happen, but at the cost of a trillonary bill on bailouts, that will be paid by a huge devaluation of the dollar and other currencies.

Don't Follow the Wall Street Crowd - Prepare for Market Rollover

Problem is that fund managers of our generation has made their career in a continuous and systemic bull market. 1987 crash was just a dip on the road. They haven't lived a serious secular bear market like the one that is just starting.

All their training, analysis and techniques (P/E ratios, buy and hold, buy on high VIX, invest for the long term, etc) are based in a life of "wisdom" based on a systemic bull market. They cannot change easily their mindset to live a different paradigm.

The bear is here to stay for many years, maybe a decade.

Throw away all your previous training and wisdom and re-learn your lessons, based on the assumption that this time things will not be fixed "magically" by the FED or the Gov. Short with no remorse until the country fundamentals are back on track again.

Global Markets, Meet President Obama. Now What?

Short List for initial Obama's actions at the Office:
1) Close Guantanamo -- Very bad PR for USA
2) Orderly withdraw Iraq -- American army not wanted there
3) Replace FED Chairman -- Very urgent, limit the damage NOW
4) Assemble an Economic Team, headed by Paul Vockler / Ron Paul / Ken Denninger / other thinking heads
5) Work on regulations for Finance -- URGENT
6) Cancel WS 700 bn bailout -- Before they throw away more money.

Good luck, Obama.

The $700 Billion Disconnect: Lost in Translation

Your reasoning is good, and it is a good defence of the bailout, pardon me, rescue program.

Problem is that you are replacing free market (which have spoken and said that derivatives worth nothing), by a directed economy.

Who will decide what to buy and what not? Hank? Someone appointed by him?

Who will decide the fair value that the Gov will pay for this derivatives?

Who will decide which financial institution fails and which survives?

It is not surprising that Hank has asked for legal immunity. He wants to act quickly and fast. Maybe he will make mistakes, and he don't want to be sued by the losers.

But this will not be the free market. It will be someone in the Gov making decisions instead. Soviets tried that and didn't work.

I like more the plan to build a specialized market for this derivates, with strong regulation that forces to disclose exactly the inners of each paper, in specific and short periods of time. Transparency. Disclose. Then the market participants will decide which to buy and which don't. As a result, some irresponsible banks will fail some others will make a profit. That is free market. That is capitalism.