mrbill

8 Reasons the Obama Administration Will Not Solve This Crisis by the End of 2009

“Why wasn’t the expressed outrage of the Obama administration regarding $3.6 billion of bonuses that Bank of America (BAC) paid to Merrill Lynch (MER) executives, a figure that dwarfs $165 million”

Great observation. Obama trying to stop the $165 million is psychological trickery. I'll bet he succeeds. So when people mention the $3.6 billion, the masses will equate that with “Obama stopped the bonuses!”

S&P 500 P/E Ratio at Troughs: A Detailed Analysis of the Past 80 Years

“Deflation is even worse because once consumers become convinced that prices will be lower next month, they naturally and logically stop buying”

Utter nonsense. Computer and electronics prices fall every year, but that doesn't stop people from buying. And no one is going to starve for a month waiting for food prices to fall. Just like no one will wait two weeks for gas prices to drop so they can't go to work. Effectively what you're saying is, people don't want cheap products. This is the typical investor mind set: buy when things are going up, sell when they're going down. IT DOESN'T APPLY TO THE REAL WORLD.

And the reason people, err, speculators, have stopped buying houses is because they are no longer going up (for all the obvious reasons). Gone are the days where you could flip a home and profit tens of thousands in just six months. Like Peter Schiff said back in 2006, paraphrasing “before, people used to buy homes because they could afford them, now they buy because they need the money. And if you need more money, you buy a vacation home.”

A bubble bursting is not “deflation”, it is a correction.

“The collapse in demand forces prices further downward which results in an economic death spiral “

Likewise, massive inflation also creates an economic death spiral because the cost of living rises. Do you really believe corporations and small business will increase salaries to compensate? Perhaps if they are run by unions, otherwise, it's not going to happen.

Chinese Are Likely to Halt Purchases of U.S. Treasury Debt

Sounds to me like this is a good way for China to buy treasuries on the cheap. With the herd mentality, investors will begin dumping treasuries and dive into/drive up stocks gold and oil. China will then buy more and say, “I hate you!”. Then smile. Mean while politicians in the US are happy because the stock market is going up, and so is confidence. “Yes we can!” Woohoo. Keep in mind, the demand for treasuries has been better than expected. Eventually, when demand dries up, Hillary will call Mr. Wen and say, “for a BJ please buy mo' treasuries, mi love you long time”. At which point, the Chinese begin singing “Yankee Doodle Dandy” (“we don't want too, we HATE you, but... we must buy more”). Around the same time expect a new “uncertainty” developing in the market and the herd will dump their stocks and rush right back into treasuries. This processes will repeat until all this “sideline” wealth is extracted.

FASB Unlikely to Suspend Mark to Market

“All they had to do was switch the MBS from M2M to Mark to maturity and they would not have had any losses”

Right. The missing link: M2Maturity. Under this rule, there would have been no subprime fallout and alt-a/arm resets that are occurring today. Home prices would still be rising and consumers still spending. Oil would be at $300 a barrel, tomatoes at $12 a pound and we'd live happily ever after.

FASB Unlikely to Suspend Mark to Market

“Short sellers can use mark to market in order to destroy otherwise solvent banks by manipulating the dysfunctional OTC market”

Sure. Blame it on the short sellers.

“By performing bogus transactions that drastically reduced CDO values way below fair market values under normal conditions, target bank(s) will be forced to mark even their prestine assets intended for 20 or 30 years hold to fire-sale prices as if they have already sold those assets at said fire-sale prices”

As long as the transactions are legal, sounds to me like you should take advantage of them. Why not buy today and wait for a market recovery? Is it because the market might not recover as you would expect?

There's no such thing as below fair market. The price for anything is what someone is willing to pay for it. Apparently, you and many others are trying to use the government to artificially prop up your investments. All on the taxpayers' dime.

Stocks on the Verge of... Something

"Wasn’t it the CEO of Bank of America (BAC) who said they had plenty of capital, but took billions in TARP — who then said the dividend was safe, but then cut it in half — who subsequently said the dividend is now safe, but cut it again to one penny?"

Good point. Sadly most people, especially in the US have short term memories. In the US, not only can you fool us once, but several more times, and then some.

The Markets Will Recover When Our Fear Abates

So your advice to investors is this:

* We have nothing to fear but fear itself

* It was the terrorists who killed our economy

Gimme a break.

2009 Depression Will Be Nothing Like 1929

To JR :^)

Lets try to keep the signal to noise ratio above 20 dB please.

Some tips:

* Try to be more concise.

* Avoid making points with these words in them (to the effect): "at least", "probably around", "more or less", "should be". People won't take you seriously if your beliefs are based on assumptions.

* On historical events, try to maintain a level of accuracy above that of a tailor park philosopher.

* Avoid wrapping yourself in the American flag while avoid criticizing others for being "unpatriotic", or you will be viewed as a lunatic. If you feel otherwise, then sell everything you own and give the proceeds to the IRS.

* An ellipses (...) for every other post, here and there is usually okay, but three times per paragraph is very annoying.

* Avoid quoting yourself

* Avoid replying to yourself

* Don't compare humans to monkeys, or any other animal, we truly are not the same. If you believe otherwise, then keep in mind, your expressed views about others, are often seen as expressed views about yourself. To say that "humans always behave THIS WAY (like monkeys or worse) given THESE circumstances", reflects how YOU would behave under those circumstances. So you are insulting not only yourself, but your friends, family, and even your children. Sad.

* Last but not least, replying to every single person that disagrees with you says a lot about your level of insecurity: IT IS THROUGH THE ROOF!

Good day,

2009 Depression Will Be Nothing Like 1929

Oh vey... this guy (psst, don't say anything, you know who he is) obviously spikes his coffee with crystal meth. Unfortunately, the last batch must have been battery acid.

Berkshire Hathaway: Proof That the CDS Market Is Irrational

It is rational to be irrational if you believe that it will save or make you money.

Example:

1. Bank XYZ is healthy, all others are not

2. Depositors take all there money out of all the banks, including XYZ

3. You don't, because you know XYZ is healthy

4. All banks fail and you lose your money because you were being rational

5. The irrational people who pulled their money out early got to keep it

So the irrational end up being the rational, and the rational, irrational.

I hope this makes sense, otherwise you will lose all your money trying to change the world.

The Search for a Bottom

This is one of the most sensible articles I've read in a long time. Congrats.

The Free Market Votes: Still No Change We Can Believe In

Every now and then a bull gets pissed off.

Sounds like you're being bearish.

Welcome to the club.

Sadly it takes a few or more serious hits to your portfolio for this to happen. This Redistribution of Wealth you talk about is really theft because it is redistributed unfairly and often in secrete. For the well and connected they not only get to keep their jobs, but are bailed out with bonuses. The little guy working at xyz gets a puny tax break, a pat on the back, and is asked to stick it to the "rich", who are really the entrepreneurial/middle class.

** Welcome to Depression 2.0 ***

All your farms are belong to us!

As for investing in stocks:

He who dies with the most toys wins.

Time to Buy China, Copper, the Canadian Dollar and Oil

* Looks like we're starting to hear "Decoupling 2.0". Wait for the rally, sell, rinse & repeat.

* With that said, I believe someday there will be a decoupling, just not going to happen anytime soon. And, I do believe there's value in some Chinese stocks. For long term value, 20+ years, perhaps you can buy the ETFs.

* And last but not least, the US economy will not collapse, at least not entirely (but it will be bad). The simple basic fact is, we are the greatest military power. The dollar will continue to be the reserve currency of the world as long as the world is forced to accept it while staring at the barrels of our guns. That is what keeps this economy going. If you think this is coercion and is morally wrong. You're right. It's both and I don't agree with it either. But that's how it works. This is the part guys like Peter Schiff (a very bright, but somewhat naive investor) don't fully get.

Market Will Bottom When VIX Finds a New Top

Here's what's in the works:

* Massive bankruptcies, corporate and municipal

* More job losses

* Earnings that keep going down
(it's priced in, sure...)

* Massive commercial real estate bust
(the next shoe, hanging by a thread, IMO)

* Government intervention making things worse

* Taxes going up

* Social breakdown/civil unrest

* Threat of war(s)

Nevertheless, I'll just let the VIX tell me when to buy. Sure.

New York Fed's Model Predicts End of Recession in 2009

If people take this seriously, get ready for another sell off.