Lonestar1

Why Was the PPIP Extended Today?

AS FASB has revised MTM accounting rule, the seller side (banks) has no incentive to sell those toxic assets any more. Perhaps hedge funds know this, and thus do not want to participate. But the funniest thing is that big banks are very interested in setting up PPIP funds. I guess the end result is these guys can swap toxic assets at much higher prices ?

U.S. Treasuries: China's Dilemma

It's so sad to read this article. This is like a bad boy being caught in the middle of his misdeed, and claims he will get worse. What's the chance this boy will prosper? Zero, because evrybody will abandone him.

Bailouts, Inflation and a Golden Future

I agree that Greenspan should take the most responsibility for the problem. He could have done differently by refusing to feed the sugar-hungry Wall Street, public and politicians.

In stead, he chose to become a hero, and indulged in the construction of modern day Barbelonian Tower of debt & derivatives. Now he looks like a big joke in the financial history.

Exactly How Bad Will It Get?

The reality should be worse than shown in this article. Defaults are across board. Of all fears in the market, default is the main one. Fear of defaults freezes business activities, which in turn results in large layoffs. Things are spiriling down. Here are some examples:
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Wholesalers now would rather hold the mechandise instead of distributing to retail chains and department stores for fear of not getting paid. The larger the retail chain, the more likely it will default on payment.
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Banks would not lend due to fear of defaults of counterparties. They are households and businesses.
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No liquidity in credit market is due to fear of defaults by issuers, & defaults by trading counterparties (hedge funds and other brokers, baks etc).

Why Are Gold and the Dollar Running Together?

We have had this virtual economy for so long that runs the real risk of virtualizing our currency. The Fed actions have corrupted our sense of wealth. Getting into gold is to get back some sense of purity.


On Feb 01 03:34 PM PrudentMan, CFA wrote:

> If gold is a hedge against inflation it should be selling around
> $4,000.00 an ounce. Admittedly, I don't have a clue as to why people
> buy gold as an investment any more that Tulip Bulbs.

The End of Gold, Part Two

Although this is a little too harsh, but it's true the article does not add anything new to the discussion on gold.

Both deflation & inflation threats are real. It is economic destruction vs money printing. We are living in a warped world, in which actions of central banks are causing great confusion to our sense of wealth while asset prices are destroyed.

What else would we want to hold if it is not tangible? Gold is tangible. It is real money, pure without stains.


On Feb 01 12:10 PM aw4000 wrote:

> The author needs his head examined!

Obama's Role in the Market's Next Breakout

When would the country abandon the culture of trying to get instantaneous rewards without really hard work? Political theater can be as misleading as financial market. People still need to deal with the harsh reality for many years to come.

U.S. Domestic Debt: What Can Be Expanded, What Must Be Reduced?

The $51 trillion is definitely misleading. The net debt is definitely lower. The data is from Federal Reserve Bank Statistical Releases.

It simply adds all the debts owed by all parties. As such, as far as the net debt is concerned, some items are accounted twice.

One obvious example:
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Approximately 1/3 of the mortgage loans are held by Freddie & Fannie. These agencies in turn finance the purchase of these assets by selling agency bonds. In this way, this 1/3 mortgages are accounted twice in the total.
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There are several other items.

Still No Consensus on When Recession Will End

Slightly positive to flat GDP growth is possible for the 4Q2009 because the bar is set so low by 4Q2008 (-5.5% or worse). We'll see on Friday what the # is.

Velocity of money appears to be close to zero. When a bank takes back the credit lines they previous extended to some companies or individuals, does that mean the velocity is NEGATIVE in that case?

Should China Continue Propping Up the U.S. Dollar?

This has been discussed in many other boards. But nobody can name ONE concret benefits to US if China's yuan appreciate. Substantial changes in currency values is a decisive destabilizing force in globalization. China began the revaluation in July 2005, coinciding with timing of US housing's entering of bubble zone. Hot money left US and entered China in order to capture the benefits of revaluations. This continued all all the way to mid 2007 when the bubble began to bust.

Will Gold Break Its Downtrend?

To be fair, TA has its merit and frame work. But can you call this an article? I share Larry House's sentiment.

What Is the U.S. - China Economic Outlook Under Obama?

Not insightful comments.


"There are some investors thinking that China may “lead the pack” and recover faster than others (see next): I hardly think so.".

Who else would lead?
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"The RMB 4 trillion stimulus package obviously is not enough – otherwise, why do they keep introducing supplementary packages?"

If you try to offer more insightful information, don't just read WSJ, do more research on your own. Including stimulus packages from local gov's, I estimate the total would be at least 15 trillion RMB.
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"A quick solution for China, for instance, would be to introduce universal, free health insurance: that would remove the yoke of having to save in case of illness.".

It is more cultural phenomenon. Japanese saves a lot too, even though they have good healthcare. You are assuming a better healthcare would cause people to spend more and save less.

On the other hand, even though US does not have universal, free healthcare, people spend more than they have. It's cultural as well.

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Those geopolitical comments are even more superfacial. Sorry to say it.

The Bullish Case for U.S. Stocks

Good article. I don't know if those bullish "strategists" on wall street even allocate 30% of their personal portfolios to stocks at this point. Only then their arguments may have some merits. They are marketers, not strategists.

Happy Days for Gold?

From a technical viewpoint, the move last week was significant in several aspects:

(1). It broke the down trendline since 7/15/08. The next resistance, as Jeff pointed out, is $92 for GLD. $92 is the trendline level since 3/15/08 (the very top). A breakout above $92 would be very very bullish for gold.

(2). Last week, gold was on its own, despite up or down move of $. This is very important.

(3). Some pullback is possible at $92, if this resistance is not impulsively taken out.

(4) My original expectation is the breakout should be in early Feb when Feb futures contract delivary requests increase more forcefully than Dec contract. Clearly if $92 is taken out impulsively, gold would entering a new territory earlier.

(5). Retracement from $92 down to $83 area would keep the bull agenda intact.
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Above is purely chart reading.

Fundamentally, let helicopter Ben airdrop to the pockets of goldbugs.

The Great 'Fall' of China?

While many think that US will be the FIRST in and FIRST out of the crisis, it is more likely that China will be the one LAST in and FIRST out. The monetary, fiscal and currency tools are only employed at moderate levels, compared to US or Europe. They have a lot more room to maneuver than any other country. The only question is when to jump in in terms of stock investment. My own bias is the same time as in the US. i.e., sometime in the Summer.