rogerk2's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/40425/comments http://seekingalpha.com/article/141227-will-a-silver-bullet-finally-kill-the-metal-manipulators?source=feed#comment-532991 532991
My guess is the bullion banks and central banks have maybe 5-10% in physical and 90-95% in certificate IOUs. They can make lots of money "loaning" these IOUs to to an ETF that needs to show inventory or a speculator for a short sale. Consequently, almost all of the daily volume you see in precious metals is the going price for the IOUs, not the real price of the physical metal. The banks won't give you physical delivery; you have to buy from a dealer.

What's happening is the same thing as when they switched off the gold standard. The govt confiscated privately owned gold and issued "promisory notes," basically IOUs. If the manipulation starts to unravel, the govts of the world will do the same thing again. You won't see them break the banks, just the little guys.
]]> Fri, 05 Jun 2009 00:20:53 -0400
My guess is the bullion banks and central banks have maybe 5-10% in physical and 90-95% in certificate IOUs. They can make lots of money "loaning" these IOUs to to an ETF that needs to show inventory or a speculator for a short sale. Consequently, almost all of the daily volume you see in precious metals is the going price for the IOUs, not the real price of the physical metal. The banks won't give you physical delivery; you have to buy from a dealer.

What's happening is the same thing as when they switched off the gold standard. The govt confiscated privately owned gold and issued "promisory notes," basically IOUs. If the manipulation starts to unravel, the govts of the world will do the same thing again. You won't see them break the banks, just the little guys.
]]> http://seekingalpha.com/article/138661-the-new-regulatory-structure-begins-to-emerge?source=feed#comment-512412 512412
So far, these guys are all just re-shuffling the chairs on the deck of the Titanic. The same "good old boy" insiders as before are at the tiller, and they're just powering further into the ice field.

We won't get a "New Deal" as long as Geithner, Summers, Barney Frank, and all the other "Old Deal" cronies are still running things. They're part of the bunch that put the country in the toilet to begin with. By the time we get past the mess they made, we'll have so much national debt, it will take 10 generations or more to pay it off.

I can't believe they want to strip powers from actual government agencies and give more regulatory authority to the Federal Reserve. The Federal Reserve Banks are private companies, chartered by the govt. to oversee interbank relations and provide liquidity when needed. Most Reserve Bank directors are bank CEOs. There is just so much incentive for them to push "the Fed" into doing whatever it takes to keep the banks afloat and protect their own jobs, is it any wonder the govt. pumped all the money in there first? (Paulson was a former banker. Geithner was a former Fed head. Summers was Treasury Sec when the easy-money easy-credit bubble got started. Pals gotta stick together in tough times.)

]]> Thu, 21 May 2009 04:47:15 -0400
So far, these guys are all just re-shuffling the chairs on the deck of the Titanic. The same "good old boy" insiders as before are at the tiller, and they're just powering further into the ice field.

We won't get a "New Deal" as long as Geithner, Summers, Barney Frank, and all the other "Old Deal" cronies are still running things. They're part of the bunch that put the country in the toilet to begin with. By the time we get past the mess they made, we'll have so much national debt, it will take 10 generations or more to pay it off.

I can't believe they want to strip powers from actual government agencies and give more regulatory authority to the Federal Reserve. The Federal Reserve Banks are private companies, chartered by the govt. to oversee interbank relations and provide liquidity when needed. Most Reserve Bank directors are bank CEOs. There is just so much incentive for them to push "the Fed" into doing whatever it takes to keep the banks afloat and protect their own jobs, is it any wonder the govt. pumped all the money in there first? (Paulson was a former banker. Geithner was a former Fed head. Summers was Treasury Sec when the easy-money easy-credit bubble got started. Pals gotta stick together in tough times.)

]]> http://seekingalpha.com/article/136733-cramer-s-mad-money-we-lost-a-good-man-5-8-09?source=feed#comment-498554 498554
Cramer's job is to get eyeballs for CNBC. More people watch the show if he's pitching stocks to go up, not down. His job is to make people think "there's always a bull market out there some where" so they'll keep watching his show (and the advertisements that support CNBC). ]]> Mon, 11 May 2009 04:43:36 -0400
Cramer's job is to get eyeballs for CNBC. More people watch the show if he's pitching stocks to go up, not down. His job is to make people think "there's always a bull market out there some where" so they'll keep watching his show (and the advertisements that support CNBC). ]]> http://seekingalpha.com/article/135669-a-stress-test-shocker-bofa-needs-35-billion?source=feed#comment-493280 493280
How many pension funds, college endowment funds, mutual funds, stayed long the banks all the way down? If they did, their shares are worth pennies on the dollar. How much of the new money going into banks this year so far has come from these big funds? Not a lot yet, I suspect. Most of the new money is speculation ... and it'll be gone in a flash at the first whiff of bad news.

If a bank is forced to raise $10B more shareholder assets, and $10B worth of speculators sell the news, doesn't that mean the bank has to find $20B instead? That's why the spec players will dump all at once and immediately go short.]]> Thu, 07 May 2009 02:32:25 -0400
How many pension funds, college endowment funds, mutual funds, stayed long the banks all the way down? If they did, their shares are worth pennies on the dollar. How much of the new money going into banks this year so far has come from these big funds? Not a lot yet, I suspect. Most of the new money is speculation ... and it'll be gone in a flash at the first whiff of bad news.

If a bank is forced to raise $10B more shareholder assets, and $10B worth of speculators sell the news, doesn't that mean the bank has to find $20B instead? That's why the spec players will dump all at once and immediately go short.]]> http://seekingalpha.com/article/131376-3x-etfs-using-leverage-for-higher-returns?source=feed#comment-467343 467343
FAS and FAZ have had lots of 30% and 40% daily moves, which is why they are so popular with daytraders and often have the highest daily volume on the exchanges. Play them with extreme caution. The professional traders have access to market-moving information before you do, they have enough money to manipulate any stock they want to, and they can trade before and after your markets open/close. If you play against them, you lose.]]> Sat, 18 Apr 2009 01:14:27 -0400
FAS and FAZ have had lots of 30% and 40% daily moves, which is why they are so popular with daytraders and often have the highest daily volume on the exchanges. Play them with extreme caution. The professional traders have access to market-moving information before you do, they have enough money to manipulate any stock they want to, and they can trade before and after your markets open/close. If you play against them, you lose.]]> http://seekingalpha.com/article/128815-cramer-s-stop-trading-so-long-stress-test-4-9-09?source=feed#comment-459200 459200 Fri, 10 Apr 2009 14:54:01 -0400 http://seekingalpha.com/article/114771-geithner-taxed?source=feed#comment-357311 357311
1. You were at the helm of the financial capital of the world during the decade that led to the biggest banking system failure since the Great Depression. What did you do, or fail to do, that allowed this fiasco to occur on your watch?

2. What in your experience as Chairman of the New York Fed demonstrates your qualifications to be given trillions of taxpayer dollars to distribute fairly and openly, for the benefit of the public? How has the public benefitted from your tenure in the NY Fed?

3. The chiefs of JPM and Citi are directors of the NY Fed. Their banks got bailed out. Bear Stearns and Lehman were not represented on your Board. They were allowed to fail, and JPM and Citi were able to buy up their assets for a song. How do you convince the American taxpayer there was no insider collusion in these decisions?

4. Why did you only pay taxes for the two years that got audited, and not for the other two years that obviously had the same tax liability? Your financial advisor or tax preparer didn't know you were cheating on your taxes? Did you use the same tax preparer as Bernie Madoff?]]> Fri, 16 Jan 2009 05:19:22 -0500
1. You were at the helm of the financial capital of the world during the decade that led to the biggest banking system failure since the Great Depression. What did you do, or fail to do, that allowed this fiasco to occur on your watch?

2. What in your experience as Chairman of the New York Fed demonstrates your qualifications to be given trillions of taxpayer dollars to distribute fairly and openly, for the benefit of the public? How has the public benefitted from your tenure in the NY Fed?

3. The chiefs of JPM and Citi are directors of the NY Fed. Their banks got bailed out. Bear Stearns and Lehman were not represented on your Board. They were allowed to fail, and JPM and Citi were able to buy up their assets for a song. How do you convince the American taxpayer there was no insider collusion in these decisions?

4. Why did you only pay taxes for the two years that got audited, and not for the other two years that obviously had the same tax liability? Your financial advisor or tax preparer didn't know you were cheating on your taxes? Did you use the same tax preparer as Bernie Madoff?]]> http://seekingalpha.com/article/111546-tarp-oversight-panel-s-first-report-what-a-crock?source=feed#comment-334790 334790
From the perspective of Congress and the Administration, Plan A bailouts are far better than Plan B failures and unemployment - even if Plan A has a very small chance of success. Under Plan A, Congress keeps racking in those campaign contributions. Under Plan B, unemployed people don't contribute much to political machines, and when all hope is lost, they tend to organize, riot, and throw the bastards out.

Besides, giving away other people's money is easy. Being responsible for causing, and then failing to fix, the collapse of the world's economy is a much tougher problem.]]> Sat, 20 Dec 2008 20:37:56 -0500
From the perspective of Congress and the Administration, Plan A bailouts are far better than Plan B failures and unemployment - even if Plan A has a very small chance of success. Under Plan A, Congress keeps racking in those campaign contributions. Under Plan B, unemployed people don't contribute much to political machines, and when all hope is lost, they tend to organize, riot, and throw the bastards out.

Besides, giving away other people's money is easy. Being responsible for causing, and then failing to fix, the collapse of the world's economy is a much tougher problem.]]> http://seekingalpha.com/article/111398-u-s-dollar-the-trade-of-the-decade?source=feed#comment-333678 333678
I've been trying to think through the broad implications of your strong dollar/weak commodities arguments. By the way, UBS came out today with a similar projection of oil at $20 and gold at $300 next year.

My conclusion is that the whole question hinges on whether or not Uncle Ben, backed by The Fed and Treasury and our singing printing presses, can pull off a global refinancing deal. It has to be a global solution because everything is so interconnected.

The US has been the global growth engine for the rest of the world for decades. China, India, etc. may be developing their own internal demand structures, but their economic growth is still tied to exports, principally to the US. They need to keep our consumption engine going or their production engine shuts down. If demand/production falls, they lose jobs, and their unemployed population won't have money to buy cell phones or pay taxes to build roads and new factories.

The producing nations are already getting hit harder than anyone expected, due to falling consumption in the US and Europe. Look at Brazil, Australia, to see some of the impacts of falling oil and metals prices. These were very strong economies, now having to scramble.

The point is, none of these countries can survive for long economically without foreign capital coming in to buy their goods and services. That's how they keep their people employed and roads paved. Govts fear high unemployment more than anything else. They can control food prices and gas prices somewhat, but having too many people standing around with nothing to do foments riots and coups. Look at Obama's plan. Step 1 is to create 2.5 million jobs. Get people working, off the streets, and off welfare.

So, Uncle Ben needs a strong dollar to support all those foreign govts holding gigantic piles of dollars and treasuries, and they need to continue buying our low-yield debt so we don't go under. They buy our junk money so we can keep buying the junk products their huge populations produce. It's a delicate balancing act, on a global scale.

It's pretty clear that the dollar's fundamentals are crap. The only way you could get the dollar to look strong while you are creating billions more of them out of thin air is by concerted actions across the world. Nobody can afford to rock the boat too much because they all realize, if the dollar crashes, the US crashes, and every other economy in the world crashes right behind us.

Finally, you can't have a strong dollar if oil and gold are going up. We already know that oil futures are manipulated by traders (primarily the big banks who are market-makers), and I suspect Uncle Ben and the NY Fed are pulling some strings to keep the spot price low. How else could you get "demand" still falling when the price is cut by two-thirds? "Gee, I'm just gonna leave my big new SUV sitting in the driveway." Sure!

Gold is another case. Demand is surging, but the big depository banks (the same guys "fixing" oil prices) are hoarding the physical metal. Spot price $800 - here, have this certificate (IOU) for an ounce. You want actual gold? Go to a dealer. Of course, he'll charge you $1100 an ounce. The spot gold price is being artificially pressured, perhaps again to support the appearance of a strong dollar.

So, I think it is entirely reasonable for Uncle Ben and his local and global cohorts to be manipulating commodities, and many other aspects of daily life we take for granted, to support a strong and rising dollar. It's a very fine line they're walking, with global disaster hanging on every step. Can they pull it off? It seems to be working so far, but I still only give it about a 30% chance of success. Every new bailout, every new pile of money they throw at it, makes the fine line thinner and thinner.

The other 70% of me says it's all going to fall like Humpty Dumpty one of these days. I'm learning how to grow carrots in my back yard.]]> Fri, 19 Dec 2008 05:09:01 -0500
I've been trying to think through the broad implications of your strong dollar/weak commodities arguments. By the way, UBS came out today with a similar projection of oil at $20 and gold at $300 next year.

My conclusion is that the whole question hinges on whether or not Uncle Ben, backed by The Fed and Treasury and our singing printing presses, can pull off a global refinancing deal. It has to be a global solution because everything is so interconnected.

The US has been the global growth engine for the rest of the world for decades. China, India, etc. may be developing their own internal demand structures, but their economic growth is still tied to exports, principally to the US. They need to keep our consumption engine going or their production engine shuts down. If demand/production falls, they lose jobs, and their unemployed population won't have money to buy cell phones or pay taxes to build roads and new factories.

The producing nations are already getting hit harder than anyone expected, due to falling consumption in the US and Europe. Look at Brazil, Australia, to see some of the impacts of falling oil and metals prices. These were very strong economies, now having to scramble.

The point is, none of these countries can survive for long economically without foreign capital coming in to buy their goods and services. That's how they keep their people employed and roads paved. Govts fear high unemployment more than anything else. They can control food prices and gas prices somewhat, but having too many people standing around with nothing to do foments riots and coups. Look at Obama's plan. Step 1 is to create 2.5 million jobs. Get people working, off the streets, and off welfare.

So, Uncle Ben needs a strong dollar to support all those foreign govts holding gigantic piles of dollars and treasuries, and they need to continue buying our low-yield debt so we don't go under. They buy our junk money so we can keep buying the junk products their huge populations produce. It's a delicate balancing act, on a global scale.

It's pretty clear that the dollar's fundamentals are crap. The only way you could get the dollar to look strong while you are creating billions more of them out of thin air is by concerted actions across the world. Nobody can afford to rock the boat too much because they all realize, if the dollar crashes, the US crashes, and every other economy in the world crashes right behind us.

Finally, you can't have a strong dollar if oil and gold are going up. We already know that oil futures are manipulated by traders (primarily the big banks who are market-makers), and I suspect Uncle Ben and the NY Fed are pulling some strings to keep the spot price low. How else could you get "demand" still falling when the price is cut by two-thirds? "Gee, I'm just gonna leave my big new SUV sitting in the driveway." Sure!

Gold is another case. Demand is surging, but the big depository banks (the same guys "fixing" oil prices) are hoarding the physical metal. Spot price $800 - here, have this certificate (IOU) for an ounce. You want actual gold? Go to a dealer. Of course, he'll charge you $1100 an ounce. The spot gold price is being artificially pressured, perhaps again to support the appearance of a strong dollar.

So, I think it is entirely reasonable for Uncle Ben and his local and global cohorts to be manipulating commodities, and many other aspects of daily life we take for granted, to support a strong and rising dollar. It's a very fine line they're walking, with global disaster hanging on every step. Can they pull it off? It seems to be working so far, but I still only give it about a 30% chance of success. Every new bailout, every new pile of money they throw at it, makes the fine line thinner and thinner.

The other 70% of me says it's all going to fall like Humpty Dumpty one of these days. I'm learning how to grow carrots in my back yard.]]> http://seekingalpha.com/article/110940-exploring-madoff-s-ponzi-scheme-will-unveil-the-causes-of-this-global-monetary-crisis?source=feed#comment-331065 331065
In the US, and world wide, we're underfunded for future needs in health care, education, energy, environment, and retirement, to name a few. We are spending money we don't have today, in all these areas, and expecting future generations to pay it off, in addition to saving for their own needs. Good luck.

In today's reality, everybody is running a Ponzi of some sort. Paying by credit card instead of cash. Buying a house with a 30-year mortgage. Borrowing against your house to buy stock or a new car. It's all a "buy now, pay later" deal, with huge penalties if you can't pay on time.

The world's economy is based on people spending more than they currently have, going into debt to the bankers, and spending the rest of their lives paying high interest and low principle on the maximum amount of debt possible. This is just the current version of the "indentured servitude" model the dark overlords have been using for thousands of years.]]> Tue, 16 Dec 2008 12:11:17 -0500
In the US, and world wide, we're underfunded for future needs in health care, education, energy, environment, and retirement, to name a few. We are spending money we don't have today, in all these areas, and expecting future generations to pay it off, in addition to saving for their own needs. Good luck.

In today's reality, everybody is running a Ponzi of some sort. Paying by credit card instead of cash. Buying a house with a 30-year mortgage. Borrowing against your house to buy stock or a new car. It's all a "buy now, pay later" deal, with huge penalties if you can't pay on time.

The world's economy is based on people spending more than they currently have, going into debt to the bankers, and spending the rest of their lives paying high interest and low principle on the maximum amount of debt possible. This is just the current version of the "indentured servitude" model the dark overlords have been using for thousands of years.]]> http://seekingalpha.com/article/110440-12-cnbc-pet-peeves?source=feed#comment-329517 329517
The "second string" down in the pits are probably at least reasonably competent reporters, although they only get 10 seconds each to give you all the news you're really interested in. All the new "politically correct" additions are unintelligible idiots. Am I supposed to understand someone with a heavy accent who blasts out 500 words in ten seconds without even taking a breath?

I haven't been able to watch CNBC for more than a few minutes at a time in over two years. Every time I turn it on, I get pissed all over again and switch out. I don't watch Fox news; too much like CNBC. I put both of them in the same league as Oprah for providing objective news.

I pay extra to get Bloomberg on my cable. My major concern there is the ads. They play the same ones over and over. You're lucky to get two minutes of news for every two minutes of ads. It almost seems like they spend more time telling you what's coming up after the break than they did on the last news story. I usually leave the sound off and just watch the news ticker.

One thing to remember about all these channels: they're not in the news business, they're in the advertising business. That's how they make their money. It's all about getting and holding eyeballs. CNBC and Fox seem to be focused on younger, upwardly mobile trader-types whom they expect to have short attention spans and want instant gratification. Bloomberg seems to relate more to serious (older?), long term types interested in the broad picture and understanding the trends.

Quite frankly, I haven't made any hot trade money from any of these channels. The closest I've come is to short whatever Cramer pitches, since lots of sheep buy high on his recommendations and then bail when they realize they got in way too late. Cramer keeps telling them, don't buy today ... but sheep are sheep.

Just my own personal opinions.]]> Sun, 14 Dec 2008 22:38:12 -0500
The "second string" down in the pits are probably at least reasonably competent reporters, although they only get 10 seconds each to give you all the news you're really interested in. All the new "politically correct" additions are unintelligible idiots. Am I supposed to understand someone with a heavy accent who blasts out 500 words in ten seconds without even taking a breath?

I haven't been able to watch CNBC for more than a few minutes at a time in over two years. Every time I turn it on, I get pissed all over again and switch out. I don't watch Fox news; too much like CNBC. I put both of them in the same league as Oprah for providing objective news.

I pay extra to get Bloomberg on my cable. My major concern there is the ads. They play the same ones over and over. You're lucky to get two minutes of news for every two minutes of ads. It almost seems like they spend more time telling you what's coming up after the break than they did on the last news story. I usually leave the sound off and just watch the news ticker.

One thing to remember about all these channels: they're not in the news business, they're in the advertising business. That's how they make their money. It's all about getting and holding eyeballs. CNBC and Fox seem to be focused on younger, upwardly mobile trader-types whom they expect to have short attention spans and want instant gratification. Bloomberg seems to relate more to serious (older?), long term types interested in the broad picture and understanding the trends.

Quite frankly, I haven't made any hot trade money from any of these channels. The closest I've come is to short whatever Cramer pitches, since lots of sheep buy high on his recommendations and then bail when they realize they got in way too late. Cramer keeps telling them, don't buy today ... but sheep are sheep.

Just my own personal opinions.]]> http://seekingalpha.com/article/109229-dividend-investing-for-monthly-income?source=feed#comment-321974 321974
This method let's me compare a variety of dividend yields on a consistent basis, i.e., what does it take to generate $100/mo net returns from dividends?]]> Fri, 05 Dec 2008 14:55:51 -0500
This method let's me compare a variety of dividend yields on a consistent basis, i.e., what does it take to generate $100/mo net returns from dividends?]]> http://seekingalpha.com/article/100184-destruction-of-wealth?source=feed#comment-283949 283949
What we are actually seeing is destruction of unrealized or paper wealth, the writedown of imputed values of stuff that aren't tangible assets. We're getting killed by failed insurance policies, not failed companies...and by the bankers and rating agencies and insurance companies that pitched this stuff like it was real.]]> Thu, 16 Oct 2008 15:20:21 -0400
What we are actually seeing is destruction of unrealized or paper wealth, the writedown of imputed values of stuff that aren't tangible assets. We're getting killed by failed insurance policies, not failed companies...and by the bankers and rating agencies and insurance companies that pitched this stuff like it was real.]]> http://seekingalpha.com/article/100191-chuck-schumer-the-new-chairman-of-the-board?source=feed#comment-283921 283921 Thu, 16 Oct 2008 14:56:58 -0400 http://seekingalpha.com/article/100202-an-outcry-from-emerging-and-developed-markets-alike?source=feed#comment-283903 283903
1) Hedge funds put a lot of money in emerging markets because of their growth potential. The funds are now withdrawing investments, taking profits where they can get them, to pay for mounting redemptions. Every market tick down now equals 10 ticks up on the margin call meter, and all that leverage has to get paid down quickly.

2) My biggest fear is that, if the coordinated response to the global crisis actually works, it will "justify" consolidation of the global financial system under one central body. That body won't be the World Bank (nobody trusts them), but it could be a global oligarchy of the few "too big to fail" banks left standing - a global shaddow government controlling worldwide commercial activity through its control of credit.

And, it'll be basically the same guys running the new global financial system as screwed up the current "national" ones. A global meltdown of the existing systems sure seems convenient, if the plan is to build a new consolidated global system for fun and profit. At least, it should give all the "new world order" conspiracy theorists something to chew on.]]> Thu, 16 Oct 2008 14:40:08 -0400
1) Hedge funds put a lot of money in emerging markets because of their growth potential. The funds are now withdrawing investments, taking profits where they can get them, to pay for mounting redemptions. Every market tick down now equals 10 ticks up on the margin call meter, and all that leverage has to get paid down quickly.

2) My biggest fear is that, if the coordinated response to the global crisis actually works, it will "justify" consolidation of the global financial system under one central body. That body won't be the World Bank (nobody trusts them), but it could be a global oligarchy of the few "too big to fail" banks left standing - a global shaddow government controlling worldwide commercial activity through its control of credit.

And, it'll be basically the same guys running the new global financial system as screwed up the current "national" ones. A global meltdown of the existing systems sure seems convenient, if the plan is to build a new consolidated global system for fun and profit. At least, it should give all the "new world order" conspiracy theorists something to chew on.]]> http://seekingalpha.com/article/99841-the-financial-axis-of-evil-past-and-present?source=feed#comment-283324 283324
Unfortunately, most Americans are closet socialists - share the wealth, regulate to keep prices artificially low, provide free education, pay for my old age, etc.

That's why we can't seem to get our political system to function efficiently. We keep sending mixed messages about what's important ... protect me from getting screwed (socialism), but give me freedom to screw somebody else (capitalism).]]> Wed, 15 Oct 2008 19:01:27 -0400
Unfortunately, most Americans are closet socialists - share the wealth, regulate to keep prices artificially low, provide free education, pay for my old age, etc.

That's why we can't seem to get our political system to function efficiently. We keep sending mixed messages about what's important ... protect me from getting screwed (socialism), but give me freedom to screw somebody else (capitalism).]]> http://seekingalpha.com/article/99880-don-t-take-over-the-free-markets-to-save-them?source=feed#comment-283303 283303
That's the banking system. It was balanced and functioning reasonably well until the bankers started stacking higher and higher leveraged derivitives on it. Then a butterfly flew by....

We've only seen the first few phone books hit the ground so far. There's still at least $14 Trillion worth of toxic derivitives (the net imbalance between up bets and down bets) that has to get written off at some point. That's more than the GDP of the World.

Mike, don't pine too much for the free market. It never was free. We're just buying it back from the banks that have owned it for the last 100 years. Of course, they've already sucked it dry, which is why we can buy it back at such low prices.

]]> Wed, 15 Oct 2008 18:23:52 -0400
That's the banking system. It was balanced and functioning reasonably well until the bankers started stacking higher and higher leveraged derivitives on it. Then a butterfly flew by....

We've only seen the first few phone books hit the ground so far. There's still at least $14 Trillion worth of toxic derivitives (the net imbalance between up bets and down bets) that has to get written off at some point. That's more than the GDP of the World.

Mike, don't pine too much for the free market. It never was free. We're just buying it back from the banks that have owned it for the last 100 years. Of course, they've already sucked it dry, which is why we can buy it back at such low prices.

]]> http://seekingalpha.com/article/98440-bailout-datapoint-of-the-day-aig-edition?source=feed#comment-273529 273529
That's how the financial system collapse hit AIG and others insuring counterparty risks. If one company fails, the insurance reserves are sufficient to pay off counterparties who took out insurance. If 100 companies fail at the same time, there's not enough reserves available to cover all the counterparties' policies simultaneously.

If you owned a house in Florida and Katrina destroyed it, you're still on the hook for the morgage. You probably had mortgage insurance to cover such a loss. But if your insurance company also insured thousands of other homes that got destroyed, overrunning it's financial capabilities and causing it to go belly up, your insurance is worthless. And you're still on the hook for the mortgage, on a now non-existant house.

Insurance is a necessary evil to protect against unforseen events, but no company carries enough reserves to cover really major catastrophies...6 Katrinas in a year, a major earthquake along the San Andreas fault in California, a nuclear war, a meteor impact, etc. We all know these events are going to happen sooner or later, but we're not willing to pay the upfront cost to build a reserve large enough to insure against them.]]> Sat, 04 Oct 2008 15:30:37 -0400
That's how the financial system collapse hit AIG and others insuring counterparty risks. If one company fails, the insurance reserves are sufficient to pay off counterparties who took out insurance. If 100 companies fail at the same time, there's not enough reserves available to cover all the counterparties' policies simultaneously.

If you owned a house in Florida and Katrina destroyed it, you're still on the hook for the morgage. You probably had mortgage insurance to cover such a loss. But if your insurance company also insured thousands of other homes that got destroyed, overrunning it's financial capabilities and causing it to go belly up, your insurance is worthless. And you're still on the hook for the mortgage, on a now non-existant house.

Insurance is a necessary evil to protect against unforseen events, but no company carries enough reserves to cover really major catastrophies...6 Katrinas in a year, a major earthquake along the San Andreas fault in California, a nuclear war, a meteor impact, etc. We all know these events are going to happen sooner or later, but we're not willing to pay the upfront cost to build a reserve large enough to insure against them.]]> http://seekingalpha.com/article/98460-how-have-credit-unions-survived-the-crisis?source=feed#comment-273483 273483
Other major differences apply. Many credit unions have restricted membership, e.g., teachers, public employees, local residents, etc., so they aren't spending tons of money on advertising. They are small and local, so they don't pay huge salaries.

Their depositors are their shareholders. They pay interest on deposits more than dividends on shares, so there is less pressure to pad quarterly results. Depositors/shareholder... are more interested in making sure their money is safe than in generating short term gains.

And probably most important, the bank manager is local. You know who he/she is, and the home phone number. If there's a problem, you can go right to the top.

That's actually how most banks got started - real peoplle loaning money to real people. Now, the "banking system" is just a bunch of abstract number-crunching with everybody trying to make more paper profits off the same dollars.

We need to get back to basics. We need to break up the banks, not consolidate them. Yes, there are efficiencies of size, but there are also higher costs is they fail. The bigger you are, the harder you fall. That's what we're seeing today.

My money is in my local credit union.]]> Sat, 04 Oct 2008 13:46:30 -0400
Other major differences apply. Many credit unions have restricted membership, e.g., teachers, public employees, local residents, etc., so they aren't spending tons of money on advertising. They are small and local, so they don't pay huge salaries.

Their depositors are their shareholders. They pay interest on deposits more than dividends on shares, so there is less pressure to pad quarterly results. Depositors/shareholder... are more interested in making sure their money is safe than in generating short term gains.

And probably most important, the bank manager is local. You know who he/she is, and the home phone number. If there's a problem, you can go right to the top.

That's actually how most banks got started - real peoplle loaning money to real people. Now, the "banking system" is just a bunch of abstract number-crunching with everybody trying to make more paper profits off the same dollars.

We need to get back to basics. We need to break up the banks, not consolidate them. Yes, there are efficiencies of size, but there are also higher costs is they fail. The bigger you are, the harder you fall. That's what we're seeing today.

My money is in my local credit union.]]> http://seekingalpha.com/article/98346-american-express-to-the-sell-block-cramer-s-mad-money-10-2-08?source=feed#comment-272294 272294
Maybe that's why they're mired in credit defaults...they'll give you a card even if you're already in over your head in debt.]]> Thu, 02 Oct 2008 23:34:22 -0400
Maybe that's why they're mired in credit defaults...they'll give you a card even if you're already in over your head in debt.]]> http://seekingalpha.com/article/96615-exposing-the-hedge-fund-industry-s-soft-white-underbelly?source=feed#comment-262138 262138
Grandma and Grandpa saved all their lives and now live on the income from their long term investments. All of a sudden (to them), their stocks are worth crap because a bunch of shysters have shorted them into oblivion. All they can do is sell, and get peanuts. That's all they know how to do.

While all you sophisticated traders are crying the blues about the death of your golden calf, how about considering that you have ruined a whole lots of people's lives. People who believed in prudence, frugality, and the fairness of the American free market system.]]> Tue, 23 Sep 2008 01:23:29 -0400
Grandma and Grandpa saved all their lives and now live on the income from their long term investments. All of a sudden (to them), their stocks are worth crap because a bunch of shysters have shorted them into oblivion. All they can do is sell, and get peanuts. That's all they know how to do.

While all you sophisticated traders are crying the blues about the death of your golden calf, how about considering that you have ruined a whole lots of people's lives. People who believed in prudence, frugality, and the fairness of the American free market system.]]> http://seekingalpha.com/article/92429-why-should-i-own-gold?source=feed#comment-260798 260798
Who sets the price on COMEX - you and me, or the "highest bidder" who has access to that exchange?]]> Sun, 21 Sep 2008 14:50:23 -0400
Who sets the price on COMEX - you and me, or the "highest bidder" who has access to that exchange?]]> http://seekingalpha.com/article/96450-preserving-u-s-economy-over-free-markets-short-sellers?source=feed#comment-260720 260720
The "rules" were written by the same guys that have been running the banks and commercial brokerages, and the government through campaign contributions and lobbyists, for the last several decades.

The "rules" let commercial traders trade 24/7 worldwide; we can't. Market-makers get to see all our pending buy/sell orders and trade their own book ahead of the open; we can't. Hedge funds can trade the same money several times a day; we can't.

They have the "rules" set up so they control the spreads, the access, the information, and the price. It's all done with very little visibility until they get caught doing something clearly illegal - frontrunning, late trading, insider trading, etc. Then their pals in govt step up, slap them on the hands, and say "No No." A thousand aggregious violators get off with a fine and no admission of guilt for every one that goes to jail.

Operating a stock market should be very simple. If you think a company is undervalued, buy its stock. If you think its overvalued, don't buy its stock. Anything else is just gambling. Betting its stock price will go down by the 3rd week in October is no different than betting the Dodgers will lose their game next weekend.

Yes, I'm in favor of throwing out the existing rule book, because it was written by interested parties to ensure they win out over the rest of us. Let's put control back in the hands of neutral parties who will actually enforce them - then maybe we can have a truly "free market." So far, it seems the vaunted free market just means the fat cats have been free to screw you and me.]]> Sun, 21 Sep 2008 13:14:57 -0400
The "rules" were written by the same guys that have been running the banks and commercial brokerages, and the government through campaign contributions and lobbyists, for the last several decades.

The "rules" let commercial traders trade 24/7 worldwide; we can't. Market-makers get to see all our pending buy/sell orders and trade their own book ahead of the open; we can't. Hedge funds can trade the same money several times a day; we can't.

They have the "rules" set up so they control the spreads, the access, the information, and the price. It's all done with very little visibility until they get caught doing something clearly illegal - frontrunning, late trading, insider trading, etc. Then their pals in govt step up, slap them on the hands, and say "No No." A thousand aggregious violators get off with a fine and no admission of guilt for every one that goes to jail.

Operating a stock market should be very simple. If you think a company is undervalued, buy its stock. If you think its overvalued, don't buy its stock. Anything else is just gambling. Betting its stock price will go down by the 3rd week in October is no different than betting the Dodgers will lose their game next weekend.

Yes, I'm in favor of throwing out the existing rule book, because it was written by interested parties to ensure they win out over the rest of us. Let's put control back in the hands of neutral parties who will actually enforce them - then maybe we can have a truly "free market." So far, it seems the vaunted free market just means the fat cats have been free to screw you and me.]]> http://seekingalpha.com/article/96336-toles-on-wall-street?source=feed#comment-259588 259588
What we're seeing is a process of ownership change, transitioning ownership of the government from big oil to big finance. The problem is, control of big finance is being "outsourced" offshore to China, et al. They own so much of our debt, they can hold a gun to our heads.

I guess at least you're happier thinking there really is a "free market" out there somewhere.]]> Fri, 19 Sep 2008 17:54:21 -0400
What we're seeing is a process of ownership change, transitioning ownership of the government from big oil to big finance. The problem is, control of big finance is being "outsourced" offshore to China, et al. They own so much of our debt, they can hold a gun to our heads.

I guess at least you're happier thinking there really is a "free market" out there somewhere.]]> http://seekingalpha.com/article/96340-short-selling-the-free-speech-of-wall-street?source=feed#comment-259558 259558
Oh, I hear you're also interested in AIG stock....]]> Fri, 19 Sep 2008 17:19:43 -0400
Oh, I hear you're also interested in AIG stock....]]> http://seekingalpha.com/article/95945-naked-shorting-needs-to-be-stopped?source=feed#comment-258712 258712
Loaning shares to short sellers is done all the time. Your broker does it; your pension fund does it; your bank does it. They're all trying to squeeze an extra penny of profit out of the shares they hold on your behalf. Do they enjoy loaning out a $10 stock and getting back a $1 stock? Oh well, it's really your money, not theirs.

Your broker can loan out shares in your portfolio without telling you, because there are no real shares there anyway. It's all electronic. As long as your broker pays you when dividends accrue and puts the requisite amount of cash into your account when you sell your electronic shares, that's all anybody cares about. Brokers love naked shorters because they generate huge transaction volume and trading commissions. Naked shorts know they're illegal, so they're in and out quickly, the electronic books get balanced again, the broker collects the extra fees, and nobody's the wiser.

Even CalPERS, the nation's biggest retirement fund, invests in a whole bunch of hedge funds to try to juice up their returns. They just announced that they are going to STOP loaning their shares out to shorters. Gee thanks, guys, but it's a little late to be getting a guilty conscience now.

I agree that what's needed is a return to basics: You can't sell something you don't own. If you buy something, you have to wait for constructive delivery and the cash to change hands before you can sell it again. That's what the SEC requires of me, as an individual investor. I can't trade with the same dollars twice in the same day. I have to wait three days for the last transaction to clear. So why does the SEC let hedge funds and naked shorters do it?

I think we need to require every large block short trade to be listed for the public record. The exchanges and brokers have all the information, it just isn't public. Even post it the following day, or two days later. It would be enough just to make all these gougers publicly admit they're doing it to the rest of us.]]> Fri, 19 Sep 2008 06:16:45 -0400
Loaning shares to short sellers is done all the time. Your broker does it; your pension fund does it; your bank does it. They're all trying to squeeze an extra penny of profit out of the shares they hold on your behalf. Do they enjoy loaning out a $10 stock and getting back a $1 stock? Oh well, it's really your money, not theirs.

Your broker can loan out shares in your portfolio without telling you, because there are no real shares there anyway. It's all electronic. As long as your broker pays you when dividends accrue and puts the requisite amount of cash into your account when you sell your electronic shares, that's all anybody cares about. Brokers love naked shorters because they generate huge transaction volume and trading commissions. Naked shorts know they're illegal, so they're in and out quickly, the electronic books get balanced again, the broker collects the extra fees, and nobody's the wiser.

Even CalPERS, the nation's biggest retirement fund, invests in a whole bunch of hedge funds to try to juice up their returns. They just announced that they are going to STOP loaning their shares out to shorters. Gee thanks, guys, but it's a little late to be getting a guilty conscience now.

I agree that what's needed is a return to basics: You can't sell something you don't own. If you buy something, you have to wait for constructive delivery and the cash to change hands before you can sell it again. That's what the SEC requires of me, as an individual investor. I can't trade with the same dollars twice in the same day. I have to wait three days for the last transaction to clear. So why does the SEC let hedge funds and naked shorters do it?

I think we need to require every large block short trade to be listed for the public record. The exchanges and brokers have all the information, it just isn't public. Even post it the following day, or two days later. It would be enough just to make all these gougers publicly admit they're doing it to the rest of us.]]> http://seekingalpha.com/article/96068-stocks-potentially-impacted-by-sec-s-enforcement-of-regulation-sho?source=feed#comment-258599 258599
The law was enacted in 2004. Cox says he is now going to enforce it, in 2008? What do we pay these people for? Why isn't Cox standing up before Congress trying to defend his refusal to enforce the law for the last four years?]]> Fri, 19 Sep 2008 00:43:11 -0400
The law was enacted in 2004. Cox says he is now going to enforce it, in 2008? What do we pay these people for? Why isn't Cox standing up before Congress trying to defend his refusal to enforce the law for the last four years?]]> http://seekingalpha.com/article/95340-brookings-panel-on-economic-activity-conference-housing-market-and-fed-activity?source=feed#comment-254038 254038 Sun, 14 Sep 2008 11:45:52 -0400 http://seekingalpha.com/article/95127-nationalization-of-the-u-s-mortgage-problem?source=feed#comment-253655 253655
1) FNM did just fine for 30 years, until the commercial bankers got their hands on it. Since then, it's been one scandal after another - exorbinant salaries, cooking the books, etc. Now the government has to take it back. We should have kept it as a government operation all along. It's as important to the fabric of American society as social security, medicare, and education. Oh yeah, they want to privatize those too, don't they!

2) Most great societies got that way because they were run by builders. Builders create jobs, make products, and pay salaries to poor people and well as rich people. Societies decline when they change to being run by lenders - people who profit from your misfortune, or from convincing you to live beyond your means. No individual, company, nation, or world can continue living beyond its means forever. It's just a matter of time.

Last century, we were the builders. This century, we got taken over by the financers. Rampant speculation in the 1920's led to the crash, and there wouldn't have been a run on the banks if they hadn't leveraged all their cash out to speculators. People felt, and rightly so, that when you put your money in a bank, it ought to be there for you...not in some risky venture designed to increase the bank's profits.

Today, the BRIC and some developing countries are the builders, and their government controls are keeping the lender-types at bay. Let's see how long that lasts.]]> Sat, 13 Sep 2008 19:17:31 -0400
1) FNM did just fine for 30 years, until the commercial bankers got their hands on it. Since then, it's been one scandal after another - exorbinant salaries, cooking the books, etc. Now the government has to take it back. We should have kept it as a government operation all along. It's as important to the fabric of American society as social security, medicare, and education. Oh yeah, they want to privatize those too, don't they!

2) Most great societies got that way because they were run by builders. Builders create jobs, make products, and pay salaries to poor people and well as rich people. Societies decline when they change to being run by lenders - people who profit from your misfortune, or from convincing you to live beyond your means. No individual, company, nation, or world can continue living beyond its means forever. It's just a matter of time.

Last century, we were the builders. This century, we got taken over by the financers. Rampant speculation in the 1920's led to the crash, and there wouldn't have been a run on the banks if they hadn't leveraged all their cash out to speculators. People felt, and rightly so, that when you put your money in a bank, it ought to be there for you...not in some risky venture designed to increase the bank's profits.

Today, the BRIC and some developing countries are the builders, and their government controls are keeping the lender-types at bay. Let's see how long that lasts.]]> http://seekingalpha.com/article/94328-frannie-bailout-private-profit-socialized-risk?source=feed#comment-248978 248978
The government program did fine for 30 years, including during WWII and the huge home-buying boom that followed. In 1968, amid complaints about this "government monopoly," then President Lyndon Johnson took it "off balance sheet" from the federal budget and privatized it (i.e., gave it to the bankers).

Over the next 40 years, the bankers and their cronies, both public and private, paid themselves huge salaries, bonuses, and perqs to do the same job some lowly bureaucrats had been doing for the previous 30 years. After all, that's what hotshot bankers do...get people in debt, and then live high off the interest.

So now we are re-nationalizing the mortgage loan business, and paying the bankers to give it back to us. Some deal. Next we're going to have to nationalize the airline industry, the auto industry, the agriculture industry, and the healthcare industry. Because of rising costs, the number of jobs involved, and the economic impact if they collapse, they're all candidates for the Paulson bailout waltz.

But what's everybody want to do? Privatize social security. Privatize pension plans. Privatize prisons. Privatize hospitals. Privatize police and fire. Hell, let's privatize the Army - that worked for Rome, for a while. At least we could take the War in Iraq off balance sheet.

In '38 we got the New Deal. In '68 we got the Sweetheart Deal. In '08 we're getting the Raw Deal. We need more government controls on the profiteers, not more privatization. The Free Market doesn't work if it's routinely manipulated by speculators, price fixing, kickbacks, insider trading, off balance sheet and "cook the books" accounting, and gutless auditors, regulators and politicians.]]> Tue, 09 Sep 2008 02:14:25 -0400
The government program did fine for 30 years, including during WWII and the huge home-buying boom that followed. In 1968, amid complaints about this "government monopoly," then President Lyndon Johnson took it "off balance sheet" from the federal budget and privatized it (i.e., gave it to the bankers).

Over the next 40 years, the bankers and their cronies, both public and private, paid themselves huge salaries, bonuses, and perqs to do the same job some lowly bureaucrats had been doing for the previous 30 years. After all, that's what hotshot bankers do...get people in debt, and then live high off the interest.

So now we are re-nationalizing the mortgage loan business, and paying the bankers to give it back to us. Some deal. Next we're going to have to nationalize the airline industry, the auto industry, the agriculture industry, and the healthcare industry. Because of rising costs, the number of jobs involved, and the economic impact if they collapse, they're all candidates for the Paulson bailout waltz.

But what's everybody want to do? Privatize social security. Privatize pension plans. Privatize prisons. Privatize hospitals. Privatize police and fire. Hell, let's privatize the Army - that worked for Rome, for a while. At least we could take the War in Iraq off balance sheet.

In '38 we got the New Deal. In '68 we got the Sweetheart Deal. In '08 we're getting the Raw Deal. We need more government controls on the profiteers, not more privatization. The Free Market doesn't work if it's routinely manipulated by speculators, price fixing, kickbacks, insider trading, off balance sheet and "cook the books" accounting, and gutless auditors, regulators and politicians.]]>