J
Jenny_Jackson
Psycho Bitch
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The market crash in 1929 followed this pattern:
A major deflation of the stock market during the summer. Chase Manhatten and JP Morgan dumped several hundred millions into the market to salvage it. Over the next few months, the market rollercoastered up and down, but mostly down. Finally, there was the big crash and the Investment Banks didn't have the cash left to do anything.
Sounds like what's going one now, with the Investment Funds doing the cash dumping.
A major deflation of the stock market during the summer. Chase Manhatten and JP Morgan dumped several hundred millions into the market to salvage it. Over the next few months, the market rollercoastered up and down, but mostly down. Finally, there was the big crash and the Investment Banks didn't have the cash left to do anything.
Sounds like what's going one now, with the Investment Funds doing the cash dumping.
Oblimo
Literotica Guru
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Last week the Fed auctioned off loans by the billions to banks...because banks were not loaning money to each other. In other words, banks don't think banks are good investments.
If Fed help like this doesn't pull us back from the brink, we're pretty much fucked.
If Fed help like this doesn't pull us back from the brink, we're pretty much fucked.
Xelebes
Little Blue Alien
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Stagflation baby!
Anyways, the group of Canadian investors who shared the large bulk of the state-side third-party ABCP announced a deal with 20 out of 22 non-bank trust funds to convert their third-party ABCP investments into longer term deals. The value of the deal stands at around 33 billion dollars. There was no involvement from the Bank of Canada or the Federal Government in the deals, however they did comment on it after the announcement was made,
As a result, the Canadian dollar rose against the Euro and the US dollar, putting the loonie more solidly in front of the greenback.
Full article on CBC about the deal and the impact it had on the currency.
emap
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Yeah, it really is starting to look like nobody learned from the Great Depression, what was so great about it is beyond me but well hey that is what they call it. 
Just seems funny, banks are doing the exact opposite of what they are supposed to be doing, instead of keeping hold of the cash they are sinking into losing endeavors. No clue what they are thinking, personally I would have stopped trading in anything beyond water electric and trash companies long ago. Even oil is a very soon to be losing endeavor.
Makes you wonder though, if the US sinks into another depression, would Bush actually say oh my god I fucked up or blame it on somebody else?
I say if because it's not a given quite yet, though damn close.
Just seems funny, banks are doing the exact opposite of what they are supposed to be doing, instead of keeping hold of the cash they are sinking into losing endeavors. No clue what they are thinking, personally I would have stopped trading in anything beyond water electric and trash companies long ago. Even oil is a very soon to be losing endeavor.
Makes you wonder though, if the US sinks into another depression, would Bush actually say oh my god I fucked up or blame it on somebody else?
I say if because it's not a given quite yet, though damn close.
amicus
Literotica Guru
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Ah, I see the naybirds are all nesting nearby, defecating on the heads of passersby.
I sometimes forlornly hope your doom and gloom predictions would one day come true and you were forced to suffer through a diminishment of the stand of living to which you have become accustomed.
And since you offer your left wing prayers to the god of the collective that capitalism and the banking system would fail, even your hopes and dreams and prayers will have no bearing.
But for those of you who take these buffoons seriously, don't. The market and the monetary system will rebound and the current crisis will reside and become dim memory until the next left wing attempt to undermine human freedom is launched.
Amicus...
I sometimes forlornly hope your doom and gloom predictions would one day come true and you were forced to suffer through a diminishment of the stand of living to which you have become accustomed.
And since you offer your left wing prayers to the god of the collective that capitalism and the banking system would fail, even your hopes and dreams and prayers will have no bearing.
But for those of you who take these buffoons seriously, don't. The market and the monetary system will rebound and the current crisis will reside and become dim memory until the next left wing attempt to undermine human freedom is launched.
Amicus...
Xelebes
Little Blue Alien
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What caused the banks to do it?
The banks were essentially fooled into thinking that all real-eastate market bonds were A, AA or AAA rated bonds. HAving been duped, they didn't realise that they bought a swack-load of bonds for sub-prime mortgages. Pretty much how it worked. There was some foolish political wrangling of public policy (i.e. Greenspan opening up the ARM market) that took place and now we're in damage control.
The banks were essentially fooled into thinking that all real-eastate market bonds were A, AA or AAA rated bonds. HAving been duped, they didn't realise that they bought a swack-load of bonds for sub-prime mortgages. Pretty much how it worked. There was some foolish political wrangling of public policy (i.e. Greenspan opening up the ARM market) that took place and now we're in damage control.
Xelebes
Little Blue Alien
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Do you have any idea what is going in the credit market right now? It could spell big trouble. The thing we have to look for is if China's bubble bursts - if that goes, we're in for a rough ride.
amicus
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~~~
Ya, know Xelebes..there was a time I read a dozen financial outlets a day, Fed reports, market report, WSJ BW, over seas market, Dow Jones, trying to present a knowledgeable range of information for my listeners.
Among whom were bankers and investment guru's who were kind enough, when I erred in interpretation, to call and advise me of such.
The political chaff surrounding the monetary condition of the nation and the world, is so intense, I can only compare it to the blizzard of propaganda surrounding the global warming hoax, gleaning through it all is a task and the seed when discovered, is just a seed.
That 'seed' in economic terms, is the basic viability of the major western economies, high employment rates, low unemployment, full production and productivity; in other words, the basic economy despite political rhetoric, is in fairly good shape.
Now catastrophies can always occur, such as 9/11 and Katrina and the war, all huge drains and strains on the economy, but the system if fundamentally strong and fuctioning well.
Amicus...
Xelebes
Little Blue Alien
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Oh, so it is just editorial. Ok.
*shrug*
It's not you who has investments trapped in the ABCP quagmire - yes, the investments are literally trapped because no one is going anywhere near any ABCP. And there are a lot of investments trapped in this - and no one knows how many. Latest figures indicate that it is over 100 billion dollars for the US market and that number is rising as more come forward. For comparison, that is at least 1/30th (3.33%) of the US GDP. Canadian investors had 35 billion trapped - about 3/100 (3.00%). A bigger issue is just how high the numbers for the American investors will climb. Canada's involvement in that market was rather minimal. Britain (Northern Rock anyone?) got hit hard as did Switzerland and Norway.
So right now it's a big international clusterfuck because you've got the socialist and the capitalist nations in a pinch. Whatever happens in the soon coming contraction of the financial market may trigger some other worse things to happen like the bursting of the Chinese bubble and economic stagflation/deflation.
That is the risk right now.
The question is what is the central banks to do? The Bank of Canada did the right thing and did nothing leading to the Canadian loonie to make more of its gains on the US dollar, Euro and the GBP. However, that is only a solution for the Canadian economy, which right now is on relatively safe footing. I'm not so sure about some of the actions taken by the Bank of England, particularily with bailing out Northern Rock to the tune of over 10 billion British pounds.
*shrug*
It's not you who has investments trapped in the ABCP quagmire - yes, the investments are literally trapped because no one is going anywhere near any ABCP. And there are a lot of investments trapped in this - and no one knows how many. Latest figures indicate that it is over 100 billion dollars for the US market and that number is rising as more come forward. For comparison, that is at least 1/30th (3.33%) of the US GDP. Canadian investors had 35 billion trapped - about 3/100 (3.00%). A bigger issue is just how high the numbers for the American investors will climb. Canada's involvement in that market was rather minimal. Britain (Northern Rock anyone?) got hit hard as did Switzerland and Norway.
So right now it's a big international clusterfuck because you've got the socialist and the capitalist nations in a pinch. Whatever happens in the soon coming contraction of the financial market may trigger some other worse things to happen like the bursting of the Chinese bubble and economic stagflation/deflation.
That is the risk right now.
The question is what is the central banks to do? The Bank of Canada did the right thing and did nothing leading to the Canadian loonie to make more of its gains on the US dollar, Euro and the GBP. However, that is only a solution for the Canadian economy, which right now is on relatively safe footing. I'm not so sure about some of the actions taken by the Bank of England, particularily with bailing out Northern Rock to the tune of over 10 billion British pounds.
amicus
Literotica Guru
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Although it is still Christmas eve for another hour, here, the thought to be slightly apologetic to harmonize with the season flitted rhrough my my mind, I shooed it away.
It is true, a measure of cynicism has accompanied my education in the business world, and it is entirely possible that one fine day, my blase' attitude about such matters will jump up and bite my skinning ass, but I think not this time.
There are forces at work in the financial world that even Handprints, who knows it all, would not admit. Dynamics, like money cartels, old money, oil money, land money, and biggest of all government money and investments that leverage every market in the world. If I possessed a bean counters mind, I would have to lease a barn to store all my money, but it does not interest me.
I do, however, cringe when people are mislead and frightened about the future and so I try, from time to time, to spread a little oil on on the tempestuous waters.
Bad genes, I guess.
Amicus...
It is true, a measure of cynicism has accompanied my education in the business world, and it is entirely possible that one fine day, my blase' attitude about such matters will jump up and bite my skinning ass, but I think not this time.
There are forces at work in the financial world that even Handprints, who knows it all, would not admit. Dynamics, like money cartels, old money, oil money, land money, and biggest of all government money and investments that leverage every market in the world. If I possessed a bean counters mind, I would have to lease a barn to store all my money, but it does not interest me.
I do, however, cringe when people are mislead and frightened about the future and so I try, from time to time, to spread a little oil on on the tempestuous waters.
Bad genes, I guess.
Amicus...
oggbashan
Dying Truth seeker
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Confidence is essential
What is money?
Does a dollar bill, a five pound note, or a ten euro note have any real worth except as a piece of paper? They're even less useful than a blank piece of paper you could write a shopping list on.
Money only has value if people think it has value. If they think that a dollar bill, or a multiple of dollar bills, is adequate payment for something then they will take the money believing that they can use it to buy something else.
Once that belief fails then the country is in real trouble. Try spending a Zimbabwe banknote outside that country, or trying to buy anything at all inside that country without a carrier bag full of paper money.
There are signs that the belief in paper money, and its digital equivalent, are faltering in the US and Europe. More people are buying and storing gold. However gold has the same problem as paper currency - it is only worth what people think it is worth. At the moment people seem to think gold is more likely to retain value than paper money, or bank accounts stored on digital media.
Yet the US, the UK and the Eurozone are still trading. Goods are still being made. Services are supplied.
The signs from the retail market in the UK from the period just before Christmas are good. More people were around spending more money - but some stores started their sales before Christmas. Will stores make a profit or a loss? Most seem to think they'll do better than last year. If so, the banking crisis is a minor episode that will correct itself in weeks or months. If not, then we may have to live with devalued money and less spending power. The UK consumer seems to think the crisis is just a lot of hot air.
Og
What is money?
Does a dollar bill, a five pound note, or a ten euro note have any real worth except as a piece of paper? They're even less useful than a blank piece of paper you could write a shopping list on.
Money only has value if people think it has value. If they think that a dollar bill, or a multiple of dollar bills, is adequate payment for something then they will take the money believing that they can use it to buy something else.
Once that belief fails then the country is in real trouble. Try spending a Zimbabwe banknote outside that country, or trying to buy anything at all inside that country without a carrier bag full of paper money.
There are signs that the belief in paper money, and its digital equivalent, are faltering in the US and Europe. More people are buying and storing gold. However gold has the same problem as paper currency - it is only worth what people think it is worth. At the moment people seem to think gold is more likely to retain value than paper money, or bank accounts stored on digital media.
Yet the US, the UK and the Eurozone are still trading. Goods are still being made. Services are supplied.
The signs from the retail market in the UK from the period just before Christmas are good. More people were around spending more money - but some stores started their sales before Christmas. Will stores make a profit or a loss? Most seem to think they'll do better than last year. If so, the banking crisis is a minor episode that will correct itself in weeks or months. If not, then we may have to live with devalued money and less spending power. The UK consumer seems to think the crisis is just a lot of hot air.
Og
J
JAMESBJOHNSON
Guest
EMAP is correct.
Stock has value, as does real estate; and it's possible to inflate the price of each beyond what the market will pay, because you eventually reach a ceiling price even reckless spenders wont pay. Then the price deflates, usually to beneath the real worth.
The problemo is, local and state government believed the Ponzi Scheme in real estate would last forever. The county I reside in spent like the proverbial drunk sailor. Then it invested its tax revenue in mortgages and credit debt, to make some fast money to keep the party going. 2008 is when the shit hits the fan, because real estate assessments will contract because of deflated prices. Less tax revenue pressures the county/city to dump the mortgages and credit debt. Almost every hamlet and burg and school district here-abouts holds 250 MILLION to a BILLION in risky bonds. How the money men can save them is a mystery to me.
Stock has value, as does real estate; and it's possible to inflate the price of each beyond what the market will pay, because you eventually reach a ceiling price even reckless spenders wont pay. Then the price deflates, usually to beneath the real worth.
The problemo is, local and state government believed the Ponzi Scheme in real estate would last forever. The county I reside in spent like the proverbial drunk sailor. Then it invested its tax revenue in mortgages and credit debt, to make some fast money to keep the party going. 2008 is when the shit hits the fan, because real estate assessments will contract because of deflated prices. Less tax revenue pressures the county/city to dump the mortgages and credit debt. Almost every hamlet and burg and school district here-abouts holds 250 MILLION to a BILLION in risky bonds. How the money men can save them is a mystery to me.
amicus
Literotica Guru
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A mystery to you or not JBJ, is not the issue, the system will correct itself.
An aside...perception is often a factor, it has been written that it was even in the 1929 collapse, people believed a crisis was at hand and made a run on the banks, withdrawing everything they had.
Surely it could all happen that way again if the, 'johnny come lately's' begin to bail and the panic spreads, and it may well do so.
Just a thought earlier this xmas morning...
amicus...
An aside...perception is often a factor, it has been written that it was even in the 1929 collapse, people believed a crisis was at hand and made a run on the banks, withdrawing everything they had.
Surely it could all happen that way again if the, 'johnny come lately's' begin to bail and the panic spreads, and it may well do so.
Just a thought earlier this xmas morning...
amicus...
J
JAMESBJOHNSON
Guest
AMICUS
I agree with your facts, but I dont share your confidence in the average Gomer's good sense...especially the Gomer's in official positions, and the Gomer's with stout government sinecures.
Last night I read an autobiography of an old Florida judge. At the end of the Civil War the CSA tax collectors were out and about, shaking-down the women for grossly inflated taxes. When their men learned of it they deserted the army, to return to Florida to save their homes....and Lee ran out of gas.
I expect the economy to right itself, I dont expect elected officials and appointees to do the right thing before plenty of people are harmed.
I agree with your facts, but I dont share your confidence in the average Gomer's good sense...especially the Gomer's in official positions, and the Gomer's with stout government sinecures.
Last night I read an autobiography of an old Florida judge. At the end of the Civil War the CSA tax collectors were out and about, shaking-down the women for grossly inflated taxes. When their men learned of it they deserted the army, to return to Florida to save their homes....and Lee ran out of gas.
I expect the economy to right itself, I dont expect elected officials and appointees to do the right thing before plenty of people are harmed.
amicus
Literotica Guru
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Mixed comment there and here, JBJ, the south collapsed when the rail hub was captured, that be Atlanta, Georgia, I do believe.
Gomers, I dunno from that...I might suggest, like cops, who deal with the dregs daily, your experiences may have jaded you...just a suggestion...
I hate myself for mentioning this a second time, but your political conversion may not have afforded you that basic faith in the self interest of the individual to have gained the necessary respect for the concept.
We, meaning us fucking individuals, will fucking overcome...smiles...
ami...
Gomers, I dunno from that...I might suggest, like cops, who deal with the dregs daily, your experiences may have jaded you...just a suggestion...
I hate myself for mentioning this a second time, but your political conversion may not have afforded you that basic faith in the self interest of the individual to have gained the necessary respect for the concept.
We, meaning us fucking individuals, will fucking overcome...smiles...
ami...
J
JAMESBJOHNSON
Guest
AMICUS
We can have one helluva thread about the Lost Cause, but I agree with Jefferson Davis' observation that the South could lose every inch of territory, capture Washington, and win the war. Atlanta didnt matter. What mattered was keeping Lee alive. Check it out: Lee destroyed more Union soldiers in the last year of the war, than in the combined first 3 years of the war. The CSA tax collectors defeated him.
Yes, I deal with the dregs daily, and I deal with bureaucrats and elected officials and do-gooders. Several years ago I estimated that 5% of the people in any organization do all the work; I have not changed my estimate. Ninety-five percent of us ride in the wagon.
We can have one helluva thread about the Lost Cause, but I agree with Jefferson Davis' observation that the South could lose every inch of territory, capture Washington, and win the war. Atlanta didnt matter. What mattered was keeping Lee alive. Check it out: Lee destroyed more Union soldiers in the last year of the war, than in the combined first 3 years of the war. The CSA tax collectors defeated him.
Yes, I deal with the dregs daily, and I deal with bureaucrats and elected officials and do-gooders. Several years ago I estimated that 5% of the people in any organization do all the work; I have not changed my estimate. Ninety-five percent of us ride in the wagon.
Oblimo
Literotica Guru
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One of the reasons I've been renting rather than buying...the other reason being my family's moving every 4 years or so. I've been risk-adverse to building equity in almost anything volatile.
