Todd Harrison out with a nice column titled “Are we trading against Hank Paulson?”

http://tinyurl.com/6bu47x

"You may not agree with the socialization efforts, but you must certainly respect them. With the election less than four months away, the eyes of the world are upon our capital markets. That lens isn't lost on policy makers who seemingly have two separate initiatives.
First, they want to break the bearish credit bets currently being made by global macro hedge funds. They're attempting to do this by squeezing stocks higher through the enforcement of the short-sale rule, an initiative aimed at 19 select financial institutions but widely expected to soon include a broader swatch of equities."

"What are you implying, 2nd_ave? That the mood can change quickly from being currently negative on oil to being positive once again?"

from the above article, harrison weighs in:

"“The second component of their master plan is crude oil, with an eye toward $100 a barrel by the election. While empirical evidence shows little if any historical relationship between the price of oil and equities -- the 10-year correlation between crude and airlines is negative 0.246 (very mild) -- psychology surrounding lower oil could conceivably shift sentiment.
Those are the ingredients for near-term reversal and while the script is still being written, you now know the motivation of the policy makers. They are playing the hand of socialization in an attempt to stem risk gone awry.”

out of IBN at 31.17...

2 art.- seeking alpha

The International Gold Rush: Bulls May Soon Be Rewarded

http://tinyurl.com/6xnl62
---------------------

5 Best Ways to Get into Gold

Perth Mint vs EverBank Select Metals Account.

http://seekingalpha.com/article/87907-5-best-ways-to-get-into-gold

david- congrats on holding onto UAUA for another day...

Unpaid Payroll Taxes Total $58 Billion

The Government Accountability Office report said the business owners took the money out of their employees' paychecks, but then kept it for themselves instead of turning it over to the government.

http://abcnews.go.com/print?id=5467328

allen- (completely off-topic)

had dinner with my parents last night, who set me straight...mom's first brother taught at Qinghua, which is the science and engineering college in Beijing...her second brother taught physics, but at a college in He Bei. Her dad worked in the administration of Yenching Univeristy, a Christian college which was eventually merged into the campus of Beijing U- he did graduate work at Columbia University, which is where he made the connections that allowed her to study in the States in the 40s...(she and my Dad met in Boston when he was at MIT, where my history begins...if your wife is laughing at how little chinese-americans know about china, well...touche...i think ALL americans will learn more about china over the next twenty years than they now know about Europe)...

man, i'm still skeptical about this rally, which still means the crowd is skeptical, which is still a bullish indicator?

Has anyone ever seen a day in the currencies like yesterday in a long while? The U.S. $ was mighty strong crushing all the majors. Aside from the fact that the U.S. Dollar has been in the doldrums for awhile, and oil is heading down, does anyone else get the feeling that there is a bit of fear in the markets about the stability of some of the other currencies?

GLW down - will buy under 20

AUO -12.86, 52 wks low, will buy some here

Hey guys!

The rules against naked shorting are, in effect, de leveraging. Since naked shorting is a bet against a given entity, it will relieve the downward pressure, just as deleveraging has relieved the upward pressure on real-estate and other long equities.

I think it's a good bet we'll see further action against short tools. Having said that, the fundamentals of the long markets, especially related to the consumer and real-estate are still grossly negative. So the Billion $ question(was million-inflation you know) is when the coming negative news on the consumer and overall economy croaks the markets. Oil above $100 is still 40% above where it was last fall. Not good for a consumer.

Bill,

Thank you for the post today. I've learned so much about capital markets in the short time I've followed the blog.

I've been taking small steps into active trading and most of my success is due to this community and it's insights.

Thanks to everyone.

Gotta' question:

Well, Uncle Ben extended the TAF facility until February. They give a haircut to assets accepted. With Merrill writing off to 20%, what effect does that have on the value of the assets? Bernanke is taking?

SLW just cracked below $13. This is one I watch, but rarely am I paying attention when it is the time to buy.

I'll keep watching.

Marshals, Coping With Business Crime Wave, Sell Fund Portfolios

``You can't believe some of the stupid investments these people made,'' said Leonard Briskman, the Marshals' deputy chief for business management who is supervising Bayou's liquidation sale. ``The Bayou guys lost money during the late '90s when almost everybody was making money in the market without even trying.''

http://tinyurl.com/6bcqgj

SLW and GG taking hits-> back on the watchlist...

I'm thinking that with all this Federal Bailout money being thrown around that the dollar will start plunging again soon. Who can be buying our bonds with confidence? And can you see any banks forgiving principle on mortgages? That would cause a widespread revolt by those of us paying our debts responsibly.

And this limiting shorting could really backfire if they're not careful. My understanding is that shorts covering are one of the safeguards to prevent severe market plunges. Maybe their plan is to engineer a huge plunge to hit the 10K bottom. It's crazy out there for sure.

Rob.

You can short, just not naked short.

SLW - dissapointing outlook, good earnings.

Witnessing the FED's privatization/socialization game is having a dramatic effect on my comfort zone.

Planning another bite of SKF when it nears the 52wk low...

The collapse of DOHA spells more serious troubles for for the US ahead. The lobbyists for farm subsidy prevailed, but high tariffs to protect the local markets (big rich producers) have always meant seriously deteriorating conditions in the US. "While barring imports seems like a solution to U.S. job losses, it is in fact a way to exacerbate economic distress and spread pain." Vivian Lewis, today, rightside.com

that's right...what rob's saying is that naked shorts caught with their pants down when the lights go on keeps a floor under the market...

TTM down 4% on Q1 results...i think it's a buying opportunity and looking to get back in...

2nd, have you seen the guys that work the trading floors of Chicago? If so, you'll know that your imagery just sent a horrible shudder down my spine.

CALM flat-> people are jumping over eachother to buy WM/C/FRE while a company that grows profits at 100% gets no analyst attention whatsoever? when this sucker hits 70 they can play old rodney dangerfield movies at the local cineplex in mississippi...

n2s- let's no go there, man...LOL

Since the " list of 19 " went out there has been no shortable shares in any of them at Fidelity . Perhaps hedge funds scooped them all up before the decree ? I doubt it . I believe there is coercion or cooperation taking place to prohibit the retail player from shorting . Despicable but not unexpected .

Naked shorting - this seems like dirty business to me.

The FED has many knobs at their disposal which they will never stop twisting. Maybe it's for the best, but if you want to play you've got to know the rules and only insiders have access to the cheat-sheets.

SLW - I meant GLW. Sorry, I'll shut up now...

Bought partial position in Goldcorp at 37.01.

The action in CALM in unbelievable. This company is at 6 P/E and 91% of the float is short. Very illuminating as to how the financials have take over the economy.

Well, the oil numbers came in puzzling, many stocks backing off.

GG - My original plan was to pick some up around $30 level. I feel very comfortable with this level after witnessing their most recent comeback.

If Friday's job numbers are as bad as expected, today's weakness in gold/silver is a gift...

"Friday's number, while not perfect, will be the first monthly job report this year that isn't defiled by ridiculous assumptions.

But each month the Bureau of Labor Statistics, which keeps track of the nation's employment health, assumes that there are loads of newly formed companies that couldn't be reached by its phone surveys.

So the BLS guesses at how many jobs these newbies created. This assumption is called the Current Employment Statistics Birth/Death Ratio.

These crazy assumptions caused the economy to look a lot stronger than it probably was during the springtime.

Even though the economy lost jobs in March, April, May and June, the numbers weren't as big as the experts expected.

Those optimistic assumptions should almost disappear with Friday's number.

Last year the government added a modest 26,000 phony jobs to its count in July - far below, say, the 317,000 birth/death jobs tacked on in this past April.

So Friday's number - whether it's better or worse than expected - is, at least, going to be more honest."

http://tinyurl.com/6ykss7

out of PIN at 21.25...

GG -

I don't think you will see 30. 33 perhaps, but not 30. Could be wrong though.

2nd
I double down on sept oex option

-OEBTP opened 3 contracts at 6.90...

fireworks:

w/ respect to the job data, i dont see a situation where the data will be considered bad.

unless it is the most extremem negative reading in the past few years, i belive it will be twisted and contorted and spun to be positive as the current market rally w/ a corresponding drop in commodity prices is just what the spin-doctor's ordered.

they will find one nuggest of positive from that report and blow it through the roof.

i just dont see how this report will be anything but that, considering the "estimates" could easily be shaded much worse to make the actual numbers appear better.

i think we need a wash out in gold/stocks before the next run up above $1000. the the party starts.

vinod- you're right about IBN, man...an hour after you sell it, it's time to buy it...

David- you know, sometimes it pays to get up earlier...

ALOHA!!

On the jobs front ... Its well known that Fortune 500 companies have either moved customer service and/or production overseas but it is not well known that small businesses, like mine, can do that as well.

I spoke with a company in Vietnam yesterday that offered customer service and accounting services to me for $4USD per hour. They knew QUICKBOOKS, which is the accounting software I have and they said they could take over all my OVERSTOCK.COM and phone order sales. I joking asked them if they could send me some farmers also!

Their English was impeccable, much better than many Americans! Its odd to think that 40 years ago my contact with a Vietnamese person would have been at the end of a M16 and now its QUICKBOOKS! Perhaps they will learn US tax laws and I can get rid of my high priced CPA for a $4 an hour one sitting in Ho Chi Minh City! So much for the DOMINO THEORY! The US government had it ALL WRONG in the 1960s and 1970s. What they are doing now inspires little confidence from me! How many of my generation died in Vietnam ... 58,000 ... for what? So I can outsource QUICKBOOKS!

Here is their e-mail:

Aloha,

My name is Emma Ha with TPL. We are a Business Process Services company that provides tailored services for Online Merchants and Auction Sellers. Our team of professionals can handle your data-entry needs at a fraction of the cost (up to 75%) savings versus U.S. rates.

We can handle the following for your Online Business:

Process orders
Product listings
Photoshop editing of product photos
Customer follow-ups and marketing
Bookkeeping

Outsourcing your data entry needs will:

Cuts costs – as low as ($4 per hour)
Reduce management burden to your company
Allows you to focus on your core business (Sell More Products)

Please let me know what your specific requirements are and we will be able to prepare a detailed proposal for you. Thank you for your time and we look forward to hearing from you.

Best,

Emma Ha

TPL

So if you add this option in to the equation then perhaps businesses won't have dip into their employee's payroll withholding to make ends meet. As jk84 posted above that is what many US employers will be forced to do in an effort to stave off bankruptcy. In tough economic times paying taxes is not easy, so rather than face the IRS and their treachery many employers will opt for bankruptcy and then the US government not only does not get any future payroll taxes but the US government ends up with unemployed people on welfare and food stamps. A DOUBLE LOSS FOR THE US GOVERNMENT ...

YOUR TAXES AT WORK!

For those interested in income trusts, the Globe and Mail has a Trust filter (first column on the right).

http://www.globeinvestor.com/v5/content/trusts/

For example, you can look for trusts that have a yield of over 6%. Results here:

http://tinyurl.com/6zhukv

Speaking of imagery - and what comes to mind? Would it be the A-team's MR-T calling a top for POG...?

http://youtube.com/watch?v=0bUxi_Eo6fU

How should we anticipate Oreo's will call the top for silver?

ALOHA !!

Yes, thinking more ...

The US government has become quite adept at LOSING ASSETS and GAINING LIABILITIES! From the way these two aristocratic political parties have managed this country and its money you'd swear that has been their goal all along!

I hope you all listened to Bill's Week In Review when he stated that he thought gold was going down. Great call Bill! Next you have to tell me HOW you had that figured out, although I could see that the dollar was at least basing and even advancing against some of the currencies. Let's hear it for "King Dollar"!

kaimu- wow...we'd better start hiring better english teachers here...

War architect said to be considering Iraqi oil deal

A neoconservative architect of President Bush's Iraq occupation could be preparing to personally reap the spoils of war, the Wall Street Journal reported.

Documents suggest that Richard Perle, top aide to former Defense Secretary Donald Rumsfeld, has been in talks with government officials and its Washington envoy, and Turkish AG Group International, over a plan to drill for oil near the Kurdish city of Erbil. Perle is also in talks with the oil-rich nation of Kazakhstan, whose ruler, Nursultan Nazarbayev, has been involved in a US oil bribery investigation.

http://tinyurl.com/5hrmns

GG - Agreed, if it goes to $33 I'll start backing up the truck.

SKF- edging in at 122...

ALOHA !!

Is raising rates a part of this strategy?

WOW ... if only a small business owner like myself could get the US FED to pay this much attention to me and my needs! I wonder why Wall Street gets all the US TAXPAYER'S money?

I'll bet nobody saw this coming! Whew ... just in time too!

READ ON:
Fed Extends Emergency Loan Programs Through January (Update3)

By Scott Lanman

July 30 (Bloomberg) -- The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still too weak to go without a backstop from the central bank.

The Fed also plans to give securities dealers options for tapping one of the loan programs to ensure financing through the ends of quarters, when funding needs can jump. Commercial lenders will be able to borrow from the central bank for a longer period, and the Fed boosted its swap line with the European Central Bank.

Today's announcement reflects continued turmoil in financial markets, after three U.S. banks failed in as many weeks. It's the latest step in officials' efforts to combat the yearlong credit crisis, after the Fed's rescue of Bear Stearns Cos. in March and the Treasury's backstop plan for Fannie Mae and Freddie Mac this month.

``The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system,'' said Allen Sinai, chief global economist at Decision Economics in Boston. ``There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system.'' (more)

Oh yeah ... you would not want any Wall Street bankers to feel any pain! Wouldn't it be cheaper to just send them Valium?

Re: Income Trusts

Income Trusts with yields into the stratosphere are acting like bonds with diminishing prices. In effect, they are acting like corporate debt.

Re: Gold Price Correction

I'm astonished to see the gold price correction come on so hard in the middle of yet another financial sector crisis. Noteable sell offs in the London market gets the ball rolling, so if its like the last sell off, you can be sure a certain ETF is selling other people's gold to cover their assets.

Along with many preperatory moves by the major brokerages/commercial banks, I'd say the market overall is signalling a major event to occur which will favour bullion, and possibly the oil markets.

However, oil futures chains show flat futures to backwardation. The oil futures have really collapsed this time around:

http://finance.yahoo.com/q/fc?s=CLU08.NYM

The gold futures chain remains unmoved at the extreme:

http://finance.yahoo.com/q/fc?s=GCQ08.CMX

Kaimu

RE: Outsourcing

To paraphrase from Thomas Friedman's "The World Is Flat":

The starving children in 3rd world countries are no longer hungry for your lima beans, they are eyeing your job!

2nd
-oeyup I double down at 13.50 and now out all at 15.00

I have a question for all you 401-K Johnny's who've been making contributions directly out of your paychecks for years and years. Theory states that the uninvolved (none of you by definition) and the passive investor shouldn't really make much if anything in stocks, so let me ask... How well have your 401-K's and other "professionally managed" retirement funds actually done in, say, the past decade?

ALOHA !!

Does the US FED have a VALIUM WINDOW?

start thinking about back to school . .

msft, dell, ....

Shark - Maybe Bill spotted Mr.T in his speedos?

You're welcome!!!

2nd - You're right about China. I experienced the same thing with Japan, and wound up being the guy-jing. Made the mistake of forgetting my credit cards at home on one of my maybe 20 trips, and all of a sudden my hosts attempted to turn my predicament against me. Talk about a rude awakening!!!

When I was subcontracting to Intel, I curiously watched a Chinese production manager who primarily had Chinese employees under him. Any outsiders assigned to his group were promptly kicked to the curb, excellent engineers from India inclusive.

ALOHA!!

BUBBLE-BUBBLE TOIL AND TROUBLE! Did that have anything to do with "Drizzle-Drazzle-Droam time for this one to come home"? Yesterday I ate a "Millie's" in Hilo and while I sat at the counter I noticed a "Archie" comic book sitting next to a US Today newspaper ... I opted for the "Archie", there's a whole lot less propaganda in a comic book! It is 1984 after all ...

The more things change in US politics the more they don't! The Clinton administration was better because we had the stock market bubble. The Bush administration gave us the housing boom and I am sure George would have loved for the housing boom to last just another year longer so he could dump the housing bust onto the Dems, but it didn't, so the Reps own it! Does it matter? The US TAXPAYERS get all the "BUSTS" anyway in the end!

This article sums up the economic propaganda nicely ...

READ ON:
Booms, Busts, and "Krugpot" Economics
Daily Article by William L. Anderson | Posted on 7/30/2008

In a recent column, Paul Krugman tries to explain the "Bush bust." Instead of clear, cogent economic theory, we are fed a mass of contradictory ideas, a bit of political partisanship, and explanations that simply make no sense.

When one attempts to apply economic theory in order to explain certain events, one is reminded of Carl Menger's dictum: "All things are subject to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary."

Austrian economists hold that there are certain principles which can be understood and which are based upon immutable laws of human action. Unfortunately, in Krugman's world, events happen with no real explanation.

For example, he writes,

One of the underemphasized keys to the Clinton boom, I'd argue, was the way the cost disease of health care went into remission between 1993 and 2000. For a while, the spread of managed care put a lid on premiums, encouraging companies to expand their work forces.

But premiums surged again after 2000, imposing huge new burdens on business. It's a good bet that this played an important role in weak job creation.

Why did they surge, and how would lower health-care costs help create a boom? Those are questions that demand answers. First, and most important, the boom of the Clinton years was centered in the stock market, yet health insurance premiums operate across the board. Furthermore, while the increase might have been slower during that time, nonetheless those costs did rise. Second, a slower rise in health-insurance premiums automatically leading to a boom in the stock market is a non sequitur — or at least Krugman does not connect the dots.

Another cause of the present downturn, Krugman notes, has been soaring prices. He writes,

What about raw materials prices? During the Clinton years basic commodities stayed cheap by historical standards. Since then, however, food and energy prices have exploded, directly lopping about 5 percent off the typical American family's real income, and raising business costs throughout the economy.

Why has this happened? According to Krugman, it is because Congress did not give President Bill Clinton enough power:

Much of this pain could have been avoided.

If Bill Clinton's attempt to reform health care had succeeded, the U.S. economy would be in much better shape today. But the attempt failed — and let's remember why. Yes, the Clinton administration botched the politics. But it was Republicans in Congress who blocked reform, as Newt Gingrich pursued a strategy of "coagulation" designed to "clot everyone away" from Mr. Clinton.

As for high food and fuel prices, they're mainly the result of growing demand from China and other emerging economies. But oil prices wouldn't be as high as they are, and the United States would have been much less vulnerable to the current price spike, if we had taken steps in the past to limit our oil consumption.

Again, we are given the non sequitur. How do we know that Clinton's "reform" would have lowered medical costs? The imposition of Medicare more than 40 years ago was the turning point in driving up medical-care costs. How would this "reform" have resulted in lower real costs to the economy? Krugman does not say how, other than to tell us that those Big Bad Republicans want medical care to cost a lot of money.

In dealing with food prices, one has to wonder if food imports to China and elsewhere have skyrocketed or if caloric intake in Asia is growing. In other words, we are supposed to believe that because the Chinese economy has been growing, the rank-and-file Chinese have been pigging out.

What kind of "steps" would have limited oil consumption? Mandatory rationing? Forcing everyone to purchase high-mileage vehicles? Assume that the government had done these things. It is unclear what opportunity costs would have been imposed by measures that would have made transportation of goods and people more difficult to attain, but one can surmise that such heavy-handed regulations would have made us poorer — and much less free.

Furthermore, I do not know how further restrictions on the oil industry — which I am sure Krugman has in mind — would have lowered oil prices and made Americans less vulnerable to price spikes in petroleum. Again, we are dealing with claims that do not pass Menger's standards of cause and effect.

Oil is bought and sold in markets that span the world. The only way to separate the effects of world prices and US prices is to set up trade barriers and trade the US-produced commodity in separate markets. That is already done with sugar, where US growers are "protected" from lower-priced sugar grown elsewhere; the price of US sugar is, on average, about three times the world price. So, if Krugman believes that a similar program would lower oil prices, perhaps he needs to review the price-theory class he took at MIT.

If there is a cause-and-effect pattern in this article, it is based solely upon who occupies the White House, according to Krugman. Now, one might expect such talk from the heads of the two main political parties, but a Princeton economist is supposed to operate by higher standards than what prevail in pure, partisan politics.

Can we blame Bush for what is happening and still be intellectually honest? Yes, but one must understand cause-and-effect in economic analysis if one wishes to affix blame that has more explanatory power than "Bush is a Republican and Clinton is a Democrat."

To understand the current about-to-bust, however, we must look back eight years at the end of the Clinton term. Despite Krugman's partisan rants, it was clear that the Federal Reserve System had actively pumped up stock values, leading to a dangerous bubble that finally broke toward the end of 2000. By the time Bush took office in January 2001, the NASDAQ was on its way to losing half of its value, and the Dow Jones and S&P 500 indices were in freefall as well.

No doubt, the Bush administration would have loved to try to pump up the markets, but by then it was clear that stock prices had been way out of kilter in relation to fundamentals, and the markets were not going to heed the word of a president or anyone else. Thus, the administration turned toward the moribund housing market.

Following the 9/11 attacks, the Fed lowered interest rates to near one percent and began to push housing. Accompanying the Fed's push was the "ownership society" mantra that came from the White House and the Heritage Foundation and Cato Institute, which put a "free enterprise" cover over what was essentially financial socialism.

Not only did we have the Fed forcing down interest rates to below their "natural" levels, but the government and its quasi-government corporations, Fannie Mae and Freddie Mac aggressively hawked their mortgage securities, with the implicit agreement that the government (read that, "taxpayers") would "guarantee" those securities in case they lost value. They lost value anyway.

While Krugman has recognized the bubble and, indeed, recognized it before most other commentators (except the Austrians, of course), his explanation for it is steeped in partisan politics and just plain faulty analysis. The bubble occurred, he claims, because Ronald Reagan mesmerized the country into "believing in free markets," which led to less regulation, which ultimately led to the financial bubbles. The solution? Re-regulate everything.

One hates to break it to this perennial candidate for the Nobel Prize, but the problem is not "unregulated free markets." For one, financial markets are heavily regulated by government. Second, the real problem has been the belief that government can act as the backstop for every financial failure. In fact, the various guarantees, bailouts, loans, and the other measures taken by the government to prop up failing markets have served not only to lengthen the coming recession, but also to block the recovery. One cannot simultaneously have free and wide-open financial markets and government guarantees to back failures, which economists recognize as a moral hazard.

The government's idea (and too many people are buying into this nonsense) is that if it can prop up the failing markets (like housing) and every brokerage house and fund that was fueled by mortgage securities, then somehow, the crisis will pass and the economy will recover. Those holding to Austrian theory, however, know better.

First, and most important, there is a reason the housing market has tanked; the boom was not sustainable. People with middle-income jobs could not reach into their pockets and continue to make payments for houses that had sold at multimillionaire prices. The malinvestments (a distinctive Austrian term) were too massive and the economic fundamentals (there is that word again) simply did not match the go-go housing market.

Second, to prop up the unhealthy, malinvested markets, governments must cannibalize the healthy markets in order to find the needed cash to transfer the wealth. Thus, over time, not only do sick markets fail to recover, but formerly healthy ones also fall into trouble, which is exactly what happened from 1930–1933.

Thus, we move into that territory where Krugman fails to tread: inflation. The Fed has attempted to perform its so-called "bailout magic" by monetary creation, known to the ancients as inflation, which is defined not by rising commodity prices per se, but rather by the unwarranted creation of new money.

Ultimately, why are oil prices rising madly? Certainly, there are supply fundamentals that play a role, but the quick decline of the dollar is mostly to blame. The tipoff has been the subsequent rise of all other commodities, which generally tends to happen in the last stages of inflation. (The earlier stages tend to be concentrated in specific financial markets before moving to commodities and consumer goods, as we are seeing now.)

Krugman, to his credit, has opposed the Iraq war from the beginning, but he also believes that it has been a boon to the economy. (All true Keynesians believe war is good for the economy, although they believe that "massive public works" are even better.) Austrians, however, recognize that the huge federal budget deficits are largely caused by the war and are financed with government paper that will surely lose large amounts of its value soon enough.

(At least the Clinton administration was able to target the stock market, so the wave of sales also meant a spike in capital-gains-tax revenues, which played a major role in balancing the federal budget. Housing sales, however, do not provide the same high-tax returns, which meant that while there was a huge amount of financial activity, the tax proceeds from this bubble were not as high as they were during the Clinton bubble.)

All of these things place huge pressure on the dollar, and the poor currency has crumbled. Again, Bush has not made a single public statement that has corresponded with the reality of the markets. Instead, he has offered bailouts and other schemes that will only prolong the financial agony.
So, can we blame Bush for what is currently happening and what will surely happen in the next year? Absolutely, and we can do it with great relish and authority.

Nonetheless, if we are going to criticize this president, one hopes that we do not fall to the Big Lie that George W. Bush believed in those free markets that utterly failed him and the country. Krugman seems to have done so, and judging from what we hear from Congress and the media, it seems that the loudest voices in this crisis are also the voices that are just plain wrong.END

In China your guay-lo

I think the US will become a completely different place once China becomes ichi-ban.

Are there any negative tax consequences for Americans who in invest in CEF?

ALOHA !!

Isn't "guay-lo" slang for "thick neck"?

ALOHA !!

Oops .. or is it "white ghost"?

As usual, today's big rally in the DOW is based on highly suspect data...

We have this piece of information in an email from a capital asset fund manager:

"I just called an economist at MacroEconomic Advisors, the local St. Louis firm that compiles the monthly ADP (private) employment data which was reported today for the month of July. Please keep in mind that this firm has ties to former St. Louis Fed Governor Laurence Meyer. The statistic was a "shocking" +9000 JOB GAIN!!! This promptly pushed the equity futures market (and U.S. dollar) sharply higher at 8:15EDT. The DJIA after a half hour of trading is up 122 pts.

Now, are you sitting down? A component of this very suspicious report showed that Financial firms INCREASED employment by +4000 jobs. I promptly told this "economist" that there was no way in God's Green Earth that banks, brokerages, mortgage companies, and any other financial institutions had increased employment by 4000 jobs in July. He candidly told me that the firm had probably overestimated that sector for many months. Upon hearing that, I asked him why they don't change their methodology in compiling their data? He indicated that they were doing that but that it was a "monumental task!"

So, we have a sharp rally this morning in the equity market and U.S. dollar, based on data that even the reporting firm questions. I think we've seen it all!"

http://tinyurl.com/6s2q2q

kaimu - You said it - The US taxpayer gets it in the end... So what's new?

ALOHA !!

We "liberated" Saddam Hussein's Palaces and their huge swimming pools. Now if you are an American you go to the Palace Pools(aka: Freedom Pool)if you need a local hooker!

This is a small part of a larger article on this subject over at the Cunning Realist.

READ ON:
Wednesday, July 30, 2008
"ALWAYS NEEDS A SHOWER"

If you have access to the Palace Pool, Salsa and Karaoke are good nights, look for the L3 ladies sitting together thier is one that looks like an old Cleopatra, stop and chat. Freedom Pool is good on those same nights but you have to be charming with the Ex-Pats.

Prices vary it could be anywhere from 20 to a 100 usd depend on where and what you hook up with. I can't give specifics (I may have to pony up the $20 bucks for PM priveledges) but a girl from the outside is almost definitly semi-pro and usually a lot of fun and always needs a shower.

Relax and have fun with it you can hook up look at all the marriages taking place and you know most of them will be left behind.(more)

A severe meanining might be white ghost, with foreigner being the gentlemens definition, I would expect.

"Round eye devil"

Hey pookie, feelin' any better about SKF?

Hey - you want GDP, you got it!!!

dr. cosa, I agree with your earlier comments. Most rational people have trouble digesting irrational government data. In fact, I have heard Alka-Seltzer has been flying off the shelves lately!

Although the USD has been making a hollow charge recently, its upward move may come to an abrupt halt on Friday. As noted earlier, the Bureau of Labour and Statistics, known to some of us as just BS, will likely be reducing the number of fairytale or birth/death model jobs it typically ASSumes in its monthly jobs report. Therefore, the intervention we have been witnessing in the USD and gold/silver pits over the past few days may be nothing more than buffering action. Also, is there a better time to issue the worst jobs report of the year other than when most people are on vacation?

nemo: Looks like my answer got eaten by the blog gods

email me later personaltao at gmail.com

nemo - My faith remains in SKF, expect to sell on the +20% side at any moment, sell limit is set. Had to get in before the moon-shot. "Always early" is my claim to fame (I really need to work on timing issues).

Next stop - JUPITER!!!

krugpot

Article seems a bit, how do I say biased.
Tax receipts were/are higher during the bush administration than the clinton.

Granted housing hasn't lead to more tax revs but there are more tax payers in the last eight years though. Granted reagan should get some credit for clinton's surplus budget.

Policies take years to work themselves out.

Kaimu,

I wonder if the situation is the same at my local Longshore pool? In our society prostitution has been institutionalized. It's called...marriage, and you get a housekeeper thrown in free! Ok, ok, I'm sorry I know that's offensive. My leg hurts and the hydrocodeones are kicking in, and this market do sucketh today, do it not?

ALOHA !!

More on Jock's post regarding PMI GOLD(PMV:TSXV). Not only does this company and others like ECU SILVER(ECU:TSX)have to contend with the central bank manipulations of the POG but they also have to run the gauntlet of profiteers like Canacorrd and Sprott and the consequences of their choice to not get in bed with them. Yet, both companies have struggled to the point of obtaining funding and one has a mine and the other is about to! Hats off to anyone who can pull off that MAJOR MIRACLE!

fireworks: "As usual, today's big rally in the DOW is based on highly suspect data..."

What if all the bs could be revealed as such with one picture? Like this one, for instance, courtesy of the St. Louis Fed (of all sources!)

http://research.stlouisfed.org/fred2/series/BORROW

Pook baby!

I wasn't trying to be sarcastic. I was happy for you that it recovered. Kinda' like it myself. Having said that, oil data today was neutral, so that won't move it much. GDP will be manipulated, so that might whack it a bit. Jobs number on Friday, which will probably have a follow on effect to the jaundiced view of the ADP report, might get her rollin'.

Wait a minute Kaimu, it's much more expensive to get married than to engage services...

Buying with both hands: UNG CHK XTO UOY

Buying with one hand with coffee in the other: SVMFF DGP MFN; Calls on GLD, Calls on UNG

Dumped GFI.

TICK going highly negative right now. Setting up for quite a reversal today.

Korvus,

Can you check on the RSI for BZP? The last price column is way out of whack to yesterday's close, not a big issue, just tracking data right now

Regarding Jock's post regarding PMI GOLD

Another factor I have learn is people only want what they expect.

PMI is breaking the rules outside expectation. While for long term investment thats what I look for.
I know from experience in most business and way to make money, 99.9% of people want something comfortable and in the norm.

Being a rules breaker, innovator etc only gets rewarded after proving yourself right after the fact.
As a result PMI prices actually would be lowered by this factor until major success prove them right to the general trading public.

So going PMI is really going long due to this fact alone.

So also consider main stream expectation in terms of companies style. Since we are in the bear pen, and short term is king... innovators are dangerous bait indeed.

I am long PMI becuase I love it for terms of how they do business, but I have no illusions that I will see return anytime in the short term on that bet becuase of that.

I do understand from some of my married friends that they do not receive within the context of their marriage the very commodity they were bargaining for in the first place. Any thoughts fella's?

SU up almost 7%. XTO looking good. Will reversal stick? Truck full, HTE.

shark: on marriage

it's that expectation trap ;) I married my love after 3 days with no expectations and only whims of a smile and we are happily still redefining our friendship every day becuase of that many years later.

just an issue on expectation... best to lose it if you consider any form of bondage...

Casey:

Alright, so you're the white dot in the Yin/Yang symbol...

Crude step up to almost $126/bbl.

well shark, i know there's at least one marital commodity for which i'd pay a high premium to enter a futures contract for...

scratch that last "for" there...

Remember how I told you guys about an economist who keeps stats based on the old criteria without the politically based lying?

http://www.shadowstats.com/

Nemo: I prefer to think of myself as being plum colored *wink*

3 days? What were you waiting for:)?

Is the oil jump short covering?

Aurator

Still reading McHugh? So far he has been right on wouldn't you say?

I suspect this is what is behind oil run today (coupled with natural bounce):

ISRAELI PM OLMERT WILL REPORTEDLY RESIGN WHEN NEW KADIMA PARTY LEADER HAS BEEN CHOSEN
- Note the speculated successor is the Transportation Minister Shaul Mofax, who has in the past been attributed to hawkish comments with regards to the Iranian issue

Posted by 2nd_ave: "David- you know, sometimes it pays to get up earlier..."

Yeah, I just looked at the UAUA chart, and I see that my position had some good profit in the morning before going down and hitting all my stops: 1/2 was sold at $8.4 and the other 1/2 at $8.1. Oh well... Since my cost basis was $7.6, I am not too upset -- the exercise in setting stops was just a fun game. Usually, I would set a sell limit order 5 or more percent above the closing price, which would have worked out as a charm today. Well, the mathematics teaches us: "do not judge decision by its outcome." It should be judged by how logically it was made in the face of the probabilities that I perceived at that point. I could have set a limit at $9, and UAUA could have stayed at the morning highs at $9.5, in which case setting a sell stop order would have been a more profitable decision.

DavidV

The gold stocks I follow have been very strong off the lows today. Kinross and Minfinders are positive after being down big to open. Barrick and Goldcorp are both up $2 off the lows of the day. Seems like some good support at these levels. Gold usually puts in a low in July or August.

Vadym Graifer

From everything that has been written about Foreign Minister Tzipi Livni these past year she'll be the one to fill in for Olmert.

Teck Cominco is up 25% on huge volume in two days right into the teeth of resistance. They are taking over a coal company.

QT: McHugh has been right off and on in the short term, not consistently. I wrote him complaining, and so did a friend. He claims he's never wrong. There's always some rationalization.

For those who do not subscribe, he says raise cash on the rise expected for a couple weeks.

I've moved to huge weightings in Gold PM and energy.

~~

Had to laugh... checking out at the grocery last night, lady in front had a "few things for the week" and her tab was $125. I had a "few things for a couple days", $35. At least double last year. Gasoline and food will slam this economy into the ground.

A recent conversation with a co-worker about a guy who sold his soul on Ebay got me thinking.............................. may I should be naked short selling my soul on Ebay?

PS.....I just caught wind of a new "Jesus Cheeto" that has been identified

http://tinyurl.com/66ulgb

enjoy

2nd, thanks for the note on your relatives. My father-in-law taught at Beijing University and is retired there now. I had thought maybe your relatives were wandering around the campus along side my inlaws. Guess not.

Re this market, I have no idea what to do now. I still hold TBT and juniors, and earned about .9% return over the past two weeks on housing and mortgage related companies, but closed all positions yesterday. I'm just going to watch for a while...

HNCadet,

Good catch. I pull my data from Yahoo, and if you look at their historical data page for BZP [ http://finance.yahoo.com/q/hp?s=BZP ], you'll see that the last data is inexplicably from 7/21. Unfortunately, there isn't much I can do about that. Maybe in a future version of the program I will mark rows that seem to be out of date...

Jeff

DXY at upper Bollinger band. Dollar rally party is just about over. Reversal like 5/8 and 6/13 expected.

Mike Swanson puts forth a very compelling article...

"I believe the next few days are going to be key days for gold stocks just as May was a key time for the S&P 500 and the broad market. If you were following me then you'll know that I took short positions against the general market back in May. However I did not short at the exact top. In fact I got in a little early and let the S&P 500 go up a percent above my entry point. I was convinced when I got in that the market was about to make a critical top - one that would last for the rest of the year - but I wasn't sure at the exact price or moment that it would come. I was only certain that it was coming within a week, so I decided to just start to build a position. Of course it worked fantastic as the market has fallen apart since then.

Gold stocks are now in a similar critical position - however, instead of topping out they appear to me poised to put in a final bottom within the next five trading sessions, maybe even today - and it will be one that should last for the rest of the year and lead to a huge rally."

http://tinyurl.com/6ymkub

vinod- IBN down to 29...let me know if/when you decide to jump back in...

Added some GDX. One screen shows GDX with a yield of 6.9%. Seems incorrect... anyone know the details on this?

allen- "I had thought maybe your relatives were wandering around the campus along side my inlaws. Guess not." i wouldn't rule it out...Bei Da and Qinghua are on neighboring campuses...

GDX - Fido shows yield as 1.71% @ 43.23

Anybody: What do your charts say about SU? Should one take profits at this point?

Take a look at XIU.TO.... just broke resistance upwards...back to 89 soon?

Is this Suncor's doing?

SU: In my view it just made a reversal and is only back to the midpoint of the channel. The upper Bollinger band is about 60 and it can hug that in a rising trend for a long time. Scale out gradually with trailing stop loss% set to 1% or similar if you are overweight.

MACD just crossed over "up" and RSI reversed to uptrend for only the last 3 days. Bullish.

nemo - "I wasn't trying to be sarcastic."

Sorry, I had to step away to feed/water the ducks and chase off the hawks. Ducks unhappy but safely back in their pen where they sleep nights.

Anyway, I was being serious above and didn't take any offense whatsoever... I really do appreciate everyone's commentary here and wish to be a part of fostering that if possible, perhaps even add some value where I can.

Yeh, my timing is way off but I truly am grateful you challenged my SKF decision yesterday. Please keep doing just that. Remember that is a primary source of value for the CARA community.

Still holding SKF, betting on a 20% return long before my longs all turn green....

USO popping over 4%. UOY up 2.3%. Rather be lucky than good, or a little of both.

Thanks Aurator. I'll try to infill my knowledge gaps later.

The other one I pair with SU when the the destruction of the pristine Athabasca basin is in vogue, is BQI. Same comments there.

CT on Gold:

July 29, 2008 4:00 a.m. ET
"Spot gold reversed below $950 and is consolidating between $910 and $935. Failure of $910 would signal a test of primary support at $850..."

http://www.incrediblecharts.com/tradingdiary/trading_diary.php

Arguably, $910 has failed, has it not? Or is a close below $910 necessary?

Goldbriefing (http://www.goldbriefing.com/) sees 900 as a possible support area.

For the record, I have exited the GFI position I entered several days ago at a small net gain, having taken partial profits yesterday and a small loss on the remainder today. (There wouldn't have been a remainder had I not gotten only a partial fill on yesterday's limit order @ 12.00....should've reflected on Jesse L.'s admonition: "When you want to get out, get out!", a statement he made with specific reference to the peril's of trading "at limits." Where do I mail my DENSA membership application to?

)

IMHO $910 has not failed. Takes a significant break below. Even so $885 area has support. Don't blow the deal trying to catch the last 3%.

Exited GFI based on the strikes, power, and other BS in SA. There are too many PM stocks to be subjected to that risk. I traded GFI in for MFN, where they will soon be in production and are setting up a short squeeze.

Aurator - Thanks. Will check out MFN.

In otherwords - if the market thinks this rally will stick, I only have one phrase to offer - "bank failures". That's where the fantastic turnarounds will come from. IMO SKF may be at near-term bottom.

subtle shift in sentiment-> confidence in the rally returning, which is now a bearish indicator...

PNP.TO +10.24% @ $1.83

http://news.aol.com/news_portal/article/body-of-ballooning-priest-found-at-sea/107766

Reports that the priest was eating cheeto's at the time of the accident are heretofore unconfirmed

Will the Fall of an Aussie Bank Rock Wall Street?
Apocalypse Down Under

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a ‘meltdown’.

http://tinyurl.com/5p2kx6

Wow did I miss a day trade on SLV. Silver might close up a buck (wooden nickel).

91 million of shares of MER being unloaded on an unsuspecting public today?

SLV +1.16%
SLW -5.66%
WTF?

Strange day: oil up, market up... 2nd_ave -- is it time to buy UAUA again?

DavidV

david- if you're out right now, i would stay out...who knows how far oil bounces?

MER declared a dividend! I declare that will be their last ever.

~~

Something about SLW outlook negative?? That would take some talent since Silver should be $33 in a year or less. Dave Morgan projects $100/Toz Ag by the end of 2010.

The Bush administration attempted to lower the price of energy, prop up housing, and crush Gold, going into the elections. I bet against them, knowing their track record. I predict they will be taken to the woodshed straight away.

Game Over.

LV - Outside day higher.

That's SLV, not LV.

Aurator: SLW earnings were flat for Q2 (reported yesterday) vs. last year despite higher market price of silver.

GG - placing limit bid @$33

re: SLW

Missed on earnings reported after close yesterday and the Lusimin mine is having some problems with ore grade causing decreased production. Buying opportunity IMO.

uxg: how long can it go?

Hee no support levels for it either

I am betting 1.25 before even re-considering it.

Also noticing Google downward trending nicely again, soon I feel it hitting back to 440 :) I think this current series of woes in Google's news enough to push it back in a week.

In my long list of target stocks I have been patiently waiting for a new baseline. I am noticing its beginning to balance out with about 10% down to go. before hitting the point which would indicate Bill's turn around point.

I expect that a drop in oil soon to drop gold out into a new bottom for gold stocks soon which would match to Bill's earlier 800 price prediction. I know Bill said he wasn't sure if it would now hit that low, However, from what I am seeing in my baselines, I have full confidence in Bill's first prediction of 800 gold before end of summer.

Patience!

[Bill Cara note: With all the ugly "protection" programs flying out of the US, and now UK and Canada, I'm not so sure the price of gold will go back to 800 again. I'm now inclined to go with 850-860. In any case, I wouldn't miss any spike downward (as a long-term buying opportunity) if it presents itself because the next one may be the last one for a while. And if gold does go to 800, you would only be disappointed having bought at 850 if you were a day trader or it stayed there for a long time. The next intermediate-term cycle high (say within 12 months of the bottom) will likely set a new record high.]

WGW catching a bid, up 7%...

GFI - within one cent of filling this morning's gap down. There should be resistance here @ 11.82. Should be, not necessarily will be. DYODD.

Posted by 2nd_ave: "david- if you're out right now, i would stay out...who knows how far oil bounces?"

Your thinking does match my experience -- whenever I would jump back too soon into a trade that seemed to be going my way, the price would invariably fall below my entry point. At the same time, my greed says: go! Well, I tried to play this game my way in the morning and got stopped out. Now I'll try to follow your advice and stay out till tomorrow. Just for fun, once again, just to see, what will happen.

DavidV

SLW profit margin 53% ? 1.2% short.

http://tinyurl.com/6k2yl8

http://finance.yahoo.com/q/ks?s=slw

Watching this "roller coaster ride" market leaves no doubt that this is the MOST MANIPULATED "trick pony" ever known to man.

The one and only way for housing to be "propped up" would be for the federal government to issue and guarantee home loans to those without borrowing credentials. Short of that, housing hits the skids for the foreseeable.

Other stocks of interest today making moves that somewhat defy expectations are GMO, CDE and Of course, Hokey Scientific.

SLW EPS 9 cents in 2Q

HL on a rip lately. Reports earnings on Monday...

vinod- added 2 contracts of -OEBTP at 5.90...

The thing that irks me is that I found General Moly last night as being a potential breakout which it did and was involved with some other BS when I should have been buying.

Vadym- This seems as much as anything to be an organization and info-management game as anything.

What is the question on SLW profit margin? They are a financing operation where they buy the silver up front for around $4 an ounce, which the miner uses to finance the mine, and SLW sells it as it is mined. Sounds like a great business model to me.

FranSix,

Would you be willing to summarize how you trade gold futures?

can you recommend a good online site to learn more about gold futures?

Where do you place your trades in gold futures?

[Bill Cara note: http://tinyurl.com/5gf5b6 ]

David - Are you still holding on to VLO? I'm still holding and waiting for a spike up to $40. I like the action, especially in the face of rising oil.

To me, it's like any other aspect of life - it is for YOU what YOU elect it to be.... :)

You can make it as complicated and painful as you wish... or as joyful, rewarding and simple as you can. Trading is fun for some, and struggling for others... source of immense satistfaction for some and endless frustration for others... yet it's the same game, it's us who elect different roles and different rules.

Above comment was in response to shark's comment two ones above... sorry, it can get confusing if no quote cited

Vad,

I agree. I'm at the point where sometimes it's fun, sometimes it's a struggle, but it always seems better than hitting the phones and playing "Death of a Salesman".

I think the profit margin question relates to a time factor issue: SLW didn't realise earnings expectations this 2Q (thus much talk in SLW earnings report about the many contracts being signed), so silver price gets decimated and SLW does too.

Meanwhile HL disappointed last Qtr (supposed "shipping delays") so this quarter there are expectations of backlogged silver sales supercharging quarterly earnings, and HL share price is relativley bubbly.

Bill: I agree the the next spike down will probably be the last for a while to such a low. Hard to imagine how much longer the price of gold can be suppressed relative to current conditions. the difference between 850 or 800 is nothing compared to where it will end up on the upswing.

Vadym: right on :) it is what we might it to be! might as well have fun in the process no matter where it is going.

Recall the last slow down/sick-out . .pilots could care less about the customers . . really disrupted anyone traveling . . . solution was to avoid UAL at all costs.

United Sues Pilots Union

UAL Corp.'s United Airlines said it asked a federal judge Wednesday for a preliminary injunction blocking its pilots from engaging in an unlawful sickout and no-overtime campaign that is forcing the airline to cancel abnormal numbers of flights and disrupt its passengers.

The No. 2 U.S. airline by traffic said it filed suit in U.S. District Court against the Air Line Pilots Association union, which represents its 6,500 pilots, and four named aviators whom it alleged are organizing the campaign partly in opposition to United's plan to reduce its fleet size and furlough pilots. As a result of the alleged behavior, United said it has canceled hundreds of flights this summer.

http://tinyurl.com/5a7e9d

Glad to see that revision in the gold price call by Mr. Cara a little ways up. I'm very unsophisticated in my outlook, though hopefully getting better since I bought BC's book, but when I see the gov't announcing massive bailouts and stocks flying up and oil flying up I just can't help but wonder if it's all about money being pumped in and who knows where it's going to go?

I hope you all caught Meredith Whitney on CNBC at 4:45. This lady's the one truth-teller on the street and the truths she tells are ugly truths.

B2Gold (BTO.V) - great interview with CEO Clive Thompson, CEO, on BNN/TV

This is the team which built Bema gold and sold it to Kinross for $3B. (B2=Bema2, get it?) They are concentrating on Colombia (an unexplored country with a fair new mining law, and good infrastructure) and Russia (where they developed 2 profitable mines at Bema, demonstrating that western companies can do well in Russian gold).

For Colombia, they have a deal with Anglogold Ashanti, which has been exploring Colombia for 6 years. (At PDAC, a B2 geologist told me AU hands them properties deemed too small for AU.) Thompson, questioned on whether his Colombia properties were too low-grade, high-tonnage and therefore too expensive to extract, he only responded that their exploration in Russia was finding high-grade veins.

The interview is worth hearing, if you want a feel for how a seasoned, successful juniors'CEO sees his prospects, and those of the juniors generally.

This interview is followed by Q&A with newsletter writer Jay Taylor, who is also worth hearing.

http://watch.bnn.ca/#clip70511

Gasoline supplies down 3.5 million barrels is why VLO and TSO had great days. The supplies had been building for a while, but it is still up 8.9 million barrels from last year. I think that supplies build next week and TSO/VLO continue to fall.

Meredith Whitney on CNBC:

Discount window has been extended a few times because the problems are not behind us. No quick fix, because capital is not flowing to the financials.
Equity is to fund growth, but this is just plugging holes for financials. We are about 50% thru this. Corporate loan market is in trouble next. Every company needs to mark assets like MER did: 22 cents on the dollar with their worst stuff.
C, UBS, BAC, WB - all need more capital from the market very soon. Flawed business models in housing market led to big losses. All need to cut dividends. Housing should fall about 33% from high.
Short selling rules- Faith in the largest system is important. So the market needs both sides of a trade. May make the market do the opposite than what was intended. The rule needs to be ended soon to make markets fair. Book values are in half for these companies. They won’t be back to their highs for a long time because they don’t have as much to work with.

"Every company needs to mark assets like MER did: 22 cents on the dollar with their worst stuff."

This is what that Australian Bank did-well 10 cents. So, it might not have the effect. Frankly, that might be where Thain got the idea.

http://nozzlerage.com/

Worth a peek. Production values in the (satirical) video DID make me wonder who is financing this site.

Could it be that great patriot Boone Pickens?

teamonfuego: VLO was mean to me today. When I was having my breakfast, it was trading at 34.5, and so I set a sell stop order at $34.1 and went out to take my son to daycare. When I returned, I saw that my sell stop price was hit... It's not so bad, though, since I bought VLO at $33.5 and $31.5 last week, and sold it this week at $33 and $34.1. I am also quite happy that VLO closed above $35, since I sold a bunch of VLO August $37.5 and $35 puts just before the 4th of July weekend, and since the premiums were huge on them, my cost basis will be around $34.3 if they are put to me. These shares would comprise 15% of my portfolio, so I don't need to hold any more VLO now in addition to those puts. Today's rise in VLO was because of the falling gasoline inventories, which suggest that the demand for gasiline will stay strong and will help the profit margins of the refiners.

DavidV

Speaking about the sad fate of the juniors, I came across the company SVM.TO, which is a silver PRODUCER that is GROWING its revenue and output fast. Its share price collapsed from $10 to $4.90 in the past few months. So I don't feel so bad now about my juniors that are not even producing. Maybe some huge fund was broadly diversified over the Toronto stock exchange and is selling its holdings in ALL resource companies? If companies like SVM.TO drop by more than 50% in several months, then something very unusual must be happening, which cannot stay around for too long. Maybe someone knows something that is really wrong about SVM.TO? They are reporting earnings on August 14, and if they grow their EPS once again, I'll probably buy some shares (I have none now).

DavidV

Just a thought:

SIMO might be good for the old DCB tomorrow.

b0ss,

Thank you for doing a vastly better job of conveying Meredith Whitney's ideas than I did. I am in severe pain of the leg and my mind's a wanderin'. You on the other hand are sharp of intellect and appear to have taken notes!

Kudos!

Pookster:

Unless something blows up, the GDP will be good, as we said, it kinda hinges on the jobs number on Friday (naw, that ain't manipulated) With the S&P closing above 1280 today I don't think SKF is gonna' fly at least until next week. Then again, it wouldn't be the first time I was wrong today.

David - that sucks man. i feel your pain. if it pops up to $37 or so tomorrow morning i may have to take some profits. Unfortunately for me I'm not longer hedged on the oil component because I sold my APWR. Still holding TTM at a loss from Monday morning.

Anything else that you're in right now or are looking at? I'm eyeing SRS at $84 to $85.

teamonfuego: I am in a lot of things now. :) Besides gold/silver juniors for 1/4 of my portfolio, I also have some underwater SLW and SWC, which I am content to hold long-term. I will buy more SLW if it drops to $12.5 and more SWC if it hits $9. I also have 5% of my portfolio in SRV -- some kind of partnership that I don't understand, but that pays 7% annual dividend and is very stable in its price. I plan to hold it long-term. 7% of my portfolio is in T, which I bought at $32.8 and $31.8. I'll sell it when I decide that the summer rally is over or when it reaches above $33. I also have 1/5 of my portfolio in TBT now (with a cost basis of around $68), which in the past week I have successfully bought at $70 and sold at $71 a couple of times. I bought some more today at $70.05. I plan to sell it when I decide that the summer rally is over. Finally, I placed a "stink bid" for GLD afterhours today at $89.30 (5% of my portfolio), and it was hit. Basically, I think the current price is low enough to start scaling in (I'll allocate 10% more of my port to GLD at $880 and another 10% at $850, if we ever get there). Besides, if oil reverses its course now and my VLO goes down the drain, at least I'll make up some of that loss on GLD. It's a hedge, sort of speak.

DavidV

The point of this video is obviously to know when to get in and to know when to get out! Good luck surfing the markets!

http://www.youtube.com/watch?v=k2vkwy2vdP4

nemo - You're absolutely right, this was definitely an SKF face plant. What do you think about some UYG?

I was wondering what everyone's thought is regarding Cramer's "the bottom is in" call tonight. While I generally don't like listening to this guy because he is all marketing hype and little substance, I think it brings up a good point that we need to consider. That is, what if we are at a bottom? Do we play healthcare because it will still perform ok regardless of the market?

The thing that makes me hesitant about being bearish is the rate of decline of the housing prices in the Case Shiller index is slowing month over month and has been doing so for about 4 months now. If there is a positive month over month change, I think there is a good chance the market could rally some 500 pts immediately.

What are your thoughts?

Ooooh, pookster, that's what I had been thinking as a hedge. IMO (as a member of DENSA) oil today might have been short covering, or just a little up because it's been so down. That Israel stuff-eh, that only holds for a day or two. That stuff on refinery utilization being low is because there's no demand. If oil goes down tomorrow (barring overnight bad news) financials up again.

teamonfuego: Cramer has been vacillating. (Oil's going to 150! Gas is going to $5 gal!) You haven't even got through the 2007 vintages on mortgages yet. Nevermind the heating season (oil is still 50% above last year's heating season) and coal prices that will affect 50% of the electricity. Don't forget food prices going through the roof. Did you hear American Expresses conference call about their customers? Don't forget Meridith Whitney saying their's much more financial bad news. You may be getting past the halfway point of the financial crisis, but you still have the actual economic crunch coming.

Maybe we should ask the Bahacanuck?

Faceplants-brings back bad memories-another jaeger tea please....

Hi all,
Never posted before, but I have been lurking and enjoying the commentary for some time.

Random thought on CALM:
What's the chance of a bird flu outbreak destroying this company?

It just scares the beejeezus out of me that this stuff seems to be almost everywhere but the Americas . . . . and perhaps it is just a matter of time.

Check this map of 2008 outbreaks so far:
http://tinyurl.com/2m96an

Sorry if someone raised this before, and I know the company rates the risk as low. I am generally more conservative than most, so CALM may be the right stock for many people, and the upside may outweigh the downside. I also raise this issue because I am always looking for an explanation when something looks to have such an attractive / discounted valuation.

Best to all,

the bottom is in? anyone looking for a "V" bottom will be shaken out of his positions more than once...grinding back and forth along the bottom coupled with higher-than-normal volatility will be more like it (remember you're trading against traders, which means you're trading against emotions, including your own)...in any case, CP has nothing to worry about-> it's still a bear market, and rallies will be sold...pretty sure we see SKF 130 before we see 100...

Hey guys,

It's funny...All this talk about the dead juniors may be ill-timed, as some of these puppies seem to be basing even in the face of lower gold prices. Here is a list of POSSIBILITIES for tomorrow. Do you buy these stocks willy-nilly? no you do not. This is a list of juniors that have the POTENTIAL to rise. What would aid them in their noble cause? A rise in the price of gold, of course.

SIL
CDE
FRG
TGB
URZ

Think you're right 2nd_ave, but on SKF, it might be close.

Betcha dollars to doughnuts the market will splash down tomorrow. My astrologer (a professional respected economist) says that it's the peak of Venus Trines Neptune on 7/31. This formation shows a tendancy for 'money running away'...she says to expect a US Dollar value drop, stock market slide, deception in relationships around money. "Prime con artist time". The flip side of this bigger picture time frame is for deceptions to be revealed.

robrix- ah, H5N1...never crossed my mind...over 90% of the float is short, so aside from insiders almost everyone with a position in CALM is in pain, and it wouldn't surprise me if they check your link (http://tinyurl.com/2m96an) as often as UNG holders check this one: http://tinyurl.com/57vzr

i like your train of thought...

Paul Kasriel [Northern Trust] posted this chart on 7-29-2008 re: SP 500 Operating Earnings

http://tinyurl.com/5uy23h

Kasriel states “Now, the nice thing about corporate profit data is that they do not get revised as do a lot of other data that go into the recession decision. With the S&P 500 profits data there is no debate as to whether the Commerce Department is using a correct measure of prices to deflate nominal data.”

loannetter- you need to reverse the attributions, my friend-> we have no problems with astrologers here, only economists...

BKX warning:
Below is a link to my chart of the BKX for 2008… We set a low on big volume in late Jan…(74.80)
Strong rebound to Year’s High in Feb (96.51)… BEAR Sterns washout and test of Jan low on
Heavy volume in March (73.22/ pink arrow) Test of low again in APR - break low and
crater down to 46.50 lowest price ever recorded since created and issued in
early 2000… prior low was in 2002 at 65.

Presently we have retraced exactly 50% of the year’s down move… We have MASSIVE
and I mean massive overhead resistence in the 70-74 area (grey box)…. We may go up
and touch the 71.50 area again on lighter volume and then I expect a big jumbo FLUSH.

The 50 day MA is pointing solidly down and the best case for this index would be so sideways
movement to flatten out the MA… Most traders and hedge funds will be selling the BKX big
time on a scale and use a stop in the 75 area….We are talking about a 30% drop with a 10%
risk….. IT is a great short! IF I had any BKX/bank stocks I would consider lightening up…
http://tinyurl.com/6mboj8

Madeline Gerwick hid out as an economist for half her career to test her theories on 'good timing'.

and Casey hid out as a physicist on his way to becoming a Tao master...i think it's remarkable the paths individuals take on the road to self-discovery...

nemo- i don't how close it will be with regard to the call on SKF, but sentiment changes fast in this market...was it only 48 hours ago we were convinced MER/WM/C/FRE were in fact (in Sprott's words) dead men walking? what's changed in 48 hours?

shark- it's a commodity only b/c you haven't found the one unique brand that changes it all...here's hoping it drops in on you when you least expect it..

craig- hope things are going well down south, my man...as with shark, things here are not the same without your daily commentary...

2nd
What change for MER/WM/C/FRE?
Is they can borrow from fed at 2% and lend at 5%/6% etc
This spread is Hugh. And this the way fed wants to subsidize these financial
Until 2009
I wish I can borrow at 2% and invest in stock that pay 7% dividend

robrix, nemo, shark and 2nd - I like your train of thought, thanks for sharing. This is precisely why we're all here (said in recognition of being reiterative).

I will be considering a UYG order with duck-butt stop limit in the morning.

robrix - welcome!!! Keep the ideas coming, don't be sorry or shy, please! We encourage people to come out of their shells.

teamonfuego - I haven't heard Cramer's commentary nor do I know his timeline, but from my point of view I'll bet my bottom dollar the real bottom isn't here yet (not your bottom dollar, however). Unless something changes abruptly, housing could slide by -30%.

2nd - What's our stance on astronomers?

CP- i don't know much about either astronomy or astrology...i assume astronomers observe the movements of planets and stars, and astrologers attempt to use those movements to explain human behavior...after listening to economists try to explain market behavior, who am i to say astrologers don't do a better job?

Get thee to a nunnery (safe bank, gold) throughout August.

Anyone who thinks the energy pop is a dead cat bounce, should heed this. Full in and if I had more $$$ I'd be more in.

http://tinyurl.com/5f23yx

The Bear-Market Rally Isn't Over

Volume for both the New York Stock Exchange and the Nasdaq have been declining since the low was formed, and this confirms what now appears to be a bearish technical formation called a "rising wedge." A sustainable rally has increasing, not decreasing, volume as new bulls are drawn into the market. The demand picture improves, and prices gain a solid trend on which to ride higher.

But wedges and their variations (flags and triangles) form when the bears are taking profits, rather than new bulls coming into the mix. Prices swing up and down in what appears to be an agitated state, and the news of the day seems to exert undue influence. Think about oil prices and how the market has been moving recently as proof
For the market as a whole, just because volume is declining and other technical indicators are not in bull-market mode does not mean investors cannot make money. They should just be aware that the ride will be bumpy and short-lived
By MICHAEL KAHN Barron

2nd - Agreed, astronomers would likely produce superior results (as opposed to economists) in terms of market behavior if they were to attempt.

2nd,

I am fully aware based on experience that there are some women so special and amazing that if I actually fully comprehended consciously how awesome they are and how much is missing in my empty life my head would explode and I would die instantly. Believe me bro, I know. And here's to hoping I find it too!

Regarding astrology, I remember years ago a guy they used to have on FETV who used astrology to predict market behavior and he seemed as right as any fundamentalist, if not righter. Then again, I also remember a time when the chart guru John Murphy was a regular guest as was the great John Bollinger. I guess you could say they've been dumbing down FETV over the years, but inexplicably, Joe Kernan still has his job. God love him, but I swear he's gotta have an uncle at the network. NOTHING else explains the longevity of his career.

July 30, 2008

The day the US Government destroyed the economy.

Stood outside after vacuuming the garage and hosing off the charcoal grill, to admire the clear blue sky sunset over central TX with a few planets showing. Neighbors walking dogs (an unwritten law in TX) crickets chirping.

Load of laundry in and dishwasher running, otherwise silent. A day I will remember for the rest of my life.

Unlimited power unleashed by a clueless government to try and fix the very problems they created. Moral hazard boosted to "norm" status.
Bailing out all the insiders before the collapse.

The names Greenspan, Bernake, Paulson, and of course Bush, will be written into the future history books as the names of "a few bad men" who collapsed the world's most prosperous economy, while we stood by clueless. Our grandchildren are totally screwed, and I suggest foreign languages and plans to evacuate be part of the family planning.

Peak oil happened in 2005. This is peak irresponsibility and it will lead to historic dislocations. "They have done it now."

Those who scoff at my paradigm change in 2006, will find chapter two forthwith. Class is adjourned.

[Bill Cara note: I am standing and applauding.]

Vinod,

I agree. I believe the uncertainty surrounding the upcoming election is and will be hobbling stocks, as if there weren't enuff other problems already. A wall of worry is fine, but we're looking at 30 feet of granite with razor wire around the top. ESLR finished nicely though and I will be looking long as a trade. Also if POG rises the juniors I mentioned above should do well, as well as GMO and KOG which I didn't mention before. Don't just buy 'em though. make sure theyre going up and THEN buy 'em.

And whatever happened to MIKE_NYC and Fred? And here's a shoutout to Jogyp who I know is out there.

Aurator - Wouldn't that be chapter 11?

Chapter 11 is somewhere between 2012 and 2016, IF we are lucky and can move on from there. 2009 to 2012 is a hyperinflationary depression. But don't tell anyone lest you be branded as worse than a UFO abductee.

Have you hugged your Gold bars today?

http://tinyurl.com/5jygop

vinod- to be honest, i have a hard time seeing a rally tomorrow...i think it's going to be all red..

I am not sure declining volume of this rally is indicative of anything. The thig is, we are at the top of summer and rolling into August, time when activity traditionally goes down until after Labor Day. This alone can distort usual volume patterns - just like lunch time volume decrease must be incorporated in reading of intraday formstions.

Great video Aurator.

Dear 2nd_

Preaching to the choir, but I think they'll at least squeeze another day out of it. Expect some sell off going into the weekend, because it is,after all, a BEAR market. So, SKF I think has a higher probability of going lower tomorrow, and probably no lower. BUT...if the job report is engineered to keep the market moving, then Friday could be another downer for SKF. Next week, another story.

As for the guy who is all in on energy. I see the chart, and don't necessarily disagree. However, there was this little maneuver a few weeks ago upon which The Cara opined. Specifically, the change in margin requirements in the NYMEX and the ICE. The last downleg in energy took place after that. There's plenty more room to increase those margin requirements and I would think the PPT will do that if necessary. You can use political outrage as a banner to prevent the mauling of the poor and the speculatin' is such a critical resource(s) like food commodities and oil.

Oh, on the declining volume. The Carameister also stated that these two weeks would be relatively light in volume. So, shouldn't we be comparing this volume seasonally as opposed to during high trading seasons? Having said that, I haven't checked the volumes, but it's a thought. Kinda' like comparing yr over yr vs sequential. Perhaps that's my DENSA gene coming through.

Oooh. sorry to step on your thought train Vadym

Aurator:

It's all over in 2012. Mayan calendar ends. The Rapture. End of the 4th race of Man. Aliens return. Scully and Mulder rise from the dead.

nemo,

thought train? I don't have too many of those even during trading day, let alone at at 8 pm... certainly not enough to fill a train (big grin)

I must live in a hole. Yep I do.

Maybe optimism is a bad thing, granted markets, housing all going down for more but things could be worse. Bad health (fit as a fiddle), bad luck (that is a given) or just plain unhappy (life to short to be unhappy). Either way cycles take time to pan out.

This cycle will pass too...

What I do find amazing is this.... Please follow along.

I am an avid football fan (one who never took or played a snap in real life) Gosh I hate to admit that because I can break down a defense "x's and "o's". I watch the game and see things before they play out. I guess my 15 years of playing Madden have honed to actually help me develop real (game speed) football knowledge (along with countless saturday and sundays of watching college and professional football). My friends are very much impressed with my football knowledge, come to think of it we are all football smart. We are "in the game" and know the game.
On occasional Sundays, we will go to the University of Phoenix Stadium and watch the all powerful Arizona Cardinals hit the gridiron and play the game that we love and know because we know "x's" and "o's".

1st down... We would watch, either quarterback or any quarterback make a bone headed play. Wow, we would think as we put our beer in the cup holder (nice stadium as they have cup holders for every seat) why did the QB not check off to the receiver just out of the flat? Next we see a coach, say it is okay to the QB and review his play book (one laminate sheet) cover his mouth and confidently call a play.
We can tell there was serious thought in that call to the huddle and this one will work. We cheer and hoot as the team breaks the huddle. To no avail the play amounts for a loss.... The coaches scratch their head. We, my friends and I know "x's and "o's" ad we know that wasn't a good call. They should of went with misdirection.... We have now lost confidence with the coach, QB and the team for this series but there is still two downs left. The call is sent to the huddle and we are looking at third and long as they line up for the snap count, my friends and I know that the play should be a deep out (when the receiver should run all the way to the first down marker and cut towards the sideline as the QB should hit the target for a first down), why because we know "x's" and "o's".
The ball is snapped and the QB drops back but it seems that the line can't hold the rush... we scream as the whole stadium does too... "Throw the ball to the receiver! you (fill in the blank)"... The QB is looking at the middle of the field and it looks like the line has collapsed... Now we have a QB who is 6'2 215 lbs, mind you he is not very mobile being chased by a mean 6'6 280 lean mean DE who can run a mid 4.5 40 yard dash... The QB doesn't stand a chance, we brace for disappointment but the QB throws the ball to the flat as the RB and the rest of the Offensive Line is waiting as the Screen play was called. The RB tears down the sideline for a huge gain that puts the team in scoring position. We, my friends and I know "x's" and "o's"
and applaud the call. What a great call, that was our second choice of a call, the defense didn't expect it and it was well executed. We would of done that because we are so smart and know "x's" and "o's".

My friends and I are nothing more than Monday morning Quarterbacks or Arm Chair Quarterbacks. We have our own professions and will never coach football at a professional or collegiate level. We still go to Arizona Cardinal Games and root for our team that hasn't won a playoff game in 50 years.

Being an optimist that we are, we realize that they will have their day. Either way, there are still cup holders in the seats and the stadium has AC.

Times may get tough but don't give up because opportunity will always be around for the taking.

nemo,

don't forget the (JFK's) Iron Mountain Report.... that too...

but 2012 will probably get 95% of us, the rest... we will all fall into the Iron Mountain report and be nothing more than cattle.

Life will be great....

haha

Norm:

You need to distinguish between US Dollars and purchasing power. Dollars mean nothing in today's environment.

If you make the leap, you will do fine. Otherwise, down in flames like all of the US real estate investors. Happy in USD, and broke.

Aurator,

I got one problem.... I am to much of an optimist... oh yeah the decoupling theory of 2k6, 2k7 and 2k8. Throw it out the window. We can look at North America, EU, Australia, Japan (has been reserving the seat for almost two decades) and China to join the Housing party.

20 years from now we will laugh at this and it will pass.

IMO 2010/11 the inventory issue is housing should be cleared.

Up, up and away, first down down and get stable. ... time will tell.

Norm: 20 years and I will probably be dead. And a good part of that will be the stress of investing. I'm, hoping for 10 more and then I'm off to Asia to live out the rest.

IMHO, real estate in all forms is dead for a decade or more.

Do what you gotta do.

norm- great story...

i've had (we've all had) more than a few extremely painful experiences, both in and out of the market...staying focused and staying positive is ultimately the only way out, and in fact there are destinations unreachable any other way...

there is nothing wrong with a pessimistic view of the world as long as one acts positively-> no secret the power of drama derives from the contrasts between good/evil, suffering/happiness, the expected/the unexpected-> can you have one without the other...

aurator can paint the canvas black, but you'll notice small touches of light and humor, and telling details that enhance the picture and bring to your attention the stark contrast between doing something and doing nothing...

Aurator, great video link!

ALOHA !!

Well ... well ... look what the cat drug in!

We hear all day long how banks are either taking huge multi-billion dollar write-downs or simply default and the FDIC owns them. That spells lots of distress for shareholders and depositors, but did you ever think how this web of deceit and failures would play out from the aspect of tax revenues? Earlier this year I did an analysis on the Bush FY 2008 Budget where he claims his budget will bring a surplus in 2012. How can that be since the US government is so dependent on tax revenues? Last I looked the IRS has not yet found a way to tax losses! While Clinton claimed a budget surplus due to the TECH BUBBLE, the Bush FY 2008 Budget is too hasty since there will not be any gains from the REAL ESTATE BUBBLE like there was to bail out Clinton's Budget.

In fact due to huge bank losses the City of New York is now faced with a huge tax revenue shortfall from NYC based banks from $173bil last year down to $5bil this year(a 97% revenue shortfall). Here is the repercussion the bankers did not count on and perhaps why they may follow Haliburton to Dubai! One question ... once the roads and bridges are sold off then what? This is the equivalent of central banks selling their gold to pay off short term debt!

READ ON:
NY POST

CRISIS PUTS NY IN 'SELL' HELL
GOV EYES BRIDGE, ROAD PRIVATIZING
By BRENDAN SCOTT and FREDRIC U. DICKER Post Correspondents

Gov. Paterson yesterday calls for a special session of the Legislature to close a ballooning budget gap.

Gov. Paterson yesterday calls for a special session of the Legislature to close a ballooning budget gap.

July 30, 2008

ALBANY - Warning of an approaching economic calamity, Gov. Paterson yesterday called an emergency session of the state Legislature - and raised the specter that New York may have to sell off roads, bridges and tunnels to close a massive budget deficit.

In a rare televised address, the Democratic governor cited "private-public partnerships" involving the sale of state assets - widely condemned by critics as fiscal gimmickry - as one way to stem a tide of red ink brought on by the sagging economy and woes on Wall Street.

"We can't wait and hope that this problem will resolve itself," Paterson said. "These times call for action, and today I promise you there will be action."

Profit-tax collections from the state's 16 biggest banks, which were at $173 million in June 2007, fell to $5 million last month, Paterson noted. That's a shocking 97 percent plunge.

But the governor's five-minute speech offered few specific solutions to a three-year budget deficit. The gap has ballooned to $26.2 billion from $21.5 billion - a whopping 22 percent increase - in just 90 days.

Next year alone, the state expects to face a budget deficit of $6.4 billion, up from a projection in March of $5 billion.

Paterson promised to examine ways to trim the state work force and consider deeper budget cuts beyond the 3.3 percent he ordered after taking office this spring.

"We're going to end the legislators' vacations and bring them back to Albany to reprioritize the way we manage New York state's finances," he said.

Paterson said he would ask lawmakers during the session on Aug. 19 to take up his proposal to cap school property taxes at 4 percent a year.

In a nod to the tax cap's chief opponent, Assembly Speaker Sheldon Silver (D-Manhattan), the governor also promised action on Silver's pet proposal to increase home-heating subsidies.

But Silver reacted coolly.

"If it is our intention to ask working families to shoulder the burden of these cuts, we must ensure that our most affluent citizens share that burden," he said.

Senate Majority Leader Dean Skelos (R-LI) cautioned Paterson that any cuts to school funding were off the table.

The "sale" of state assets has been tried in the past during difficult economic times and has been met with condemnation from budget watchdogs.

The most famous - or infamous - example: former Gov. Mario Cuomo's sale of Attica prison to a semi-independent state agency in 1991 to raise $200 million. Many critics noted that the bond sale cost the state hundreds of millions extra over the next few years.

"One gets a little concerned when 'selling off state assets' and 'budget deficits' get mentioned in the same sentence," said Elizabeth Lynam, a state policy expert with the Citizens Budget Commission.

"If it's used to close a budget gap, it's a one-shot. It's doesn't help you in the long run. It's a fiscal gimmick."

Mayor Bloomberg last night praised Paterson's effort "to tackle the serious problems we face" this year.

"The governor demonstrated that he is ready to stand up to the interest groups that will no doubt protest before the State House, just as they took to the steps of City Hall earlier this year," Bloomberg said.END

I have to think Gov. Paterson knew this all along (the big bad master plan) and that his buddies are already geared up to bid and win the tendors for the roads, tunnels and bridges.

What a farce, it's so disappointing.

Kaimu:

That's been one of my big concerns. Everytime we have a period of relative "prosperity", used loosely of course, local governments go on a spending binge proportionally and institute fixed costs that can't be covered in a downturn. I'm sure we'll be revisiting bankruptcies like that of NY, NY in the 70's. Unfortunately, being the net debtors we are, how the hell will it be rescued.

Oh, Here's Cramer's take on housing:

"Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California - you name your price. That's how the madness ends: with huge price cuts, the way it ended in Bradenton, FL.

And believe me, we get more Fannie Mae money (FNM - commentary - Cramer's Take)--forget these darned covered bonds, lets just solve the problem. You get buyers after a year and a half that buyers went on strike.

Remember, while we can't live in stocks, we know they trade like houses, and when the first stocks to go down bottom, the others are not far behind.

With the new housing bill, the rate of foreclosures will go down and the bargains will be quite evident for those who want to take them. Either a new administration will remove the fear of the illegal immigrants from buying homes--they were a huge part of the hard hit Arizona, Florida and California markets. Or the dramatic decline in inventory at the home building level has given us breathing room.

It is all coming together, just when no one sees it coming. Because you have to look at the hard-hit regions to know what's going on.

This morning the Wall Street Journal noted that more clarity on Merrill's (MER - commentary - Cramer's Take) arrangement with Lone Star is needed, and speculates whether Lone Star is going to renege on this deal, and whether this is not a fair arms length deal.

I say give me a break. These mortgages, if held with a private company with a servicing arm that is in the subprime business--Accredited Home Lending--and has assumptions and models for this time--would not have bid if it didn't want them. I think the loan is fine.

More importantly, if the homes are down 50% and you are buying mortgages that somehow--we don't even know--relate to those homes, you can figure you can buy them for 20 cents on the dollar and flip them for 50 cents on the dollar if you can work out the financing. And Lone Star can.
This deal works because of depressed markets like Stockton and Daytona and the Inland Empire. Not because of the financing.

You have to pay attention to the real markets, not the Wall Street markets if this stuff is going to be successful and I think it will at these prices.

I continue to think that Merrill was a game changer and that things look brighter now everyday."

Just an addition to my previous post: NY and NJ (according to Corzine) are extremely dependent on Wall Street for tax revenue. Where is Wall Street going to make the money now?