Over here on the other side of the pond, shares in HBOS, parent company of Halifax, the UK's biggest savings institution, are taking a beating:

http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=314405&re=3724&ea=53967

Here is a brief excerpt from the story on Citywire:

HBOS plunges further as debt fears persist

By Deborah Hyde | 10:47:10 | 16 September 2008

Shares in Halifax building society parent's HBOS are falling further as the fears about the group's debt position continued unabated.

HBOS shares fell 13.76% to 200.25p, much worse than its peers. Barclays was down only 3.09% to 305.75 and RBS was down 3.8% to 202.50p

The shares have been under pressure since news over the weekend that Lehman Brothers has filed for bankruptcy led to fears the group's asset values could take a hit if Lehman and or Washington Mutual are forced into a fire sale of their assets.

[And so on ...]

The entire story is fairly rational and mature, free of the usual mainstream media nonsense.

I've listened to the arguments but don't really see how the Halifax hard numbers justify focusing this kind of panic on Halifax.

-- REG CROWDER

TLT ask >100...TOG in the batter's cage...

"Goldman Sachs Profit Plunges 70%"

Should read:

"Goldman Sachs Makes Profit in Uncertain Times, Ticker Tape Parade Scheduled for Tuesday"

The last few years have been all about the Fed becoming more transparent, which of course turns the Wizard of Oz into just some guy behind a curtain pulling levers.

Should be ok for people who follow the yellow brick road the next few years.

n2s- what you have this morning is an opportunity to turn your situation around...it is now the best of times to diversify-> almost anything you look at is now down 50%, and anything you buy has the potential to double...think about shifting some of your oversized longs into other areas: china, emerging markets in general, miners, technology, financials, even a short bond position-> every one of these moves will spread your risk without taking anything away from potential upside...

From the skype banter:

Sell off this a.m., violent upswing after FOMC announcement?

AIG is history...who is next?

WAMU or Wachovia lining up just like tropical storms off the coast of Africa before they head west and become full fledged hurricanes

banking crisis,
possible fed rate cut,
and gold? tanking.

whats going on here?

[Bill Cara note:

Marc sent along this clip of Leslie Nielson as Hank Paulson
http://www.youtube.com/watch?v=rSjK2Oqrgic ]

Cara 100 Update:

DELL - Target Price Lowered from $19 to $16 @ Cross Research

dr.cosa- what you have here is a ticket to a bullet train...we're all going to try to board the one that takes the best route, but honestly it won't matter in the end whether you board today, tomorrow, thursday, or friday...JMO...

unless you're BH, who bought his ticket book at a discount last year, and has a round-trip planned..

where's the crowd headed-> buying the dip, or jumping to cash?

anyone for a 700 point drop?

I'm sitting tight on lot's of put I bought yesterday.

staying away pre-FOMC, because we really have no clue what Bernanke is planning to do...

2nd,

my working assumption currently is. They will drive down the market right before the fed announcement. Fed can then easier justify rate cuts. Then we will see a reversal. What do you think?

SU moving towards 52 week low

I expect a much small drop than yesterday. Do you expect a 1/2 point cut in the fed funds rate?

too many dip-buyers, man...

Ok,
Anyone have an idea...at this point on the next shoe to drop beyond - Washington Mutual and AIG? Will the shorts move on to another?

Has anyone given any consideration for which trades will be the first to reverse? I suppose it's easy to identify which have fallen the most, but some may not recover for a period of time. I've been thinking about this as I'm sure everyone here has as well.

Hammer1,

I'd guess that Wachovia(WB)is in the on deck circle.

Regards

i think the Fed may (a) actually do the right thing, which is to hold rates and let the market find its true equilibrium point, or (b) lower 0.50, which will drop bond yields to the TOG entry point...either way, we have entries into interesting set ups...the true contrarian move here may be to do sit on the couch until tomorrow, which i'm contemplating...i have a small position in ESLR, which is like starting the day with a coffee stain on my tie, so i may be changing ties later in the day...

ITRI is holding up well. I would expect a nice bounce when the mkt turns.

CP- that's what bothers me, is the lack of fear...all these buyers driving up the opening gap, i just think they're heading into a trap...but as you know, i'm wrong half the time...just going with my best guess..

Platinum keeps dropping, now -100+

thank you, BH..adding SU to the watchlist..

2nd,

on the other hand...looking at the expectation of the blogosphere of a nearterm reversal the contrary might just be in the oven which would support your thesis of the FED doing nothing.

SLW testing the 52-wk low...

For instance, SSO has fallen, and is likely to just lie there, alongside with perhaps DXO. Upside potential and event horizon will be critical.

2nd_ave: "i have a small position in ESLR, which is like starting the day with a coffee stain on my tie"

that was gold.

i remember a few pre-fed moves in gold where is moved up then violently downwards finishing the day lower.

i think the best case for collusion into the gold markets can be made by simply watching the kitco 3-day spot gold price, you see the biggest moves tend to be just before and after market open, unless they are downward plunges which have been happening right before lunch in what seems like all year....

vlo -4%+, PBR -6%+

I am over 50% in cash and for weeks have been contemplating on jumping in, but for some reason I hold back when stocks hit my lower buy point.

Waiting has been correct so far... but it is getting harder...

I would like to address the experienced traders...

Is there anything you specifically look for out there, to denote some sense of a bottom?

do i never learn? aig looks tempting right here only so much as it looks scary.

DELL's been cut in half (relative to last October)...still a Cara 100 and definitely in the AZ, but it i don't think it hits a buy point until the broad market hits bottom...SNDK, on the other hand, is up 4%...

Hammer1,

When Larry Kudlow throws in the towel, we've hit bottom. ;^)

Regards

GOOG is green, so far.

I bought a little SNDK yesterday, but am just watching today. Will probably closeout my puts soon.

2nd
Invested around 20% of my cash yesteday
doing nothing rest of the week
Friday is triple option expiration and it going to be wild
as of now I am down on all my yesterday's purchase

WGW - $1.09

Hammer1 - I'm contemplating events, like perhaps a FED rate cut. Otherwise, it would be unwise to jumo in to catch a falling knife. Need a reversal before I'm making commitments.

Is anyone considering getting into BCE?

Seems like a good deal if the deal doesn't unwind...

Risk is huge in this market. AIG can take down the financial system if they fail but if they are bailed out there will be a relief rally.

Hammer1

Place to start: Watch the volume.

**************************************

Vinod, Friday is actually QUADRUPLE witching option expiration day.

*************************************

I sold a few puts on UYG and SU in the past couple of days. They're all in the red, but I didn't make any large moves... may do it again today with a couple more...

I'm wondering where Oil is going from here. I feel this correction has been just as sudden and irrational as the rise to $145 earlier this year. Light Sweet Crude Oct08 futures seem way over sold!

Daily RSI-7 on SU is sitting at around 10 according to my IB chart!!!

Hammer,

Prefer early selloffs vs late. Watch RSI 7 day on indices/stocks. Below 10, near a tradeable bottom.

Also VIX/VXN compared to indices.

Probably best one is $NAA50R on stockcharts.com. When this one (% NAZ stocks trading below 50 day MA) is around 20, tradeable bottom. Naz bottoms before DJIA/SPX.

"DELL's been cut in half (relative to last October)...still a Cara 100 and definitely in the AZ, but it i don't think it hits a buy point until the broad market hits bottom..."

Didn't Michael Dell just buy a whack of shares! OUCH!!!! Double Nad kicker!!!

Fingerlakes

Remember that bank in your area I mentioned to you last Spring? CBU. Actually has held up quite well during all this turmoil. Expected some sell off with all the others, despite very good financials. No position.

re:SU.

check on stockcharts. RSI 7 day shows 25.5 on 20 min delay

Michael Dell is an opportunist in my opinion. The second largest computer producer in the world, with some of the best engineering and design when it comes to desktops, workstations, laptops, and servers. It all looks ugly now, and for many months Dell will be hard pressed to produce as we progress into a recession, but this company seems to have its affairs in order and is willing to fight tooth and nail.

Hammer1- for me it's fear...last august 16th was a good example...i knew it was time to buy the miners, but i had to 'push' myself to do it...clicking a mouse button can actually be a gut-wrenching experience when the ultimate buy point arrives...

WaMu was down .50 and is now up; banking index is up 3%. I think I've grown balls of steel as I am riding AIG up.

I'm not making any moves until after FOMC.

GS just came back from the abyss!

I hear that it is difficult to impossible to buy T-Bills at Morgan Stanley - anyone else hearing that?

2nd
are you buying any
Seamus
Thanks, also will be interested in any recent buy

Looks like they tried a take down on BX and FIG with the rest of 'em this morning but they were quickly bid back up. BX is about flat but FIG is up 5% after also being up 5%. Anyone know otherprivate equity companies that I should add to the watchlist? Seems to me that the good opportunities for private equity are more plentiful by the day.

I am also watching IWM as I think it is a good tell on the state of the broader market. It has not made new lows recently with the SnP500 or DJIA. I think it could provide some clues in the near future since it is running w/o the pack since it is less manipulated. (i.e. you can't make a green day in IWM by juicing GM's crap stock when it suits your fancy like was done last week.)

1000 aig@ 2.65
100UYG @ 17.94
With you Moab

should have read:

....FIG is up 5% after also being up 5% YESTERDAY.

2nd
guys here told me to buy USD/SSO/QLD at today low price if you can get it. wil do good six month down

Into TBT @ 55.9999 this morning, riding it up... plan to be out before the FOMC.

iShares Silver Trust SLV at the bottom of the ETF Leaderboard:

http://customer.wcta.net/roberty/ETF.HTM

bought 2000 shs of AIG at 2.60...could be my worst move yet!

Billy Sundance,

re: private equity bullish?

yesterday morning you asked about why private equity shares were up (a bit). as the investment banks all require the fed's help for liquidity, and a merger with large commercial banks to survive, the inevitable result of this is that they will soon be regulated just like commercial banks, whether they are independently owned or not. with this shift toward forced conservatism, there is an opportunity in the marketplace. some believe sovereign wealth funds (SWF), private equity (PE), and maybe even hedge funds will ultimately step into the vacuum created by the demise of investment banks. they've got the ambition, talent pool, and most importantly, independent access to large amounts of unregulated capital. whether that makes publicly traded PE stocks a buy, I haven't the slightest idea, but like bill says, the world goes on, adapts, and as long as your investments have positive cash flow and no debt, they, and we will survive...

Does anyone know if there are an Ultra ETFs for Silver?

The Ultra Long (x2 UP) for Silver; and

The Ultra Short (x2 Down) for Silver?

vinod

Picked up some GE this a.m. at 22.99 for another account. Have Long position in my account. Can also sell puts if you think it will go lower. Opportunity appears gone for now, unless you believe more upside with fed announcement.

Added to TSO position this a.m.. Refiners depend on crack spread and with falling oil, that's what's happening. It may take awhile to work out, but eventually refiners, HOC VLO,TSO will move. Refiners will not disappear. For short term trades, the hedgies have dumped these along with others, and there may be opportunity but be careful. Disc: Long, underwater overall. doydd.

Keeping an eye on the dollar, especially if rates are cut .50 . . . PMs, miners should turn up as dollar declines.

Thinking of hitting the gym soon with return prior to FOMC announcement. By that time 2nd should have a new tie on his shirt! ;)

long evergreen

Although I think there is a decent chance for an up day, I will short the S&P around the overnight high of 1200 for a trade prior to the Fed announcement-the first test of a new resistance area-as in prior support becomes future resistance.

Seamus
Thanks, I am not comfertable selling put on my position
May take some time to learn that.

Thanks bsi87, Seamus and 2nd...

This topic of spotting a bottom seems to be the most significant topic of the day... at least for me.

Schnauser....thanks for your thoughts

I think that a lot of the private equity has been sitting on its hands waiting for the opportunities to come to them this year. One clue I've found on Blackstone is that they have a JV that they set up in Feb '08 which plans to buy up U.S. refining assets:

http://tinyurl.com/6xtsku

This suggests to me that private equity is ready and prepared and patiently waiting to pounce on some good opportunities when they arrive......

Any relief rally here will likely be short-lived. After all, what's in the pipeline? More Fin trouble + fallout, margin calls, Mutual Fund year end selling, weak earnings, lowered '09 expectations. What else am I missing?

roller coaster

[Bill Cara note:

Big changes are coming after the market hits the bottom. Sen. McCain is basically saying that a new Securities Act and Regulations must be legislated.

http://tinyurl.com/5dus32

When I made the same statements in June 2006 in a Wall St Journal article, when the DJIA was 11260, my opponent in the debate (a Fund of Funds manager) laughed at my recommendation. I wonder if he's still laughing? ]

is that a bullish flag on the 15-minute chart of SRS?

Out of AIG.

$70 billion in REPOS yesterday and another $70 billion today, one would almost think someone is preparing to throw quite the party.

AIG out

homebuilders turned green! gonna be a good short soon,

Fortunately, I came across this site about a month ago. I am learning a lot... This seems to be a very comfortable and welcoming community. Anyway, here is an interesting short article re the Bush family and Lehman -- I also read yesterday that Paulson's brother(?) works there.

http://tinyurl.com/33nq2s

vinod- no, i'm planning to sit this one out...hate to place bets in front of FOMC, and not sensing capitulation as of now...

Nice Scalp guys!

half of TBT off @ 57.64

BSI87, yes I too follow the $NAA50R on Stockcharts, here is one of my charts I use to follow it on a weekly basis. Agree still not in the low risk area of a bottom yet. I also plot the same thing for the S&P and NYSE

upload saved on Imageshack.
http://tinyurl.com/63yp4a

Quasi

:-(

Near the end August I was going to buy
FXP @ 78.xx. Today it a high of 129.49. That is a 41pts jump in about 13 +/- trading days.
Ooooooo the humanity...did I blow that one!

Anyone have data on current Put/Call ratio in relation to other recent extreme market bottoms?

Seems like a perfect opportunity for the big dogs to pull a rabbit out of the hat and steal a lot of put money by friday.

Of course it would be a lot easier if you got a FED tip sheet before the final exam......too bad nobody knows besides the bearded lady and her disciples :-)

GS -

CFO refused to comment on AIG during the conf. call. So, there are major efforts in getting AIG out of lock jam. GS was sold off during premarket, and getting traction now. I think the bad news have already baked in yesterday's fall.

Billy,

I've also got my eye on IWM & SPY at the moment.SPY has is becoming quite predictable in the way it's trading. So far I'm doing very well.
This is some gear on IW

**IWM Breaks Support*** It is official. IWM failed at resistance and broke support to reverse the medium-term uptrend. IWM was the last holdout. With this support break and new downtrend, the July lows mark the first downside target around 65. On the 60-minute chart, IWM remains within a falling price channel and moved below the lower trendline late Monday. The short-term downtrend is overextended and 10-period RSI moved below 30. With the ETF short-term oversold, we could see a bounce or some firmness in the next few days. As far as strength, I am watching Monday's gap. Look for a move above 72.5 to fill the gap and follow through above key resistance at 74 to reverse the short-term downtrend.

Barclays seals deal to acquire parts of Lehman

http://tinyurl.com/5rctua

Not much detail, but apparently they are getting the "core" of the US broker dealer operation.

UXG bid at 0.75...

Sounds like the Fed might be blinking first with an AIG bailout.

damn what is going on with AIG?

I bought that AIG rumor and made 50 cents

Sold VLO put at profit. Trying to unlaod PRB and STO puts. But no panic.

Someone just threw a can of green paint all over my watch screen.

Rafish - I was also eyeing the 65 level for IWM to see if it would test current trend as a breakdown of that level would suggest a brand new down leg.

IWM just popped nicely into the green so I will be watching the 70 level. The way I see it the jury is still out on whether this mornings hit was a big headfake to take out stops before resuming the uptrend. I am not ready to call it a breakdown of support. Looks like buyers moved in very willingly at $67-68.

A rate cut would be good to ease financing for the smaller cap co's in IWM (R2K).

SPY has been very difficult for me to gauge as it does not seem to be marching to a different beat as IWM does.

Missed the $1 ramp on AIG, but back in. Balls of steel can make you money.

My wife just called me that her coworker friend is down 10 grand on WaMu stock and doesn't know what to do. Mother of ... How the hell can anyone risk so much on probably one of the top ten worst stocks?

i see nice entries for TBT and GE, congrats...

Overall market trend is down, afterall this is a bear market. But a rally in a bear mkt as we've have seen can be huge as shorts run to cover.

Not saying it's coming right now, but be aware.

IMO, we're a long way from a true bottom. Unlike '87 where the surgeon just came in and tore your guts out in one (day) fell swoop, this is like being in the dentist chair for agonizing months.

Bill,

Some of us here in the USA have seen this coming for a long time. When our legislators won't listen, there is nothing we can do. I first saw it locally in management about ten years ago.

Today's local newspaper political columnist called it just what it is — a move to socialism at the highest levels of government and pay-offs to the good old boys.

I just heard the Brits have agreed to Shia law.

Not much hope out there for anyone of sound mind. That is scary. I believe it was John Kennedy who said something to this effect, "If people can't get change through political means they will resort to other means."

[Bill Cara note:

Capitalism and entrepreneurship with minimal intervention by any kind of government is the best system. There is nothing wrong and everything right with putting the capital market system back into the hands of the owners of capital. That is not socialism -- it's to the benefit of those of us who have wealth and want to protect it and grow it, who wish to work in our own interests in a free market. All these intermediaries -- HB&B (credit-mongerers), the Fed (protectors of HB&B), and government (wealth transferors working for the interests of whomever will vote them in and for the few who pay whatever it costs to get them elected) should have almost no role in the free functioning of our markets. They are the culprits who are advancing socialism. From what I can see, the USSA 4-year plan is not much different from the old 5-year plans of the USSR that failed.]

moab

Remember that posting (can't recall who) reference Pring's 60 minute chart? I've added it and it seems to work and be helpful. Have you used it?

2nd,

I am at around 85% cash.

Sept. 16 (Bloomberg) -- American International Group Inc., the largest U.S. insurer by assets, hasn't gotten access to a $20 billion lifeline announced yesterday by New York Governor David Paterson.

``They don't have that $20 billion'' yet, said David Neustadt, a spokesman for New York Insurance Superintendent Eric Dinallo, in an interview today. ``It would be part of a broader deal. If there's no broader deal, then it doesn't happen.''

AIG, which is based in New York, has been granted permission to access $20 billion of capital in its subsidiaries to free up liquidity, Paterson said yesterday.

Just sold off last of puts as mkt seems to want to go up a bit.

bot some FCX @60.26 this morning.

always made on this stock.

itri spike 92.09 to 94.19 now

Seamus

Great analogy!

I don't want that baby-bomber screwing around with my stock market. I like it the way it is.

GDX looking better and better.
Comments???

Grym,
I've also been hearing the same message lately, starting about noon yesterday and into the wee hours last night with Roubini being the most verbose. Maybe now, the message has been announced and reform will commence. Bill helped me put a finger on it, something I couldn't understand for years and wondered how Americans could afford such extravagance. The leverage bubble is popping and the message has been a long time coming.

I think it was MikeNYC talking about the MACD (65,90,12) on the 60 minute chart. It works well IMO.

These are some wild times in AIG man

Covering S&P at 1185-easy money has been taken

Grym- 85% sounds good...don't see any reason to rush into any trades right now...any train this week will get you to same elevation...

make that destination...

2nd, nice word of encouragement & advice to n2s

thanks on his behalf, you are a very caring person.

This is hilarious. FETV says "theyre getting a bailout" and AIG goes up 2 bucks. Then FETV says "theyre maybe not getting a bailout" and AIG plummettts. Yowza.

looks like its going up again

this stock has a whole lot of "down" in it.

i'm just sitting and waiting. my 70% gains just turned to red. however, i believe that if everyone is saying AIG is too big to fail then the lifeline will be thrown out to them. their underwriting business is still a great source of cash flow and if they can get the loans they need then the cash flows will pay back the loans.

ChickenPookie, Google finance is a good free source for financial data. You have been wondering about where to check for FRO’s debt level’s, so here it is.
http://finance.google.com/finance?fstype=bi&q=NYSE:FRO
I have also included ESEA, which Kaimu likes or did for comparison. Kaimu does very good forensic analysis on FRO ( see his post below)
http://finance.google.com/finance?fstype=bi&q=NASDAQ:ESEA
Pookie, I know you followed my FRO purchase and the timing was wrong for capital appreciation purposes, but I assume we are all adults and it was timed to capture the dividend.
Anyway, I hope the links help you understand and see what Kaimu references. Cheers.
By the way, see mid July I have been wrong a lot.
ALOHA !!
FRO DEBT
Current debt for FRO is around $480mil(close to half a bil). In 2006 FRO debt was $2.2bil. They converted that debt to a capital lease in 2007 through Ship Financial and in the notes of their financials when calculating total debt they include "capital lease", which is listed at $2.3bil and add that to short and long term debt and we get close to $2.8bil in debt. Their debt level was becoming a concern so they off loaded it to Ship Financial, but if you look at the financial notes, when they calculate their debt to equity they include the long term capital lease as debt(note #6)! I consider that DEBT since they do! If you look at line item LONG TERM DEBT and line item OBLIGATIONS UNDER CAPITAL LEASE from 2004 to 2007 it is very obvious what happened to the BIG DEBT! What is that word "obligations" anyway?
Think of it this way. You go out and buy a car and you assume a long term debt, but if you lease it you still have a debt(payments), but if you default on the lease payments they still repo your car, you're just not on the hook for any lost principal because you never had any plus you lose tax write-offs on depreciation since you do not own the car being leased.
To me this was a tactic to off load burdensome debt. Hopefully Ship Financial has sustainability through the turbulent credit markets. I would watch Ship Financial along with FRO since they are very much tied together! What does FRO do without their "insider leasing" pal? Hummmmm???

Posted by: kaimu at September 15, 2008 6:39 PM [link]

teamonfuego: you have massive B.o.S.

If I had a 70% gain in several minutes, I would take it and run!

The AIG thing seems to be moving us into uncharted territory as to who is affected.

Are individual state guaranty companies really well funded enough to takeover these insurance contracts if AIG fails? And what if they are not? For the sake of Average Joe who might have multiple lines of insurance w/ AIG, I hope that they are trying to offload some of these business lines to other insurance companies and diversify risk for their customers. The last thing I would want is my insurance contract being offloaded to the gov't b/c we all knows who will pay if they are underfunded....

On that note, it would seem a rate cut today would really be beneficial for AIGs short term prospects.

Is it just me, or is there a massive H&S formation building on the intraday DJI by minute?

Play this market right now is more like playing roulette in Vegas betting on black or red.

In AIG at 2.75.....spin the roulette wheel....see where it lands.

BTW....How on Earth did AIG pay a $.22 dividend on september 3rd? Has there ever been discussion about regulatory requirements/conditions for companies to be able to distribute dividends?

Too many companies are issuing dividends at the cost of risk to their own customers/clients (taxpayers of course).....quite a conflict of interest......

Red 23 was so last week. :)

AIG is no FRE/FNM.

My guess: A Fed straddle.

1. Arrange a private bailout/loan/takeover for AIG/WAMU.
2. Keep Fed Funds rate unchanged. .25 tops.

I don't think there is a cut as this would panic market and it's a no winner, cut and the market sells, don't cut and it sells. .25 might be compromise with the market. Only finding a solution for AIG/WAMU will get anyone's attention.

Thus they keep commodities/USD under control and they hold the line right around here (10800-11000 or so), which was the line last time.

Fazeli - i actually didn't even have much of a chance to take it as i was making breakfast and got back 10 minutes later to a 10 or 15% gain...

also, i might be blindly naive because i sold ABK with 50% gains only to watch it go up another 400%...

Moab - Your thoughts on GX it's range bound all morning? Is this a bottom?

Moab - GDX not GX, sorry.

With oil still selling off, 25bps cut seems likely, if ultimately unwise.

can someone please make a decision on AIG already. at this point i just want my day back...

....maybe not

GDX? To me the MACD(65,90,12) is turning up on the hourly chart and it is trying to get above interim highs at 29.50. You would think it would make a small run up to 34 over the next few days but with the wholesale liquidation in the markets who knows what will happen.

I am liking the action I see - IWM (R2K) and S&P SmallCap 600 (^SML) acting nicely. It would seem to me that a lot of the liquidation of small cap companies occured closer to the beginning of the panic earlier in the year and thus it does not sell off hard w/ the large cap indices.

There is also a decent amount of green in the ^DJIA (and being led by big cap co's like HP and not the crap like GM whipsaw trading).

Essentially it seems like there is still plenty of panic but that we haven't matched the hysteria of yesterday. I think we are nicely green by FED time - and likely after - but nothing is certain when the bearded lady is about to sing....

Not.v

Is there any good reason that this has fallen so much? Other than the normal sell all miners stuff

Unbelievable........politicians and money men....scum of the earth.

http://tinyurl.com/6auvjh

Moab - Thank you. I'm up a tad on SNDK, but nervous to buy a lot. I am down and heavy in PM and hoping for a turnaround. At least PM is better than financials, but you would think it wasn't much better?

"Are individual state guaranty companies really well funded enough to takeover these insurance contracts if AIG fails? "

BillySundance brings up an interesting question.

My playing partner, who is in ill health, has his life insurance with AIG. According to him, the phones at AIG and his insurance agent are ringing off the hook, going unanswered.

His call to the PA State Insurance Commissioner's Office has yet to be returned, but I'd guess that answer will be a resounding "NO".

Moab - Your thoughts on SNDK now $15.13 with bv $22.06?

Pre-Emptive Strike against possible SEC Short Sale Reforms - September 16, 2008
David Patch
Okay, okay, so this isn’t mainstream media reporting out here, it is just an engineer out of Boston. Yet, after reading the mainstream media report on the SEC’s rush to get out short sale reforms later this week I figure somebody needs to step up to the plate and call out the SEC before they continue down this path of negligence..
Let’s start with what we know.
The SEC has two proposals on the table that have gone through public comment. Rule 10b-21 making it illegal to lie to your broker dealer (duh) and the Options Market Making exemption proposal now under 2.5 years of public comment.
According to the WSJ and the Associated Press the SEC is “rushing” to get something out this week; earlier than originally planned.
So there was a plan in place? Who in their right mind proposes something identified as a possible means of fraud and manipulation back in 2006 with intent to address it sometime in 4Q08? Does that even qualify as a plan or does it instead qualify the agency for the governmental version of a Darwin award?

Read the Full Story at the Link Below
http://investigatethesec.com/drupal-5.5/node/386

SNDK? I don't see any edge in the chart but at least it has a confirmed bottom under which you can put your stops.

Moab - Thanks again.

Here is a link to maximum liability limits of each state guarantee fund (by state):

http://www.annuityadvantage.com/stateguarantee.htm

Seems to me that even if the states could takeover these liabilities that some(many?) insurance policy holders would still get chopped due to the liability limits. If I understand this table correctly, in most states, someone with a large life insurance policy would only be entitled to $300,000 max in the event of death or $100,000 max in cash withdrawal value? These are pretty large sums but for people who have been paying for life insurance by the month for decades and have accrued large balances would get their equity chopped.

Maybe someone w/ more knowledge of the life insurance industry could weigh in......

Today’s environment really shows the folly of insurance contracts or annuities.

Their pitch is, give me your money and I will protect your life, provide for your long-term care needs, and or provide you an income for life.

So you pay your premiums and then find out that your insurance company just went under and you lose it all.

Moral is never give up control of your assets. At least if you go down you know who to blame.

modus operandi of this Chinese water torture Bear market seems to be:

"any news is bad news, so let's sell off.
but first - a short covering squeeze!"

After hearing Joe Biden on CNBC today, I thought for the first time that the Dems could win. My next thought:

AIG - I bet to save AIG they'll design a derivative contract so huge and so confusing that no one will be able to figure out the FED's role till after the election. AIG will be saved, the Republicans will be able to keep power.

If Cheney can't engineer this, the market will fall apart and the Dems might actually win ...

XOM hit my weekly 200SMA exactly this morning @71.51 and bounced.

The quality of the bounce so far is questionable.

Not buying or selling anything, just watching what it does for now.

Regarding stop orders.....I bought AIG on 06/23/08 @ 30.82. I put in a stop at 5% loss that triggered on 06/26/08. I haven't used stops on every trade but did on this one b/c I was worried about downside....understatement of the year.

Without the stop I probably would have riden it down thinking it can't go lower than.....

So in this case, the stop saved me some tuition.

Hoyer shot down any chance of a complexity getting by this AM by pushing everything out past the election.

Next step to look for...Karl Mar..uh, Rove, blaming the Dems for inaction on the crisis.

Just keeping my inner cynic sharp.

ALOHA !!

Here's another $120bil in two days thrown onto the fire! The LTCM crisis in the 1980s cost $150bil, so essentially the US FED tossed nearly an entire LTCM in two days time! If you add in any AIG bailout there you go ...

READ ON:
Tuesday, September 16, 2008
Fed Adds $50 Billion to Banking System After $70 Billion Injection Yesterday
Listen to this article. Powered by Odiogo.com
Money market rates doubled overnight, forcing interventions by central banks overseas. and the Fed joined suit this morning. From Bloomberg:

The Federal Reserve added $50 billion in temporary reserves to the banking system when it arranged overnight repurchase agreements, or repos.

The rate for overnight loans between banks had opened at 3.75 percent, above the Federal Reserve's targetrate, as American International Group Inc.'s credit rating cut increased banks' reluctance to lend. The rate dropped to the central bank's target of 2 percent after the cash injection.

The Fed added $70 billion in reserves to the banking system yesterday, the most since the September 2001 terrorist attacks, to bring borrowing costs down after the bankruptcy of Leman Brothers Holdings Inc. triggered a hoarding of cash. Funds opened at 3.5 percent yesterday.

``From a pure reserve perspective, the desk might not need to arrange any repos at all today,'' Wrightson ICAP analysts wrote in a note. ``From a dealer-funding perspective, another round of large morning repos may have a calming effect.''END

The US FED has to keep injecting cash to move the Fed Funds rate to its target rate so the US Banks have a better WELFARE SPREAD!

the only thing I have a put on just now that is truly acting like it's in a bear market (= near total lack of buying interest) is XLU.

Utilities have lost there mojo apparently.

I have to admit that I’m in awe of the wealth destruction that this market has delivered. It makes the period of March 2000 almost seem tame in comparison, at least with respect to the financial sector.

This is truly a disaster for most people.

"The Social Imperative of Sound Money"

This article looks at the distorting effects and accompanying loss of freedom of government intervention in markets (e.g. Fannie/Freddie bailout).

http://tinyurl.com/69ppzu

Good morning! A few fun things happened while I was asleep. :) First, my VLO buy limit order was hit at $30, so I just sold it at $31.45 (I still have the shares I purchased yesterday at $31.5). Both of my buy limit orders were triggered for ESLR, one at $4 and at $3.50 (which was twice larger than the first one). So I just sold at $4.08 the shares I purchased at $3.50, since I already have A LOT of ESLR in my portfolio. Then, my buy limit order for WGW was triggered at $1.10, and I am placing a sell limit order at $1.45 for these shares -- don't want to sell them too early, as WGW is a solid low-risk company (fundamentally). Finally, I just bought some more SLW at $7.93 (replacing the shares I sold at $9.20 on Friday).

2nd_ave: I should have been careful about what I was wishing for. :) PM shares did pull back and I did reload. Now, I need the second part of my wish come true -- another day like last Friday! :) OK, I am off to my morning routine and I should be back before the FOMC announcement.

Telestar,

This may be a disaster for most people. However, we are NOT most people. This is a great, historic opportunity for us.

On another note, ever hear of a Marvin Schwartz? Portfolio manager at Neuberger Berman? According to my highly placed Lehman source, the other day around the 'ol water cooler conversation naturally turned the topic of "how much of the company stock did you all sell versus keep?..."

According to my source, Schwartz never sold a single share of his Lehman largess...Though you'd have to have been smoking opium to do this, he apparantly rode BILLIONS worth of LEH down to worthless.

Misplaced loyalties.

Guess where that money is now? This is a GREAT HISTORIC opportunity.

a few years from now when giving talks at local YMCA's or the Jewish Learning Center, Schwartz will no doubt explain that losing billions was the best thing that ever happened to him, that he'd in fact been sleepwalking through his life, that he's since reconnected with reality, with family, friends, and perhaps a spiritual savior. But this week this has got to be some tough tittie.

Telestar3d - Yes, we are adults and hey, I'm not worried or sorry about FRO. I had previous plans to capture the div. and what you did for me was simply just that, and so, for that I thank you. In fact, I actually captured some profit on the sale of my third purchase. I am now also thanking you for the links, I had already poured over the reports provided on Yahoo and what I could find on the company website prior to entry, which concluded of course, without red flags (boy do I need to rethink that one...). This ain't the first bag I've ridden to bottom and held to profit, but obviously that's a roller coaster I prefer not to ride if possible.

Long story short, I extend to you my thanks for your genuine concern and convey positive feelings in the spirit of the adventure. There can be a million reasons to do or not to do something, and in this case I'd do it all again but with a little more prior research.

Mox-nicks my friend, a mere bag of shells, it all comes out in the wash! ;)

Pookster: Yiddish? the German is macht nichts

What happens when bankruptcy is declared if Credit Default Swaps are involved?

AIG has over $400Billion of these babies

Lehman is one of the major counterparties in the highly concentrated credit derivative swaps (CDS) market. A LEH bankruptcy filing requires an assignment of its dealbook to other counterparties. The ISDA has started a 'netting' process where any offsetting contracts are canceled out and where it is established if Lehman is a net debtor or net creditor when all contracts are marked to market (-->end result is a single net payment from or to Lehman's trustee.) Derivatives contracts enjoy special seniority rights ('close-out' see Bliss/Kaufman): their claims are not 'stayed' in a bankruptcy as is the case for other creditors. In either Chapter 7 or 11, derivatives counterparties seize and liquidate positions and collateral immediately which could lead to potential asset market disruptions--> Authorities announce expanded emergency liquidity plans

Shark, I agree that at some point there will be a historic opportunity to be buying.

There are a lot of really smart people here, but unless you have been shorting you are probably underwater. Usually I can keep what I make this year has been different.

I basically trade directionally either long or flat (I know, seems stupid not to include shorting). This year I have been all over the place, down -17 in January, up 14% in July, and now down -16.8% today. Why I did not protect myself here more I consider a failure on my part to remain disciplined. On the plus side this only pertains to 15% of my portfolio as I have maintained a cash portion of 80% or more for the whole year. In fact I rarely ever go long more than 35% of portfolio.

With hard work, we should be able to have the insight as to when we should position ourselves for the historic buying opportunity, however this fiasco has been at least 20 years in the making and time is likely needed to heal this.

Good luck to us all.

Fazeli - back up 30% and holding. am i stupid or greedy or naive? or all of the above?

w/ AIG that is...this volatility is wicked

At some point? How about this morning when guys bought AIG for a buck and a quarter and sold it an hour and a half later for over four bucks?

Or WM which went from a buck fifty to two seventy in an hour?

That's historic dude. That's trading on steroids. That's totally off the hook bro.

FWIW-I keep tabs on the 5 day sum of the daily trin readings. In normal markets a reading of 8 and above is oversold and a reading of 4 or lower is considered overbought. The 5 sum today currently is 4.07. Even after the steep slide yesterday this number is unbelievably low. Although anything is possible, this is definitely NOT bullish. Keep stops in place and expect a false move immediately after the Fed decision is released.

Out of AIG 3.25

Bill,

By most definitions when an entity is owned by the government (yeah, I know "We the People...") it is called socialism. I can't see how this takeover, bailout our co-signing of the GSE debt, or whatever other name given to it, is anything else.

[Bill Cara note:

Grym, my point exactly. There should never be a GSE unless there are no private sector players in the industry. There should not be a Fed, but a Permanent Under-Secretary of the Treasury who reports to his/her boss, Congress. There should never be 1-800-HELP lines because that is not managing the affairs of govt; that's nothing more than vote-buying, which is socialism. Govt should look for all means to cut its numbers to the bare essentials. What should happen, unfortunately isn't. Sen. McCain stated some of the right words in his CNBC Squawk Box interview, but putting action to expression has always been a problem for politicians.]

Shark,
Not much different than buying a call option with a day or two left on it. It might go to zero, or you might gain 400% in a day. But for a Roth IRA account, that is the setups that I trade for(AIG, WM).

Grym -

The Qur'an states the following on Riba:

“That they took riba, though they were forbidden and that they devoured men’s substance wrongfully – We have prepared for those among men who reject faith a grievous punishment."

...if only.

schleppy - why did you bail? any reason at all or just taking gains and remaining on the sidelines?

Jock,

There will be no winners in this election. Someone will move into the White House, but neither pair has a clue what to do. Their promises are the same old party lines and will not change the DC/Wall St. co-op.

The "losers" may actually be better off staying at their old jobs.

Shark, good for you, but not my style too much like Russian roulette right now.

mebea,

Don't know who or what Riba is, but am no longer a religious believer of any kind.

I don't forget, I just get even (when possible).

Thanks anyway.

nemo - Thanks, my German is nicht..

You guys see CEG? 2 bags of popcorn in order

The TED spread is 2.1, indicating that we are still in credit-crisis mode.

Vadym Graifer

Your thoughts... Feds cut will the market rally up [big]?

Vad, I can't eat and watch this at the same time.

CEG, yeah I had a limit order today to buy at 41.19 cancelled and replaced to 37.19. Started thinking why this stock could not do an AIG etc and cancelled the 37.19 bid. Just too dangerous!

CEG infected with the Lehman virus...bounced off 13 and now 27...unreal...

VAD,

Did you buy Constellation? I didn't I heard the report but didn't check it.

Grym -

I'm pretty sure Riba is something to do with debt and interest. I try not to worry about getting even. Besides, isn't living well the best revenge?

QT- Stocks talk to Vad, but I don't think the Fed does...

CEG: 13 to 29, 123% in 4 minutes. That's historic.

QT... I had too good of a day up to this point to risk even guess anything, let alone trade, LOL.

Honestly... this is beyond my comprehension. I am on a sideline waiting for dust to settle. May short carefully extreme spike or buy extreme drop, either for just a quick scalp

Vad

Never mind...

The "Shock" Market

answered it for me. :-)

(US) FOMC LEAVES RATES ON HOLD AT 2.00%

ALOHA !!

ON GM'S NEW VOLT
Okay here it is the savior of GM the new VOLT ... or so it is billed! Here are the stats briefly:

The compact sedan's drivetrain runs solely on electricity and can go 40 miles on a single charge, with another 360 miles or so available when the gas in its small fuel tank kicks in to recharge the battery.

The engine will deliver the equivalent of 150 horsepower with a top speed of 100 miles per hour, the Detroit giant said. END

Okay so it runs on electricity and a little bit of gasoline, but where the heck is there any mention of the cost to charge this little beauty every night when you go to bed? How many miles per charge does it get? Of course the cost of electricity varies from one city and state to the next, but electricity isn't exactly cheap and GM wants around $40,000 for this so how can I figure a payoff rate without all the info? With the Toyota Prius I was thinking of buying the payoff rate was 12 years for me since I hardly drive very many miles so to me it was not worth spending near $30,000(out the door)!

Of course these types of electric cars are pretty useless when there is no power like in Houston!

So far as I see I hope GM has more than this in its pipeline and I am sure even with this GM will need to be dining at the US FEDs begging bowl fairly soon!

Knowing Americans now that crude oil has come down they are probably out buying up SUVs on the cheap! HA!!

GROUND REPORT
Here in my part of Hawaii regular unleaded gas is $4.32 per gallon which is a drop of $0.17(high was $4.49) now that crude is below $100 per barrel! WOW ... we haven't saved nothing off this "commodity bubble"!!! PRICE inflation is alive and well here! How about where you live?

MikeNYC,

Great call on the CSX puts! It is down over 3 bucks today!

Holding 30 CSX Nov $50 puts.

Thanks for the call on that one!

Adding to my SLV position at $10.4

rates unchanged. AIG's next.

CEG, what a miserable company. Mostly ex Enron cut throats. Not that all Enron employees were bad.

CEG not exactly in recovery mode...plateauing around 29...

DXO RSI 7 day 9.80 USO 9.64.

Capitulation. I'll be looking at DXO in the AM.

TBT fell down, triggered my stop loss for the remainder of my position, and went back up. Arg. I hate stops. And the delay between my decision to buy/sell, and the transaction itself.

my spin algorhythm just interprested the FMOC annoucement:

"holding pat on rates will give some support to recent dollar strenght, it lets the public know the fed is still prepared to contain inflation while supporting the markets during this period of volatility"

in bizzaro world, gold should tumbe on this news just as it would tumbe on news of an increase, or on news of a cut??

CEG = Holy cow! What is going there? From a previous day's close of $48 to a low of $13!

This is supposed to be a solid energy company. Does anyone know what happened?

CEG -> comment on tickerforum that rumor is credit lines to be cut and/or Lehman owned a large amount of stock.

AIG: Still holding. I feel like Mel Gibson in Braveheart....HOLD! HOLD! HOOOOOOOOOOOOOLD!

when the ones that ran may turn out to be the smart ones in this case...

CEG Debt protection costs http://www.reuters.com/article/hotStocksNews/idUSN1640488720080916

Bah! my stop loss practically bottom ticked that TBT dip!! within a couple pennies.

I noticed BBT bobbing along all green the past few days. It's gotta be driving Karen Finnerman nuts.

Me? I'm just angry I sold my EWW puts too early.

I'm also depressed I didn't get any of those crude puts i was banging the table about the days before the previous storm. Really. That trade was so clear and the gains potentially game changing for an investor. And me just watching. It's killing me.

IBN headed for a buy point, IMO...

shark... no, did buy CEG but did make out like bandit on SRE short (sympathy play)

Well, in all the xcitement I hadn't been paying attention to UAUA, which has been working just fine. Whre do you think oil will be tomorrow, should make UAUA work. It was even up yesterday when the market was down.

did NOT buy in the post above

finger accent again, Beard.

Too bad Fed did not lower the rates as and gold did not zoom. Well, in this case, I just bought some October $19 puts on XHB, as homebuilder stocks should not be happy about the absense of a rate cut either. :)

b0ss: That's aweseome. Tell the truth, I was a little stressed a day or so after I posted that. It's one thing to kick back and eyeball stocks and give an opinion. It's another when someone follows you in with real money.

It's silly, but I was worried. (I know we're all responsible for our own trades, etc., but I'm funny like that.)

I think we got a little lucky with the big crash and all. The chart definitely looked weak, but I dont know if all those gains would have come so fast without it. I'm just really happy you were still holding and it's working out well. Thanks for reporting back and brightening my day.

what the hell going on with this market
down 80/up 80

Ya' gotta' love th action in AIG. I read a story about Greenberg an hour ago-nothin". Same one comes out 10 minutes ago, and the stock bounces 15%

it's all about AIG vinod. loan is back on for them. my gut instinct says the FED is too afraid to watch them fail. that's why i've held through this from 2.60 this morning and have lost at least 7 years of my life...

Here’s a good one, my step-father is heavy into financials. I was trying to get him to understand that the banks were basically insolvent. It did not make an impression. He just said he had two different managers running his money and one was doing and one poorly.

When C (30) and others rallied about I year ago, I suggested that this was his chance to get out. He say’s but I would lose 25%. I bet that sure looks good now.

So yesterday I asked him he saw AIG and he said no but he was heavy into as his “good” manager had it in his portfolio. I said that AIG is never coming back in his lifetime and there was an odd silence.

I asked what kind of a money manager would ride down a stock 96% and he says that his manager does not believe in selling.

UNBELIEVABLE!

oebik premium bid 4.50 ask 11.00

no doubt one of the craziest days we've ever seen

CEG- in at 26.40, out at 30.83...sorry, unable to post while glued to the screen...;)

850,000,000 shrs AIG traded, how can the market makers keep up with that volume - that's 850 million...

I am still reading through today's discourse. Just got to the point where someone mentioned NOT.V being down. So I just purchased some NOT.V at $1.41US.

teamonfuego:

I sold the AIG b/c I was going to be away from the desk during Fed announcement and 18% gain was fine w/ me.

I have the same feeling that AIG won't be allowed to fail but I also didn't think they would allow Lehman to fail.

Thought maybe I might be able to buy back in lower....we'll see what happens.

Why is DUG down?

because oil stocks are up.

Oil didn't go down enough to compensate, huh?

ALOHA !!

ON LEHMAN'S OPUS
Now that LEH is down the creditors are going to want to force a sell off of anything with even minimal value once bankruptcy proceedings begin so that they can recoup some of their losses. Man, can LEH even afford the legal bills to file Chapter 11? They'll probably get a US FED "temp" loan to cover legal expenses! HA!! This is similar to what hit the ASX when OPUS PRIME went under and creditors just sold off any stock holdings lock stock and barrel ... one big dump on the markets and a lot of those shares sold were Australian mining and junior companies. That got a few peripheral lawsuits going as well. What will be the fallout from LEH, a 158 year old larger than life investment bank that was the underwriter for many an IPO? Watch out ... God only knows what will get sold off yet! Whatever Tricky Dicky didn't sell off already!

I wonder if he and his family and insider pals sold off their own shares of LEH in time? NAH ... A $22mil bonus is enough .. or is it? Heck, $22mil that's only winning SURVIVOR 22 times! I want to see Dick Faud go to "Exile Island"! HA!! Maybe that should be HB&B punishment? We send them all to a small Fiji island where they all fight amongst themselves for title of ULTIMATE SURVIVOR! Like an EXTREME FIGHT contest with bank CEOs and CFOs!!! HA!! Man would the TV ratings skyrocket for that! Maybe Maria Bartilomo can be the Jeff Prost?

nemo oil prices have come back up on NYMEX. Just turned positive.

oil rising fast on NYMEX now up +1.30 bb

Schleppy - gotcha. i almost sold because i had to hit the toilet...i could only imagine having to go to a meeting...

There must be an AIG deal...should've stuck around.

miners recover...

Moving down the sell limit order on the WGW shares I purchased this morning at $1.10 to $1.35. These are the replacement shares for those that I sold on Friday at $1.45 (which I bought a few days before at $1.20). Just trying to keep the fixed absolute desired gain to $0.25 per share.

Massive buying immediately following the announcements. PPT or Options? Both? If so, will we hold today's low?

2nd
At fidelity I wanted to buy NOT.V at 1.51
and here is what I got
Buy 2,000 Shares of NOSOF
Details Filled at $1.4462

Did I made mistake and got something else
Your help will be appreciated before I call Fidelity

Placing a sell limit order at $4.95 for the ESLR shares I bought this morning at $4.

Looks like my expectation of a gap down at the open and a green close is working out. :)

NOSOF is in US$ while NOT.V is quoted in C$. You have to convert the prices.

vinod

Not necessary to call IMO.

Usually when you place an order, it's received as buy at $1.51 or best price available. This is true at good, ethical brokerages like aFidelity or Schwab.

I'd say you received a best price.

I read that the Russian market was halted after a 17% drop.

David, you ever try just trailing a stop upwards to lock in some profit without limiting the upside?

I'd think that especially on something like ESLR where the upside v downside risk highly favors the upside (IMO, which is why I'm very long ESLR).

Seamus
Thanks for
Information
By luck I got a good price?

Toshiba interested in buying SNDK. I own 200 SNDK. http://www.solid-state.com/display_news/167312/5/HOME/Toshiba_eyeing_SanDisk_bid_to_fend_off_rival_Samsung

A "Max Pain" question:

When you pull max pain for "SLW" using this calculator

http://www.optionpain.com/MaxPain/Max-Pain.php

Am I understanding this correctly, that the price of SLW could be manipulated to the option pain price of 12.5 by Friday?

Seamus 2nd
It been crazy
I wanted to buy SUN (refiner) and made mistake and got SU and it work out good. here is example
Buy 100 Shares of SU
Details Filled at $40.4935

ALOHA !!

ON B OF A
BofA or BOFA! Please-e-e! The title of this article on Google Finance is "Bank Of America Seen As Big Winner From Nation's Credit Crisis"! Today CNBC dubbed the BOFA CEO "King Of Wall Street"! Yipee !!! Who's behind all this SPIN ... Ben Stiller?

If you add the CURRENT liabilities that include just the CURRENT write-downs for both BAC and MER you get a total of $134.8billion, which does not include one bit of CFC toxicity. It does not even count BOFAs own toxic derivatives that took Warren Buffet years to unwind and by my last look BOFA (#3)was within the TOP FIVE largest derivatives holders in the World right under JP MORGAN and CITI ... Hummmmm? How can CNBC declare someone KING when they don;t even know what they're KING of? KING OF DEBT? So far that's all it looks like BOFA is KING of!

Now, if job cuts stop tomorrow and job hiring begins the next day all over the USA and defaults on mortgages and credit cards and car loans all end today and mass buying of homes and cars and big screen TVs start the day after tomorrow and if the US government stops spending today and closes the 134 military bases and pulls out or Iraq and Afghanistan and replenishes the $92.4tril back into the SS and MediCare Trust Funds and the US FED stops loaning and eliminates itself then maybe ... just maybe ... BOFA will be the BIG WINNER!

KING OF DEBT!!! That's all Wall Street has ...

OCT oil +1.77 a barrel

ALOHA !!

BANK AMERICA BIG WINNER

Bank of America seen as big winner from nation's credit crisis
Nashville Business Journal - by Mark Calvey of the San Francisco Business Times

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*

The stature of Bank of America and its CEO Ken Lewis took a giant leap forward Monday.

Despite a 21 percent drop in Bank of America's shares Monday, the bank is likely to come out a huge winner from the nation's credit crisis.

"The bank is emerging as probably the biggest beneficiary of the disarray in the financial markets," said Dick Bove, an analyst with Ladenburg Thalmann. "Bank of America will be stronger, larger, and command more business than ever before once this debacle is over."

Clearly, the bank has its hands full. The bank sealed a deal to acquire Merrill Lynch on Monday after recently closing on the nation's mortgage lender, Countrywide Financial Corp. (more)

Hummmm????

Bill,

I guess we must have been talking about two different examples, since it looks like we are in total agreement. Communication is an iffy sort of thing at times.

My socialism complaint was regarding the nationalization of private debt thru the unlimited funding GSEs.

I would like to see a genuine free market regarding risk/reward with regulations to prevent as much as possible the kind of fraud we are witnessing. We've seen the post depression protections removed and, as you pointed out, even those rules still existing ignored.

Soon we may just resort to the black market which is a truly free market and totally unregulated.

[Bill Cara note:

Grym, As you may know I have been travelling, and then moved into a new residence. Well, today I had separate meetings with the CEOs of three important banks, one of whom came in this afternoon from Switzerland to meet me, all of it related to my setting up Cara Trading Advisors Bahamas. That plus an ocean swim before lunch to take a health break between market and business meetings. So, I haven't had much chance to follow the Discourse, and too often I miss the point (and shouldn't comment). Things will settle down in a couple days. I had intended to take off Monday and maybe Tuesday, but with this market, I had to put some time in, and also try to write stuff that might be helpful. Sorry if my communications became miscommunications, but I do all I can do.]

2nd,

I hope you got in on the evergreen party.

Alaskan Pete, I did try trailing stop orders a few times, in the cases when I really wanted to sell something. Since I kept my position sizes small in all my recent purchases (thanks to the lesson 2nd_ave taught us!), I have only slightly encroached into my margin at this point (even though I have been buying a lot lately, as you see from my posts), and I don't feel a large pressure to sell now. In other words, I don't want to close any position prematuraly now because of a little fluctuation in the price -- I would rather wait for a sizeable when my sell limit order gets hit. I believe we are now in the time when going all out will be profitable for those who survive, so am I accumulating positions now either for a long-term hold or for a short-term sizeable profit.

vinod

Good mistake is much, much better than a bad mistake.

SU good oil sands company as long as oil doesn't crater below $75 or so as expenses are high. (Disclosure: Sold DEC puts on SU @ 40 back in Aug.)

You ought to buy a Mega Millions lottery ticket on the way home tonight. I'll pay for half of it! Of course, if you win, we split ;)

QT that's my understanding.

LOL, if MaxP is correct then there will be a LOT of very happy folks on the ESLR train. The MaxP value there for Sept is 10, heheh.

Interestingly, the October Max pain value has shifted in the past week from 10 to 7.5 to now 5.

So either folks are not bothering to trade the Sept options at this point, (i.e. hoping against hope, or just thrown in the towel) or there will be a massive upsurge Thurs/Fri in the stock, followed by an MM manuevered draw down back into the 5 range.

shark- got invited to the constellation party, man...can't hit 'em all, i like to play one casino a day

The Greenberg clan takes a hit with AIG but still ole Hank is still a billionaire.

"Mr. Greenberg is a major stakeholder in A.I.G. He has seen the value of his holdings plummet as A.I.G. shares have sunk. He holds about 39 million A.I.G. shares directly and an additional 243 million through his private equity firm, Starr International. The shares were worth about $15.8 billion at the beginning of this year, but just $1.3 billion as of Monday."

gdx is coming back

PWE ~ 23.0, 52 wks low, yield ~ 16.5%

Moving down my sell limit order on ESLR to $4.50 for the shares I purchased this morning at $4. The original target of $4.95 was too adventurous. Given my position size, the gain between $4 and $4.50 would be the standard $500 gain that I am aiming in a short-term trade (the same I would make if I sell at $1.35 the WGW shares I purchased at $1.10). Moreover, I did buy ESLR yesterday at $4.50, so if ESLR keeps rising about $4.50, I'll switch to thinking when I should sell that bunch of shares.

how'd you do at CEG? Make a few bucks?

I bought CEG at 24.5, now up 800 on 100 shares. I'll hold for 2,000.

Vinod, IMO, your "good" price was the USD, no longer par with CD.

vinod- congrats on SU...

personally, still in capital preservation mode, and not doing much

Boy, am I glad that I bought puts on XHB earlier today (as a protection in my portfolio against further broad panic selling) instead of shorting XHB directly! Now I don't have to worry about XHB shooting up to the sky -- my losses are capped. The lesson I learned is that one should carefully review the motivations for each position and choose the appropriate instrument (stocks or options) for implementing those intentions.

2nd
I did not wanted to do anything
but my OEX call went to green from red and got stuck with market
sold oex call which I mention I got yesterday

opening ultra long China eod today.

Dave

shark- refer to the 243pm post...

daveb - what's the ticker on that. do you know of an ETF that tracks the SSE index?

looking to cash in on AIG before the close...

UGPIX - Profunds 2x Long China

Dave

Question about selling puts:
Let's say I sell an OTM put and the price goes the wrong way for the trade, i.e. down to the strike, opening the possibility of the stock being put to me.

My trade would show a negative profit all the way up to either a) the put expires or b) the put is exercised.

What happens if the put is exercised, but I am not chosen to be the one the shares are "put to"?
Would the negative profit go away, and I would show the sold premium as a profit on the sale?

Or would this still amount to a loss, even though I was not dinged for the actual shares?

Thanks in advance

closed out AIG at 3.75 right before close. bought at 2.60 so a nice gain. not the best gain possible but can't complain and didn't want it hanging over my head with vacation looming tomorrow.

David...nice call on the market action today.

Also....small caps lead again today. Russell 2k up 2.6%.

jk484- thanks for your kind words...

mebea,

I'm very angry with what a relatively few people on Wall St. and within the government have done and are continuing to do to the future of our country. The anger is magnified by the inability to get more the talk from any of those in a position to really do something positive.

At best none of the candidates seem to even realize the declining condition of the average person's standard of living. In an age when "information" has been billed as so important and as one of our leading features, real information is distorted, spun or ignored.

We are occupying a country we never should have gotten involved with, we have exported or best jobs and now taxpayers will be stuck with the bill for rescuing a bunch of crooks.

This is not living any where near as well as would did 30 or 40 years ago and is declining at a fast clip.

My revenge (or better term — justice) requires that those who caused or allowed this to happen should pay in some meaningful way.

reenza -

if the put has not been exercised by the buyer before, it will be automically exercised on expiration day.

no free lunch, as usual ;-)

AIG tanked after hours. whatup?

Just returned from sitting still for 45 minutes and doing Vipassana meditation (observing my own thoughts and sensation with the understanding that each sensation/thought is not MY sensation/thought but just some passing sensation/thought, and there is nothing more to it).

My whole portfolio gained a little more in the last 20 minutes of trading, but my limit of $4.50 did not get triggered for the ESLR shares I purchased this morning at $4. However, there is always after-hours for that! :) So I just sold these shares at $4.50.

However, what happened to all the miners after hours??? WGW, SLW, SWC are all down 5-6%.

AIG showing Bid of 1.89 AH

AIG -

dropped to 1.90 after hours in the last 5 minutes. Any news?

Schleppy - government considering conservatorship with AIG.

Wow, this AIG thing is brutal. Good on whoever covered!

AIG -

I overheard on CNBC, but not sure, that AIG was offer some money in a package, but they have to file bankruptcy for protection with NY Court today. Something like that. But, the deal is not final.

Notice the conservatorship details come out after hours once "they" have pumped the financials up tremendously to cushion the fall tomorrow.

This market is disgusting.

Grym - the best revenge is living well.

Most of the white collar criminals never get caught - only a few tokens. It's best not to let the bastards get you down. Don't you think?

AIG volume is at 1.186 BILLION!!! (including after hours trading)

Sorry for the confusion -- SWC is actually up after hours. Or maybe it moved from being down 5% to being up 1.4% in 10 minutes? Maybe those who missed the move in WGW and SLW have a chance to buy them cheap after hours, while the market is going crazy about AIG?

So, market down tomorrow unless a market approved solution for AIG?

AIG is supposed to file bankruptcy unless they get $70B by tonight to post as collateral. I can't believe the markets are not coming apart. I suppose they think the Fed can save everyone of consequence.

AIG has been a yoyo after hours.

AIG - where's my air sickness bag?

A few minutes ago, in after hours trading, AIG was at 3.93. After Bloomberg published a rumor that USG was considering conservatorship, it quickly dropped 50% to 1.95.

I’ll bet the rumor mongers made a bundle on the few elapsed minutes!

sndk -

congrats to all that still hold SNDK. It's got an offer for $26 from samsung

OK, SLW is up after hours! It looks like someone got cheated of their SLW shares at $7.96 after hours, and this last deal price persisted for some time. Now things are back to normal. I wonder if the same thing is happening with WGW right now...

This is huge folks! Now we are sure to see panic!!

http://tinyurl.com/First-of-Money-Market-Freezes

Placing a sell limit order at $8.93 for the 500 SLW shares I purchased today at $7.93, so as to earn the standard $500 prize for a trade. :)

some money mkts may not be safe?

NEW YORK (MarketWatch) -- One of the first and largest money market funds has put a seven-day freeze on redemptions after the net asset value of its shares fell below $1. Primary Fund(RFIXX), a $62 billion fund managed by money market fund inventor The Reserve, said Tuesday afternoon that its $785 million holding of Lehman Brothers Holdings debt has been valued at zero. As of 4 p.m., the value of the fund's share is 97 cents. The Reserve said that redemption requests received before 3 p.m. Tuesday will be paid out at $1 a share.

Re: Off Shore Driller Opps?

Don Coxe is adamant that some off shore drillers be at the top of our list here for new money. I concur. A few come to mind for this play - RIG, APA, SLB (though I understand the unwinding/deleveraging opp that may occur in SLB as Bill smartly pointed out).

Anyone looking at any other potential plays for the off shore oils as this plays out over the next 3 years? Now seems to be the time to start nibbling and perhaps over the next 7-10 days to take full positions as we hopefully bottom in oil shortly.

As a side note, I was also impressed by Joanne Hruska on her oil/gas picks. I would put her beside others who I respect greatly and kept tabs on over the past 3 years (though wrt mining) - Robert Cohen, Brent Cook and Jean Francois Tardiff.

Futures are down 1+% DOW AND S&P 1/2% NDQ

ALOHA !!

Buy LMT ... If these guys have anything to say about it LMT will be swimming neck deep in US government contracts for another 20 years.

Isn't this how Germans under Hitler viewed things? I believe most people would commit any atrocity if the US government condoned it. Take the consequences away and you get "convenient psychopaths"! When have there ever been any consequences for the current Wall Street gang, including Ben, Hank and Greenie(The Gang Of Three)? Take away the consequences and these CEOs would sell their Mothers for a profit!

READ ON:
September 11, 2008
Poll shows support for torture among Southern evangelicals

by Adelle M. Banks
Religion News Service

WASHINGTON -- A new poll released Thursday (Sept. 11) finds that nearly six in 10 white Southern evangelicals believe torture is justified, but their views can shift when they consider the Christian principle of the golden rule.

The poll, commissioned by Faith in Public Life and Mercer University, found that 57 percent of respondents said torture can be often or sometimes justified to gain important information from suspected terrorists. Thirty-eight percent said it was never or rarely justified.

But when asked if they agree that "the U.S. government should not use methods against our enemies that we would not want used on American soldiers," the percentage who said torture was rarely or never justified rose to 52 percent.

"Presenting people with this argument and identifying with the golden rule really does engage a different part of people's psyche and a part of their heart, their soul, and really does shift their views on torture," said Robert Jones, president of Public Religion Research, which was commissioned to conduct the poll.(more)

Link: http://tinyurl.com/4k9uv3

Since I mentioned LMT they just snagged a Pentagon project worth $5.6bilUSD. If you double that number then you get a more realistic outcome. Does the Pentagon get $5.6bil from their profitable business model? HA!!!

As goes LMT so goes America ...

This is becoming serious fun. Money market funds not paying redemptions now? What will they think of next? Kaimu's mattress and the stuff he buries under the end of the rainbow is starting to look appealing.

MarketWatch reports that JPM lent $138B to LEH this week (give or take a few $B, spare change). So no official bailout from the Fed, but the Fed can lend to JPM who can lend to LEH!

Congrats to the SNDK holders.

Thanks everyone, I was watching the blog earlier and saw Toshiba was considering a buy on Sandisk. Having dabbled in that stock several times this year, I bought 100 shares for 14 and change. Just a few minutes ago I thought I would check the stocks and Merry XMas as I saw Sandisk was up, up and away. Sold 100 for 22.98. I guess some people would be beating themselves up wishing they had bought 200 or 300. I'll take what I can get. Thanks again.

Scanning over the Country ETF performances this evening, one thing struck me. Over the last 3 months, the 3 hardest hit (by far) are China, Russia, and Japan and the best performing is USA. Is there any coincidence in this that those three are, by far, the largest holders of US$ denominated debt? Could this be the market's way of downgrading the quality of US$ debt? Just a thought...

kaimu,

here is the rest of companies . .

Consider fiscal year 2001, which conveniently ended in September of that year. It serves as a good, pre-War on Terror baseline for grasping just how the Pentagon expanded ever since—and how much more it is paying out to private contractors today.

Back then, the Pentagon's top 10 suppliers shared $58.7 billion in Department of Defense (DoD) contracts, out of a total of $144 billion that went to the top 100 Pentagon contractors. Number 100 on the list was The Carlyle Group with $145 million in contracts. Keep in mind, of course, that this was the price of "defense" for a nation with no superpower rival.

Fast forward to 2007 and the top 10 companies on the Pentagon's list of private contractors were sharing $125 billion in DoD contracts, out of a total of $239 billion being shared among the top 100 contractors. The smallest contract among those 100 was awarded to ARINC and came in at $495 million.

http://tinyurl.com/64kwxj

Scratch that last idea. Faulty data. Certainly Russia is the worst hit but China and Japan are really no worse off than most others.

haha - i'm so glad i followed Bill's buy signal on SNDK 7 days ago. Small position which I darn near closed at a loss on Monday. Sadly, when i say small I mean SMALL! :(

Fed to Give A.I.G. $85 Billion Loan and Take 80% Stake
By MICHAEL J. de la MERCED and ERIC DASH 1 minute ago
In an extraordinary turn, the Federal Reserve agreed to take a nearly 80 percent stake in the troubled giant insurance company, the American International Group, in exchange for an $85 billion loan.

and BANG!!!! The futures turn around.

Not doing much for AIG shares though

Who cares.. didn't help Freddie and Fannie did it.

More BS from the FED.. and now they are close getting to Zero for their FED reserve!!

Still don't understand why gold isn't back up over $900!

May I ask you, 2nd_ave, what signal are you waiting for before starting to scale into CAF? When do you think that signal will come?

What negative forces do you think are still pushing the Chinese market down? I thought that the major problem for China (and other emerging markets was the high commodity prices, but now that they have come down considerably, I am surprised that China did not rebound.

Thanks!

Did you see the news on AIG? We now have an 80% stake in AIG! I sure hope our investment does well. I wonder what other investments I will be participating in.

aurourant, no it can't be. See, AIG was last trading at $3.75, times the 2.7B shares = $10B market cap. $80B by the Fed should be far more than 80% ownership.

How do they come up with these magic numbers like 80% anyway?

So the Fed will be insuring cars and houses now?

And I thought the Fed only had about $800B reserves :-)

Fed is a Finacial services Conglomerate now. They will go full service when City goes belly up.
Bob

So whatever the government gave to every working(and I only include working) citizen in the US as a stimulus check, they are giving to AIG also? Wow! $600+ for every working person! I almost wonder where the money keeps coming from... I guess that is the end of the bailouts and problems so we can rally from here. I heard that most of the financial companies had models for a 20% drop on the housing market from the top. Most of them are concentrated in CA/FL. I wonder what happens if the "correction" is a 40%+ drop in prices from the highes.

Building a portfolio? Yup. I'm feeling good about owning Freddie, Fannie, and AIG. Fat dividends for all of us, baby?

Does this mean the CEO of AIG is a GS-17 employee? Executive compensation on the gubmint's (read taxpayer) dime? What a country!

Do we own WaMu, Wachovia, and National City next?

SiO2 - All day I kept mentioning SNDK. But everyone ignored it. I bought more shares and mentioned the Samsung rumor abt aquiring SNDK.

This just came accross the wire.
"BURLINGAME, CALIF. - Late Tuesday, Samsung Electronics offered $5.8 billion in cash, or $26 a share, in a hostile bid for flash memory and storage-maker SanDisk. Shares of SanDisk rose 54.52%, or $8.20, to $23.24 in after-hours trading on the news."
http://www.forbes.com/enterprisetech/2008/09/16/sandisk-samsung-takeover-techsolutions08-tech-cx_bc_0916sandisk.html

JohnE,

"The board of directors at SanDisk Corp. on Tuesday rejected Samsung Electronics Co.’s offer to buy it for $26 a share"

Good short from here like YHOO was?

Homework tonight:

Scouting out and pricing long-dated call spreads on oil and silver futures.

SiO2:
I think there will be more offers. Anyway I bought at the bottom at abt $14.58 a share. I don't expect it to fall much below that if at all.

Well, I was real happy there for a few minutes.

MikeNYC,

If you find any opportunites like CMG/CSX puts, tell us here first! SLW calls might be the way to go... Mar 09 $12.50's if they fall back down.

TIA

David/(n2s)-

i'll tell you exactly what i plan to do (which is also exactly what i would advise n2s to do if he wants to run a back flip on the strangle hold his ESLR shares/RYL puts have him in):

take the portfolio, divide it into equal increments, and invest the entire amount in some combination of China+India, technology, the mining index and/or selected miners, bond shorts, financials, and energy.

you can try it on foot with a(n) (over)load of ESLR/whatever, or dump the backpack and head for the high-speed rail line...at this point, I honestly don’t think it matters if you're able to snag fully-discounted tickets; you could pay full price tomorrow and still be content...

So by Tuesday morning the S&P 500 was off about 80 points from Friday's close because Lehman declared bankruptcy over the weekend. Market chatter is suggesting that Barclays will be buying some or all of Lehman's asset management unit.

Today Timothy Geithner, who is President of the New York Federal Reserve skipped the FOMC meeting in Washington, D.C. Normally, the New York President serves as the Vice Chairman in FOMC meetings. But Mr. Geithner stayed back in New York to help JPMorgan and Goldman Sachs work on a $70-75 billion capital raise to save AIG.
The capital raise failed.

The result was that AIG would have to file for bankruptcy tomorrow (Wednesday). So the Fed stepped in and offered an $85 billion loan for 80% of the company. S&P 500 futures went from -12 after the close today to +9 after news of the loan began to leak out. Fascinating to see the private sector interactions with the U.S. government as the "too big to fail" policy response is alive and well.

But these interventions by the Fed and Treasury are just putting out fires that keep popping up in the financial system. While the effect provides a short-term boost to equity markets, the markets are so vast that the Fed will not be able to keep up. That is why we believe the markets will ultimately wring out the excesses of the overleveraged parts of the system, not the Fed. That means lower lows are ahead...stay tuned!

JWibbs
http://www.2globalmarkets.com/

B0ss - Thanks. I thought that was SiO2 replying.

JohnE- now that the offer is public, why would you think SNDK drops much lower than the AH range of 22-23?

I wonder with the current financial blow ups if consensus here is still that we will still test the cycle bottom on gold. Regardless, it still sounds as though prudent investors here are nibbling and taking positions while keeping some powder dry should we see the 5-15% drop.

2nd_ave - That's comforting! I hadn't thought of it. I have 500 shares and hope there is a bidding war now.

JohnE, congratulations, you will have a good day tomorrow. Unfortunately I only hold SNDK's dirt poor cousin MU. It does not look that good for them (but hey maybe the Fed will print them some money too?).

I am down a bunch in Vanguards precious metals fund. I don't think I can sell. Is it a smart move to just hold on?

[Bill Cara note:

If you are a long term holder as I suspect, I would hold. I believe the oil price will hit a cycle bottom soon, which will support the Price of Gold. With the reckless, unjustifiable destruction of the US Balance Sheet under a failed Treasury Secretary, I believe there will soon be major failure of the $USD, and another pop in commodity prices.]

LOL...don't forget to thank the person responsible for your inability to sell...

SiO2 - MU appears to be at a bottom. They may get a buyout offer too. I suppose there are a lot of companies that look very attractive for takeovers and mergers.

Thanks for the encouragement.

FED now has FNM/FRE/AIG and they might have GM and F
by taking over FNM?FRE Morgage rate are lower so, if they take over GM?F we will have lower rate for car financing.
This is good for consumer why people are complaining?

Vinod, the FED also gets to advertise during PGA commercials now.

I work for the US government, so I can't watch youtube.com at my computer. I just saw what Bill Cara put up this morning as a "note" on the 5 post of today:

[Bill Cara note:

Marc sent along this clip of Leslie Nielson as Hank Paulson
http://www.youtube.com/watch?v=rSjK2Oqrgic ]

90% cash now and ready to put it to work at the right time! (Maybe long term one of these days like MikeNCY said..nah!)

Bill,

Great clip on youtube. Wish it's only a fiction. I wonder where is the line which them can fail and us get bailed?

vinod- the american consumer complains when things are bad, and when things are good...but in this case, they have good reason, as making vehicles and housing more affordable (once again) via Fed take-overs is just the same scam in different form...

ha ha ha, must see

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24957156

SiO2 - Thoughts on MU? I've been long MU for about a year with an average basis around 7. Unsure whether or not to buy some down here. TIA

BTW those following the ARU saga note that Kinross has extended its deadline for the 2nd time due to falling short of the required 90%. Still lots of dissident shareholders out there screaming louder than ever for the OSC or someone to step in and halt the process until it can be reviewed for numerous allegations of impropriety.

If you have ARU shares you have absolutely nothing to gain by tendering your shares and if you already did you were hoodwinked by hoods

Bill,

Can you explain how the current AIG bridge load package affects Credit Default Swaps? I heard that a vast number of hedge funds, including PIMCO's Total Returnd Funds, owns CDS. How will the current bailout affects these funds?

asian markets up on the AIG bailout, $85B loan, nationalization, or whatever you want to call it.

http://finance.yahoo.com/intlindices?e=asia

RE: AIG Posted by: SiO2 at September 16, 2008 8:16 PM [link]
"... AIG was last trading at $3.75, times the 2.7B shares = $10B market cap. $80B by the Fed should be far more than 80% ownership.
How do they come up with these magic numbers like 80% anyway?"

Well SiO2, I look at it this way, 10B + 80B = 90B, Fed has 80 of 90 = 89%, well close to 80% maybe they used slightly different numbers, the big question is dilution, ie how many shares are there now. And I'm willing to bet those new shares the Fed owns are some kind of preferred shares way up the ladder from the existing common share holders. As usual I think the common share holders are screwed.

But what concerns me more is the fact that they did this because a disorganized failure of AIG would be a catastrophic financial problem, so what did the 80B of taxpayers money buy, "an organized failure"??, I'd be very careful over the next few weeks / days.

Quasi

Who has a take on the AIG share movements tomorrow?

I am very interested to know what the outlook is for ASX:CXC (NYSE:CDE) given that Bill previously recommended silve on a 11 handle.

If anyone has looked at this company then please share your views.

Cheers,
Ben

Is AIG the entire market. I cannot figure out the bounce up after the fed said no rate cut. I would of thought the opposite. What are people thinking?

ALOHA !!

Grantmi posted ... "Still don't understand why gold isn't back up over $900!"

Currency markets are "managed" by central bankers using derivatives through the futures market, just like they manage every other "free market" and gold is the one currency they fear most because unlike their paper IOUs they toss around by the trillions now ... with a T ... gold has no such paper liabilities.

I ask where are the assets of AIG? If they had assets then why does the US FED need to take it over? What is backing AIG? Its a paper company backed by yet more paper ... its a paper shuffler! And when people can't afford insurance what happens? I have to ask? What is AIGs exposure in the latest IKE disaster? Is there any info on any US insurance company's exposure to IKE? We have two AIG offices here in Hilo and I just walked by one on Saturday and on the door it said "AIG - commercial-residential-auto" ... Now what will the door say? "AIG - commercial-residential-auto-toxic derivatives!"

I got out of insurance company annuities 18 months ago, because as I envisioned a US Bank collapse I saw no reason the US insurers would not follow suit! You cannot have a collapse of capital assets and not have insurance companies severely impacted ...

Boy, AMEL BAER ROTHSCHILD hit the nail right on the head ... essentially, "You control the money ... you control the country!" Gosh, where is all this leading to?

With the major counterparties now keeling over of course the US FED needs to step in! You can lay this one right at the feet of ALAN GREENSPAN! How many times over the years was he asked if the derivatives markets needed regulating? How many times was he asked by Ron Paul if the derivatives markets were sound? How many times did this paid puppet for the FIAT KINGS tell Congress that derivatives need no regulation and are strongly supported by major commercial banks? I can't count how many times this one man has lied to the US CONgress and the American people and yet Bush hands him a Presidential Medal Of Honor for his lifetime achievements at defrauding the World! I think I heard Bush say, "GOOD JOB GREENIE!"

How much more evidence do the Polyannas need in order to finally come to the conclusion that the US FED has to go? Give me ONE good reason the US FED needs to stay in power! JUST ONE! Anyone?? Whats a good reason these days?

I guess it takes a complete monetary collapse to convince the Average Joe that the US FED has done a pathetic job and needs to be fired! We are headed in that direction ... Anyone here ever lived through a monetary collapse? They don't announce it! It happens and its over and in one mouse click you and your entire family are 90% broke! The next vision after that is some AMERICAN YELTSIN standing on a M1 tank that just blew a hole through the Rotunda in DC as our elected leaders scurry to their LearJets!!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY!

The Federal Reserve says it is taking over crumbling insurance giant AIG in an $85 billion rescue plan.
skylane

Are you sure you don't mean Mayer Amschel Rothschild?

bobbyo, (re: AIG)

I don't think that you were in the "room" when the discussions where going on. I guess you missed out with the rest of us. If the US puts $85 billion into AIG, they will put whatever it takes into them to "help them out". The same with FRE/FNM. (1 Trillion assets for AIG) If your assets are worth 10% less than your liabilities, you're bankrupt! Just think what their "REAL" assets could be sold for Right NOW! Think big taxpayers! You just paid 1200% premium to buy AIG, when NO one else would do it for a 10% premium!

Gold probably isn't back up over $900 because commodities and precious metals are risky investments, and risky investments are getting tossed first in this market along with any other margin calls. Cash is king.

Why buy metals when you can buy cheap companies for less than what their assets are worth?

Why does it seem like these bankruptcies are some sort of strategy? CDS = protection from bankruptcy, holder gets paid after a credit event. The bankruptcy, delisting, and then asset selloff formula sounds like strategies used to acquire certain Canadian companies Bill has blogged about in the past.

With Long Term Capital, there was talk that everyone looking at purchasing/investing in the company got access to their books and traded against them into the ground. Could the same thing have happened with LEH?

An 80% government-owned bailout sounds like a credit event to me... not knowing much about credit events. Who are the ones who will profit most from an AIG credit event?

From wikipedia..

There are several standard credit events which are typically referred to in credit derivative transactions:

Bankruptcy
Failure to Pay
Restructuring
Repudiation
Moratorium

http://tinyurl.com/5k73mo

"American International Group has taken the No.1 spot in the financial sector in terms of market capitalization with a market value of $217 billion. Its shares have been trading in the $90 to $100 dollar range, and have held up well in the recent market turmoil. AIG replaces Citigroup, whose share value has declined 13 percent since the beginning of November to $214 billion, at the top of the list.

Rounding out the top 5 were the U.K. 's Hong Kong and Shanghai Bank Corp. ($125 billion), Germany's Allianz (84 billion), and Fannie Mae ($80 billion). ING is the insurer with the largest market capitalization after AIG and Allianz with $69.8 billion.

The French Financial newspaper Les Echos commented that the high value the market places on AIG recognizes the success of its niche strategy and ability to control costs, and to expectations that it will significantly expand its markets in the U.S. and Asia.
"

That was December, 2000. Times sure have changed.

And why do the managers get fired after the bailout? Isn't that like tossing the captain overboard during a thunderstorm? Shouldn't they be retained under house arrest to help sort the mess out?

What are the chances the guy in the crows nest is going to know how to steer the ship?

For all those people who said Bre-x could never happen again...

Posted by: bgold on September 16, 2008 11:00PM

The joke's on you... HaHaHaHaHa (copyright- Fearless). This time it was even worse.... this time we HAD the motherlode.... no gold seeding required. With the memories of the run and gun Vancouver Stock Exchange a distant memory... tighter Gov't regulations, stricter exchange rules, this fiasco could never be repeated, shareholders would never get cheated again. Or so we were promised. But here's the problem as I see it. First of all you need you need an OSC that is proactive, not reactive. Secondly you need an OSC who is even INTERESTED in reacting... remember Conrad Black... all his nefarious deeds transpired while he was on the TSX. His downfall began as soon as he listed in the US. Canada can be the best country in the world to do business... if you're dirty. And finally, once the TSX became a publicly traded entity who's share price was dependent on income derived by trading volumes of their customers, ie. companies on the TSX exchange, is there really one person here who honestly believed that shareholder rights would be at the forefront... now that really is funny.

http://agoracom.com/ir/Aurelian/messages/942150#message

I bought SLV today from 10.33 down to 10.30. It just seems like the tail end of a panic. Hoping the low from a few days ago holds, as its getting stupidly cheap, IMO. At these prices production will decline over time. Nothing like low prices to cure low prices.

Kaimu

Glad you returned after your recovery from MRSA. Certainly not an easy thing to deal with nowadays. As bad as that experience was, be glad it wasn’t the fast emerging virulent C. diff (AKA: Clostridium difficile) Time to cut back on the antibiotics?

Note the controversial transplant strategy.

http://tinyurl.com/5ljflw
(WSJ article-may require subscription)

Think we’ll continue to see foreign companies with cash looking to snap up good companies on the cheap.

SNDK offer is the latest example.

Barclays will benefit with purchase of LEH asset management unit.

More to come.

Modelling AIG's CDS exposure.

http://www.gedankenexperiment.dk/finance.php

"By 9/30, assuming the collateral on watch is all downgraded, fully 60% of AIG's CDS portfolio will have been marked to A credit or lower. From a valuation perspective, the underlying collateral has been written down to near nil. "

This was a posting from Aug. 25. There's even a spreadsheet to show his work!

http://tinyurl.com/6272s4

will be away tomorrow, but i have the following order in:

buy to open Sept $50 Put COF (COFUJ) @ $1.10
sell to close Sept $50 Put COF (COFUJ) @ $2.20

Have any "investments" in ECNs (based on exchange traded notes)? watch out.

http://tinyurl.com/ETF-Securities-products-plumme

ETFS Precious Metals dropped 50.68%, ETFS All Commodities dropped 54.7%.

On its website ETF Securities says it has assets of $7.65bn under management
in exchange traded commodities. These products track commodity prices using
financial instruments mainly provided by AIG-FP which are backed by AIG.

This morning ETF Securities issued a statement saying that AIG was
continuing to honour its obligations. However it warned that AIG faced the
risk of further downgrades and said: “A number of firms who were making
markets in the Commodity Securities stopped doing so yesterday afternoon.”
. . .

If the issuer of an exchange traded note goes bankrupt, investors holding
exchange traded products backed by these notes will join the ranks of other
creditors hoping to get their money back.

ALOHA !!

Okay ... It looks like the US FED cannot keep its hands off its "insiders' even when they pretend they don't care if they file BK! So here we have a $138bil bailout of LEH while they're having their attorneys write up bankruptcy Chapter 11 petitions. UNREAL!!! Backroom bailouts!! These guys trade $100bil pesos like they change underwear! MORE MOUSE MONEY PLEASE!!! So with this the PESO PUMPING total is $343bil for the week($138for LEH and $70bil for banks and another $50bil for banks and $85 bil for AIG). This is clearly a bailout for toxic derivative counterparties which LEH has underwritten. See, what good is a CDS as insurance if the counterparty insuring the default is defaulting? LEH defaulted and now JP MORGAN, an agent for the US FED, has to rescue all those failed toxic derivative contracts LEH had on its books, otherwise it would have started a chain reaction! These guys are teetering on a complete MONETARY COLLAPSE instigated by a failed attempt to save every defaulted contract that US Banks own!

These guys(US FED & JPM) knew what was going on way before LEH filed Chapter 11 yet they put out these false news releases saying Hanky Panky Paulson was not going to commit US TAXPAYER funds. If the US FED has guaranteed advances then its US TAXPAYERS on the hook! I need to know what "collateral" does LEH have to cover a $138bil advance? This to me is clearly to cover derivatives even though there is no specific mention of that! READ BETWEEN THE LINES!

A word of warning to all you ETF holders and I have mentioned this many times before. The ETFs you buy are loaded with derivatives and specifically allows for 15% of each ETF to hold "illiquid shares". You as the ETF holder are never privy to the counterparties and their financial status. Do not be surprised some day if you see a trading halt! ETFs can technically default by becoming "illiquid" or "untradeable"! Its in the fine print of every EFTs prospectus. Its the part nobody ever reads or they read it and say to themselves, "That's just canned legal mumbo jumbo!" Its in the RISK section! BUYER BEWARE.

ETNs are already blowing up! Here is the prospectus info on "third party" liabilities and "illiquid" or "downgraded" guarantors.

READ ON:
One of the Frequently Asked Questions on the ETF Securities website is: “What is the credit risk for investors?" The reply is: “ETFS Oil Securities and ETFS Commodity Securities are backed by commodity contracts purchased from AA-rated third parties. Currently, these third parties are Shell and AIG.”

In its prospectus, ETF Securities says that it is through "equivalent Commodity Contracts" with these counterparties that "the Issuer will seek to assure itself of having funds available to meet liabilities to Security Holders upon redemption."

The prospectus says: "The payment obligations of AIG-FP (but not of any other Commodity Contract Counterparty) are guaranteed to the Issuer by AIG in the AIG Guarantee."

In its prospectus, under the heading "AIG-FP and AIG Credit Risk and Default" ETF Securities says that the value of its products could be affected by a credit-rating downgrade, saying this "could cause Commodity Securities to trade at a discount to the Price". END

Do you have time to investigate every ETFs "third party", "illiquid shares" and derivative counterparty guarantors? I doubt you can even keep up with that on a daily basis. Who is the counterparty to your ETFs SWAPS?

At some point even the Average Joe on the street will realize that the liabilities of the Paper World are just to onerous. Then what? Then the "C WORD"!

Look at LEH ... Dick Faud, why aren't you sitting in a jail cell right now? Why does the US FED exist after all of this?

READ ON:
Tuesday, September 16, 2008
$138 Billion Post-Bankruptcy JP Morgan Advance to Lehman; At Least $87 B Repaid by Fed

Bloomberg story below, that the Fed repaid JP Morgan for an advance made to Lehman after its bankruptcy filing:

Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to settle Lehman trades and keep financial markets stable, according to a court filing.

One advance of $87 billion was made on Sept. 15 after the pre-dawn filing, and another of $51 billion was made the following day, according to a bankruptcy court documents posted today. Both were made to settle securities transactions with customers of Lehman and its clearance parties, the filings said.

The advances were necessary ``to avoid a disruption of the financial markets,'' Lehman said in the filing.

The first advance was repaid by the Federal Reserve Bank of New York, Lehman said. The bank didn't say if the second amount was repaid. Both advances were ``guaranteed by Lehman'' through collateral of the firm's holding company, the filing said. The advances were made at the request of Lehman and the Federal Reserve, according to the filing.

Lehman disclosed the advances in a motion seeking court permission to give JPMorgan's claims special status in its attempts to recover any advances. Lehman said that if that status isn't granted, JPMorgan may not be able to make future advances needed to clear and settle trades.

`The granting of the relief requested is in the best interests of the estate and its stakeholders and the public markets,'' Lehman said, adding the advances would be ``essential to Lehman's customers.''

JPMorgan may make future advances at its sole discretion, all of which would be guaranteed by Lehman under its agreement to pledge collateral, Lehman said.

JPMorgan said in a statement in court documents that it has had a clearing agreement with Lehman since June 2000, and had pledged its collateral under an Aug. 26 guarantee. END

Link: http://tinyurl.com/6j5p7j

ALOHA !!

Seamus ... Thanks for the MRSA info etc ... Actually, prior to this MRSA episode I have not had antibiotics in five years! I rarely ever use antibiotics or any medication at all unless there is no other alternative.

Atlas Copco (Swedish co., mining equipment)

sees continued high demand for it's mining equipment, commodity prices are still high enough for many minme operators, and they plan several years ahead.

Europe & N. America are weaker, emerging markets stronger and will soon be more than half of sales.

Sandvik (specialty steel & materials), which I recommended a few days a go, had also commented not so long ago that they had not seen any reduction in demand.

maybe the financial crisis evoves to an industrial crisis by this time bext year?

who can say . . .

ALOHA !!

Everything is intricately linked, so never imagine that there will not be any geopolitical or social distress that results from a financial collapse. This is the result of a FIAT regime here in America where spending and debt are rewarded and where living beyond one's means is the status quo.

We already see the fallout coming as both the Dems and Reps scramble to blame each other. Nancy Pelosi states aggressively that this financial debacle is due to the Reps and the Bush economics, but it takes the vote of both parties to pass spending bills loaded with pork. It took both parties to vote for funding the Iraq War. It was Clinton and Greenspan that gave us the repeal of Glass-Steagal as well as the derivatives markets. I might note that the during the Clinton years spending never stopped or ebbed and the US DEBT grew and the unfunded liabilities of Social Security and Medicare increased substantially. Who is to blame? I believe it is the US Voters for being so inept at their job! We Americans are now paying the price for voting in larger numbers for American Idol than the US President ...

This is an excerpt from the Cunning Realist in that regards.

READ ON:
The geopolitical implications are obvious. And along with Haffner's perspective on the social effects of economic chaos, they're distressing:

"Everything takes place under a kind of anesthesia. Objectively dreadful deeds produce a thin, puny emotional response. Murders are committed like schoolboy pranks. Humiliation and moral decay are accepted like minor incidents. Even death under torture only produces the response 'Bad luck'...The result of this million-fold nervous breakdown is the unified nation, ready for anything, that is today the nightmare of the rest of the world."END

In 1947 Ludwig Von Mises wrote a book entitled "Planned Chaos" about how governments misuse power to force Wars and financial collapse onto its citizens for the benefit of banks and corporations and those who sit in political power. Now that was back in 1947 so where's the C-H-A-N-G-E ... Obama? Where's the R-E-F-O-R-M McCain? That's 61 years of the same old BS that we are seeing today! GET A KLUE ... at KLUES-R-US!

"Planned Chaos" CHAPTER ONE, page 17, "The Failure Of Interventionism"!

"Planned Chaos" CHAPTER TWO, page 23, "The Dictatorial, Anti-democratic and Socialist Character of Interventionism"!

HOLY COW ... Damn, 61 years of INTERVENTIONISM and we reach this pinnacle of the NANNY STATE ... the USSA!

Let the US Banks fall and let the US FED dissolve into the historical trash heap of failed monetary experiments! That's exactly what it all is ...

When I was in the communications biz building MATV networks(baby sitters)at California State Prisons there was a saying about "signal quality" ... "GARBAGE IN ... GARBAGE OUT"! That sums up the US government and the US FED!

Russia halts stock market again today.

How come the fact that Reserve Fund stops money market redemptions (and its holders will lose money) is not on the top of front page of major newspapers?

kaimu -

man's natural state is war.

let's go murder our neighbors & steal all their stuff before they do the same unto us.

but wait! "business is war" they say these days.

sublimation -

let's go drive our neighbors into bankruptcy & steal all their stuff before they do the same unto us.

what's the next level?

because a people that stops warring loses it's edge & becomes soft, easy pickings . . . for the aliens from Altera when they suddenly arrive?

just pondering . . .

more on the apparent new correlation AIG - oil:

(Financial Times)

DJ-AIG commodity index is the second most popular in the asset class, with pension funds and other large investors investing some $30bn in derivatives that track the benchmark. The index fell 2.7 per cent to its lowest level since September 2007.

Bankers said while AIG had not provided all that exposure to the index through derivatives for clients, it was a counterparty for a “significant amount”.

Bankers said investors had moved about $10bn since Monday – more than 5 per cent of the funds tracking commodity indices – because of concerns over counterparty risk from several institutions.

While pension funds were transferring their accounts, hedge funds and retail investors were liquidating positions, they said. The collapse of Lehman Brothers was exacerbating the problem as the 158-year-old Wall Street bank ran an estimated $5bn commodity index business.

Jerome Drouin, head of commodity indices at Credit Suisse said: “Clients are trying to diversify their counterparty risk”.

Good morning.

Here are your Cara 100 Ratings Changes:

GS - Upgraded to Outperform @ Wachovia

Other Stocks of Interest:

ESLR - Upgraded to Hold @ Citigroup

--------------------------------------------------

"The fun never stops at the federal reserve! And, why would it? Those zany central-bankers plan the party, invite the guests (you and I not included on that list), and, choose the venue.

The best part for the fed is that you and I pay the bill. The bar tab is on US. All the party favors, funny hats, and, "spirits" are courtesy our membership dues.

Tonight's party is in honor of AIG. You know AIG, right? The multi-national insurance conglomerate that is - ahem - "too big to fail".

The answer? Another bailout. This time it's $85 Billion. Those are some big numbers - and we thought $30 Billion for Bear Stearns was big. Oh, those were the days. I can remember when a billion dollars got you something.

Now, all you get for a billion dollars is a t-shirt that says, "the fed just bailed out another company and all I got was this lousy t-shirt!" ---- Don Harrold

4% round trip on the footsie this morning on this most recent "run-on-the-bank".

hard to say if there is real risk of default here, or if it's just the bigger bank-fish conniving to eat the smaller fish.

(Telegraph)

The news Lloyds was in talks broke just after 9:20am this morning as HBOS shares continued to be heavily sold amid fears that the Halifax owner may not be able to borrow enough on capital markets to fund its business.

Both HBOS, led by chief executive Andy Hornby, and the Financial Services Authority, said that the bank remains well-capitalised with good access to funding.

HBOS shares recovered most of their losses on the news, and were little changed at 180p at lunchtime.

The stock plunged 22pc yesterday and 18pc on Monday as the collapse of US bank Lehman Brothers sent shockwaves across financial markets.

Here is a chart I watch regularly showing the NAVs of several of the floating
rate / bank loan CEFs, which as you can see are are still heading down.

Senior loans are usually just that - senior to all other corporated debt, including bonds & preferreds.

For those of you that do not know the CEF (Closed End Fund) world, these are specialty closed funds (as opposed to the open end mutual funds) which are usually leveraged about 30%.

Note that PIMCOs PFL & PFN are major players here, and that Bill Gross I believe still has a large amount of his personal money in these, having ridden them all they way down.

http://tinyurl.com/59pg8z

I was using these for several years, up until the spring of 2007, as an
alternative to money market funds, as they pay around 10% and have better
security than corporate bonds.
They are generally a buy when short term interest rates are stable or
preferably moving up, and especially (from an international point of view)
if the USD is also.
Assuming corporate defaults are under control of course.

Looking at the charts, I don't think they are a buy yet, at the very least
the NAVs should be firming (they are instead collapsing).
And I am not at all convinced that the USD has bottomed, and who knows what
interest rates might really do near term.

Is a gold breakout about to happen,or is it too early? That tic data was horrendous yesterday

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2984294

On banks and broker safety,how about Scotiabank in Canada, are they safe or are any banks safe at this point?

I spoke with a r.e. friend of mine in toronto whow had no worries whatsoever about the financial system. Now that really scared me.

Here is a similar chart over the NAVs of some CEFs investing in preferreds & convertibles.

http://tinyurl.com/6p4kqx

these were hit hard by Paulson's default on the GSEs preferreds.

they as you can see are still cratering.

coming soon to a market near you?
this bears closer study.

perhaps Gazprom & Lukoil might be a good speculative buy here, via options I mean.

The banks are a big no-no, as I recall Sberbank is not even a "state bank" as is generally believed, rather a collection of regionally owned banks with murky ownership.

Perhaps Vadym knows something useful here?

Russian bourses halt trading for second day

http://tinyurl.com/66ktlv

Russia’s two main bourses, RTS and MICEX, said on Wednesday they were suspending trade until further notice from the state’s main market regulator as shares continued to tumble one day after their steepest decline in more than a decade.

Russian stocks had continued to slide on Wednesday morning even as the government unveiled new anti-crisis measures to pump up to $29.5bn in extra budget funds into the three main state-controlled banks.

. . .
In a sign of how the liquidity crunch in Russia is exacerbating the problem on local bourses, Russian depositary receipts traded in London were up on Wednesday morning. ”They have access to funding,” Mr Nash said.

IRX at 2, down 76%?

*TREASURY 3-MONTH BILL RATES DROP TO LOWEST SINCE AT LEAST 1954

pappdjavul,

no, sorry. I stay away from that market and do not intend to change this position in the next 15,000 years or so.

TED SPREAD WIDENS 64 BPS TO 283 BPS, HIGHEST SINCE OCT. 1987. TED spread is now calculated as the difference between the three month T-bill interest rate and three month LIBOR. The TED spread is a measure of liquidity and shows the degree to which banks are willing to lend money to one another.

MMmmmmm...ESLR two upgrades this morning...Is that a sell signal????

Vadym,

dobroe utro,

I understand, and I think you're correct. Things will likely get exciting enough anyway, no need to seek out the extremes currently.

Jock,

I know you are right about white collar crime. The worst part of it is the ignorance and even complicity on the part of our elected representatives and even more so the control having been passed to those appointed figures over whose actions we have no recourse.

I am concerned partly because for the first time in my life I have grave doubts about both my wife and myself being able to avoid what I see happening to friends slightly older than my 71 years. Medical bills and RXs, nursing homes — and over the past 10 or 15 years — a continuing fall in their savings, investments and purchasing power.

I have a list of 57 individuals who, while in (what used to be) their prime earning years, have lost their jobs, their businesses or at the very least their health insurance. (My one and only claim — cataract surgery — cost me $12,500 of $14,000 and then my premium went up 457% within 3 years!) I'm lucky to be able to get my meds through the VA.

The exporting of jobs has cost our younger son 2 jobs so far and a reduction in income to less than one half what he earned in the early 1990s. The other is likely to lose his job to India.

Where the hell is our representation in ay of this?

People under the age of fifty do not know what living well is for the average American citizen. This includes minorities who were among the first to lose those manufacturing jobs which ushered them into the middle class.

If this were 1775, I'd be hosting a Tea Party and carrying a bucket of tar!