Bill

Any comment on Merrill Lynch's economist David Rosenberg statement [very end]?

“If we get a resolution trust type of repository for the bad debts and an infusion of taxpayer capital into the banking system that will be good news in terms of establishing a real framework for tackling the credit collapse rather than a hodge-podge of patchwork reactionary policies — which seem to backfire,” he writes in a note to clients today.

“But also keep in mind, for all the bottom pickers out there, that the RTC was established in 1989, but it still took a year for the stock market to bottom, two years for the economy to bottom, and three years for the housing market to bottom.”

i like Vad's scenario as a working model...the flip side, of course, is that you can be buying while the plan is in doubt, sell on the announcement, buy again on the shake-out, and be sitting in the catbird seat as the rocket finally lifts off, leaving the spectators behind...

I have the deepest of respect for Mr Cara's remarkable market-timing, and his selflessness to impart his knowledge.

On his call for a new bull market, I feel very conflicted as I cannot reconcile how this is possible in the face of the coming recession and future declining corporate earnings.

More importantly, I've closely followed the work of Mr Bob Hoye who I hold in equally high regards as Mr Cara.

http://tinyurl.com/4ns34b

"This season of "immediate financial disorder" has been likely to run into late October. Typically, post-bubble contractions suffer heavy liquidation in the fall with severe hits into late October. Also typically, the initial relief pop can be tested in November.

Often, a hard stock market decline can run for 55 trading days and, using the Nasdaq, this counts out to late October. There can be some interesting swings on the way. Once this selling phase is exhausted the market could rebound into the first quarter. It could be a tradable rally within a cyclical bear market."

I believe a market bottom is coming. Just not quite now...

That's the plan, 2nd... if that scenario materializes of course

here is what NYT says Paulson will say:In his prepared testimony, Mr. Paulson sought to underscore the huge risks to everyday Americans. “The market turmoil we are experiencing today poses great risk to U.S. taxpayers,” Mr. Paulson plans to testify. “When the financial system doesn’t work as it should, Americans’ personal savings, and the ability of consumers and business to finance spending, investment and job creation are threatened.”
I guess he means that without the bailout that liquidity will remain tight for individuals, investors and businesses. But couldn't the markets work this out without the bailout even though it may take significant time? what is the short to intermediate term risk other than lower equity prices?

Vorlon- keep in mind the market is a leading indicator...the recession is now, which the market began to correctly discount a year ago...and of course the beginning of the 1982 bull market began with interest rates in the teens and corporate profits that likely continued to decline even as the market began to climb...

RSOTT,
If the problem was only liquidity, the injections of billions into the banking system would have worked. They have intentionally avoided using the term "insolvency" but as Kaimu has often said, that is really the main issue. The market deals with insolvency by allowing a company to go bankrupt, having creditors take losses and selling off assets. It is the fear of insolvency that is preventing banks from lending to each other and to anyone else.

The TED spread was as low as 1.89 last night (still high) but is now back at 2.36. The credit markets are still in crisis mode.

put another way, the smart money leads the market down, and leads the market up...those holders were the ones selling last october, driving the market down...and they'll likely be the ones buying now, driving the market up..

Vadym Graifer

I just checked out your plan for the process of bottoming of market. Brilliant! Step 3 & 4 really makes alot of sense to me especially with what I have been reading else where.

(follow the guy in the BMW, not the guy in the 1981 Tercel- as admirably frugal as he may be)..

(or as they say in any sport- go to where the ball is going, not to where it is)

Vad,

Thanks for your view of the near term Markets. Like 2nd, I think it sounds right.

Really appreciate your input on the site.

Regards

Interesting to me the groups that Bill feels will be the leaders of the next bull move, particularly the utilities.

I've been operating under the premise that interest rates will rise over the next few years, and that would in turn would not be good for the utilities.

Maybe rates will rise but not as soon as I expect. Many things to consider ...

[Bill Cara note:

Many of the Utilities trade inside Energy sector ETF's because of the nature of their businesses. Next, the market is a leading indicator, and I think that a couple trillion dollars injected into the US economy will boost the economy so that greater incomes by businesses and consumers will lead to greater pricing power of the Utilities. Interest rates will rise, but that rise will lag economic growth or else this rescue package will fail. Job #1 is to stop foreclosures, and so the authorities will keep rates down. This package from Paulson is a good one in that he is using reflation to inject liquidity into banks that will keep mortgage rates low in order to keep good business on the books as mortgages come due for rollover. Capital will be made available by the banks to buyers of homes, which will firm up prices and lower the inventory overhang. These homeowners are subscribers to the Utilities. So, more customers, and more pricing power. The downside is that Utilities hold bonds as investments, and the value of their portfolios will sink as rates rise. So, if Utilities may be of interest, you need to find the ones that don't need to refinance any time soon, and can sell bond investments if necessary. A proper study requires looking into the type of utility: gas, electric, nuclear power or mixture, and whether a user of coal, hydro, etc. You need to look at the dividend and payout and financial strength. But at the end of the day there will be traders who want Utilities and I feel they are in better shape than the banks and insurance companies that bought the high-yield real-estate loan syndications and thought they were protecting themselves with credit swaps, etc. Usually, a Bear ends after interest rates have peaked and start falling. The Utilities perk up first, followed by the Financials. This market is different because of the toxicity within banks.]

make that "is NOW"

FRE/FNM back to 1-handles...

Nice gap up this morning on MAG.TO - I took profits on part of my position at $6.20 CAD and will look to reload on a dip.

not sure why i passed on UAUA yesterday...

Freddy up 38%...

2nd - Back even on my FRE, I'm glad you held..

USD up 2.5%...

(that was USD as in ultra-semis, although i'm sure the $USD is up also)

CP- that's right..you were going meet me at 1.20, and here we are...

really speechless. i cant believe the tax payer will end up with the burden. i should show up to John Thain's mansion and act like i own the joint.

scaling back into 20% positions in QLD and CAF..

Cara 100 Update:

GRMN - Target Price Lowered from $42 to $40 @ RBC

Market bottoming

I remember a while ago I read a comment from Vad, saying the harder the government tries to intervene, the longer and more painful this bottoming process will be.

I forgot if Bill have made similar comments.

It seems that we are bottoming, but the timing of the rally is hard to tell because of all the intervention.

From this point of view, perhaps the rally will come after 10/2, when bailout plan is laid out and short sell rule is removed.

[Bill Cara note:

Yes, I think there is a lot of hedge fund closings and sell-offs of positions for the end of Q3. Why would a financials-related hedge fund continue if the authorities no longer will permit them to sell short against what they go long? Answer: many won't! A lot of this selling, then, will end at the end of the month.]

DELL- i've been waiting for DELL to show its hand...taking a LT position here at 1712, hoping to at least see the mid-twenties by next year...

I don't like to see a rally in the first 30 minutes if I want to be long. Amateur half hour. JMO

With the volatility in the markets these days. Would a regular "Stop" be better than a "Stop Limit"?

Senator Richard Shelby is ripping into the plan. good for him. there is hope afterall. being televised now.

2nd
thinking about unloading all I btought yesterday
all together they are up enough?

Babybear (gosh, what a nick :),

this is highly fluid situation... interventions we discussed at that point were all those tweaks they tried - adding liquidity, saving this, banning that... Such drastic surgery as currently discussed plan is in a bit different category in a sense of how it impacts the bottoming process.

Thanks for the feedback Vad. I got your book, and Bill's book and I am reading it.

btw, can anyone please tell where to find Vad's bottoming plan as many referred to?

Thanks.

2nd, I've been thinking the same thing with DELL. I took an LT position a bit earlier at 17.75!

Took the freddie ride but I botched the trade. I bought a little early and took a stopout, thereby eating into my profits on the upmove which I bought back into. Bad execution.

"Kraft Foods is profiled by Value Line as the largest branded food and beverage company headquartered in the US and second largest worldwide." (today's Cara daily report)

Isn't NSRGY (U.S.) the largest worldwide? If it were a Cara stock, it would be a buy. (3 days ago)

RSI D 37.37
RSI W 9.63
RSI M 20.16

"Around the country [China] milk powder is being withdrawn from the shelves, leaving, as one Western expert on China's dairy industry puts it, "not much but Nestle," a Swiss group whose milk powder is not implicated in the scandal." [the Economist, 9/20-26/08, p58]

BB,

http://tinyurl.com/3pzkkj

Lots of talk about reinstating the uptick rule. Does anyone remember why the SEC dropped the uptick rule last year? Have they indicated why they haven't reinstated it along with the shorting restrictions?

Ouch... I am sorry for the long link...

babybear -

"btw, can anyone please tell where to find Vad's bottoming plan as many referred to?"

In Vad's book, there isn't a specific topic on the "bottoming process". But, I would start Chp 9 on accumulation and distribution. Vad's done a great job in describing market cycle/mood, beyond the ticks and trend. If you find otherwise, please let me know.

Re: Junior Golds

Cogent article in the National Post:

http://tinyurl.com/4r4njs

babybear:
Vad posted the following this morning on yesterday's page:
Gotta throw my 2 cents in the discussion of "bottom-no bottom".

I believe the market is working the process of bottoming these days. Bottom, however, is a process rather than event, right? In last week's explosion market kind of showed its hand - made it too obvious that rescue plan is what it wants to put the bottom in and reverse. Things can't be that obvious and easy - market is always trying to go with as few people on board as possible. When I ask myself "if I were a market, what would I do to fool those who decided they figured me out?", my scenario comes out as following:

1. While the rescue plan is being discussed, retreat and plant as much doubt as possible
2. When the plan is adopted, spike briefly luring "reflexive players" in
3. Drop sharply, possible making new low, shake out hopefuls as violently and rudely as possible
4. Rally from there as fast as posssible, leaving new believers minimal chance for entry and make them chase.
5. Now that credit crisis ceased to be THE worry, start looking for new worries or recycling old ones (USD, oil etc), but do it in a context of new bull market.

If it sounds a bit wierd to talk about market as an entity with its plans and thoughts... well, it is, but if you look at it the market as a conglomerate of participants' thoughts and emotions, it helps decipher its messages.

All above is my working assumption - kind of framework that I, as a short term trader, try to assign to Bill's bottom call

Posted by: Vadym Graifer at September 23, 2008 8:29 AM [link]

Bill,
You say that the GE model has failed, so do you think it will still participate in the new bull market?

freddie aint done either

SIL a rocket again today.

Chuck Schumer just spoke as well. he wants to make sure the tax payer comes before the bond holders, ceo's and executives, etc.

that would be a 1st in history.

Paulson's plan is called TARP "troubled asset relief program." Schumer wants to make changes and also add THORP (Tax payers, Homeowners, Oversight, Regulation)

Who will get the signage contract to change out WaMu's signs to either Goldman Sachs or Morgan Stanley? Why keep Wall Street in NY when they can be right in your neighborhood.

Well then, I guess the phrase "socialism for the rich, capitalism for the poor" will come in quite handy these days.

Bill

Do you think this has any merit?

Mike Morgan's Quick Notes
- Behind Enemy Lines -

This is an ominous warning from Marc Faber, who is not often wrong:

"The next emergency measure will be that Americans are not allowed to buy foreign currency and transfer money overseas, and the next measure will be not permitting Americans to buy gold and so on and so fort . . . It creates even more uncertainty in the market place when you continually change the rules,"

Marc Faber

[Bill Cara note:

I think Marc Faber is remarkably good, and he's an excellent communicator, very popular with the media because he gives great quotes. This is one of them. What he is saying here, I think, is if the measures being put in place today fail, which being open-ended will likely cost several trillion dollars at that point, the US monetary authorities would have no option but to control USD and possibly gold trading so as to effect a total collapse. I think if gold trading is controlled by the Fed in that event, which would be to halt purchases and sales, they would also most likely force US financial institutions to take control of client gold holdings in those institutions. These steps are possible, but at this point not likely. That could change.]

unless you're a trader, it ultimately doesn't really matter if you buy today or next month...on top of that if we end up in a range-bound market for the next few years, you could simply board the commuter trains when they stop at your station- be RSI Daily, Weekly, or Monthly...

bsi- that's true, but i've seen a few amateur basketball players that could shut down pro players, and that may be true in the trading game as well..(especially in 2008)...

be IT the RSI Daily, Weekly, or Monthly..

Jumped back on freddie did good

vinod- all i can say is you've done well...i'm sticking with my buys for now (of course, i'm far from being fully loaded..not sure what your exposure is right now)...

I thought that I would point out if the derivatives market finally collapses completely in the U.S., but remains alive in Canada, you can always find ETFs actively traded under Horizon Beta Pro or iShares products. But who knows? If derivatives finally shut down, then it would take just about everything with it.

Thanks a ton, Vad and bobj!

Talk about a balancing act by the windbag politicians - they owe their souls to the HB&Bs but the steamed taxpayers are ready to push them off the high wire... I'd beat on the politicians siding with the Paulson and the HB&Bs in a day or two after some grandstanding and posturing for the benefit of us little people.

Cara 100 update (Final):

GRMN - Coverage Initiated @ Global Crown Capital with an Underweight Rating - Target Price $27

yowza...ive been long both freddie and fannie today...good day.

PM article from today, I found somewhat interesting http://tinyurl.com/4r4njs

[Bill Cara note:

Please use TinyURL. I don't have the personal time to be your Administrative Assistant in changing these long links, which screw up browsers. Thank you.]

I found out what accounted for the huge volume on MAG.TO yesterday from this release by Fresnillo PLC (FRES.L)........very interesting:

"Toronto, London, Mexico City: Fresnillo plc, the world's largest primary silver producer, announces that on 22 September it acquired 5 million common shares of MAG Silver Corp (TSX: MAG, AMEX: MVG) ("MAG Silver") through the facilities of the Toronto Stock Exchange at a price of $5.31 Canadian dollars per share. These shares, together with shares already owned by Fresnillo plc and its affiliate Peñoles, total 7,233,593 common shares, and represent approximately 14.7% of MAG Silver's common shares outstanding, based on MAG Silver's public disclosure. Depending on market conditions, Fresnillo plc intends to continue to acquire additional MAG Silver common shares."

http://tinyurl.com/4dbmh6

I knew these little dogs could still hunt...

2nd,

U have to go with the probabilities. In the case of DJIA last Friday, it opened up 400 pts in the first 15 minutes. The average daily move at that point was something under 300 pts. It was up 20 pts in the last hour.

Yesterday DJIA was down 110 in the first half hour and down 114 in the last hour.

The guys trading in that last hour have to make up their mind to buy, sell, or take the position home.

We'll know in the fullness of time.

bsi- what i meant was, the first half hour is a good time to fade the crowd, buying the gap down or selling into the gap up...vinod and i sold (partial positions in) QLD/UYG either pre-market or at the open for prices unattainable at any other time during the day...

JohnE thanks for the link. As courtesy, please use Tinyurl to shrink the link so this page stays in readable format

if you want to watch the capital hill in session here is link.

http://tinyurl.com/5dsokw

JohnE, as was done by Fran6 at 10.08am linking same article

CEF is now down 12.4% versus 0.7% for GLD and 1.3% for SLV. This is equally weighted between gold and silver. It seems to drop whenever they announce that new shares (non-dilutive) will be issued. A good portion the premium to NAV is removed at this price. There do not appear to be potential conflict of interest issues with CEF like there are with GLD/SLV. Scaling in for a long term hold.

above post refers to last friday..

2nd,

totally agree.

To paraphrase P.J. O'Rourke, "Giving power and a blank check to Alan Paulson is like giving whiskey and car keys to teenage boys."

2nd
sold QLD/USD in morning will reload later on also brought CARA 100 stock MBT 200 at 60.00

Photogray - Will do. Now i have to learn how to do that.

http://tinyurl.com/3wg48p

markets turning down. maybe the interpretation is that the check wont be cut by this friday.

BH- actually, it's more like giving Paulson the OK to hand over the car keys/alcohol...he'll be first on the scene when they call it in...

2nd, RSOTT,

2nd —It sounds like you are saying, "If you can't lick them, join them."

If I were to follow the guy in the BMW, it would be to run the SOB into a ditch.

Paulson's "concern" for the taxpayer is pure BS and we all know it.

I'm with RSOTT on this. Let the market work it out. Anyone who buys a grab bag should live with what turned out to be in it. That's how we all learn to avoid it.

So what if banks can't lend? it wouldn't be long before people learned which ones were worth their trust.

So what if people can't borrow? Let them learn to live within their means.

This applies to individuals, corporations and nations.

This is just another "media event" of The Sky is falling!

It looks to me as if the two parties for the most part have become one. They take care of each other, corporate buddies and international partners and to hell with the ordinary people. We are now a country with a self-made aristocracy.

It makes little difference if it was planned or came about by virtue of the fact that a candidate must please all the special interest groups, or at least not offend the important ones. This way they all eventually become members of the same bland, do-nothing club.

MAG.TO - I let some of this go WAY too early today......Fresnillo PLC is up a cool 25% or $6.5m CAD on there purchase yesterday, now that is some ROE

Paulson's plan is called TARP "troubled asset relief program." Schumer wants to make changes and also add THORP (Tax payers, Homeowners, Oversight, Regulation)

More like Troubled Rat's Asset Protection or TRAP.

Commercial Recovery Assistance Program

I guess negotiations are not going so well in DC. TRIN is exploding.

There is a very cogent discussion of where we are economically here from a finance pro:

http://tinyurl.com/4yqv29

Essentially, confidence in the dollar is key to the bailout. If it is lost, the bailout will not work and we will be at the mercy of foreign creditors.

Hello community! As promised, I’m writing a brief summary on Acadian Mining:

Last week I had the pleasure of meeting with the Chief Operating Officer for Acadian Mining (ADA.TO), Bill Rogers. This company’s head office is in Halifax, Nova Scotia. They have an operating open pit zinc lead mine (Scotia Mine), five advanced gold properties and one barite fluorite property all within the province of Nova Scotia. As well, they are part owners of Royal Roads Corp which have three zinc lead silver copper gold properties in the province of Newfoundland. They have established cash flow with no debt.

Several months ago, the company direction was to spin off the gold properties and raise capital in the market to get the projects off the ground (old mines that need to be pumped out, re-habbed and definition drilling completed). This plan was scrapped due to the difficulty of a junior miner raising capital at the time. The management team has not ruled out the possibility of spinning off their gold properties in the future. The only other way to get their gold properties off the ground (besides debt financing) is to rely on the cash flow generated from their zinc/lead open pit which is making money and will continue to do so if zinc stays above (approximately) 65 cents. Can someone close to the base metal markets please comment on the price outlook of zinc? We are all very aware of the price outlook of gold.

They experienced a production set back in this pit this last quarter. They lost a bearing on the mill which was unexpected and had to shut down due to record rainfalls in August. Even with these setbacks, they are confident that they will make their quarter’s production commitments and I’m in full agreement that they will do so. Thus far, they have a very good track record of over-producing from this pit, so they should be able to make up the production interruptions. Unfortunately due to time constraints (I was on vacation…) I was not able to tour or to speak to management at the mine site but know some of the engineering staff.

The upside of this junior will be in the ability to generate enough cash by themselves that they can begin to develop their gold properties, starting with Beaver Dam, followed by Tangiers (I think). Beaver Dam is open-pitable with an underground option. The neat idea here: this is where the central processing plant will be set-up. The following gold projects that are developed will be mines only, and the ore will be trucked to this central facility for processing. The metallurgy should be very similar so the central mill will work for the different ore streams. This is a neat idea and saves relatively huge capital expenditures and life long operating costs.

One item that I quizzed Bill Rogers on was the ability, or inability, of the company to generate cash in the market when the CEO has the name of Will Felderhof (the brother of John Felderhof: Bre-x). The reply was: There is certainly some difficulty due to the last name, but the CEO is a genuine guy that has already raised 50M in capital for the company, but no doubt the name does hinder the company to some degree. The more people deal with Will (the CEO) the more respect and trust he gains.

I was impressed with the honest and open answer. As Bill Cara has said before – those in the mining business tend to be very honest open, and very real people trying their best in a very tough industry. The COO – Bill Rogers is just that, a mine operator not a businessman. There is a difference IMO.

My take on this junior is positive IF the base metal market rises which would mean a sustainable cash flow to develop their gold properties. This would alleviate the necessity to raise capital through the market or take on debt. Their permitting is almost entirely in place and the relationship with the local government is excellent. Nova Scotia has a rich mining history and there are plenty of miners working around the world that would jump at the chance to ‘go back home to work’. I’m one of them.

Full disclosure: I own no position with the company and will answer any questions the community has at: rugger09 [at] hotmail.

Cheers

Shannon

long ANF at 41.91. In accumulation zone (Triple RSI)

Also saw a divergence on hourly MACD.

that was an invigorating upmove in fannie/freddie. kind of like a rubdown from a tag team of supermodels. anyone else get involved?

Taxpayers Under Rigorous Dominance

Rome's burning

SNDK just took a big gap down.

I am taking my foot off of the gas as far as the PMs go. A lot of resistance in this area and seems like we are doing some "evening out" on the charts here. Of course I won't rule out a continuation of the current run but I think we will see a nice retest of $850-65 on gold.

Every good bottom/reversal has its sharp pullback at some point to bring in some more doubt as to direction - I'll be there waiting.

With that said - I really like some of the action in the junior explorers I've seen lately - specifically some heightened volume. Recently nibbled on GIX.V / LAM.TO as I think downside risk is minimal at these levels.

From: Jesse's Café Américain

Analyst Whitney sees "little hope" from bailout plan
Tue Sep 23, 2008 8:42am EDT

Sept 23 (Reuters) - The credit crisis that began last summer has intensified so much that any U.S. government bailout plan has "little hope" of improving core fundamentals over the near and medium term, said analyst Meredith Whitney, who expects the country's GDP to take a hit from likely moves by state governments to cut costs.

The Oppenheimer & Co analyst cut her outlook on U.S. banks and expects further dividend cuts and capital raises.

Whitney also said home prices were not close to bottoming and expects prices to ultimately be at least 25 percent lower from current levels. She expects homeownership rate to decline further.

The analyst also noted that unemployment was up over 40 percent year-on-year in key states, and said unemployment is "headed materially higher."

Given that over 12 percent of the U.S. GDP is driven by state and local government spending, and with many key states' 2009 budgets being under-funded, governments will be forced to cut costs and this will weigh significantly on GDP, Whitney said.

"Credit market disruption has had underappreciated consequences on the economy... A virtual suction of liquidity has occurred in the credit and lending markets, and consumer and corporate credit is already showing the effects," Whitney wrote in a note to clients.

"Since the onset of the credit crisis, over $2 trillion less liquidity has flown through the U.S. domestic capital markets than during the same time period a year prior," she added.

Q3 OUTLOOK

Analyst Whitney forecast a third-quarter loss of 36 cents a share for Citigroup Inc. She had a prior profit view of 8 cents a share.

Whitney widened her third-quarter loss forecast for Wachovia Corp to 31 cents a share from 15 cents.

She cut third-quarter earnings estimates for Bank of America Corp to 40 cents a share from 75 cents, for JPMorgan Chase & Co to 21 cents a share from 40 cents a share, and for Wells Fargo & Co to 13 cents a share from 17 cents.

. (Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)

Thanks C3

I am kinda on the fence whether we are within the 10k-15k range or do we fall too a level of 8.3k or less and work our way back up...

As of late last week I am now about as long as I am short with stocks...

However, I am long (pretty heavy) precious metals and short low yield bonds...

I am far more interested in my precious metal/bond position than I am the stock positions and I am curious as to the communities thoughts on precious metals if the market goes up to 13-15k over the next couple years and also what they think of the price of precious metals if it drops further.

re:SIL. Full disclosure. Long and carried it like an anchor forever.

wow, volume is double.

long DXD @ 64.29

Is the P/E on SIL correct.....(.76)??

Long term/intermediate trader;
In step with Vad's Plan, one could place a large percentage of their funds in the Dodge & Cox Value Fund, now open to new investors, on Vad's final shake down, if one is not interested in picking their own portfolio. Many that read this site I believe do not have the time to do the DD and would be better served to enter one of the best value funds available.

Schleppy - If you can believe the earnings it is.
bv on both SIL and AUY is attractive IMO.

FWIW:

SIL, 50 day ma is at 3.75.

re CEF, it seems to have a nasty habit of producing new shares just before an intermediate top in gold. Not every time, but often enough. Of course I suppose that means the management knows what it is doing? (no position)

Is UDN worth a buy at 28?

CEF tends to issue shares once the premium becomes excessive: more than 20%.

Grym- depends on what your goal is...if you want to make money, follow the Beemer...if you want to hurt someone, run it off the road...

CEF- anyone think this would be a decent proxy for GLD/SLV, and represents a bargain at this level?

Anybody know how Northgate Minerals, NXG on the Amex, shapes up as a company? Thank you.

oil keeps dropping, now 105/106 +/-

CEF:

It simply holds in vaults in Canada 50% silver bullion and 50% gold bullion.

Is it a bargain? Well that depends on your outlook for gold. In the past, this type of offerings has been attractive entries

Swedish Financial Inspection has said that there is currently no need to restrict short selling - but they coukd quickly if some reason arose.

No international financials trade on the Swedish bourse, but several big multinational partly Swedish companies could conceivably be short selling targets. AZN, ABB come to mind.

Rumour has it that the extra treasuries auctioned off by the Swedish Debt Office were to help Swedbank, which is rumoured to soon be in need of more capital. One of the best Swedish analysts predicted several years ago that Swedbank would eventually become insolvent and have to be taken over by the government. But the Swedes will not bail out the share or bond holders, they didn't back in the early nineties either, and the same man is still head of the Riksbank.

Bought SKYW @$17.75

2nd: I prefer CEF because there is less counterparty risk, with JPM and other banks being counterparties, and I can understand the prospectus. I can't say that I can fully understand the one from GLD/SLV with sponsors, trustees and sub-trustees, some of whom may have interests which are not aligned with mine. Also, CEF specifically states that they cannot loan metal. The downside is that it usually trades at a high premium to NAV. Today, with the issuance of new shares (that are said to be non-dilutive), much of this premium is removed.

Sil: Short term the 50 dma acted as resistance.

This stock has a history of out of the blue rises of 50% or more. One around 2/6/06 and another around 3/20/07. I was fortunate to be long both times, but have not participated in Sil since the May 07.

I guess what I’m trying to point out to longs is to consider selling the spike and
re-access. Good luck.

WJA-T

Last week I noted my interest in WestJet Airlines, saying I believed the market knockdown and oil price strength would push the stock price down to where it formed a double bottom. I think that's happening now, so for what it's worth, I've started accummulating shares around $12.25. If a new bull is soon to emerge and if oil prices subside for lack of any more fear mongering, I'm liking this as a growth stock.

Debate welcome. (I'll even accept being called a knife-catcher, given the short-term chart!)

Sen. Schumer asked Paulson about approving "just" $150 billion for now instead of the entire estimated need of $700 billion and approve further amounts as the deal moves forward.

Paulson said they need it all right now to ensure "market confidence".

This is just utter silliness; a travesty. A rape of the U.S. taxpayer, front and center on visible for all to see on cable TV, IMO.

ptofits from trades with CEF are taxed as equities in the US I believe, whereas GLD & SLV are "collectibles"?
That I think is one reason for the premium.

I don't know about following the beemer....the guy may be *just* making the interest payments!

For those questioning Bill's Bull call, look around. There are several good reasons.

1. Stock market crisis news ubiquitous. On every station, newspaper, magazine, comedy show.
The sky is falling everywhere.
2. Negative sentiment. Most negative since 9/11.
This is backed up by the charts.
3. $700 BILLION bank bailout. (In addition to the previous stimulus which we all know went right to bank bottom lines).
4. The precident for rescuing banks is now well established so you can bet on it continuing once they throw good money after bad.

rugger,

Appreciated the write up on Acadian Mining Corp, I like to riverboat gamble as much as the rest of them. Although, when I took a look through their home page, I noticed quite large shareholder dilution for a junior mining company? 171 million with their numbers(oz's), I don't see much, if any upside here? Shareholder dilution is almost as bad as ECU Silver(263M FD).

Some comparisons. Exeter Resources(50m), Geologix(58m), Great Panther Resources(88m). First Majestic(91m)

Best,

The CoinGuy

Select the correct answer to the following question:

Q: Why would Alan Paulson leave a 40 million dollar a year job to become U.S. Treasury Secretary?

A: a) to serve the U.S. Taxpayer
b) blank check

Paulson could easily fit the role of 'Big Brother.' W must be a little uncomfortable with that.

go.a.to
Oil stock to put on watch list with Hruska's picks as takeover candidate. Juicy production. Down more than 50%off highs

CoinGuy, thanks for the feedback. Yes, very high dilution. For me, I'm a rookie when it comes to the investing side of the 'coin'.

Could you take a few minutes and explain what shareholder dilution is and how it is detrimental to an investor's choice of stocks to own. There may be a few other rookies out there that would benefit as well.

Cheers

Re: Share Dilution vs. Market Cap

In the junior mining sector, you have plenty of companies that resorted to the ATM to fund their continued development. A small float means sharp price rises on any bit of news in a favourable market, not whether there is any real prospect for development.

If there's a larger dilution, then you have to look at the market cap and the prospects for growth.

Its not going to be a 'no brainer' going forward.

Rugger - Great writeup on Acadian

Kitco lists zinc price at .7949. Incredible that ADA would keep as CEO the brother of Bre-X' CEO.

If American, he'd start a "mining fraud detection" company, and be a regular talking head on CNBC.

Would anyone in the community have the skills to estimate what zinc price would be necessary for ADA to fund internally development of its gold properties?

Taking a bite of BEAV @$17

Central Fund of Canada Limited (est. 1961) is an exchange tradeable refined gold and silver bullion holding company. Class A Shares are qualified for inclusion in many North American regulated accounts. Bullion holdings are stored on an unencumbered, allocated, segregated and insured basis in the treasury vaults of a major Canadian bank and are audited semi-annually in the presence of Central Fund's auditors and bank representatives. Class A Shares are quoted on the AMEX, symbol CEF and the TSX, symbol CEF.A (Cdn.$) and CEF.U (U.S.$).

added to FXP position.

Sold SKYW

The "best and brightest" minds from Wall Street will assist Bernanke and Paulson value these distressed assets that the taxpayer is going to purchase from the financial institutions.

These are the same "brightest minds" that allegedly didn't see this coming months, and even years, in advance like many other "common people" (bloggers) foresaw.

I'm not really one to readily subscribe to the conspiracy theories floating all around out there, but it just seems like this was all planned in advance. How could these "brightest minds" not have seen this coming ?

And so when the whole financial system inevitably came to its knees, Paulson and Bernanke essentially tell Congress, "either give us the money in entirety or we're going to blow the whole thing up."

It's just so ridiculous.

[Bill Cara note:

They did see it coming. But Wall Street operates on a mind-set, with group-think. As long as everybody has bought into the program, right or wrong, they stick together, always believing they can front-run the public.

While at a high level conference of Citigroup, one of the speakers said to me that he was aware I had called a top of the real-estate market. We talked about the bursting of the debt bubble and what that would mean when it happened. He then asked rhetorically, "So what would the next bubble be to make that happen?" I said commodities, meaning oil and metals and precious metals, and he nodded complete agreement. I think that people fail to see these organizations as umbrellas of business, much like a beehive. Sure, there is a Queen bee in the form of the executive committee, but there are so many departments and sub-departments, all over the world, within these major companies. The staff is spread between front office (ie, client oriented), middle office (trading oriented) and back office (admin). People have a job to do each day. They are like worker bees. The front office (sales, research, corp finance, etc) establishes the mind-set, typically through people called investment strategists. And then the army moves accordingly. Not everybody in the army agrees with the leadership, but they buy into the program or else they leave. Take an institutional salesperson for example. If every time an analyst in the firm published a Strong Buy recommendation and that salesperson was telling the clients to sell, the records would quickly show that and the sales manager would soon drop by to ask what was going on. So the front-office moves in lock-step with the leadership whether they agree or not. It's like any army. In recent events, it was the leadership of HB&B that failed. I have published correspondence in this blog from Henry Paulson to his peers at other major broker-dealers. He was the commander-in-chief. If you don't understand that, then you may not have been reading this blog back in 2006. After he joined the White House in June 2006, he continued to pump his program to hype real-estate loan syndications as a way to keep the economy rolling and stave a Bear market that should have started 3Q06. So Paulson gave it to you all from both ends and now Congress has to stomach his bail-out plan. If you poll Wall Street front-office people I think the majority would say they saw this coming. Why does everybody think that the Financials started sinking earlier and faster than the rest of the sectors? I was telling you at the time. That was your friendly advisors selling their positions in their employers' company shares. That's why I have been on Paulson's case for 18 months. The man should be impeached. Bernanke and Cox are not the problem, although they are problematic in many ways. Congress also is supposed to have the brightest minds, but in the testimony today they are blaming the monetary authorities for not telling them the truth. That's a laugh. Do you recall my words after the Bear Stearns fiasco testimony. Nobody wanted to ask a serious question except for Rep. Ron Paul and Sen. Bunning and a couple others. I wrote they were lobbying softballs to Chris Cox: "Mr. Cox, what city are we in? How many fingers am I holding up? And instead of standing on his chair and screaming about the problems we all saw, he gave the Congressional committee just what they wanted to hear. If smart people don't want to do the job, or can't because they are beholden to special interests and employers, we get into problems, like today. As I say, this is all about conflict of interest.]

What happened to SLW today?

share dilution - please explain

Is there SO much difference between a junior having 10M shares out at 5.00 vrs 100M shares at .50?

If the average dollar trading volume in each case were the same as a % of float and of market cap, what's the difference?

added to DXD position.

Both FXP/DXD orders were set above resistance.

trailing 1.5*9 day ATR sell stop on SIL.

works out to 2.74

market rolling over & breaking yesterday's low during lunch hour is not bullish.

Rugger,

To put it simply, when a junior mining company is diluting their shares in excess, they are in essence diluting your interest in the companies future earning potential.

Even simpler, you can cut a pie into only so many pieces before it becomes a mess...

Best,

The CoinGuy

JMO. So much equivacating that I think the foreign mkts will sell off overnight.

SIL, the 50 dma has contained the price since 11/9/07, with the exception 7/31/07 four day break. Logical conclusion is until SIL convincingly breaks the 50 dma, the trend is down.

Long CEF it is a core holding that I sell rarely.

I wish I had bought MS 1st thing this morning. It's a one way street for now.

Re: Bond Yields

If we get another day of zero bond yields, then you can expect a very serious rally in gold prices:

http://finance.yahoo.com/bonds

FranSix - Thanks for the heads up and link.

Hard to model the utilities, they are a mixed bunch.

Most buy them for the dividends, so they correlate to bonds, but they also often follow the energy stocks. Like the tanker stocks, which theoretically should not, but usually do anyway. Some have been treated like "growth stocks" on occasion.

All in all I think they cannot but have a very tough time ahead. Not that many should go bust, but their dividends will be pinched from every side.

Kim -
That Marc Faber comment rings eerily close to Kaimu's predictions and musings of Gold assets being seized during the depression. History and cycles, history and cycles.

Jock,

Perhaps you we're a shareholder when the 100m share company you mentioned was sitting with 15 million shares outstanding and was trading at a dime?

Best,

The CoinGuy

Thought you all might enjoy this one

http://tinyurl.com/47dzbk

Mastercard video spoof on Lehman/Paulson etc...

Soros sold out his entire SIL position Q ending 6/31/08. Who knows what he is doing now. Soros was one of the original investors in this mine and held for years.

UUP/UDN appear to be a bit range bound, gold has reduced it's selloff for the moment.

bigboyz

Excellent!

:-)

CEG just gapped down

There's that lower oil I was looking for yesterday...

Re: OMG Bernanke

http://biz.yahoo.com/ap/080923/financial_meltdown.html

UYG down over 4%

These financial stock short sellers simply must be stopped.

Oh, wait a minute........

Bsi87 said, “trailing 1.5*9 day ATR sell stop on SIL.
works out to 2.74”

If you have time could you explain this concept. The average true range (ATR) on a daily set at inputs of 9, 9 is .6178. So (1.5*.6178=.93) what am I missing?

TIA

More bad news for GRMN (can't recall who was interested):

More challenges expected for GPS maker Garmin
MarketWatch Databased News - September 23, 2008 12:58PM EDT

SAN FRANCISCO (MarketWatch) - GPS device developer Garmin Ltd., which is already smarting from having to delay the release of its long-awaited touch-screen nuvifone until early 2009, is likely to face more business headwinds through the rest of the year due to weaker consumer spending in the U.S. and abroad, according to an industry analyst.

(Got this thru my broker, no link - sorry.)

looks to me like Act I of Vad's working model is playing out...

And the band played on..............

Congress is scrambling to pass the Pentagon budget, aid for flood and hurricane victims and $25 billion in loans for Detroit automakers in a late-session burst of activity that's flying under the radar compared with efforts to bail out Wall Street.........

http://tinyurl.com/4dmv5u

Re: Paulson

Just imagine this face on very large posters all over America as if he were Chairman Mao or somebody:

http://tinyurl.com/5yvevn

Your new leader.

Take note of Bill reply's to Kim's 10:17 post.

2nd - That was fun, let's run FRE up another 40% tomorrow, wadda ya say?

Drudge news site has an interesting, unexpected "ripple effect". It is reported that some fired workers from an auto part mfg plant clubbed the CEO to death.

I can remember here in the US when there was literally "blood in the streets". It ain't over til it's over, and CONgress will have to survive its home visits with voters. Could get interesting.

For anyone still awake and aware.

An 'exit tax' has already been imposed on Americans seeking to leave.

Good morning! Today is the first down day for my PM-heavy portfolio in a week... I am getting ready to buy ESLR again -- have a buy limit order at $5.50. On the fun side, the sell limit for FNM was hit at $1.40 for the shares I bought at $0.89. I decided not to wait until it gets in the teens, as I read several reports that suggested that both common and preferred shareholders of FNM/FRE will be eventually wiped out if the house prices continue to decline. It was just a gamble for me, to see how it feels in 2nd_ave's shoes. :) It felt OK, since my position size was relatively small -- slightly bigger than the options positions I usually open. But then, my percentage gain was also small, compared to the 300% gain on the ABK options position I closed yesterday.

Last night I got to reading John Hussman’s weekly letter that he posted on Monday. Here is an interesting excerpt from it:

“Moreover, we know from a long history of economic experience across countries that a major expansion of government liabilities is invariably followed by multi-year periods of extremely high inflation, particularly when it is not matched by a similar expansion of economic production. Such inflation would initially be modest because of the current weakness in the economy, but could pose unusual challenges to the United States in the coming years.”

This is another confirmation that investing in precious metals now is a pretty good idea. :)

David- you may not like walking in my shoes, b/c they're always uncomfortable...which, i guess, is the price one pays for playing against the grain...

[Bill Cara note:

As this testimony has gone on, especially with Sen. Bunning who did a surgical masterpiece on Paulson, I could see the equity market sink. I think there is a possibility that it could sell down hard here, maybe even testing 10000. That would also hurt PM stocks, even though PM bullion prices might lift. As I watched this morning, as soon as the regulators started saying that they would ensure good regulatory practices would stay on top of the Paulson Plan, I could see a strong lift. But after the Senators started asking questions, the market backed down. Then Sen. Bunning really laid it on Paulson. Clearly these people are not going to let him walk away from the White House in January with the taxpayer taking over syndicated credit card and auto loan debt and whole loans because they will still be in place to have to answer for the mess. So, unless there is a quick agreement, I think this market could turtle going into month-end.]

UYG - Sure is tempting to pick up some of this road kill... Might cause indigestion...

Re: OMG Paulson

http://tinyurl.com/3spya6

adding to DELL @ 16.50...

Bill,

Thanks for your comments on 2nd's 1:33 post.

I needed that advice....still holding massive amounts of QID.

Regards

[Bill Cara note:

If anybody can find a youtube post of the Howard Lutnick interview on Bloomberg TV at about 1:50pm today, please post it asap. Howard is CEO of Cantor Fitzgerald, and one of the smartest people on Wall Street. He explains why the Paulson Plan will be approved and why it's a good thing for the People, and (my words) as soon as the agreement is struck, there will be a massive rally -- but not in the Financials (or probably in the Consumer Discretionary sector where companies rely on loans from banks). But the big thing here is that Paulson has guaranteed (ie, the taxpayer has guaranteed) that no more banks or broker-dealers will fail and any of them that are selling bad assets to the govt will pay huge fees to govt in future years. This means that a failing bank will stay in business and the poor shareholders will get stuck with huge future dilution -- like AIG, which killed its stock, but the company remains in business. The intellectual property of these companies is what Paulson is saving. If you recall the Stelco bankruptcy; that was precisely the opposite. The bandit private equity guys from Brascan worked a deal with their boiught-and-paid for judge to steal that intellectual property and goodwill, which I say was a fraud. This Plan is a good one. The arguing by the Senators from this point on is all about their negotiating pork. I agree they have some points re Paulson and monitoring, etc., but what these negative senators want, in my view, are take-backs. I say that too many of these take-backs are what kills good legislation. I also agree that the Senators are legitimately concerned about their constituents' furor. So, there is a need to get something done quickly here. Meanwhile, as the market stays down at these levels, you will have time to buy new long positions in the stocks of the best quality companies. ]

Re: € bond yields

Euro bond yields finally dip:

http://www.ecb.int/stats/money/yc/html/index.en.html

turtle-mode it is, then...

Bill,

Great note up there Re the sworm of bees and the role of Paulson.

I am having a hard time believing what we are living.

Cheers!

[Bill Cara note:

Thanks maro. What is most interesting to me is that the public has a birds-eye view of crucially important matters. This type of stuff has always been decided in darkened boardrooms. Here it's right up front -- kind of like watching CNN coverage of Katrina, which exposed the raw underbelly of America's theretofor hiding of its poverty. That session today was the best Congressional testimony I have ever seen. There were very few softballs. Both sides were fighting because what's at stake is huge.]

2nd,

I guess it depends on whether making money is primary or seeking justice. (The run off was hyperbole, of course.)

I'm with Bill on avoiding tobacco investing and funding these financial pirates.

everyman - Thanks on the GARMN info. I have 10 calls. Amazingly GRMN has been up a little today.

I've been trying to send Sen. Jim Bunning a message, to thank him for his handling of King Henry, but his server is overloaded.

Must be a lot of Americans who appreciated his efforts.

Grym- understood...i was just making a joke..;)

I just called my US Congress persons and senators. I was on hold for awhile but finally got through.

I would love to be able to sit in front of a banker while applying for (demanding) a loan, and when he asked me how much I think I'll need for my venture, I could respond, "I really don't know."

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson
Lagos, Nigeria

Well, there certainly is a case to be made for American realpolitik should the bailout not proceed.

Somebody tell me why I'm still holding GE?

Like I said, I get these Nigeria messages every day. :)

im wondering how the asian and london markets will digest today's events in terms of gold.

i wonder if there may be a sudden jump in the price overnight while they smell panic, leading to a dramatic follow through tomorow, or if gold bases around this level until the full weight of this plan is sussed out.

im starting to wonder if it will be asian buying of gold that may spark any sudden surges in the price at some point in the future.

is this just tin-foil hat talk? imho, i dont know.

From:
Mike Morgan's Quick Notes
- Behind Enemy Lines -

Three Cheers for Senator Bunning - Senator Bunning finally asked the hard questions . . . and he pointed out that Paulson was at the helm of the creation of this entire mess. I can't say enough about Senator Bunning, but I encourage you to email him or fax him with your applause and appreciation. I will have a full discussion of today's hearing and market activity on our Client Call this evening. Below are links to Senator Bunning's contact page and a link to purchase access to our Client Call this evening. It starts at 9:30PM Eastern, and these calls usually run three hours long.

Thank Senator Bunning - It will only take a few seconds.

http://tinyurl.com/2lvku9

I am looking at buying GE, but I am going to wait to around $22 if I get the chance.

I just sold DXD @ $66.40 that I bought Thursday/Friday of last week.

Always great reading Bill Cara's comments as the action unfolds.

wavesmash- the (real-life) nigerian scams WORK, which is why the keep playing them (i first heard about them incidentally last summer when i was reading books about unrelated subjects [HIV, oil] based in Saharan/sub-Saharan Africa)...

Why do you guys waste time with Nigeria... folks from Ivory Coast are much more generous, I got way better offers from them. So generous, I donated all my nigerian and UK lottery money, now just need to go to Ivory Coast and collect multple inheritances, contract money etc etc.

Vad- it's b/c Nigerians don't like violence, they prefer to talk you out of it...gets a little rougher on the Ivory Coast..

Bill, excellent summary of what's happening behind the curtain in addition at 12:44 pm, thank you. Gives an insight into how such a massive failure can occur in plain sight.

LOL................

"I nationalize strategic companies and get criticized,but when Bush does
it, it's OK," Chavez said on weekly television program Sept. 21. "Bush is turning
socialist. How are you, comrade Bush?"

Hugo Chavez

Sen. Bunning video:

http://tinyurl.com/Bunning

ALOHA !!

TS ELIOT ON SPIN ...

Where is the wisdom we have lost in knowledge?

Where is the knowledge we have lost in information?

--T.S. Eliot, The Rock, 1934

Here is a more modern version of Economic SPIN ...

"Three percent exceeds 2 percent by 50 percent, not by 1 percent."

--Edward Denison, in conversation, about 1960

EDWARD DENISON Author of "Accounting For Slower Economic Growth-The United States in the 1970s" A Nixon adviser ...

Current SPIN of today ...

"Recession is more likely without a bailout ..."

Ben Bernanke, US Congress Sept 23, 2008

FROM AN ESSAY "JAPAN AND THE USA" ...
“A different perspective comes from author Guy de Maupassant who long ago commented the prospect of growing old is most unappealing, but that the alternative is completely unacceptable. Very similar sentiments, I believe, today concern the powers that be in US. Continuing along the current path, for households and the government, piling on more debt on top of an already top heavy credit system to keep it from collapse, is unappealing; most unappealing. However, the alternative – to end the debt spree and to begin working down the outstanding debt – will trigger very serious consequences for the GDP, for US business, for the home property market, for the dollar and US interest rates, for jobs and for investors – both the local variety and, horror upon horror, also for the foreigners. This is – as de Maupassant will understand so well – politically completely unacceptable. Political suicide, no less.”

Those you have voted for have leveraged promises to unrealistic heights, political derivatives that are just as potent as those owned by the US Banks, on the backs of the most SILENT and UNREPRESENTED entity in America today ... the future US TAXPAYERS.

You cannot have a true recovery based on LIES and the only sane solution for current US TAXPAYERS and your kids, the future US TAXPAYERS, is to get rid of all the LIARS ... The "GANG OF 535"! The entire US CONgress ...

Its an EMPIRE unwinding that's all ...

UYG- in at 19.50...train's leaving

Some headlines... looks like bank fees are going up.

FDIC plans significant bank premium increase
FDIC Chief wants home loans part of bailout plan

Now that Buffett is out of bank account insurance does that mean they have the monopoly?

QLD/USD showing a little power coming out the gate...UYG in fits and starts (DYODD, please)...

Jim, thanks for the link. It was hilarious. The king lost his crown.

President Lula also commented last week that it was "very sad to see all these banks who dictated how we should run our economy and how to manage our risks, now all go bankrupt." :-)

After the bailout, lines they can never use again:

"What we need are totally unregulated free markets..."

"Government, leave us alone, we don't want anything from you..."

"We'd be better off with NO government..."

And my personal favorite:

"The unregulated free market IS a self regulating mechanism...."

What potential long term buys are you looking at. I'm trying to concentrate on some picks here but my head is spining with short term developments. Trying to remember several recommendations over the last several weeks from Bill et al.....

My "potential" list currently includes

ABB
RIO
INTC
NOK
MSFT
GE (but unsure of financial component)
BA
GG

Already holding SLW, WGI, CEF, VAL

Thanks for everyone's help.

Stv

Coinguy - dilution in juniors

At a given point in time, it doesn't matter whether their equity is priced at .50 or 5.00.

What counts - over time - is whether companies create more shareholder value (market cap) with each financing than its cost.

If so, with growing market cap, each successive financing can be priced higher than the last, and shareholders will be happy.

Sounds great, doesn't it? - Just that it's not happening very much these days .... FMM just did a private placement at their 3 year price low. OUCH.

Good one re: Chavez, QT.

Failure is the greatest humiliator. Chavez has been a classic example, and now it's George's turn. Money does not make anyone wise or right.

I am thinking about Bill's comment about intellectual property protection benefited from this bailout plan.

But if the taxpayers' burden is too high, people may not be willing to stay in US. So does intellectual property.

I don't know the outcome. but I think this plan may not fullfill its intention.

I think this plan will get approval, because no one in Congress can bear the consequence if do nothing. If we know there is a storm, we had better do something no matter whether it is effective and to address the root. That is the human nature. JMO

remember the salesman tactic:

ask for the whole enchilada, total control, free of judiciary over sight, and virtually unlimited capital to work with.

let the politicians huff and puff at what an abomination such a proposal would be,

then agree to a toned-down version w/ some controls and slightly less capital to work with, giving the appearance that the government has taken a smart road to fix the problem and avoided any extreme action such as the one we were saturated with just prior to paulson's appearance before congress.

Let's give King Paulson the money with one stipulation. Ron Paul gets to dole it out.

ALOHA !!

ON JUNIOR DILUTION
To comment on dilution is relative. Dilution only matters if it is unrealistically high based on the stage of development.

ECU has combined five mines into one and has good infrastructure(roads, power, etc)and is currently selling production to Penoles and upgrading mill capacity all the while proving up a huge deposit with reasonable country risk. Compare that to a company like GIX who has no infrastructure and no mine. What will dilution look like once they start producing? Current share levels will not be where they are today at that point ...

If you're going to go purely on dilution then NEWMONT and BARRICK should be sold immediately!

I own both ECU and GIX ...

King Henry:

Bill's alluding to Paulson as King Henry brought this to mind.

In 1831 Alexis de Tocqueville, after traveling the length and breadth of the U.S., wrote "Democracy in America".

His observations and insights are remarkably relevant even today.

This is from his chapter on political parties:

"...it is easy to perceive that the rich have a hearty dislike of the democratic institutions of their country.The people form a power which they at once fear and despise. If the maladministration of the democracy ever brings about a revolutionary crisis,and monarchical institutions ever become practicable in the United States, the truth of what I advance will become obvious.
The two chief weapons which parties use in order to obtain success are the newspapers and public associations." (today —add TV and the internet)

dr.cosa,

exactly. During university times we called it "a bone in an assignment". Couple obvious things for professor to pick up, in plain sight, in order to aurrender those easily and have him sastisfied with doing hid DD, while fairly lamely executed assignment as a whole goes through

Averaging down on ADM & CAG with lower commodity prices to assist recovery of stock valuations.
Might look to the Community Reinvestment Act (CRA-brought to you by "progessives")& Graham, Leach Bliley( GLBA-brought to by "conservatives" w/progressive support in order to strenghten the CRA in the political trade offs to finalize the Act to explain how this whole mess came to pass. Won't see me put too much blame at the door of Wall St. - they just responded to the realities of our "leadership" to bring this upon us. Blame Wall Street and lax oversight by SEC for slicing and dicing $2.2T in mortgage backed securities "assets" into $485T of credit default swap "obligations" to make the fixed income desks the savior of huge bonuses for the GLBA crowd's Long Island summers' sojourn. Happy Trading

stvh: most CARA100 companies, plus many more

VE
VT.to
SDA
PDA
GOL
ECA
FUJI
CRESY
KGC

Several income trusts,.... big list, no hurry.

What This Bailout Means to You
http://tiny.cc/oaev5

Otherwise known as "never lead with your best offer".

Spot,

About ten years ago when the CEO (for only about two years) sold off an long time company (our biggest single employer) for a low share price and a personal gain of $25 million, he had to employ bodyguards 24/7 until he moved out of state.

1st half hour

DJIA +58 pts
Naz +17 pts

market bounced today from the "last chance" level for a bullish revival, if today's intraday low is taken out in the close that is very very bearish (very short term)

well, that train's running into a few problems...

the big boys are selling

sold half my SIL position.

Nigerian scams have been going on for years . . . first came across them in the late 80’s . . . the old 419 scam . . . . If they had a 0.10% response rate, they were way ahead.

As for Ivory Coast, when “business” became a little difficult with a Nigerian origination, many Nigerians used Ivory Coast for scam mailings, calls, emails. Later they used controlled addresses from all over the world outside of the African continent.

Claiming another homeland kind of reminds one of the Jamaican drug dealers who would say they were from the “Virgin Islands, mon”

2nd,

Grym- understood...i was just making a joke..;)

OK, I guess I'm a bit stressed out with all of this stuff.

A couple of my friends have been hurt due to their trusting nature and I'm unable to watch this drama without getting really angry.

Sorry to be so touchy.

i like the negativity here...

Kaimu,

T. S. Eliot quote is a favorite.

Our current plan is a bit like telling a smoker, "Try a bit of crack and kicking tobacco is a breeze."

..adding a little QLD into the close...

Like it from what perspective 2nd?

Looks like GG took a pounding from King Henry's legions today.

from the perspective of buying on weakness...

During the last 20 years (maybe more), have we had anything close to what could be called a "free market"? Short term interest rates are set by the Fed, the banking system is effectively a government sponsored cartel, bought-and-paid-for politicians enact laws that favor special interests -- the market isn't even allowed to choose its own medium of exchange.

SLW held the gap, so far so good.

As Bill pointed out, if the general market tanks - almost everything that even looks like an equity usually goes down.

But SLW is a royalty play . . .

Note how energy stocks sold off yesterday even though oil was up - but the pure royalty play US trusts were up nicely.

We shall see, perhaps . . .

bsi.....are you holding SKF and FXP since the late day selloffs the past two days shows that the "big boys/pros/smart money" is selling?

Re UAUA
this from Jeff Macke
Did anyone else notice last week's announcement that United (UAUA) was blaming a drop in fuel prices for part of its massive losses? "Hedging." Suffice it to say, I doubt United is going to be the last airline to have to own up to buying the top.

re:SKF/FXP

yes

good point 2nd. Ah, the other side of the trade. I was in and out of GG today, ended in where I started. It was sure moving around.

ALOHA!!

The new bull in the DOW will be a reflection of the US dollar's inflation rate and lost purchasing power. Denominate the DOW in gold or a Swiss Franc or in Central Appalachian coal and nobody would step foot in it! As a store of value the DOW has been dead many years, but for short term trading it can be like winning the Lotto! I actually think Las Vegas casinos are better funded and better regulated and way more honest! At least if you're playing BlackJack the dealer does not suddenly announce "ALL FIVE OF HEARTS ARE ACE OF HEARTS", just because he needs an ACE! But the net result is still the same ... There will always be more losers than winners otherwise there could be no NYSE or Las Vegas! Both the NYSE and LAS VEGAS, for most, are basically massive wealth transfer stations just like the US government is.

Something to study ...

-What does one dollar buy you based on the US government's balance sheet?

-What does one dollar buy you based on XOM or MSFT's balance sheet?

This is where stock certificates become more valuable than the currency they are denominated in ... Look for high PP&E to become a standard for favored stock selection. The foreigners are already looking there first. Warren Buffet has been on that one line item most all his life!

The US Stock and bond markets are the SPIGOT for the US FED and anyone who knows anything about water knows that abundance is found closer to the SPIGOT(source) not further away! That's why the Colorado River dries up in Mexico!

Best add the US stock and bond markets to the extremely lengthy list of US companies and entities that could not survive on their own without a US government handout! Can the US TAXPAYER afford it? NO ... What's left? Look for those Caribbean banks to up their anti on the US debt auctions substantially! Its called "monetizing the debt"! One clue ... ITS NOT DEFLATIONARY by any means!

YOU GET WHAT YOU PAY FOR ...

GARBAGE IN ... GARBAGE OUT ...

re:ATR

u can go to stockcharts.com, use sharp charts, and go to the bottom left for indicators, use drop down tab "Average True Range" and put in whatever u want.

Elder recommends 10 days. If there's a lot of volatility like in case of SIL, I use a shorter time frame.

Also use ATR to calculate position size, more volatile, smaller position. Use to calc a volatility based sell stop limit order and sometimes to calc a sell limit.

In the case of FXP and SKF, I will put a sell limit for the first 30 min, today's close + 10 day ATR.

Last hour

DJIA -133
Naz -35

Both closed below the open AND previous close.

Will note the volume is lower than yesterday for both.

So much for testimony.

Bill,

Here is Howard Ludnik interview:

The link is on this page...
http://www.bloomberg.com/news/av/

Scottrade recently added a new platform called OptionsFirst that offers complex/naked option orders (writing puts is not allowed in Elite but is ok in OptionsFirst). Have anyone tried it ?
One important thing - the account balance and option clearing is done by Penson while Scottrade only re-sells the front-end. So the second question is how reliable Penson is ?

GLD had a strong last hour....maybe that is a positive indicator as bsi says....Holding some GLD.

Re: Bond Yields

Bond yields have fallen precipitously today, signalling that any bailout would have virtually no effect:

http://finance.yahoo.com/bonds

occam_razor - Penson

I've had Penson for clearing for a couple of years now. As far as I know, Penson is part of DWS-Scudder, which is part of DeutschBank. The future - who knows, but for the past, I have had no problems with Penson although my broker says that Penson lagged a little on account balancing during those hi-vol days last week.

Hope this helps, and I would like to hear other opinions/experiences.

Close above the open and previous close is needed to show strength.

SPY zooming after hours, anyone know why?

GS -

Wow. GS is up @ 135 after market. What's happening?

Ron Paul: This Bailout Won't Be the Last

Luke Mullins, The Home Front, U.S. News & World Report

I recently chatted with Rep. Ron Paul (R-Texas) about the gigantic financial bailout that the government is preparing to undertake.

Some excerpts from the interview:

What's your take on this huge financial bailout?
"It's more of the same. More debt and more inflation and more pressure on the dollar. Ultimately, although the markets are responding very favorably at the moment, I think it is going to be devastating to the dollar and to our financial situation in this country."

But don't we need to get these toxic assets off banks' balance sheets?
"Sure, they need to be removed. Somebody needs to suffer the consequences [but] not the taxpayer. Everybody knows that they have to be removed. They are priced too high. The assets don't have real value-some have zero and some have 10 cents on the dollar.
The people who had been making profits for all these years and dealing in all of this debt creation and derivatives-that now is becoming unwound-are claiming that it would be so painful if somebody went bankrupt and therefore we have to put so much burden on the taxpayer and on the dollar because the alternative is worse. But quite frankly, if they destroy the dollar and the dollar system, then they have a much bigger problem that they are going to have to deal with and it would be the collapse of the whole international monetary system-which is conceivable."

So instead of having taxpayers buy the bad debt, the market should take care of it by itself?
"Sure, prices need to go down. Bad debt needs to be eliminated. The taxpayer ought to be protected. Taxes ought to be lowered...We are following the same routine that we did in the Depression, and that is artificially try to keep prices up. People were starving in the Depression and the only thing they did was try to keep wages artificially high and keep food prices high. We are doing the same thing now-we are trying to keep housing prices high. Low prices for houses mean poor people could buy a house. This is the most important part of a free market economy and that is free market pricing. Without free market pricing, the market can't work. And this is in a way a major effort to price fix."

So you think the government should not have bailed out an y companies during this crisis?
"That would have been the best thing. It would have been painful, but housing prices would have come down sharper and faster, and it would have been over by now. But this whole idea of price fixing-that's what they are doing-has been trying to keep housing prices up and trying to stimulate home building. Well, if you have 100 percent more homes than the market really wants, you can't keep prices up and you can't stimulate home building. If the prices go down, then people will go out and buy homes again. So they should allow the liquidation of debt.
Before the Depression, [the government] generally allowed these kinds of problems to unwind. They were very severe. They would last six months or a year-a lot of liquidation of debt would be wiped off the books. And then it would go back to work again. What we've been doing now-especially since 1971-is preventing the real liquidation of the malinvestment and the excess of debt . . . If this process continues, we're going to own General Motors and Ford, then we will have to own the airlines. We are socializing our country without even a vote by the Congress. It's a horrible situation."

Will this bailout stabilize the crisis?
"I personally don't think so. It might be temporary, but no, there is much more involved. I mean, we are talking about trying to unwind trillions of dollars of derivatives . . . You have to get rid of all that stuff."

Will this bailout be the last?
"No, no. This won't be the last one. There will be something else later on. But that doesn't mean you might not have a few months of a reprieve. But it will continue."

Will we have to bail out the auto makers?
"Oh I think so. We are not going to let them fail. Our policy is such that everybody gets bailed out. It's like a drug addict, they've got to take their fix. It's too tough getting off these drugs. And the drug here is easy credit.

Berkshire Hathaway To Invest $5 B In Goldman SachsLast update: 9/23/2008 5:51:04 PM(MORE TO FOLLOW) Dow Jones Newswires (201-938-5400)

wow, Buffett buying GS but dilution.

GS -

Buffet invest 5Billion in GS preferred.

http://tinyurl.com/43ttgo

out of SKF at 100

buy SKF limit 88.14 for tomorrow.

quick and the dead. Geez

Hi,

Call me crazy if you will, but watching this almost operatic event unfold before our eyes I am more and more convinced that we will have a dramatic outcome.

My point is that the size of the market movements which will result after all is said and done by politics will reflect the unheard level of hype, anticipation, and even suspense, all of it cooked and expanded by the media.

Mind you that I am not forecasting any outcome in particular, as I have no crystal ball.

What I am saying is that the kind of emotions being pent up are overwhelming, and the ensuing movement, what ever it is, must reflect that.

Consequently, some "legacy" trades will be made, and fortunes will be lost.

Anyway, again, I hope for the best, and remain astonished at what is unfolding before our very eyes.

Keep your eyes on the ball...

Cheers!

GS -

Glad that SEC ban short-selling - the best protection for the small guys. There could never tell what deals are cooking in the kitchen in time like this. GS was up the last 1/2 hour while the market nose dived.

changed order to if GS >141, buy SKF at market

bsi - interesting strategy. You think GS will cap @ 141? The recent high is 145 premarket two days ago. Pretty big volume in the after hours on GS. Looks as if some big money has followed @ 136.

10 day ATR is 16, add that to the close.

PS note the first half hour/last hour.

Think someone knew?

bsi:

The only thing with buying SKF is we're that much closer to a deal, which will probably negatively effect skf, at least in the short run.

Grym - your 3:30pm “King Henry:
Bill's alluding to Paulson as King Henry brought this to mind. ...”

Great minds must review history ... cause it rhymes. Actually, my not-so-great mind flashed with Bill’s comment on the “Magna Carta”.

Checking Wikipedia,, I found some chilling rhymes to the present that match your reference to Tocqueville.

. Here are some snips and the link

“ ... [In 1215] The Magna Carta required the King to proclaim certain rights, respect certain legal procedures and accept that his will could be bound by the law. It explicitly protected certain rights of the King's subjects, whether free or fettered.

... Magna Carta influenced the development of the common law and many constitutional documents, such as the United States Constitution.

... By the second half of the 19th century, however, most clauses in their original form had been repealed from English law. ....”
http://tinyurl.com/3sos9

It’s that last sentence, above, that gets me.

Let’s see now, when was it that Banks moved into major power - mid 1800's? Certainly, that is true for the US because Lincoln had some serious problems financing the Civil War. Later, of course, WWI financing most likely helped bring about the Fed which is now the force behind our puppet on the throne.

What can we do? I say we strike and refuse to deposit funds into nor buy any “no short listed” financial stocks. We don’t have to rule - just create enough uncertainty to force those financials to fail and thus “clean” the system.

Too simple? Not really, no bank can exist without depositor nor investors.

SPY, GS ...

Wow2! SPY is at 120.4 AH!

Short-selling ban so GS & COF can short their stocks into the market. But they don't have to buy their stocks back after they sell them! Great trick.

I am still mixed about the market direction over the next couple months...I have been questioning various theories all day....

I just have one observation to point out and again as full disclosure I am as long as I am short stocks but they make up less than 20% of my portfolio...

If this is the bottom...and congress works things out and the world continues to spin etc...then in my 17 years of trading stocks (part time most of that) this will be the most called bottom I have ever seen...is it that obvious or do the blogs etc I frequent simply share a similar opinion since those blogs seemed to share the same views I did heading into this...

Does anyone think that if this plan is a success equities will trade lower in the next 1-2 years...would love to hear some opinions...

As always this is the center of the best discourse I have come across... - Bill you have done an excellent job surrounding yourself with the internet's most elite community...

[Bill Cara note:

Here is the Howard Lutnick interview at Bloombery earlier today that I referred to. It was sent to me by a new member of this community:

hi bill,

just started reading your blog recently. Your call for a bull run from here is encouraging.

i'm not signed up to post on the community but i thought you would want to post this link for the Bloomberg video clip of Howard Lutnick. it's currently under the editor's picks for video on Bloomberg site - not sure how long it will be available on their site.

http://www.bloomberg.com/news/av/

I watched it and he doesn't say anything about a massive rally so i reread your post and i see you put "my words" before the rally comment. Too bad...it would be great to hear someone of his stature call for rally.

keep up the great work on your blog - you are very generous to spend your time helping out us little guys.

/mc
------------------------------------

Yes, those are my words, but for a player of Howard's importance and (in my view) brilliance to say that there will be no more bank failures if and when this deal goes through is all I need to know that he expects prices to rally as soon as the deal is done in Washington.

As for the deal, you know I have written here many times and in my book as well that there is good debt and bad debt. No matter how big this deal works out to cost the taxpayers, the govt is taking back fees and equity from any bank that needs to drawdown capital. That keeps the banks intact and ready to re-build their businesses, along with their key people and clients, which I say is a good thing. Later, when the share prices go back to former levels -- which may take time -- then the govt will be able to sell that stock for a huge gain. As for a semi-related precedent, look at Canada's Petro-Can (NYSE:PCZ)(TSE:PCA). Now, and for many years, it has been a leading energy company in Canada -- but at one time this was a govt agency. When the shares were sold to the public, the government treasury was a winner. I'm sure the same will happen with banks and broker-dealers in the US, although I don't think too many of them will want to accept the govt deal. I completely agree this Plan is a nationalization (ie, socialist) plan, which I detest in principle, but if I were the manager of this portfolio (negotiating the acquisition prices and determining when those shares should be sold to the public), I think I could do very well for Treasury, and those shares would be offed in the next Bull market, which is to say before the next President left office after his first term. Tonight, the public is being whipped into a frenzy of emotion (CNN's Lou Dobbs is over the top!), and most of their material is coming from politicians -- and politicians who are sitting at the negotiating table. I sit back and shake my head that full transparency is sometimes a bad thing. Washington and NY have become Twin Spin Cities. I'm trying to be objective here. I think Howard Lutnick did a good job in explaining the process that Paulson and Bernanke are trying to work out. I think traders need to stop listening to rhetoric and start looking at the details because there is a deal that could be worked out here. I think the short sale rule was worse than this deal. At least with this one, Congress can insert some checks and balances and demand some concessions (judicial review, employment bonus clawbacks on executives of any company that seeks a bail-out, and so forth).]

Solars
Bloomberg is reporting that the U.S. Senate today passed a $17 billion energy tax credit which will affect solar and wind power companies, as well as refineries that process heavy oil. The tax break will be extended through 2016 for solar projects, by one year for wind-power production and by two years for other renewable sources like geothermal. The measure will also include breaks for coal projects that mitigate carbon emissions and for cars such as plug-in hybrids.

I have difficulty accepting Bill's forecast for a new bull market phase. I think we may indeed have a powerful IT rally once the bailout package gets approved yet the bottom may be at least few quarters away. Here are my reasons:

1. I think the financial collapse of recent weeks eclipsed the equally (if not more) important issue of US consumer financial strain. We may well have seen the worst financial news but falling consumer demand will IMHO bring more nasty surprises to the sectors outside financials.

2. The reduction in US consumer demand does not seem to be fully offset by domestic consumption growth in BRIC. I believe it will eventually but not yet.

3. US economy has too much weight on the failing postindustrial sectors - financial, service etc. that are ineffective wealth creators and high in overhead to the society. A large portion of that sector is failing and the rate of unemployment will grow adding to the consumption stress.

4. I think that the next bull market in the US (overhanging commodity boom) will start within industrial and technology exporters (with high level of value add). The next decade the flow of goods will reverse emphasizing BRIC consumer and US exporters. The restructuring process of that magnitude is not quick and certainly painful for both financial markets and the society.

For the short term I am 60% in cash and 40% market neutral with short bias toward consumer discretionary/retail and long bias toward PM, natgas, canroys, techs, industrials. For the long term (next decade) I want to be heavily in BRIC and US/EU exporters (industrial and tech). I just have hard time convincing myself that time to get in is now. I did start actively writing puts on things I like along this plan (for now fairly deep OTM at major supports) but do not feel comfortable to go full in yet.

5. Consumer decline has been partially postponed by 300b injection but it can not be contained this way.

With all that said take my arguments with a grain of salt. More often then not when I acted against Bill's advice I've been punished by the market :)

[Bill Cara notes:

Can you imagine what traders thought of me after the market crash on Black Monday 1987? I called a new Bull would start within a week -- to clear out the margin calls, a little time was needed. But most people, including the leading technical analysts of the world and many Fund managers, were shell-shocked and were saying that another shoe would drop, the world was coming apart, Great Depression 2 on the cusp, yada yada. And why wouldn't they? To put today and the events of the past week into perspective, let's compare it to Black Monday Oct 19 1987. From the high on the preceding Friday to Monday's low, the DJIA plunged -30.0%. Had this same thing happened after the high of Friday, there would have been a loss of -3450 DJIA points! Can you imagine that? Traders were stunned at the destruction of their portfolios. Well, this bail-out is going to put at risk maybe $3,000 for each man, woman and child in America, and the upside is that (I think) they are likely to get a return on the risks taken by the Administration. So just like Black Monday didn't sink the US, neither will this situation. What is needed immediately after the Paulson Plan is put into effect is to impeach him and Bernanke and Cox, and hire trustworthy people who would have good optics with the public. Then negotiate a new Securities Act (that eliminates conflict of interest) and a new set of Rules and Regulations, including a restructuring of the Fed (totally privatize it), and the SEC (establish it as an independent regulatory agency like the Federal judiciary, as free as possible from political domination). A new SEC should become Federal Market Regulator of all financial companies and financial matters, including commodities, mutual funds and securities. Fannie and Freddie should be sold entirely (in pieces) to the public, and govt should get out of these quasi-private agencies entirely. Such a monumental reorganization will take possibly two full years to develop, but a new Bull market (fairly range-bound) will facilitate that. At the end of the day I believe there would be less regulation needed because it would be a simpler system without conflict of interest. At the end of the day, this reorganization is needed. Otherwise we are staring ahead at Panzner's Armageddon.]

is buffet saying he knows a bottom when he sees one? or is he saying not interested in the rest of that cr-- but i'll take this one?

He knows it is a no risk venture. because the United States of Goldman Sacs cannot fail. Buffet loves free money.

re: Senator Bunning video--I didn't find what he said all that heroic--at least from what I saw in the video posted by JIM. His questions were often incoherent and he didn't even mention that Paulson was granting himself absolute authority with no possibility of review. Paul Krugman, tonight on PBS Newshour with Jim Lehrer, on the other hand, did go straight to this issue and was brilliant. Likewise, on the same program, Alan Meltzer pointed out that this type of begging for emergency funds is old hat--he's seen it for 40 years--and it is never justified. Instead, failing concerns should be given loans that they must pay back with interest, rather than a straight bailout, thus placing the burden on the private sector where it belongs. Paulson comes across as lying through his teeth, barely able to conceal his contempt for the American people he was performing for. Indeed, he was almost at the point of shedding crocodile tears when he said that nobody was angrier than he at the mismanagement that led to this mess. As Bill says, bet on the jockey, not the horse.

didn't he also ask gates to help him give 40b away? maybe paulson asked him to redirect his philanthropy closer to 'home'...

Bernanke has said that they are planning to offer higher than market prices for the troubled assets - along the lines of what one would expect them to return over the long run if things work out. For a while I was puzzled about this because it looks like a bad deal for tax-payers. Now I think I have an idea why.

If the Treasury becomes the market maker for bad debt, then similar troubled assets will have a known market value for banks' asset sheets. So even if a bank doesn't sell a bad MBS, if a similar one has been sold it can adjust its balance sheet to reflect the new price. Such a step could transform a technically insolvent bank into a solvent one, stop the flood of write-downs and reduce the amount of new capital that is needed. Also by paying high prices, the Treasury can recapitalize the banks. Rather than needing to hoard the extra cash, perhaps the banks will lend it. Some of it will make its way into the equity markets which will make way for a new bull market.

It is smoke and mirrors of course.
What do you think about this take on things?

We should pay higher than market prices for worthless assets? No way!!

Make a copy and send this FAX tonight! All credit to Mish and details at link:
http://tinyurl.com/4rhsm7

[The FAX: ]

Dear Senator

Please stop the Treasury's $700 billion auction scam.

Bernanke lied today before Congress when he stated auctions from assets will earn "good value".

It is clear from Bernanke's testimony that the Treasury's intent is not to buy assets at fair value but any value the Fed and Treasury wants. This puts taxpayers at risk for the full amount of the $700 billion.

This scary provision of the bill must be eliminated:

"(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act."

The following scary provision cannot be tolerated as it would allow the Treasury to repeatedly roll over debt at the treasury's discretion ensuring that the entire $700 billion of taxpayer money would be wasted.

Depending on interpretation of the following wording, taxpayer liability may be unlimited.

"Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time."

Your Name
A Concerned Citizen
(leave your address off, some Senators toss out of state mails)
[eof]

Fax List

Sen. Richard Shelby (R) 202-224-3416 or 202-224-5137 (try both not sure which is correct)
Sen. Harry Reid (D) 202-224-7327
Sen. John Ensign (R) 202-228-2193
Sen. Jim Bunning (R) 202-228-1373
Sen. Chuck Grassley (R) 202-224-6020

Those inclined should also fax their own senators as well.

Please see Phone And Fax Numbers For All US Senators; More On What To Do for more numbers.

Please send this email to 10 others and have them do the same.
Thanks
We CAN make a difference

kiron- i agree with the effect the removal of uncertainty would have on the market...i'm not convinced that it would be smoke and mirrors...who's to say that current market prices are higher or lower than fair value? it isn't just the financial services industry that suffers from 'group think;' we do also, and once we start down the road of assuming the bailout overpays for trouble assets, then we become blind to the possibility the 700b may turn into an investment that pays off well for the US economy...

troubleD assets...

Spot,
Too simple? Not really, no bank can exist without depositor nor investors.
Well, sounds reasonable. But then, these days reason carries so little weight. Maybe my Social Security check will be invested at a bank of Paulson's choice next month.
This whole episode reminds me of playing Monopoly when I was a kid. After someone had hotels on Park Place and had taken in nearly all the money — sometimes he'd make "loans" or just pass out a few bucks all around to keep the game going.
A friend (age 90) is teaching a class about ancient Greece at our Jr college. He pointed out how much of Tocqueville's commentary meshed with their politics and law.
I guess we can at least say the U.S. had a good run while it lasted.

Mike Morgan's Quick Notes
- Behind Enemy Lines -

Very sad times. Remember the Maria Bartiromo interview with Buffet, when he slipped and said Paulson called him on the big Sunday a couple of weeks ago? Many people wondered why Paulson would call a private citizen to discuss Fed matters? Obviously, we now know.

Sham Deal - Buffet gets special stock with a 10% dividend and he gets the right to by another $5B at $115, when the stock was trading at $125 and the deal makers knew it would spike on this kind of news. So why didn't Goldman set a higher price on the stock? Buffet would have never done the deal. He probably cut this deal with Paulson himself when they spoke on that funky Sunday.

Conspiracy? - We have never witnessed anything like this, with rule changes and special deals and the biggest thief in the world, running the financial world. The Buffet deal could only have been done if Goldman had a new business model . . . because the old business model was busted. Voila, they have a new business model as of Sunday night courtesy of King Henry . . . and less than 48 hours later, Buffet come in with $5B.

Someone needs to question that Sunday conversation. Someone needs to question this Sunday's move to bring Goldman under the Fed's wings as a commercial bank. Someone needs to question the very deal struck with Buffet. But no one will.

Main Street or Wall Street? - The price of Buffet's stock is at $4,300 for Class B and $128,800 for Class A . . . because he doesn't want to deal with Main Street. And Warren Buffet stands to lose more in a market crash than any person on the planet. Warren Buffet's deal with Goldman is just another example of the power of Paulson and his Wall Street fraternity.

Free Markets Will Prevail - Eventually, the free market will prevail. Eventually, the markets will crash. But once again, the market will bubble up on the Buffet news. Paulson is truly brilliant. There could not have been a better moment than now to pull this card out of his sleeve. After today's Hearings, Paulson was cooked and he was going to be the focus of the media tonight. Not anymore. Now the focus will be on the household name of Warren Buffet and his purchase of stock. But . . . and this is a HUGE but . . . Even though the consumer and the PPT will be back in there buying tomorrow, nothing has changed. The toxic stuff is still there. We have not resolved anything. This just give Wall Street more time to suck up the dollars and more time to trade in and out of pension fund portfolios.

Ban On Short Sellers - Maybe we need to question why a sham deal like Buffet's should be allowed. It is the opposite of what we saw with short sellers, but at least the short sellers were all dealing on a level playing field. In fact, the deal would not have been done at all if Paulson did not instruct Cox to ban short selling.

Paulson Crossed the Line - Why has no one yet publicly questions why Buffet has a private call from the Secretary of the Treasury about a company the guy ran as COO and CEO . . . and government business with a private citizen involved in Wall Street so heavily. This was a private deal with our top government guy in the mix. If we thought we had stinky fish yesterday, we have super-stinky fish today.

I hope you will all take a moment to write your Senators and Congressmen again, because market manipulations like this will destroy everything we have ever dreamed of. Wall Street is pulling out all stops to make sure Main Street crashes . . . so Wall Street can come back in and pick up the pieces for next to nothing.

Tomorrow . . . The markets will probably rally on the Buffet Bail-Out, but eventually the stink will overcome even Warren Buffet. He had no choice. If no one stepped up to the plate tonight, it was all over tomorrow. And he would have suffered huge losses. We already saw that this afternoon. Obviously, Paulson still has weapons. We just never dreamed he had so many fraternity brothers. I think this deal will come back to haunt even Buffet, because there is so much more to be written . . . and even great men (or formerly great men) can't stop Mother Nature or the Free Markets.

[***If "Mike Morgan's Quick Notes" is of not much value to the group let me know. I will stop posting it]

now it's Act Ib or IIa...

2nd,

I think that the true values of many of the assets are unknowable right now. Some market values are far too low. John Mauldin has written about likely recovery values of some of the better quality tranches and they will probably turn out just fine. Some of the current market values might even be higher than the eventual value. It will depend on how far prices fall, the extent of the real-economy effects of the credit crisis and the ability and willingness of the banks to lend. Right now, because of market conditions and how these instruments are structured, it is very difficult to know their value.

The reason that I think it is smoke and mirrors, is that banks will sell their very worst assets to the Treasury at values that are likely too high - and these values will be reflected on balance sheets as marked to market.

1987 Crash

I had stops on all my investments and as they each got picked off I thought, "Oh, no!" But I was back into the same ones within less than a week and made out just fine.

9/11: I had investments in five RR stocks and had sold with nice gains on the day before. I bought them all back for 30% less in a week or so.

The difference now? No job, no steady income — only my investments.

No guts, no glory? Let me just say, It's a whole new ball game under these circumstances.

Have anyone followed Dell today? Near close, and in extended hour, someone dumped 1 million shares or more. I wonder what that is about?

For the value of those assets: BNN reported that Mr. Bernanke said today that mortgage assets were being valued too low. Well, a few weeks ago, MER sold some of its mortgage assets at 20 cents on the dollar. Two weeks later they announced results and marked identical on their balance sheets at 40 cents on the dollar! Bernanke was either wrong or lied.

That is the value of those assets.

Now Ben and the King would like to value them at higher than marked, say 60 cents on the dollars?? That'd be 3X times the actual value.

aucourant,

"failing concerns should be given loans that they must pay back with interest, rather than a straight bailout"

Isn't this pretty much what they are getting? A loan that the banks need to secure with assets? Lutnik does mention that once the assets are sold, if below market, the bank the assets came from need to give taxpayers equity and with interest.

The issue most people have with this bailout is with the value assigned to the assets. Presumably if treasury pays 70 cents on the dollar (market value currently 10 cents), and the asset never recovers and treasury takes even a 100% loss, banks have to issue equity to cover the loss plus interest. It does seem low risk on the surface.

But I have to wonder what such potential massive dilution will do to the banks in the future. And even with all the garbage off their books at above market prices, do banks rally? With option arm resets peaking in 2011, there's probably a lot more junk to be sold to the treasury, so when does it end?

If this is $US negative, and interest rates need to go up to continue funding deficits, those resets will be much higher, for that matter, all resets and mortgage renewals could be much higher. If this action doesn't stem the tide on house price declines, what happens to $300-$400K mortgages if the interest is 2 or 3% higher than now? Looking at $500+ per month higher payments.

Not to mention the houses might be valued at $50K to $200K less if prices keep declining. How many people would be way underwater on their mortgage?

Can the banks survive or thrive without mortgage loan business? On people saving more? With continued loan defaults? It's all very interesting for sure...

On Bills bottom call, I know the market bottoms before economy, but with all the consumer debt outstanding, stagnating wage, falling home values, I'm not sure how the economy is turning meaningfully any time soon. But I'm a pessimist :)

"If we thought we had stinky fish yesterday, we have super-stinky fish today."

the interesting thing about the human psyche is that for every opinion, there's almost always a contrarian opinion of equal conviction...having grown up on equal amounts of american and asian cuisine, i can understand strong reactions for/against, let's say, roquefort and 'stinky tofu,' both acquired tastes for most people...there will be those who question a call to buffet, and those who welcome the idea...not saying the end justifies the means or 'what up' to anyone's grimace, but if they're on capitol hill saying they have to pull out the stops, then why does buffet come as a surprise?

On the other hand, this Buffet investment is great, doesn't it prove that GS et al do not then need government bailouts as they can find private money?

Read that when he took the Treasury job Paulson put the $500 million he had in GS stock in a "blind trust", which he can get back as soon as he leaves office. If this bailout deal does not go through, wonder how much he will have... No conflict of interest, right.

So he basically kept his GS stock??

Buffet gets 10% perpetual and warrants to buy $5Bn at $115! GS trading now at $135.

It's all outrageous.

CEG update - http://tinyurl.com/CEG0923-1916
"Mr Buffett has nothing to lose – either he gets Constellation or he gets a $200m payment if he has to walk away. The desperation to secure a quick fix at Constellation was such it agreed to pay Mr Buffett a break fee of $175m plus another $25m for any fees and expenses incurred.

So if EDF’s higher bid wins the day – and the French have until the Constellation shareholder meeting in December to convince the board – Mr Buffett will get $200m and will have made a 20 per cent return on the $1bn cash injection he has paid into Constellation’s account."

If the value is too low on these instruments, Packaged mortgages, Why don't they just unwrap the package? Split it up again to the original single loans and recover all that value. No you can't because these packages are the bottom brick of the inverted pyramid of derivatives. Who are these people fooling. They are worth much less than zero. 700 billion is nothing to what this thing is actually going to cost. Don't be naive.
Bob

proudPapa-

ust throwing this out, not saying you're wrong: we know from past experience that a bottom becomes clear only in hindsight; also that investors (in hindsight) will invariably be seen to have the exact sentiments being expressed in our discourse last friday, saturday, sunday, monday, and today...hey, i have them myself...all i'm saying is distance yourself enough to observe your sentimental stance, and allow yourself to wonder if maybe it's sending a signal...

..make that Just throwing this out...

stvh...GE (but unsure of financial component)===
45% I read somewhere today

SiO2- is it possible GS has no need for cash? Paulson needs assistance, and Buffet's gesture provides it?

going back to gladstone versus disraeli...

gladstone was the right person to parachute into the summer of 2006 to captain a ship full of kindred spirits...

but you need(ed) disraeli to sell a 700b bailout to the american public...gladstone can't help but sound like a prick...

Is this a British history lesson?

Interesting twist 2nd, who knows... May backfire badly.

What it does look like is:

1. these banks don't really need government money (proven by Buffet's money)

2. the govmt. can get the same kind of sweet deal

or

3. GS was going bankrupt (Bill commented on the GS action many days ago), and this whole scheme is to save GS, and Paulson's millions. A tremendous conflict of interest which to me says this bailout should be a non starter.

bobbyo- LOL, no...it's an inside joke...i forget how/when it came up on this blog, but there's an old story about Gladstone having the ability to give one the impression he's the most intelligent person one has ever met, whereas Disraeli had the ability to make one feel as if (you) were the most intelligent person he had ever met...

This just in on Mish's site:

Fate May Rest With Shelby

CNBC is reporting Fate of Bailout May Rest With Republican Sen. Shelby.

Many members of the U.S. Senate blasted the Bush administration's Wall Street bailout plan Tuesday, but no senator has come forward so far with an explicit pledge to kill the $700 billion proposal.

The rules of the Senate, unlike the House, give individual lawmakers substantial power to delay or halt legislation, but three Senate aides said there were no clear signs yet of that power being exercised.

As the Senate Banking Committee held a hearing on the plan put forward by the Treasury Department, aides said much would depend on Alabama Sen. Richard Shelby, the committee's top Republican, who was sharply critical at the hearing.

The outlook for Treasury's plan would dim greatly if Shelby were to move to block the bill that is expected to emerge soon from congressional debate over the plan, the aides said.

Other senators, including Republicans Jim Bunning of Kentucky and Jim DeMint of South Carolina, have expressed strong concerns.

But the aides said these lawmakers also have stopped short of warning they would work to block the bill.

Do you folks have any bad investment to be bailed out? You can add it to the list for Paulson, currently running at $391B, still $300B to go:

http://tinyurl.com/4zquel

re the Senate 'confrontation' with Bernanke/Paulson: not necessarily staged, but may in fact be nothing more than a bar brawl that end with drinks on the House...

when i was 18 i somehow ended up in central Washington state washing dishes at a restaurant in a small town...my first night there the owner's son walked me out the back door of the restaurant/bar to show me where i would sleep with the rest of the help...there were two cowboys taking on a native american with his back to the wall, violent shots to the mid-section which sounded even louder in the winter air...i was thinking about calling the police when i realized everyone was laughing; 'working out' the day's problems in the field, as it were...drinks for everyone afterward...(not to be construed as representative of cnetral WA, of course...also recall they had the best looking waitresses i'd ever seen, but when you're 18, impressions are easily made and difficult to alter)...

maybe they're just working out their problems on the Senate floor...

jasper-

it's been at least 9 months...wondering if you're still reading and whether you're shifting out of cash and back into the market...

Im sure much has changed in central Washington no more cowboys vs. indians. More like Yuppie biker vs. unemployed lumberjack.

Associated Press
FBI investigating companies at heart of meltdown
By LARA JAKES JORDAN
09.23.08, 8:09 PM ET

http://jessescrossroadscafe.blogspot.com

2nd_ave,

I totally get where you are coming from on the sentiment idea, and I agree it all seems much to dire now. I certainly can envision a rally from these oversold and overly negative levels, but I just don't see it lasting.

I believe Bill has said in the past that the consumer has 'no tickee' or something like that, meaning consumer is tapped out. Has that changed? Is that likely to change in the next year? 2 years? All products/services need customers, and with the masses lacking 'tickee', not sure where these customers are going to come from.

I don't know the stats, but I recall consumer debt growth for 2003-2007 was something like 6%/year. This year the pace of growth has slowed, but that doesn't mean it's declined. When do people start paying the debt back? What about reversion to the mean? What if debt started shrinking 2%/year? For how long would that need to continue to bring debt and debt servicing to historic levels?

I'm not calling for a depression or anything, but don't see robust growth from current debt levels.

although they're not doing a great job of presenting it, they may be correct in making the implication that the time for reform may not be when the ship is going down...it seems many people would just as soon see it sink, but for those on board with no lifeboat waiting to whisk them away, is there another choice? if you're on a fixed income and in ill health, allowing the country to (deservedly) fall into a depression probably isn't your first choice...

they had to throw the FBI headline in there too? now i know we're going up...seriously, if i'm an FBI accountant, and i find evidence of corruption, what do i do with it...and who does he report to?

vinod- back to trading-> on a gap up, my plan would be to sell UYG, buy GDX/XLE and possibly add to USD/QLD/China + India...on a gap down, it would be to buy UYG/USD/QLD/CAF...if the gap is big enough, i will be looking at OEX options to tweak the trade...

This week is the week that American government was toppled in a bloodless coup without a shot being fired. Washington was taken over by the Wall Street gang that can't shoot straight and now Hammerin' Hank Paulson has a gun to the American taxpayer's head and he's saying "Give me your money. Give me your children's money. Haven't you heard? There are multi-millionaires who need bailing out!" This country is "F"-ed.

and fwiw, i shifted all cash into OAKBX at market close today as a substitute for money market funds...

Having now watched most of the proceedings of today, I don't want to comment on the content - there's nothing new here that we haven't talked about endlessly for months. What struck me is how worn-out and on edge Paulson and Bernanke look. Dang, these guys are feeling the heat of this ongoing crisis - Paulson's twitching twice as much as usual and Bernanke looks half-asleep!

There are some here who just endlessly beat-up on these guys but I don't see any of them serving the public in positions of grave responsibility. Yes, I know US taxpayers are getting a raw deal here, but I also suspect this thing has reached a point where there's no other choice. Hopefully Bill is right and this will lead to positive change in the Capital Markets, to avoid this in the future.

Anyway, Warren B. has come to the rescue to tide this thing over until the haggling ends later this week and forestall a market rout before the relief rally.

they don't NEED to shoot straight...it's what Seamus called the 419...in this case, the revolution IS being televised, and my bet is willing participants outnumber the protesters...not saying it's right, just calling it as i think it will happen...

Proudpapa, thanks for your comments. I listened to the Lutnik interview on Bloomberg and found that I had to rehear it several times before I could figure out what he was saying. Gov spends 10B for bad mortgages from bank. Bank issues "contingently" 12.5B in stock. Gov sells mortgages for 8B. (loss of 2B). Bank issues 2.5B worth of stock to gov by diluting its shares. Thus, if the bank share price drops by 10% due to this dilution, all other things equal, the bank must issue 11% more shares, if the drop in share value is 25%, the bank must issue 33% more shares, and if the drop is 50% the bank must double the number of shares, if my calculations are correct. I guess we are banking on share appreciation. It’s kind of like packaging mortgages and selling them to third parties with the idea that the underlying asset value will appreciate and thereby lessen the risk for these securities. However, if all the banks and financial institutions follow this Paulson approach, I would think we would be back to square one. Since all troubled financial institutions will be doing this under the Paulson plan, I would think that the share prices of these "rescued" financial institutions would drop, once the market perceives this systemic risk. Thus, I'm led to the question, "Cui bono?" At any rate, perhaps more sophisticated people than myself can look at this Paulson stratagem or sleight of hand find other weaknesses if I am incorrect.

I thought that Lutnik interview was garbage. He was almost insensible and contradicted himself on a number of occassions.

"FNM and FRE are bidding up pre-market, and seem to want to rise"
Posted by: shark_attack at September 23, 2008 8:47 AM

"Took the Freddie ride..."
Posted by: shark_attack at September 23, 2008 9:58 AM

"Freddie 'aint done either"
Posted by: shark_attack at September 23, 2008 10:10 AM

"Jumped back on Freddie did good"
Posted by: shark_attack at September 23, 2008 10:19 AM

"yowza...ive been long both freddie and fannie today...good day"
Posted by: shark_attack at September 23, 2008 10:25 AM

FRE closed up 55%
FNM closed up 65%

Mackinaw- Paulson may have been twitching due to lack of recent experience with being interrupted, and Bernanke probably looked half asleep b/c he was half asleep..

Next Bull Cycle -

Ironically, GS & MS both beat street's estimates, and so did ORCL. Although business/earning has decreased year-year, and as expected giving the current economic condition, the analysts do not necessary have a handle on the degree of economic contraction and equity valuation. We "COULD" possibly have a slowdown, but not as bad, yet, as the street perceives it. NKE, MSFT, HPQ all increased buy-back. (They obviously have money to spare). LEN reported after hours with contracting loss. RIMM & ACN will report Thursday after hours. Both reports should give us a glimpse of tech-spending on an individual and corporate level. Quite a few companies maintain their 2008 guidance in the last quarter. PERHAPS, earning is what will fuel the next bull for a short while... or is this just a wishful thinking?

"analysts do not necessary have a handle"

c3- why don't you run that by BH?

2nd
As of end of today I have put in 60% in this market
OEX call I brought yesterday was up 2k in morning and did not sold them, down 2k later on –Break even later on and at end of the day down 2k
I brought 10 more Call at end and now have 20
Also now I have USD/QLD/UYG/IBN/CAF/TTM/TBT/AIG/ESLR/MBT
Intension is to be in 100% cash at end of the day Friday

c3- i agree with the earnings comparisons on tap...how could they NOT be good for financials, especially if given the opportunity to value off-balance assets at 'Treasury-denominated' values? this would be my premise for a short-squeeze going into earnings...

2nd...There's going to be an opportunity, tomorrow, later in the week, I don't know when, but there's a time when we're gonna want to get VERY aggressive with Fannie/Freddie. They could rocket if the market thinks they're gonna maybe get saved. We're talking big mondo dollars here.

I've always wondered who those people are that sit behind the visiting speakers (paulson, bernanke, coxe). Interesting, I think I recognized the CEO of Harvest Energy Trust right behind Coxe.

vinod- can't say i recognize the Russian telecom company, but you seem positioned to cash in on a gap up tomorrow...good luck, my friend

shark- i don't disagree...red 23 could in fact come up...

red 23? what is that roulette?

alright, let's make that the brunette with the trust fund could invite you home to meet the parents...

2nd, c3,

I don't place much stock in ANALyst's earnings estimates.

A major study conducted on 1500 NYSE, Nasdaq and Amex companies, based on the estimates of 500,000 individual ANALysts' estimates, over the course of 18 years showed that the average ANALyst estimate was off by a whopping 44% annually.

On the other hand, ANALyst estimates do move stock prices, which is why, at Bill's request, I report on these changes for the Cara 100 on a daily basis.

Regards

Vad could answer the phone during dinner and send you an autographed copy...

Ok, three questions for the group to provoke some discussion:

1. What do you think is the probability that the Paulson-Bernanke bail out will pass by the end of this week?

2. If it doesn't pass (or is delayed), what would be the result?

3. If you weren't allowed to go to cash (hypothetical), what would be the best way to position your money?

BH- LOL...

ttl- based on reports that President Bush "reassured" members of the UN it will pass, i would put 60-40 odds on it happening by EOW/80-20 by end of next week...

http://tinyurl.com/53c5vh

Do you have the reference for that study, Bullhunter?

BH -

Precisely the point. The "mis-estimate" is an excuse for the movement and the game plays on...

shark- seriously, i see FRE/FNM in double digits within a year, and i plan to keep my chips where they are...i would NOT, however, bet the farm, as you will be violently taken out at some point...

Mackinaw,

The study was done by David(I love holding Fannie Mae Notes)Dreman and Michael Berry of James Madison University.

It was published in The Finacial ANALysts Journal in the May/June 1995 issue.

Source: Contrarian Investment Strategies: The Next Generation by David Dreman. Simon & Schuster 1998

Regards

Posted by 2nd_ave: "David- you may not like walking in my shoes, b/c they're always uncomfortable...which, i guess, is the price one pays for playing against the grain..."

I understand your logic, and that's why I bought FNM in the first place. However, after seeing that FNM did not double in the next few days, I figured that maybe its fair price is really below $1. Over the weekend, this position gained new colors, as I think traders are hoping now that the Fed will buy some bad mortgages from FNM. I don't think this will happen, as FNM is already government-owned. In any case, this was just a fun game for me (as I invested very little in FNM), and having made 1K (which is twice the usual $500 target I have for a trade) I was happy to close this position. I hope you are right and it does hit teens within the next year, and you'll make a ten-fold gain on your position.

Democrats to let offshore drilling ban expire

Buy DUG

Oh I didn't notice Bill's reply to my 9:48am post until now. Thank you so much Bill.

Why bailouts will only place the taxpayer on the hook in the U.S. and why they won't work in the future:

Bond yields as they were on Friday:

http://www.flickr.com/photos/11747277@N07/2883432567/

Bond yields as of the close:

http://finance.yahoo.com/bonds

Nemo - Why DUG? Why not XLE?

Here is the report on Offshore Drilling

http://tinyurl.com/3jemgv

Wall St. Bailout - After reviewing the telecasts from today, my conclusion is Wall Street should be allowed to fold or reinvent themselves without taxpayer assistance. The GSE's weren't properly regulated, and whomever is responsible (or even a party to) for the oversights should be promptly removed from public service.

I think Bill was right from the beginning, the economy won't fail from allowing these bankrupt businesses to go by the wayside.

And why not RIG, and other offshore drilling/equip?

nemo - Thanks for the heads-up!

2nd,

All I deal with is the present. What happens a year from now believe me I'm not enuff of a genius to know. But do they go to 2 bucks tomorrow? That's what I'm interested in.

shark - I think they might go to the moon if wall street doesn't get their taxpayer gift, what do you think?

Hello everyone,

I won't rehash my previous posts. Just something to think about as we watch the centralization and socialization of the US banking system:

In the event of some sort of crisis precipitating the need for US officials to declare and enforce martial law, just such a centralized and socialized banking system here in the US would be beneficial if not a requirement. If a social engineer were to anticipate the enevitability of a martial law scenario, he or she would pursue the advent of such a system at the earliest time ahead of the event itself.... putting in the necessary infrastructure early so that it would be recognized as acceptable and functional to some future indignant and perhaps reluctant populous (international as well as national) and so that the system would be working well when required.

To me, the machinations that got us to this point are superfluous and will be the fodder for attorneys to litigate and historians to debate for many decades to come. I am more concerned with what comes next after this uncomfortable point in history and the repercussions of those events for myself and my family. NOTHING happens in politics by accident.

Perhaps this perspective has already been raised.
I havent been able to keep as close an eye on posts as usual.

Hope you are all doing well.
Sincerely...

Always a cogent contrary opinion via Russ' blog:

http://wallstreetexaminer.com/blogs/winter/?p=1918

Recession now fully visible even in Sweden.

Volvo cars shuts down factory 1 month, Scania (trucks) reduces production because of less demand in Europe, Volvo (trucks) sees orders reduced.

Swedbank has been under attack by short sellers, now the Financial Inspection has started looking into the situation and has opened for a possible stop for short selling. Level of short selling on the Stockholm bourse has never been higher.

Jan Kvarnström, the man who actually ran the Swedish "RTC" back in the early nineties, and most recently was an advisor to Germany on how to handle the IKB problem, says that the US plan is in principle on the right track. But the Swedish crisis was local, now the whole world is involved, so things are much more difficult now he says.

Hmm saw this today

Get Out the Pitchforks and Lighted Torches: Protest at Wall St. This Thursday at 4 p.m.

http://tinyurl.com/54lvcx

I wonder how it will compare to the village Halloween parade :)

I love the city and always miss it.

"Paulsons Plan Was Not a True Solution to the Crisis" by Martin Wolf of the Financial Times

He proposes ways to solve the crisis without taxpayer involvement.

http://tinyurl.com/52zgbl

Mortgage defaulters, short sellers, oil speculators ... take your pick for the scapegoat of the day. This crisis is defining the presidency of George W. Bush ... he had his chance this week at rejecting Paulson's harebrained, self serving plan, removing him from Treasury but meekly fell into line.

Both Paulson and Warren Buffett seem to be reading from the same playbook of death spiral financing.

How anyone could gain confidence from either action is beyond belief.

Instead of trying to fight the mbs battle that was lost long ago, Washington needs to come up with a plan to save the banking system and the stock market by topping up and then some) FIDC and SIPC funds.

If foreign entities need to be made whole, due to fraud, so be it. But give them long dated treasuries that must be held for, say, 5 years; otherwise, I fear that as soon those being made whole are paid off, they'll be cashing in their newly minted chips.

http://tinyurl.com/4eyuuq

Write your Congressman and others. Demand QUID PRO QUO.

http://tinyurl.com/3z62tf

Works better if you put in the right link. Duh.

So $700b is enough, $150 billion isn't enough, but $5b out of Warren's wallet is enough?

I was pretty close to dumping my BRKB stock after I heard about that one. It's all over the news that Buffett bailed out Goldman Sachs.

There's a bunch of flat green over in Asia markets. Wait & see?

Congrats to those hitting the lottery with FNM/FRE. Easy come, easy go...

Jimmy Carter says bailout plan is faulty

"It's only three pages of outline. It gives him dictatorial power with no supervision," Carter said.

http://tinyurl.com/4a33xl

The TED spread has been increasing again. It was as low as 1.98 on Monday, but is now at 2.73.

Didn't you see the $233.33B/page 3-pager memo yet?

http://tinyurl.com/3m9mfa

"b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

"(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;"

Jobs with out interviews or qualifications? Whohoo.

"(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;"

Does this mean they can get their clients drunk and sign contracts legally?

"(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;"

Would this include "bank-holding companies?"

"Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3."

Google "and semiannually thereafter goldman" for more commentary and bankspeak.

"The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

I'm just waiting for him to ask for frickin' sharks with frickin' lazers on their heads.

http://tinyurl.com/3lxajk

CADUSD=X appears to have made a nice bottom. Or is that a H&S pattern, awaiting further beatings down to $0.90?

http://tinyurl.com/megk5

Gaps gotta get filled.

http://tinyurl.com/cjeu7

Good morning Wall Street benefactors.

Here are your Cara 100 Ratings Changes:

EXC - Upgraded to Outperform @ Wachovia

INFY - Downgraded to Neutral @ Credit Suisse

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

The words of Bob Dylan keep echoing thru my pointed little head this morning:

"Dear landlord,
Please dont put a price on my soul.
My burden is heavy,
My dreams are beyond control.
When that steamboat whistle blows,
Im gonna give you all I got to give,
And I do hope you receive it well,
Dependin on the way you feel that you live."

Offshore drilling ban will lapse, allowing potential exploration. CHK is backing off further exploration. Gas is plentiful and now more areas are open to oil exploration. Economy going down, demand going down. Oil probably to test Bill's $85 level-even if it spikes today, we're seeing a post Gustav/Ike effect which should wain.

NEMO
DENSA

http://www.federalreserve.gov/newsevents/press/monetary/20080924a.htm

I would think this is positive for gold. Yes?

where do u see TED spread?

Sold ESLR pre-market at 6.45 and 6.50

Still have some to unload @ 6.99!

I look for the TED spread here:
http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND

http://www.rba.gov.au/MediaReleases/2008/mr_08_15.html

TED spread is here apollo:
http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

I wonder if the $700 Billion bailout will pass. It appears there is a lot of grass roots resistance to it. Many, many blogsites are encouraging Americans to contact Senators and Representatives. It is happening. I have several coworkers who have asked me about it and tomorrow I send them links on emailing our politicians.

Maybe I'm just a fool but I don't believe this is cast in stone yet. The anger I hear from average non-financial type citizens is immense. My anger is immense.

If it passes I have a few longs selected for the invariable stock market rise (NO FINANCIALS - I have to live with myself). I have been looking at BA, WFR, and ZOLT. BA is in buy zone and WFR accumulation zone as per Mr. Cara's system. Zolt I am slightly underwater on from a bad trade in August and holding until they report next probably.

What I wonder is since Comrade Paulson banned shorting financials how can I profit if it *gasp* doesn't pass? I made a lot of money off SKF but am sort of gunshy on it now. If the public ground swell grows I may just go as much cash as possible. I am also going to close all banking and checking accounts I don't need and go into cash. Why? Spite I guess. A few thousand here and there all add up.

Yes, I contacted Reid, Ensign and Porter (Las Vegas, Nevada, here) with emails voicing my opinion against the bailout.

Just like I always do when they start giving my money away.

CP,

RIG was recommended by Jim Jubak at MSNBC this week.

MtnGntx,

Good points re: banking controls and martial law scenario. I see you are about as suspicious a I am.

Not a good feeling—like waking from a bad dream and not sure if you are truly awake.

History is one of my true interests. In the past year I've read, "IKE, an American Hero," "1776," "1812, "bios of Andrew Jackson, John Adams, Gerald Ford ("Tell it when I'm gone") and the Memoirs of U.S.Grant.

Currently: "Hard Times," (personal experiences of the 1929 depression).

Your posting recalls the treatment of the Bonus Marchers by Mac Arthur and Hoover.

Watch out for a mass recall of firearms.

Are we there yet? http://tinyurl.com/436b3e

Bill said: "One of my key indicators for timing the end of the current Bear market will be the Toronto Venture Board index."

"So, when you see the reversal in the CDNX market (ie, Toronto Venture Board), I believe that will be a signal that smart money (of which there is plenty around) is returning to capital markets. That will be the time for you to take a reasonable risk to seek the legitimate reward opportunities that equity markets periodically present."

JVS3,

In case you missed it, WFR got the Outperform Rating at RBC Capital this morning.

Regards

Thanks BH...I own none at this current time but have been watching.

I am mostly cash and trying to be very conservative at this time. Daughetrs >>college, etc. Even if I just hold my own thanks to Mr. Cara and this site they will be able to attend college without crushing debt.

I won't regret missing out on whatever WFR does with the upgrade, since bigger factors are overwhelming the market. The upgrade could pull WFR into the buy zone using Mr. Cara's RSI technique, so there will still be time to make some money.

So BH? THANKS! That's why I read this every day and do my best to contribute. Very much appreciated.

bought some DXD at 62.29.

should clarify. It was close less 10 day ATR€. Some panic selling. Premarket futures green.

JVS3,

Along a similar line, have you ever checked into HXL ?

This is another one that holds my interest.

Regards

Occam_razor,

Much of what is in your 7:30 PM post is adding to my reluctance to re-enter the markets in any major way. I have managed my own retirement investing since 11983 (first year permitted). Except for 1993, I never had a down year until now.

In the past I had an income from business, but the other major differences now are:

• Loss of manufacturing jobs — provided middle class status to minorities and others without higher education.
• Service jobs are mostly low paying and missing benefits.
* Individuals responsible for retirement planning, health care
• Decades of declining purchasing power
• Huge credit card and other debt
• Influx of large minority workforce willing to work for cash at lower rate

I realize my personal experiences and living in the rust belt color my perceptions, BUT...

They also provide rose colored glasses to those not having these same conditions or knowing people who have been devastated by them.

Bill is obviously wealthy and even though he has a good imagination the ability to recognize some of the effects, it is not as jolting as being there.

We had it so good for so long that even many of my closest friends who retired prior to the effects of globalization think I am imagining the degree of change.

Looking over yesterday's action,

XLP accelerating down, though on decreasing daily volume.
Intraday looks bearish as can be, has been sold down into the close every day for some time now. Institutional unloading, distibution is finished, time to mark down.
Remember, being a "safe haven" XLP usually went up when everything else ws down? Not any more. But, after 3 days down, maybe time for a bounce soon?

Most bearish otherwise are:

XLY is dead meat already (what rally?)

XLU "should" have held up better, already down at support.

Only thing up I watch was IYR(!?)

An enormous amount of accumulation has been going on in this as I see it, the bust could/should be spectacular when it comes - on the announcement of the mega-bailout?

That scenario would be a bear market version of the classic "buy the rumour, sell the news""

Something like:

"Sell some on the rumour, dump what's left on the news".

bobbyo,

Sounds like Gladstone is to Obama as Disraeli is to Bill Clinton.

I have checked into HXL but not as much as ZOLT. I just like ZOLT's action and story more.

Since it was founded and run by an engineer that appeals to me. It is also what is holding the company back (IMHO).

I do believe the carbon fiber market will grow emmensely. I have started to run into it where I work as a means of reinforcing conrete, just this year. That was a first for me. The auto, oilfield, wind turbine blade, etc. markets should continue to grow (at what pace is the question).

I've just picked a different horse. The runt horse.

occam_razor: Re Penson,

I use thinkorswim, the best for options traders, which uses Penson as fiduciary/backend, and they have been very good in all ways.

I had serious problems with for example Interactive Brokers, which I would never go near again.

I removed all assets from a broker using First Clearing, run by Wachivia, this spring after repeated problems getting a simple wire transfer done.

trailing 2 more buy stops on DXD