This came up today:

OSC Temporary Order Prohibiting Short Selling Cdn Financial Securities

SUMMARY:
The Ontario Securities Commission (OSC) has announced a temporary order that prohibits any person from effecting a short sale in the publicly traded securities of certain Canadian Financial sector entities.This includes common shares, preferred shares and debentures of the affected companies.

Short selling any publicly traded securities of certain financial firms is prohibited. Open short sell orders will be cancelled for these securities

Further details may be found at the OSC web site at http://www.osc.gov.on.ca/Media/NewsReleases/2008/nr_20080919_csa-sup-temp-order.jsp. We will provide additional details as they become available.

CONTACT INFORMATION:
Should you have any questions or require additional information, please contact an Investment Representative at 1-800-465-5463.

vinod- why don't you drive the Mustang today, have a little fun on the trading field ;)

2nd,

Do you see where fannie and freddie are?
Goshdarn investors bidding up stocks overnight. There oughtta be a law...

"NEW YORK (MarketWatch) -- Billionaire investor Warren Buffett said Wednesday that he believes some form of Treasury Secretary Henry Paulson's rescue plan for the U.S. financial system will pass and that he would not have invested in Goldman Sachs this week otherwise."

http://tinyurl.com/4mqcnz

which doesn't mean it happens, or even that the odds have improved; it's the reaction to what he says that flows through to prices...

I TOLD you those dogs could still hunt...

Bill;

Do you think Buffett might be taking one for the Team America... it's not as if $5B is going to hurt him. Maybe his pal nObama asked him move close to the plate for the walk???

shark- what's stopping you from buying at 1.80? if you're afraid to buy, then so is everyone else...(btw, i don't think FRE/FNM made the list of disallowable shorts, so they still have the potential to lift off)..

Dude I'm not "afraid" to buy here. Just wish the prices didn't move so much overnight so that the sharkster can make the coin instead of johnny-overnight. And yeah, this kind of appreciation can make people think twice and can make a re-entry more difficult, but don't sorry, I'll do it. No I don't think this is too expensive at all. Freddie should be good for $2.30 today and fannie oughtta get to $3.20.
Damnm they're going up again...

2nd sharkster:

FNM FRE dip on open?

nemo- i don't know, but if that's what everyone's waiting for, probably not...

re everything else: i think there's plenty of time to go long...everything's down more or less by 50%..no need to catch the low on all of it..

Buffett: Paulson Should Be Asked To Remain Tsy Secy In Next Admin -CNBC

Last update: 9/24/2008 8:34:28 AM

2nd:

Ask, and you shall receive!

So what are we buying today at the Wall Street Bargin Basement Sale?

i'm only around 35% loaded...i don't know that it's all day trades from here, i think the time horizons gradually get stretched out, till you're fully loaded and trading wider swings...JMO

One more brick in the confidence wall being built. Buffett is telling us the same thing Bill is.

We've tested the previous low, the sentiment is crap, Buffett's buying and the Government (of, by, and for the people)is injecting $7 billion in stimulus/capital.

We jumped from here to 12,000 on that puny stimulus they passed earlier. $7 bil. is not pocket change....

Lot of air in those pre-market fannie/freddie prices

Yeah, volumes on FNM FRE slowing.

Cara 100 Update:

GOOG - Target Price Lowered from $657 to $570 @ Kaufman Bros.

I think Buffet's buying is well timing event. it seems like the last silver bullet.

Don Coxe issued the warning last Friday. Henry & Benanke are managing the public perception. Hope they will succeed. How far can they go?

Did anyone else catch that ride? I was late seeing GS at $107 and rode it to $125 yesterday.
It was up so much in three days I had to take profits. Could have eeked another $6 a share this AM but I'm a happy camper making my gains off Buffett.

futures backing off...

bought some DXD at 62.29 this AM pre mkt. Trailing 2 additional buy stops.

Report this morning that the December 18 T bill traded at 5 basis points this morning. Unreal.

Yeah, at the moment with FNM and FRE people are waking up and seeing who they're sleeping with

Credit Suisse upgrades AmBev (NYSE: ABV) from Neutral to Outperform.

Opened up 2.97% on the Bovespa this a.m.

... and one more comment before I head off at 6:30am to a job I can't stand, and can't change because of the downturn in the economy, and will be working another extra 5 years because my pension funds have been KILLED by these bozos!!!

You know what Mumbling Paulson, Ben (everything is contained) Bernanke, and Chris (deer in headlights) Cox... looked like yesterday before the hearing committee.

It looked like the kid who broke something... AND THE COMMITTEE was the KIDS MOM, who was covering for him before DAD - The USA TAX PAYER comes home from work and hopes he doesn't discover the mess!!!!

Holly COW! What a joke.

fyi - RIO was knocked down from $24 to $21.21 within the last 48 hrs:

http://tinyurl.com/22om8t

fre/fnm look ready to rip

OOOOh! You're gonna get it when your father comes home November 4th!

The stock price was at $125 for GS. If Buffet bought here at a price of $115 with 10% intrest on top of that. Plus, got a five year opition to buy the same amount of stock again for $115. I would guess the vaule alone for the warrents would be over $40/share. So he paid in a since 115-40= $75/share for GS when it was trading at $125. I think I would do that right now too, if I could turn around and sell the opitions to someone else after the big run up in a week.

sharkster, why do they look reay to rip? Early morning bull trap because of overnight?

Went long WFR at 30 and BA at 57.50.

I think this will be a long day for me watching.

Grantmi: you may not get you money back but if things go as planned you may get justice against the people who helped make this happen,and hopefully they get to spend 5 years working doing laundry in some prison!

Skylane

"Two law enforcement officials said the FBI was looking at potential fraud by mortgage finance giants Fannie Mae and Freddie Mac, and insurer American International Group Inc. Additionally, a senior law enforcement official said Lehman Brothers Holdings Inc. also is under investigation. The inquiries will focus on the financial institutions and the individuals who ran them, the senior law enforcement official said.

The law enforcement officials spoke on condition of anonymity because the investigations are ongoing and are in the very early stages."

waterhouse down again...

closed out remainder of SIL position at 4.16.

Set a contingent order if IEF>89.35, sell SIL at market.

Quiet Opening -

Has the market halted entirely? Most financial shares prices are stagnant.

Fear?

Timing?

Sheesh.

wasn't that a weird open, strange price action, slow flow then alll of a sudden, woosh!

nemo...theyre not theyre dropping first

FRE/SSO - I couldn't decide which was the riskier so I bought both...

IRX is plunging to 0.40% this morning. Something may be up.

I getting bullish like Bill but I am scaling in slowly.

CP- SSO looks good to me also, scaling in here...

Whaddya' think sharkster on fnm an fre?

Credit Default Swaps (CDSs):

There is a lot of talk about a regulated exchange for CDS contracts. Given that there most likely will be an exchange for these and the notional principal amount is in the tens of trillions of dollars, the volume of contracts could be large enough to establish a new source of revenue for companies like IBKR.

Also, I work on a lot of hedge funds and know that they invested heavily in CDSs because they were essentially unregulated insurance contracts and had they invested in regulated insurance contracts then they themselves would become regulated. Given this, the impact on hedge funds and the market in general can not be underestimated should they regulate the entire CDS market...

Bill - any thoughts on this?

Bought AIG on the dip at $4.25

SSO - Bought a little soon?

wall of worry..

Theory: Bull traps until Congress Acts

took a bite of fannie while watching the freddie chart, rode it up and sold and realized I was looking at the FREDDIE timestamp. Fortunately they move pretty much in tandem, so I actually made more money in 14 seconds than I ever made in 14 seconds at a regular job!

Buy 100 Shares of SSO
Details Filled at $51.90

wall of worry..---2nd
it's only money?

XLY probably weakest sector, watching it for a breakdown or bounce.

XLP now just below a major fib 27.24

XLU now below it's major fib 33.47

DIA looking weak, qqqq looking ready to fold.

if they can't do any better on Buffett buying GS (no-one has asked - did his arm get twisted?) and bounce from this level in the open already, it's down to last Thursday's bottom where the "rally" started.

Nemo...right now I think they're correcting. Patience.

I agree pappdjavul. The SPY looks the same, whoops, there they go............down

Craig,

As much as I hold Warren and Bill in the highest regard, I must speak against the love-in that is shaping up around this bottoming-out commentary. IMO, Buffet has a $billion reason to talk up why he is now investing in failing investment banks. He is attempting to corrall his followers into insuring the success of his strategy to speculate and profit in a volatile market. I agree strongly with Vad's near-term strategy as presented yesterday in commentary. In looking at what may be the best of the financials out there - Canadian banks - I take away the earnings resulting from "new banking" since 2003, add in retained earnings after dividends and arrive at valuations based on "old banking model" . I conclude that they remain hugely over-priced as they move into a weakening economy where it it will be even more difficult to do business the old way. For example, I will only start to accumulate RY when it moves below $40 CDN. Anyone out there that is like-minded?

TerryC- if there's a love-in going on, it's a downer...differences in opinion must exist in order for trades to take place, so each of us has varying degrees of confidence in the bull, or the bear for that matter...i'm worried myself, and monitoring my own reactions to all that happens at all times...

Hi Bill,

I worked hard my whole life, didn't cheat, paid my taxes and I resent getting stuck with other people's bubble debt resulting from their greed. Like others here, I am trying to build a portfolio so I will have a roof over my head in 20 years. I am 51 now and live alone.

I Really appreciate your blog and guidance.

I have loaded up on many of your picks like GG,SLW,RIO,TCK and today DELL.

Question:

Since I am in for the long haul 1-3 years,what are your views on the falling USD? Should Canadian Mining Shares be purchased in Canadian dollars or USD?

Would appreciate comments on this.

I bought gold/sil through the perth mint in Australian dollars and very happy so far.

Best Regards,

JB

Buffet just got free money, who would turn that one down?

You can see with 5 year SPY chart that volume has been crazy recently.

http://tinyurl.com/46sc2l

A huge component of SPY is energy/oils (XOM/CVX) which if oil falls should fall proportionately. Maybe $90/barrel range?

If all the speculative excesses were unwound (unlikely) and the CDS mess unravels (likely) would we see $101 spy (1999 levels)?

Of course, with 10% inflation per year, would that give us $262 SPY from 1999 levels? Bill could be right... from a devalued dollar perspective.

I would settle for $150 level if it could get me out of GE intact.

Though with slowdown in economy, credit crunch, steel price drop, commodity price drop, PM price drop, not sure what would create a bull run on stocks?

Who knows...

Where is $2000 gold?

speaking of love-ins, first hour has shaken out a few of the newly-minted buffet groupies...real garcia fans know the off-key playing weaves its own way to resolution...stay on the bus if you're a deadhead...

Terry... but there is no contradiction between Bill's take and mine. Just want to clarify, since it sounds like you perceive it as such

From Frank Barbera:

In the chart below we see the S&P 500, ... a pattern of intensifying selling pressure with the last trendline ... dating all the way back to 1982 violated in recent weeks.

http://tinyurl.com/1w56

GSE's are beating the market again - That's messed up...

when I check indicators like $indu:ief, $naa50r, the markets are not at extremes. The month end effect is coming - my guess is a retest of the mid Sept lows by Friday to set up the EOM rally.

I suggest that those interested in trading in the first half hour put a buy stop above the 10 AM high. U can judge your success whether bought in the lower 1/3 of the price range for that day.

GL

Averaging down on HERO and RDC following the lapse in 25 years of lunacy of not drilling promising offshore prospects - brought to us by the progressives.
Happy Dancing

bought some GME at 33.76. Max pain 45 in Oct.

Do ur own homework.

vinod - It's not real money, it's just an IOU!

TerryC, if you are able to glean anything from the 'Discourse' it is to leave your ego at the door and concentrate on the pricing behaviour of stocks NOT the emotion. I personally am challenged everyday to be clear on those points. This is a terrific forum to air ideas BTW.

Very interesting variation on the World Time web sites: http://tiny.cc/RnkjB check out the running US debt clock........

Oops wrong Tiny url here is the real one:
http://tinyurl.com/2qeuu4

Buffet & Company -

This is a history making time. Buffet gave lots to charity. Perhaps this is one chance he can/wants to be patriotic, be a savior in crisis and make history book? No? He certainly has the credential and the money. If you want to do a fund-raiser, who'd you call?

shark - Sometimes you've got to treat your stocks like you do your women; you've got to hold them overnight...

Re: Buffet and GS

If the downside risk is $75/sh in GS, then I suppose that you can expect to see that.

Chickenpookie
It is not a market if it does not move other way than we like

Terry,

Do you have figures for what portion of RBCs earnings were from "new" banking versus the traditional type? I would be interested in knowing because I am also interested in adding it to our portfolio at some point.

Just a caution. The problems faced by the IBs have as much to do with leverage as they do with loan quality. The banks in Canada used lower leverage and insisted upon higher loan quality. I don't think you could use American statistics and apply them to the Canadian banks.

RBC is the bank we use. They have a very good franchise and I have noticed them expanding their business to include insurance. However,I do expect economic headwinds to affect their bottom line.

GLD down GDX up

Opened a position in purified metals supplier 5N Plus VNP.TO today @ 4.98. They are a big supplier to solar co. FSLR and have 2 production facilities in Canada and Germany. They have a nice cash position and minimal debt and are profitable - $0.22 CAD earnings for last fiscal year.

They did a nice share offering in April that priced above $11 CAD/share for over $40m CAD total. Shares are trading at less than half of that now. I think that someone has just been blownout of this stock.

weekly chart is setting up nicely and big volume spikes just came in.......might be worth a look

Opinions appreciated.

I am planning on riding this to $7 in the near term

added to FXP position at 93. ave cost 86.42

Banks - JMO, as a thought, I wouldn't necessarily deposit my monies in the same bank I would be trading, necessarily. But of course, that all depends on the level of risk you're willing to accept...

MGM - I saw the CEO out yesterday jawboning Vegas...

MGN-Been in and out a number of times but with more or less proven reserves of 230M oz of AG & 2B lbs of CU this one could make an attractive target for a real company. Under a wilderness, but Montana recognizes right to proceed with underground development.

I'm thinking that when we finally do begin a legit rally, there will be a knee-jerk reaction to sell off gold/PMs as money moves out of "safe" assets and back into the market that could lead to a retest of supports for gold. Soon thereafter everyone realizes that we are really in a hyper inflationary environment?

Perhaps now is the time to look for TBT to try to close the gap for a buy around $60-62 and simultaneosly be waiting for that knee jerk gold sell off and buy in at $800?

PS......lots of talk about $80 oil here. Am I the only one who thinks that $160-70 is in the cards over the next couple years?

Congress should step away from the table, develop their own plan, and order Paulson to execute accordingly. Take it or leave it. We're talking about taxpayer money and how do we know the US economy would collapse if nothing was done to keep Wall Street from collapse? Collapse is just another WS fabrication.

Bill,
I'm confused by your banking recommendation — especially GS. I thought you were opposed to giving them our money.

Billy - I'm with you on all of the above. Oil will see lower prices before rising to 170 for the same reason gold will fall from here (temporarily).

Grym, think Bill is opposed to supporting GS, but that doesn't mean we shouldn't consider making a profit on the fact they exist... In my mind, being able to sell into their rallies just takes the wind from their sails, no?

Sold VLO@$33.57 after 9/17 buy

freddie's gonna have a big day

BillySundance, nice entry into VNP. With the tax credit passed, solar should be good. Just cant get into vnp until it cools a little. Ahh, there it goes...dn to 5.30

Ron Paul speaking now.

Ron Paul's on cnbc

[Bill Cara note:

Dr. Paul and I must have been educated at the same school. He railed against a Fed that has no constitutional authority to make the decisions it has been; he said that interventionist price fixing is not price stabilizing; and he said that a free capital market is the best system of determining value, and the socialist Interventionists have taken control of it, which is the cause of our problems today, and is unacceptable. I will nominate Dr. Ron Paul for Treasury Secretary. Actually I wanted him to be candidate for President but he was not given the shot by those special interests who control both Parties. In fact he was ridiculed as a loose cannon. In Dr. Paul's words, today, he doesn't think 15% of the People's representatives give a whit about the constitution or the rule of law. He nailed it.

Having said that, the problems of the day must first be arrested, and then clearer heads can set about the time-consuming task of building a new system. The part of the Paulson Plan I would never accept is his establishing control by Treasury and the Fed over developing the new system. That's putting the fox into ownership of the hen-house. Totally unacceptable.]

Photogray - thanks, I can momentarily stop kicking myself for my untimely exit from MAG.TO yesterday. The last couple weeks have been good to me though............I am keeping a watchful eye on JAG.TO as this is one of my favorite mid-tier gold producer plays

11:14 a.m.Bernanke:If economy stabilizes, rates must go back to normal
11:12 a.m.Bernanke: No special need to hike if Paulson plan passes
11:09 a.m.Bernanke: No impact on inflation from Wall Street rescue

....also keeping an eye on MAG.TO should it be nice enough to grant me another timely entry but may be awhile.............I can't stand to chase now though.

Everyone, including Bill, think Henry's bailout plan is necessary. Let us say it is necessary. Andy Xie raises a question that where do America get the cash?

By printing or by borrowing? $700B is a lot of money.
Read his blog please, take a look at what a foreigner thinks of bail out. Andy Xie is educated in US, (Havard) and used to work for MER under Stephen Roach. His past prediction has been quite reliable.
http://xieguozhong.blog.sohu.com/100493433.html

TED Spread back above 3

http://tinyurl.com/2uwt2g

Donald Coxe views a spread over 2 between (uninsured) eurodollar accounts and US treasury notes as an indicator of crash risk.

"During 2007, the credit crunch, which many believe was caused by the U.S. subprime mortgage securities meltdown, ballooned the TED spread to a region of 150-200bps. On September 17, 2008, the record set after the Black Monday crash of 1987 was broken as the TED spread exceeded 300bps"

http://en.wikipedia.org/wiki/TED_spread

XLY put in a slightly lower intraday low than last Tursday's, then bounced.

It looks like it is setting up to test a major fib just below @ 27.90, should bounce, or react there in some manner.

next fib below that 24.85, it should go there soon.

Just sitting on Jan ITM puts, sold the last Oct. puts yesterday, didn't get around to the Nov. puts then, so bought a few now.

11:48 a.m.Fed won't print money to pay for Paulson plan: Bernanke

11:09 a.m.Bernanke: No impact on inflation from Wall Street rescue

Unbelievable. I don't know how these people can live with themselves.

Re: POO

The oil price is going to spend some more time in the limelight as a safe haven, but in reality oil is just a commodity which is grossly overvalued. Will the oil price see $170? Perhaps, but I tend to think not until we see an oversold condition, so that has to come first. The RSI has turned up already, though. I still believe the rally was a hail mary effort.

Oil prices were almost 30 weeks into the last correction which ended in January.

So if oil sells off again, then it may take gold with it. Considering where bond yields are at, gold should see some support where it was lacking a few weeks ago.

How is the gold price faring against the sudden drop in money supply? There is a clear differentiation there. This is an essential change.

stockcharts.com

http://tinyurl.com/4c3pr2

Also, I have decided for the purposes of following the €/¥ trade to invert the chart:

stockcharts.com

http://tinyurl.com/4eu3e8

Note that this would imply that the ¥ and the $ are defacto pegged and if the ¥ appreciates significantly against the € which I think now is imminent, then the $ will see a lot of support.

The key factor is bond yields:

http://finance.yahoo.com/bonds

For a sudden rise in the gold price, you would need a panic rush into treasuries.

The Euro area yield curve at the short end will have an outsize influence, and it has come off about 30 basis points since last Friday:

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

yvrapx,
I left my ego at the door years ago when Bill's blog first started. I have done well by the C100 and RSI strategy and am extremely appreciative. I am simply trying to bring a balance to the hype on some of the financials that are beyond question by the media and some who comment here. While CM and BMO have been creamed by their disclosures of huge ABCP, CDO etc. all participated ( TD possibly excepted ) and the final numbers are not in. Take away four years of strong equities markets, high earnings from trading & investment banking and compare the P/E to what is was in 2003 for these banks. Is RY really a value at over 14x trailing earnings? Historically, Canadian banks have had a P/E of less than 10 but this has been recently higher due to their foray into high-risk environments where the money has been made and the door of opportunity has closed for the forseeable future. Time, and the return of short-selling of Canadian financials, will bring some reality to the price, IMO.

Interesting look at the bailout by Marty Chenard.

The Bail Out Plan … Is it a Good Thing, or a Bad Thing?

The consensus is that a bail out package that will pass before or on this weekend.

Unfortunately, some Senators are getting quite upset because the package is becoming corrupted with the attempted inclusions of credit card and automobile debt. By itself, the bail-out package has a number of flaws for reasons which I will discuss below.

First … A number of people have come to the conclusion that the bail out package is really a package that has our tax payers taking the hit for re-capitalizing the banks.

The methodology behind this is that Paulson and Bernanke are asking Congress to buy troubled and non-performing assets at their maturity value. The reality is that these trouble assets are worth far less and will probably never reach their maturity value. Wall Street often buys such assets at discounted rates that are only 20+ cents on the dollar because that is their “present value” … but Bernanke wants us to buy a $50,000 car that has been in a wreck for the full amount it was worth before wreck.

What if we don’t overpay for these non-performing assets? The problem is that ... if the Government pays what the troubled assets are REALLY worth now, then the banks will be under capitalized … and that will keep our financial system in a crisis state.

Paulson’s plan is for the government to overpay for these assets in order to save the financial system. But, that also bails out two other groups who should not be bailed out …. Bank shareholders and bondholders. As investors, these two groups should take a hit on their investments like any other investor caught in a bad stock that has plummeted. That's the way it works for you and I as investors.

Senator reactions …

Senator Dodd has proposed a counter-plan which include provisions for the government to receive equity in exchange for the bailout while still requiring the government to deal with the non-performing assets.

Apparently, it is not a new idea. Sweden did it in 1992 when faced with a similar problem. Sweden forced the banks to write down their assets to the current market value, and THEN re-capitalized the banks with preferred stock equity purchase injections. Essentially, they forced the banks to take their write downs and then did an equity for capital exchange. We can't do that? Why not? If Bernanke embraced this strategy, it would give taxpayers the chance to generate value for getting stuck with the bill. Why are Paulson and Bernanke avoiding this strategy? Why do taxpayers and the Government have to re-capitalize the banks and not get stock shares in return?

Making a less than perfect plan corrupted …

If the plan wasn’t already NOT as fair as Sweden’s plan, the current plan is becoming corrupted with the attempted inclusions of credit card and automobile debt. Why should your tax dollars be used to save the credit card companies from their bad business debts? Can you spell lobbyists?

Does Congress really understand the long term problem?

An ignored warning from a Wall Street firm: In the hall's at the Congressional meeting yesterday, one Investment firm executive told Senators that "the current plan is essentially a drop the size of a pea in the ocean". The feedback I heard was that he was ignored and no one wanted to hear what he was saying.

What was that all about? It could be related to what Seen. Elizabeth Dole brought out during the proceedings. She mentioned that the CDO problem was really troubling her. She mentioned a figure of 60+ trillion dollars in CDOs. Nothing came of it and it was largely ignored ... but she did at least get in on the record that it was worrying her.

What's the worry about on CDOs?

So, finally ... someone in Congress acknowledged that they know about the CDO problem. I have not addressed it in the past due to sensitiveness of the information and issue. But now that it has been mentioned in a Congressional meeting, I will discuss it.

From what I have been told, there is just over 80 trillion dollars of CDOs worldwide sitting at the world's largest financial institutions.

Here is what the concern and issue is about ... Merrill Lynch reported CDO values of $11.1 billion on their books. Less than two weeks later, they reported that their CDOs had loss 40% of their value. Recently, Merrill sold some of their CDOs at 22% of the original value ... that's a drop in value of 78%. Are you starting to get the picture?

The sub-prime problem has brought our financial system to its knees and was less than 2 trillion dollars in size (so far). If CDOs were to merely be devalued at 10%, and not the 78% hit that Merrill took, then there would be over 6 trillion dollars in write offs. And that would be a problem 300% larger the sub-prime problem. That would certainly be a scenario where the Wall Street executive's description of the of the bail out being the size of a pea in the ocean would make sense.

Summing it up ...

I know it is just conjecture on my part to draw all these analogies and discuss how they may effect us in the future. But, given some of the facts, common sense seems to be whispering that we should at least be aware of these possible problems. I'm sure Senator Dole knows more about the CDOs than I know, and she knows enough to say that she is very worried.

As I understand it, the CDO issue is not a problem right now. Why? Because they are under contracts that don't mature for another year and a half to two years. And, they are currently on the books at their maturity value like Merrill's were. So that gives the CDO holders time to try to wind them down, reduce the risk, and pump up their values. At the same time, it strikes me that 60 trillion is a lot of winding down to do.

Bernanke thinks the FED prints money? The FED doesn't own the printing presses, it's the Treasury. The US mint is a branch of the Treas. Dept.! Get that guy out of there....

I can't stand to chase now though...LOL. I agree,thats my MO. That and selling too early. Sold FRE 2 days ago at a profit @ .72.
Question for the group....Do I take profits on RBY and OSK.TO as I am up 33% and 22%?
Just not enough bullets to go around!

The whole plan to bail out commercial banking interests on Wall st. is so that all of the underlying 'assets' to the derivatives market don't collapse. These 'assets' are 10X leveraged loans, which count as assets against derivatives, which are also 10X leveraged.

Bailing out the underlying assets now will only create much greater problems down the road. All of that bailout cash will be lost. Surely Congress has more insight than to follow along with Paulson's plan blindly.

Fund manager Kevin McLean said yesterday that some large gold producer is accumulating OSK. (GG?)Hold, is my opinion.

[Bill Cara note:

I used to work with Kevin. Great guy. Has lots of experience with precious metals.]

Henry Paulson and the New Yazoo Land Scandal

Advocates of the $700 bailout are now rounding up a choir of voices to proclaim that the problem is simply a lack of liquidity. This kind of problem, we are told, can be solved “cleanly” (that is, with no Congressional add-ons to protect anyone except the major Bush Administration campaign contributors) by the Federal reserve “pumping credit” into the system by buying securities that have no market when “liquidity dries up.”

What is wrong with this picture? The reality is that there is much too much liquidity in the system. That is why the yield on U.S. Treasury bills has fallen to just 0.16 percent – just one sixth of one percent! This is what happens when there is a flight to safety. By liquid investors. Many of which are now fleeing abroad, as shown by the dollar’s 3% plunge against the euro yesterday (Monday, Sept. 22).

http://tinyurl.com/3s4vcr

The Bailout Will Kill the Dollar

It’s not about saving Main Street, as Paulson claims. Main Street, under the bailout, is toast. It’s about helping the banks and investment banks and insurance companies that brought on this crisis to ride it out in style, their astronomical losses bankrolled or absorbed by the American public, so that they can shift their operations overseas and continue with their rape and pillage of the global economy.

The US will be left behind, a smoking ruin, with Americans, like Weimar Germans before them, going shopping with wheelbarrows full of worthless green paper to exchange for a few days’ groceries.

http://tinyurl.com/54ycjx

The CDO problem referenced above by Chenard is gold positive long term.

The Wall Street Model: Unintelligent Design

Wall Street is collapsing not because of bad mortgage debt or lack of capital or over-leverage. Those are merely symptoms. Wall Street is collapsing because it deserves to collapse; it needs to collapse in order for America to survive. The economist Joseph Schumpeter called it creative destruction, a system where outdated models collapse to make room for new innovation.

Wall Street of the past decade never really had a business model as much as it had a business creed: greed is good; leveraged greed is even better.

The fact that Wall Street is collapsing is a given. How it survived as long as it did under its corrupted model is the question that will be debated in history books for the next generation.

http://tinyurl.com/3vd6nt

New York City condo prices are diving now as Wall Street employees leave the city or go for consulting jobs .....that's my understanding of it and so the housing bust continues to get worse. How much is that former $2,000,000.00 studio worth now? My guess.....$175,000.00

A session which rivals the poetry and grace of a Korean opera with the brutality of a Tijuana donkey show.

Go Ron Paul... Give this whole subject some sense of direction!

I hate the idea of the bailout, but are we not between a rock and a hard place.

If we really let the frozen credit ring seize up to the point of destruction, what will the US and world economy look like?

Are we as Americans willing to endure a 1930’s depression times 10?

What do others think America would look like if we let all the chips fall where they will under free market principles?

Going forward, the powers to be better set-up a clearing market mechanism and mark to market daily with the proper credit/debit flowing to each parties account as we do today with futures.

Telestar3d - There are better bailout options than Paulson's plan. Congress must put their heads together and collectively think this through...

[Bill Cara note:

Paulson's ahead of everybody's thinking on this. He has positioned America this way:

http://tinyurl.com/4rxmlv ]

Dump the RBY my friend. And don't hesitate to take a ride on fannie/freddie today. I still think theyre going up.

Somebody may have already mentioned this but AEM has currently retraced .618 of it's waterfall decline from the August high. Up 22 plus points in a few short weeks-maybe a time to lighten the load a little. Just my 2 cents.

Chickenpookie, please explain your better plan. What is it?

I like the Sweden model better than the Paulson plan.

Hard times.

after it goes down

On AEM: It's also suffering from the Cramer effect 2 days ago. It should get whacked when a plan is announced.

Ron Paul is frequently right on the mark. If he is not on my ballot, I'm willing to write Ron Paul in for president. The two front runners for president offer very few solutions and seem to be more of the same old system.

Also, I'm very impressed with David Walker (former Comptroller of the US) and IMHO think his leadership would also be worth considering.

Pentagon budget hits new record in spending bill

The Pentagon budget would rise to a new record while U.S. automakers and victims of hurricanes and floods would receive billions of dollars in a $630 billion-plus omnibus spending bill rushing toward the House floor Wednesday.

The year-end budget measure also lifts a quarter-century ban on drilling for oil off the Atlantic and Pacific coasts and is flying under the political radar compared with a hugely controversial White House plan to bail out Wall Street.

http://tinyurl.com/53mjdb

Swedish model seems much better to me.

As a taxpayer, if we are actually pursuing a "bailout" as opposed to creating a market for MBS etc that doesn't currently function, I want giant equity stakes in or full nationalization of any company participating in a bailout. I want clawback provisions to re-claim looted wealth via exec compensation packages at ALL levels from VPs up in those companies.

I understand the need to create a govt market to purchase securities to create realisitic pricing for mark to market wrt capitalization rules. But creating a market for is much differnt than wholesale purchasing of these securities without regard to taxpayer monetary outlay.

The need here is to un-seize the mechanism, which requires the counterparties to trust that the other won't go tits up due to inadequate capitalization. And this capitalization issue stems in part from there being essentially no market for these toxic assets.

The simple difference between a full-on "bailout" and creating a market pricing mechanism to address mark to market concerns is not even penetrating the mainstream commentary (at least not that I'm seeing).

Paulson got greedy, he may be hitting the wall.

Telestar3d - Sweed model IS much better than Paulson's plan. I'm thinking they could simply make the money available to banks which can demonstrate they are prudently managed, and to heck with wall street. Buffett can make the mom&pop retirement accounts whole again if he really wants to help, by buying up bad paper with Zimbabwe dollars, converting into USD at whatever price he can get.

TTM getting cheap

"During the Great Depression the Home Owners’ Loan Corporation was create to buy mortgages from bank at a discount price, reduce further the face value of such mortgages and refinance distressed homeowners into new mortgages with lower face value and lower fixed rate mortgage rates. This massive program allowed millions of households to avoid losing their homes and ending up in foreclosure."

Seems like "HOLC" is a more socially equitable solution, no?

http://tinyurl.com/5xesoa

Roubini, not Paulson!

The Andy Xie blog post that apollo7 recommends in his comment above is very interesting. It bears on what Jock pointed out yesterday regarding the power that foreign investors now have over the U.S. economy.

Interesting is Ben Bernanke's response to Ron Paul. His response: Instead of price fixing, the intent is to set up a market mechanism.

It seems right approach is to set up that market mechanism first then determine if $700 billion dollars is needed.

Roubini is a very smart guy, he should be invited into Ron Paul's administration.

L-E, I think most of Americans have not realized this, which is pointed out by Andy Xie.

"The U.S. still has an unrealistic view of itself. Its domestic politics are too insular and xenophobic. Even though the U.S. is the largest debtor in the world, it behaves like the largest creditor. "
-Andy Xie

He also has another article where Washington DC invited to express his opinion about what US should do as a foreigner point of view. His suggestion was quickly ignored. I guess that is the difference between the east and the west.

Hi,

Once the questioning by Ron Paul is uploaded to youtube, could some of the Commuity Members please post the link here, so other members who are not US based can see it?

Thank you in advance.

Cheers!

Oh, did you guys catch who it was Paulson selected to set the market price for which the sale to USG? Why it's HB&B, of course!!!! Ha,ha,ha!!! Paulson is such an idiot.... There isn't anyone in Congress who's dumb enough to fall for that one.

Bernanke and Paulson are merely involved in a game of passing off the risks apparent to the most convenient and available source, the taxpayer.

The U.S. has it's own leverage to a point, and it's those reserves other countries have. If they don't finance us, the $ crashes, and so do their reserves.

Now they're saying that President Bush will address the Nation tonight, in order to gain support for the bailout.

Nothing like having someone with a popularity rating slightly less than that of typhoid fever shilling for you.

nemo, so who do you think get the hurt most then?
And who recovers first? And how many enemies will the irresponsible debtor have in the world?

Larry Kudlow, the socialist

http://tinyurl.com/4jfff5

Just thought of Bill a few minutes ago when my stock broker called me a few minutes ago to find out what i was thinking.

Thanks Bill for helping me focus in on the various aspects of captal markets and what is most important to consider when making decisions...and what to study to become more of a positive invester and trader.

My brokers comment was (and she has many big clients with major firm) "Mark, you are one of just two clients here that have a portfolio that has increased in value this year"

I have been reading this blog on and off for almost a year and do appreciate the insight I have gained and what I have learned. I am wondering about trading platforms and software.. What are some good tools that some of you use? Has anyone done the Secrets of Traders course (Larry Levin)? I am thinking about jumping in a trading soon and want to be well prepared with the right tools. Any advice would be greatly appreciated. If you would like to email me direct that would be great. Thanks
Bill canarybill216@gmail.com

Apollo:

The US probably gets hurt worse, but it's just like when Trump was in serious debt a few years back, you're too important to your creitors. Enemies is irrelevant. Enemy today friend tomorrow.

I would submit that the heart of the problem is transparency. Government agencies and wall street institutions operate with mechanisms that are not available, observable or reviewable by the public. This secretive and hidden operation permits fraud without consequence of free market action while at the same time largely removing the ability of the investor be responsible.

The idea of a bailout at this point is an oxymoron as it relates to the general public. Either way, we pay. Savings are taken by either a bank failure or severe price inflation.

It seems to me that the bailout is for government agencies and wall street institutions. As I see it, there are four fundamental scenarios which face the general public:

1. No action, severe contraction, price deflation.

2. No action, severe contraction, price inflation for US (because foreigners flee dollar).

3. Bailout, government agencies and wall street institutions are saved, price inflation.

4. Bailout, government agencies and wall street institutions are saved, severe price inflation for us (foreigners flee dollar).

On the last two, the public is at a severe disadvantage to government agencies and wall street when it comes to keeping up or ahead of inflation.

It seems the prudent action right now in this period of uncertainty would be somewhat postured for each of these scenarios.

Michael Randallbard, why does clicking on your name take me to the agoracom web site? TIA,

Before this is over I expect Bush to quote the Bible to the grumbling taxpayers....

It is more blessed to give than to receive.

However, regarding the bailout I would like to say to the congress...

Check out the Old Testiment:

Voters will demand an eye for an "aye".

Selah

The U.S. has leverage well beyond the fact that China/Japan et al hold so much US debt. That leverage is the unmatched might of the US military.

gadensky - That blows me away..... I'll have to ask some investor friends how they're doing... And stop to thank Bill once again for teaching me how to understand the market.
Thank you, Bill Cara!!

Here is a simplified explanation of why I think the bailout plan will work:

1) The FED buys mortgage backed securities from banks, freeing up liquidity that will then be available to lend in the open market.

2) Banks, which now have liquidity available can lend to company X to finance capital investment

3) Companies are able to finance capital projects, contributing to economic growth and keeping workers (and the owners of real estate) employed.

4) With employment remaining stable/high, the owners of real estate benefit from a more stable financial atmosphere and their ability to repay home loans increases.

5) Stabilization of homeowner ability to repay loans leads to increased value of mortgage backed securities.

6) The FED is able to resell mortgage backed debt at some point in the future.

Please feel free to tear this logic to shreds..............that is why I am here

Well, how would you use the military to solve that problem?

fre has fallen below it's opening range-top. It never really established an "up" today yet, so I'd like to see this rise more and show it's stuff.

Bull Hunter
This is one reason TTM is cheap....
http://tinyurl.com/5yoqwh

Wow, Alaskan Pete, that is a very powerful answer.

So why not stop the payments to the creditors right now, since so mighty?

SEC/NYSE is just putting off the day of reckoning.

This guy has it right...

http://tinyurl.com/ytn8ru

"we learned today that The White House was planning this little piece of financial dictatorship for quite some time:

"Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough."

What a tangled web we weave when we practice to deceive.

If this was being prepared for "some time" then the "emergency" status was manufactured. Instead of bringing this before Congress "months and weeks" ago for consideration where it could be debated and passed, ready if necessary, The White House and Treasury instead back-pocketed their plan and then sprung it on Congress with an outrageous and ill-advised "bump in the night, Freddy Kreuger style" scare campaign at the last possible minute in an attempt to give Treasury dictatorial power over our entire financial system"

- end quote -

Paulson's Pride... Putting the CON back in the economy, via Congress, sticking it to the consumer.

Financial WMD, indeed. Visions of mushroom clouds, all over again.

Don't be fooled America!

Debt is the slavery of the (perhaps once) free. Serfdom awaits you, and your children.

From NYT: ""None of the senators who listened to Mr. Paulson and Mr. Bernanke disputed the grim possibilities if Congress should do nothing, but it was clear that they were hearing from their angry constituents. Senator Elizabeth Dole of North Carolina, for instance, said residents of her state have been complaining about “costly and reckless” behavior on Wall Street, and the potential cost to people who are anything but wealthy. (Senator Dole is running for re-election.) "

Your actions are working, if you keep the pressure on your elected politicians they may ditch this robbery.

If you read the online articles on the WSJ, you will see thousands of comments, 99.99% of the people are against this plan.

That is what real people think about it.

Billysundance, how about lending those $1T (or $5T, whatever will be the actual final cost) directly to businesses who actually create something of value, as opposed to saving Wall ST. HB&B people?

AP - The honest side of US military keeps world peace, I'm not sure what damage the dishonest side does.... Regardless, this is all at the expense of the US taxpayer.

out of ANF for 1 pt loss.

When I say US taxpayer, I'm including anyone who holds US currency or it's derivative.

To BillySundance:

If the Fed's purchases of bad debt create inflation, interest rates could rise, which might cause home-owners with adjustable rate mortgages (that reset) to be unable to service their debt, which could create another crisis.

re:TTM

Thanks RDR.

They're having all kinds of labor problems over there but I love their upcoming product line.

My finger is twitching on the Buy Button.

Regards

TerryC
Fair comment and I concur fully.

Often when a situation like we currently face arises, I think we get so narrowly focused (helped by the media, no doubt).

In listening to the Congressional questioning of Paulson and Bernanke over the last 2 days, a question that has arisen several times from is "what happens to the economy if we don't pass this financial bailout package?"

It's either: we pass it and everything supposedly gets back to normal, or we don't pass it and we face financial armageddon.

Ron Paul often talks about malinvestment and misappropriation of taxpayer money.

What would happen if instead of giving that money to Paulson and Bernanke to distribute to troubled companies if instead, the govt would take that same amount they plan on spending in this bailout and send a check to each American taxpayer ?

Do you think the American taxpayer would be able to handle that money (invest it & spend it) better than the troubled institutions that got themselves into this mess in the first place ?

Wall Street, Paulson, and Bernanke want us to think that the situation is black or white. In reality, there are more colors in the box that could be considered.

SiO2 - that is a valid question. The Devil's advocate in me would ask:

How would the FED lend directly to businesses? Doesn't the banking system provide a competitive atmosphere for those seeking to borrow? If bank A and bank B are not competing for that financing deal, how would the interest rate be determined?

Rharaz

Higher interest rates could/would make it difficult to service/refinance ARMs. But, I don't see how high unemployment or lack of economic growth would be a better option for most ARM holders.

Long AIG @ 3.94

On Credit Default Swaps:

As I understand them, they are an insurance policy against entities defaulting on their debt. In the insurance industry, you generally are not allowed to take out a life insurance policy on an individual unless you can prove an insurable interest. Obviously, if you hold a corporations bond, you have an interest in insuring their liability, but to allow CDS's to be held by people who have no insurable interest, incents them to follow courses of action that trigger the CDS (the default of the entity with the liability). That's not to healthy, financially.

Don't forget that demographics don't add up to enough buyers to the housing market. many homes bought as investment on spec. the house prices have to fall. P and B want everyone to make mortgage payments to support existing prices.
What has to happen is the mortgages have to be rewritten for smaller amounts reflecting real house prices, affordability, not the fantasy prices created over the last 5 yr runup.

Bush is going live to try and get Republican support.

Pelosi says she won't bring the "bailout" to the floor unless a majority of Republicans support it. Reid says only one Republican on the Banking Committee could be counted on to vote for in favor.

http://thehill.com/leading-the-news/pelosi-wont-jump-alone-2008-09-23.html

Billy, well clearly the current banks did not do a good job at all. If the treasury and Fed can lend trillions (the Fed alone has already lent $800B to HB&B at 2% isn't it? Wonder how much the total is between them and CBs around the world) to HB&B, I am sure they could lend say at 4% to businesses who want to do something productive and stimulate the economy. Would it be inflationary, yes, but far less than the current plan of giving it to rich people at Wall St.

Back to yesterday's comments, does anyone know how many shares of GS Paulson still has in his blind trust out of the $500M he had when he took office?

BillyS - There is alot of "if" associated with the "bailout" plan presented by Paulson or Bernanke.

I have yet to hear either of them guarantee the plan will work, tell us this is all they need and there will be no more, to provide the odds of their success or to provide the complete pro's and con's of their plan.

Also, the debt needs to be backed by collateral to have value. The transparency of the situation is lacking to the point that we as citizens don't even know if the debt is backed or what type of debt will be bought.

Rumor has it that the debt may have been securitized to the point that it may not be completely trace-able. Additionally, we don't even know if these are debts in first place against the collateral or second or third mortgages (which may not ever get recovered against the collateral).

Without this information, should eanybody really be behind any such plan? Do we continue to give our confidence to these people and give them credibility because they say "trust me, I have all of the information and know what is best for you"?

Financial IQ Test:

1) Do you believe that the bailout plan is all about helping the taxpayer?

2) Do you believe in the Easter Bunny?

sold my AIG at $4.00 that I bought at $4.25 and put that spec money into FNM at $1.79 instead. it's my gambling money and I don't like to gamble.

Sorry if someone mentioned this before, but if the problem in the "World Financial System" is, and the "bad mortgages" resulting from "the housing bubble", and the "Solution" is to get rid of the "bad mortgages" as opined by our King, ahem, er, Treasury Sec.....then, since "the Consumer" drives the US economy as also opined by the talking heads, then I think the best solution is to put money in the hands of "the Consumer".

How do we do that? Have the Fed (pay off or make the banks cancel & receive some amount from the Fed in exchange) all the mortgages.
They have already figured the cost of all "the debt", so the hard part is done.
They don't care about printing money (or fake printing money, or cheating, lieing... er sorry off topic) so there is no hazard in that direction other than inflation (what's that!?)

Thus, we fill lots of needs at once:
1. No more bad mortgages
2. No more mark to market qtrly reporting pressure on those "poor Wall St victims"
3. HUGE economic stimulus to the "the Consumer" (or the fundamental strength of our economy as McPainlin would say)
4. No more foreclosures, so the housing market can recover
5. And most important..... MY HOUSE is paid off 25 years early!! WOO HOO let's PARTY !!!

Paulson probably doesn't have any GS stock left. I read, that as a government official, he could dispose of his assets that could be thought of as conflict-of-interest, capital gains tax-free. If that were so, I would think he would have taken that deal. He knew where all this was going.

Correcto mundo nemo Paulson sold all of his GS for $700 million if I recall correctly.

jk484 12:54 - My time in the military managing budget: The more you spent, the more you got and were rewarded for it. If you spent less than your budget, those excess funds were taken away and it did not reflect well on you. At the end of the fiscal year, we were frequently up all night creatively finding ways to spend every dime and then some.

Sorry y'all if I'm posting more than usual. I just feel I have a responsiblity to speak up for the future of my children to the extent that I might be able to make a difference.

hey all you RSI(7) traders, Dell just popped gave a buy signal. There will probably be a pull back from the last $0.10 run-up, but Dell is now "on the clock" as they say.

questrade down

The price of gold is managed very well.

Max Pain experts...

Can this be right? TTM max pain @ 15?

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

Blowout Preventer

DELL

Good to hear that loaded up the UHaul @ 16.36

Meager volume & that's probably to be expected before the bailout goes through... Everybody is in limbo. Got out of DDM yesterday for some lunch money. Hanging out in cash, taking a break & watching.

Si02 - I agree with you that the banking system has been completely irresponsible in lending and it is a cryin' shame that they stand to benefit once again from this bailout.

I guess the FED figures that using the banking system as a front for FED lending keeps up the illusion that this bailout isn't a hugely socialistic move.......

Bert-

I completely agree lots of IF involved. Definely a few ANDS and BUT as well. We do need more detail of how the market mechanism to determine pricing would work and a proposed timeframe for holding whatever the FED would be buying. Lots of questions to be answered........

Bull hunter
Major LOL

Cramer: Goldman Would've Failed....But thanks to Buffett's investment, the company's solvent, says Jim Cramer.

http://tinyurl.com/44t6p5

Nemo - Paulson

I have read Paulson sold his GS stock. Wouldn't you? A bit dangerous to have your $600M fortune concentrated in one stock in an industry which you know to be precarious (since you led its massive leveraging).

Just think, he could NEVER have diversified his fortune while head of GS (show of disloyalty!). AND, he would have had to pay $100M in capital gains taxes, which he avoided by his "selfless" act of "public service"! - LOL

I get that we are in a holding pattern until bailout approval, then explosion. Would be interested in knowing what setups people are contemplating right now, since it probably won't happen until tomorrow.

Paulson has apparently accepted the limits on executive pay under the bailout plan.

http://tinyurl.com/4cc2kn

Hi,

At this time I am completely convinced that the bill will get a green light.

The measures to be taken have clearly been outlined by Bill over the last few days, and are quite clear.

My personal portfolio looks like this:

Long:
- great quality companies at the accumulation zone
- Gold
- Junior oil exploration companies

Short:
- US Bonds
- US Dollar

Please please do your own due dilligence. Never intended as advice.
Cheers!

westcoaster, holding straddles, doesn't matter which way it goes. As long as they don't ban puts.

I see IBM was added to the no-short list, who's next MSFT?

Posted at 2:11 PM ET, 09/24/2008
CBO Director: Bailout Could Worsen Crisis
Peter Orszag, director of the Congressional Budget Office, dropped a couple of surprises during his testimony before the House Budget committee this morning on the government's response to the current crisis.

Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke are steadfast in their support of their $700 billion bailout plan, saying it's the best chance for preventing the economy from sliding into deeper trouble.

Today, Orszag said, essentially: Eh, maybe not.

"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said. "Establishing clearer prices might reveal those institutions to be insolvent."

Orszag talked about the cost of the bailout to the federal budget -- his department -- and said, "CBO expects that the administrative costs of operating the program could amount to a few billion dollars per year, as long as the government held all or most of the purchased assets."

How many is a "few"?

washingtonpost

Initiated position in TTM @ $8.52

maromatics,

what instrument did you use to go short the $?

VR

What is going on with this government?

NYSE CEO Duncan Niederauer And Short Sale Rule
Posted By:Bob Pisani
Topics:NYSE | Investment Strategy | Stock Market

NYSE CEO Duncan Niederauer has just held meetings with a number of
financial company CEOs regarding the short sale rule. He has also
spoken on the phone with the SEC.

The NYSE has said they are expecting a broader solution to the short-
selling ban, but they are expecting an extension of the current ban on
short-selling in financials, which expires October 2nd.

The NYSE also said it was in discussions with the SEC on "marketwide"
rules for short-selling, i.e. rules covering short selling for the
entire market, not just financials.

Valleyrat,

I love to trade options and warrants, so for my personal taste in the money USD put warrants are adequate.

Other alternatives are futures or forex trading, but too leveraged for me.

ETFs are very dangerous, and I do not buy them. Please refer to the excellent advice by Kaimu at the discourse.

Please DYODD. Talk to a certified advisor if you need advice.

Cheers!

Is anyone considering UTX here? A while back, Bill had opined that the accumulation zone would be in and around $58. The stock's daily RSI7 as of yesterday's close was 34.4, weekly: 29.3, monthly: 31.2! So that's pretty close at a price of $60.15

Now we sit at $59.60. Still, the chart isn't so pretty. LT support is right at $59.50 it seems, followed by $57.50. The 50day and 200day SMAs are also considerably higher than where we sit today.

Any thoughts?

Hi westcoaster,

It seems like we (ordinary citizens) are damned if the bailout bill is passed (inflationary?), and damned if the bill is not passed (deflationary?). For some time, I have been somewhat confused about the inflation/deflation debate, so since last year I have had my long term investments setup in "permanent portfolio" mode -- ~25% diversified stocks (including a conservative, hedged fund HSGFX), ~20% commodity related investments (precious metals, gas/oil, ag), ~25% bonds (mostly short term, some TIPs), and ~30% treasury money market & FX. This portfolio is down in dollar terms only slightly (1-2%) for the year so far.

Maro, may I call you maro?

No advice needed, just curious on what was your approach. Definitely DMODD. Trust no one... well, certainly not an advisor, certified or not.

Thanks for the reply.

VR

VR,

:-)

You can call me maro, no problem.

Hope you do well.

Best.

CNH here in dirt cheap territory:

http://finance.yahoo.com/q?s=cnh

BUSINESS SUMMARY
CNH Global N.V. engages in the manufacture, marketing, and distribution of a range of agricultural and construction equipment worldwide. It operates in three segments: Agricultural Equipment, Construction Equipment, and Financial Services.

guess what: the juniors have bottomed!

If you look at CDNX (the venture exchange composite, which is 60% junior miners and 40% junior energy)or PNP (a huge bag of venture stocks, 80+% junior miners) or EDV (Endeavor Financial) they have all bottomed and bounced.

I looked a number of different types of juniors (pure explorers, project generators, and emerging producers) and it seems to be a general trend.

Reactions?

Jock,

Having been vested in the jr. sector for 3 years fully, I have to concur. However, I would add that they still look very cheap even after this bounce. There are plenty of quality companies there with high grade ore and high grade management. I would also put PNP.TO in that category.

The tide does seem to be turning as Bill has so strongly stated. ('you ought to be ashamed of yourselves - Bill Cara') LOL!

Rep. Joe Barton apparently told CNN the bailout is dead - only 40 votes in the House for it. I've heard that calls to Congress are 97% against it. There will have to be major arm twisting to get Congress to approve such a controversial bill 45 days before they have to face the voters.

Not saying it doesn't happen, but there are more obstacles then you would think to passage.

P&F scans for CDNX.

http://tinyurl.com/4lr3wz

As of Sept 23, 57% are in Triple Bottom Breakdown mode. FRE was in this mode beginning of August.

Didn't most stuff bottom & bounce last Fri?

CDNX stock is probably the first thing to go to get risk out of portfolio... first thing back in too?

Bernanke's own words on crisis - Bloomberg Television Bernanke excerpts:

http://tinyurl.com/5x56dc

see this after-hours rally in FRE? It broke out AFTER the close.

Prediction
http://tinyurl.com/4djkmr

Stocks on the list (would be interesting to see what return would be after triple bottom breakdown from Aug 3 - present.

FRE
FNM
LFC
UBB
GS
HBC
JPM
C
WFC
AIG
BBD
MS
DB
WBK
MTU
BBV
CS
BLK

Wavesmash - Are juniors a buy or a sell?

Are you saying juniors will follow F&F into the tank? or that it's time to get back in?

21 Stocks in triple bottom alert. What about the other thousand or more?

Moab,

Those voting numbers are staggering. Just as none of them understood the magnitude of this while it was preventable, none of them understand this now while it is happening. Throughout I have thought that Bernanke is not being as open and forthcoming to congress on the magnitude of the risks in an effort to keep markets calm. Perhaps that is proving a mistake now with such little support.

Look out below if this does not pass. The deflationary spiral scenario is at hand.

At this point I have to think the average joe is looking at the proposition and thinking 'why should I?" My life isn't going to change. Well, I think it would change should we see sharp deflation. It would have been the right solution (taking the pain), had the magnitude of the situation not been allowed to grow to such epic proportions as we now face.

Bert - I confirm your experience with the budget process, however you didn't mention requesting for 2x your actual budget requirement, which has been my experience.

Lehman gave themselves over 5 BILLION dollars in bonuses last year (hey who couldn't use a few xtra bucks around Christmas?)

5 BILLION in shareholder value stolen.

Hi Jock,

Not sure about this market... but I'm no expert.

Just putting out some (useful?) info.

Top 100 by volume CDNX
http://www.baystreet.com/html_cdnx.html

Highest volume stocks look pretty flat.

If they didn't show up in the screen I think that means "no new P&F pattern"

NOT.V chart doesn't give me warm & fuzzy feeling.

http://tinyurl.com/2fv6q9

PON.V holders probably think something smells.

http://tinyurl.com/52gj9m

I would say juniors are a buy after next leg down...

a 33% haircut in less than a month would probably grow back eventually and the MACD looks pretty under water... if it floats it should come back up like a rocket.

http://tinyurl.com/7ygy2

back to mama...

http://tw.youtube.com/watch?v=mbD62gNi9WE

I got stopped out of AIG at 3.79....that was a quick ride...at least I am glad I got off.

sharkster:

FNM an FRE: either somebody knows something or it's gambling on a solution coming through.

This report indicates the current deal is dead on the hill:

http://tinyurl.com/4hp7f5

I think Bernanke is being cagey but they did anonymously float those reports over the weekend that we were '500 trades from a meltdown'. They are trying to pressure Congress through the markets and press. but job security is #1 with Congress critters, so voting for this will be hard. A report came out yesterday that the White House has been working on this package for months. This is pissing lawmakers off as they are being stampeded into voting for it when they could have been consulted weeks ago.

McCain heads to DC... says debate should be delayed

Obama just on TV saying it is more important than ever
to present ourselves to the American people as the election is only 40 days away.

I hesitate to express an unpopular opinion here, but it does not appear to me that the market has reached its final bottom for this fall-winter. Using the RSI 14 and bollinger band envelope the $INDU still has a distance to fall. Moreover, the MACD has reasserted its downtrend.

On a fundamental basis, the theory that this is the bottom is premised on the imminent passage of 700B in bailout money. I would agree that some kind of bailout plan will be passed, but the assumtion that the amount will be 700B now might be erroneous. Chuck Schumer got Bernacke to agree that 700B will not be spent immediately and 150B would satisfy present needs.

I think a 150B package even with the promise that Congress will revisit the issue if more is needed will precipitate that last leg down.

RE Mama, beauty Online,
Was anyone there listening?
Ok so the people's people are finally awake and they're on it now. Legislators have the picture, their constituents are p'sed off. Couldn't be much worse.
The deal needs to be done, but I don't think it's going to happen w/o more strips of flesh peeled off. Start with tracking down the LEH $5b. This could take a while.
What says the room?

Won't AIG be diluted by the 80% now that they signed off on the $85b loan?

Look at the 5 min chart today on AIG. Shows perfectly what bsi87 has talked about regarding first half hour and last hour of trading.

It popped at the open and was beat like a red-headed CDO at the close.

Just saw this news on WaMu (WM)

http://tinyurl.com/3klg2b

Jim Cramer was on CNBC a couple of hours ago. He was talking about 4 stocks, and the bailout plan might affect them.
His thoughts:

FNM, FRE should go up

AIG, WM should go down

But he said that he didn't know why FRE,FNM would go up since the government already guarantees them.

This is why the stocks might be moving a little bit?

Re: back to mama...http://tw.youtube.com/watch?v=mbD62gNi9WE

westcoaster -

glad you enjoyed it. I thought the same. It seemed to me like the room was empty.

This might be an appropriate time to re-read the controversial & much discussed remarks by Bernanke from '02:

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

Deflation: Making Sure "It" Doesn't Happen Here

http://tinyurl.com/4fq2fu

PDA Cara 100

Brazil Perdigao sees better margins
One of Brazil's leading meats processors, said profit margins should improve in the second half of 2008, helped by the weakening real and the stabilizing of feed costs.

http://tinyurl.com/4clzoq

No present position, but monitoring.

shark- FRE bid at 2.01 after-hours...any idea why?

onlineaces, thanks for the post, enjoyed it very much

people are either having dinner (east coast) or listening to the debate.

lessmore, agree with you, we are not done yet.

HI,

Please read this well written article which:

1. Explains why the bailout package will hurt the economy;

2. Explains the underlying reason for the Trade of a Generation

http://mises.org/story/3119

Cheers!

Bloomberg-

Pilgrim's Pride tumbled $3.90 to $6.36 at 3:28 p.m. in New York before trading stopped. That was the biggest decline since the company went public in November 1986.

``The stock decline is based on concerns they're going to trigger some of their debt covenants, and they may have difficulty getting waivers in this credit environment,'' Heather Jones, a BB&T Capital Markets analyst, said in a telephone interview.

Chickenpookie - Thanks for reminding me. As I recall, the goal was to always make a case for a much larger budget so you were covered when the approving authorities made their adjustments. Not too different from what B & P are doing today to congress.

In the field report:

Methodology: using technical analysis on Fundamentally strong businesses - MACD EMA Bollinger + RSI
Portfolios: currently greater than 80% cash. (1) Investment account and (2) retirement accounts.
Buy/Sell: buying small, mostly initial positions
Bull/Bear: mostly Bearish
Frame of mind: member of DENSA / hold for the medium term (1 month) or longer. Dancing
market bottom? don't know, don't care - acknowledge we are at a turning point
market view:
Bought today a Cara 100 from 10(energy). Purchase is a small initial position. Stock is Canadian listed. Not interested in penny stocks under $5.00 at this time. [056]

I know the Prez will deliver a stirring address and convince the American public to support the Paulson/Bernecke plan.

;)

Powell ~ Iraq war
Buffett ~ Financial Heist

MS

Bearish engulfing pattern.

No position.

I'm drinking

Start early and don't stop.

ALOHA !!

I posted on the Bush FY2009 Budget earlier this year and the provision his administration had for THE AMERICAN DREAM DOWN PAYMENT ... On the release of the Budget Bush had upped that budgetary line by another $50mil to $100mil. SO even after the housing market has imploded the US government is still throwing money at the AMERICAN DREAM of NO MONEY DOWN! The BUSH BUDGET since 2004 has been throwing hundreds of millions of US PESOS every year for NO MONEY DOWN!!! Yet the US CONgress decry the fraudulent mortgage lenders for their crimes! When the FBI investigate the crimes at the White House and Capital Hill? That is where the AMERICAN DREAM MAFIA really resides ...

I heard some of the TV spots with Bernanke in front of RON PAUL and its the same old Greenspin story of when Alan was sitting in front of RON PAUL. Bernanke may as well have just piterally SPUN in his little chair ... yelling WHEEEE!!! I also heard a lot about nobody could have seen this coming and we need to act ASAP or the end of the WORLD IS UPON US!!! Jeez, these guys at the US FED and the US TREASURY sound like a lot of DOOMSDAYERS!!! You know the kind of people they ridicule and call "tin hatters"??? THE END IS NEAR!!! Look the SUN WILL RISE ... When Nero fiddled as ROME burned ... the next day the SUN ROSE IN THE EAST! What has changed since Roman days? Certainly, the human condition has not!

One thing is CLEAR ... That whole INVESTMENT BANK MODEL is dead and buried now that GS and MS have capitulated! How many "experts" and financial geniuses bought into that and touted it like there was NO TOMORROW over the past few decades? NOW ... there seems to be "NO TOMORROW"! WOW ... imagine that???? Well simply put GS and MS saw what happened to LEH!

WHO COULD HAVE PREDICTED THIS MESS?

READ ON:
Wednesday, September 24, 2008

No One Could Have Predicted...

I signed into law the American Dream Downpayment initiative, which authorizes $200 million a year to assist an estimated 40,000 low-income families with downpayment funds. In this year's budget, I proposed the Zero Downpayment initiative, which would eliminate the statutory requirement of a minimum 3% downpayment for Federal Housing Administration-insured single-family mortgages for first-time homebuyers.

George Bush 9/20/04

The Zero Downpayment Act, as its names suggests, creates a federal program that allows some homebuyers to obtain federally-insured mortgages without making a down payment. “Federally-insured” really means taxpayer-insured, as taxpayers like you foot the bill for defaults...Between the Federal Housing Administration, which is the largest insurer of mortgages in the world, and the government-created Fannie Mae and Freddie Mac corporations, the mortgage market is hopelessly distorted. Millions of mortgages in this country are federally insured, and the tax bill for defaults could be astronomical if the housing bubble bursts.

Ron Paul 6/21/04

posted by The Cunning Realist

bsi87:

If I drink too much I'll see two George Bush's at 9:00

``I'm not looking for extraordinary power,'' Paulson said in response to questions from lawmakers. ``We need and want oversight, transparency, protection. And we've got to do it in a way in which we can be effective.''

heh, no comment, just too easy

Ooooh! Mr. Bill, where are youoooooooo!

[Bill Cara note:

I had guests and now back at "work". Just uploaded an ADDENDUM at 8:43pm ET and will be watching the President. As I say in my ADDENDUM, I think Henry Paulsonhas had a total disconnect today and he did pretty much nothing yesterday. The President, McCain and Obama will get this deal done, and Paulson may soon be sent packing. That would look bad for the President, so he might be allowed to stick around, like a dog on the leash. But the King made a fatal mistake by not kissing the Pope's ring. Arrogant people never learn. Washington is all about politics and these politicians have had Paulson for dinner.]

TTM -

"Tata Motors Net Declines 30%..." reported on Sept 23, 2008.

http://tinyurl.com/3taezv

Is this news baked into the price? Is that why TTM is trading around $8.50?

position in TTM.

I think the bailout will get done sooner rather than later. What we are seeing from many, but not all, politicians is contrived outrage, grandstanding, and posturing for the folks back home. The folks back home will be voting this year, and they won't be happy bailing out fatcats. Most of these politicians will feign outrage and then sign off on the deal in the backroom, not at the urging of the voters back home, but at the urging of those who get them elected ... i.e. the monied interests.
The politicians need to convince folks back home that, as much as they hate it, they are forced to bail the fatcats for the good of "working" men and women and for the good of the country.
On the other hand, there is a chance many of these political windbags will start believing their own drunken rhetoric and think they know more about economics and finance than either Paulson and Bernanke put together. It that happens, we all better be ready to head for the barn!

ALOHA !!

"On the other hand, there is a chance many of these political windbags will start believing their own drunken rhetoric and think they know more about economics and finance than either Paulson and Bernanke put together..."

I would rather have a gold based monetary system with a chimpanzee running it throwing darts at a board of "solutions" rather than the two IVY LEAGUE monkeys Bernanke and Paulson and their FIAT based dart board!

This boils down to nothing but "SAVE ME FIRST" mentality! The US Banks all want saved by the US TAXPAYER ... that's all it is! Just like in 1913 and 1999 they will grind our supposed "representatives" into the ground one way or another until they get their way! THEY WILL GET THEIR WAY ... even if this emergency $700bil is NOT passed!!! Who controls the issuance of money in America? ITS THE US FED! Like BUSH didn't need a debate in CONgress before he occupied Iraq! Do you not think there is more than one way to skin a US TAXPAYERR? They've been doing it right under our noses for 95 years now ...

Ron Paul says vote for Chuck Baldwin.

Well, I don't know about that. I think Baldwin is from Florida - hmmm, no votes will be counted for him there, eh?

http://tinyurl.com/3n2u3c

Maromatics,

Here is a link to an exchange between Dr. Ron Paul and Ben Bernanke during today's hearings: http://tinyurl.com/18r

Johojo...

try again.. doesn't work ...

please.. thank you

Okay, here's the link straight from YouTube, since TinyURL won't cooperate:
http://www.youtube.com/watch?v=Bjpor8iBe58

2nd
Buffett Bounce, lasted only 45-minutes into Wednesday's session
And, market goes up first 30 to 45 minutes and market goes down. It is happening in last three days. Market does the opposite of what I expected
Trading volume this week on the decline has been less than it was last week on the rally
I think we might hit 10000 before real long term rally take place
I will start to get out slowly and by Friday plan to be 100% in cash

Look like politics has taken over bailout plan and reaction of market may not be same as Expected (rally)

[Bill Cara note:

There may or may not be an agreement this Sunday, but I think it's crucial to have one. If it still looks that way on Friday afternoon, I think a straddle on your biggest positions might be in order -- rather than just selling.]

Global Glee at America's Financial Pain
By RANDALL W. FORSYTH

IF SCHADENFREUDE WERE A STOCK, it would have set new highs around the globe Tuesday.

This joy at the misfortune of others was palpable as the United Nations General Assembly opened, with speakers piling on to decry America's credit crisis and blame the U.S. for the ills of the planet.

"The world economy can no longer tolerate the budgetary deficit and the financial pressures occurring from markets here in the United States," Iranian president Mahmoud Ahmadinejad declared in a speech to the U.N.

Even Cristina Fernandez de Kirchner, the Peronist president of Argentina, said no longer should emerging markets collapses such as the "tequila crisis" as in Mexico in 1994 be dwelled upon. Instead, we should refer to the "jazz crisis," which emanates from the center of the world's biggest economy.

Of course, Kirchner conveniently forgot that Argentina has been a serial deadbeat, most recently defaulting on $95 billion of its debt in 2001. At least she recognizes America's incomparable cultural gift to the world, jazz, whose freedom and improvisation may not be appreciated in authoritarian states.

Fittingly, the schadenfreude is thickest in Germany. "The world shouldn't have to bear the burden for America's lapses," read a headline on Spiegel Online.

"Now Washington is asking other countries to jump in and help" with the Treasury's proposed $700 billion bailout package to buy impaired mortgage investments, according to the German newspaper's Web site.

Somewhere I missed the memo to Bonn pleading for alms.

The $700 billion Troubled Asset Relief Program would be funded by additional borrowing by the U.S. Treasury. Of course, the Treasury market is a global market and the world's largest, but Germans need not participate. Indeed, over the past 12 months German investors have sold a net $70 million of Treasury securities, according to Bianco Research. So their involvement hardly has been crucial in funding the U.S. government.

Ironically, German interests have profited handsomely from the U.S. Treasury's efforts to shore up the American mortgage market.

The Pimco Total Return Bond Fund had its best day two weeks ago Monday after Fannie Mae and Freddie Mac were placed in the Treasury's receivership, which assured the value of the mortgage giants' debt securities. Pimco's Bill Gross had publicly called for a backstop for Fannie and Freddie, whose securities made up the lion's share of the Pimco bond fund.

What's the German connection? Pimco is owned by Allianz, the huge German insurance company.

Allianz has been in the news in the New York area after it backed down from seeking to place its name on the new stadium for the New York Giants and Jets football teams. The proposal stirred protests from Holocaust survivors who objected to Allianz's history of having insured Nazi concentration camps and having handed over cash proceeds of Jewish clients' policies to the Nazis.

So, too, is the American public. According to a Bloomberg/Los Angeles Times poll, 55% of those surveyed said it is not the government's responsibility to bail out private companies with taxpayer money, even if their failure would harm the economy. Only 31% supported such bailouts.

Bloomberg News also reported that a differently worded question posed by the Pew Research Center for the People and the Press found that, by a 57%-30% margin, Americans supported government "potentially investing billions to try and keep financial institutions and markets secure."

While criticism of the U.S. financial crisis rained down from demagogues from abroad, the wisdom from America's heartland spoke far more loudly.

Of course, the Treasury's $700 billion mortgage bailout plan would balloon the federal deficit to unprecedented levels of 7% of gross domestic product, surpassing the Reagan era deficits of 6% of GDP.

But to our German friends (with whom I share a common ancestry, by the way), I would remind them of another program on which the U.S. spent a comparable percentage of GDP: The Marshall Plan.

vinod- a lot can happen in the next 48 hours; almost anything, really...you might want to wait before making plans for friday...

Ron Paul today re: bailout

http://tinyurl.com/48v55k

MCM

The SEC this morning added another dozen names to its list of stocks that are temporarily banned from new short sales. The weirdest addition: IBM

2nd
I have 70% in market and do not have good feeling about this market.I have to preserve my gain

Sorry 2nd I was out a few hours. FRE totally broke out at 4:00, and was as high as 2.10, 2.12. As I suggested this morning, getting a good entry into FRE proved difficult. I had 4 or 5 of them!

vinod- absolutely...you have to go with your own take...

shark- congrats, the volatility should continue tomorrow..

http://www.youtube.com/watch?v=ANGsBNMY1_c
Above is a link to another powerful speech on C-span; it is from Rep. Peter DeFazio D-Oregon.

And did you catch the last 10 seconds of the video link from Bill in the addendum above? President Bush: "If this were a dictatorship it would be a heck of a lot easier. Heh, heh. Just so long as I'm the dictator." (Laughing in the background).

vinod- IMO, bush struck a chord with J6P, with references to retirement accounts, jobs, and confidence in financial institutions and the economy; ie, everything the average citizen is concerned about right now...well-crafted speech for a public which (for the most part) care more about the big picture and the bottom line than the details and politics behind the proposal...it may be difficult for opponents to assail the plan unless they are able to steer the argument away from those terms..

careS...

shanghai up 3%, may reclaim 2300 tonight...

Ya' Know...that last 10 seconds regarding the dictatorship comment, was part of a clip from 6 or more months ago, and it may have had nothing to do with the markets when it was originally filmed. I vaguely remember seeing it on the news. That was a gratuitous attempt to distort the situation. Now, he may not be a good president, but that's the kind of bullshit that serves no purpose. Having said that, I think if you go back to Aristotle you'll find the same commentary. A benevolent dictatorship (which may be an oxymoron) arguably is the best form of government-in theory. Democracy is a mess...and you need no further proof than to listen to many of the airheads that sit on that House finance committee

[Bill Cara note:

I will remove this clip if the Congresswoman did not speak in the past couple days. I admit, I have seen the clip at the end previously, but that wasn't the point of my showing the earlier part. Get me a clip without the President in it, and I'll replace this one.

As for my views on the President, I think he could save his legacy with a William Seidman (87 years old) appointment to run Resolution Trust Company II to manage this rescue package. While this President hasn't been a particularly distinguished one, I empathize with him. Not in the 45 years of my adult life have I seen any President faced with such difficult issues. I seriously doubt whether any of the other Presidents would have finished eight years with high ratings.]

nemo,

BRAVO!

great comment.

I was in Marcy Kaptur's district...sorry to say.

McCain suspends his campaign! Man this is getting surreal.

http://tinyurl.com/4rhjmg

Chinese Markets roaring overnight (+6%) despite the concerted western media campaign to throttle it (melamine, etc). China and India were the first markets to turn down in this year-long bear so, if Bill is right, and a Bull is on the horizon, it stands to reason that they might lead the way up.

[Bill Cara note:

As soon as the Chinese monetary authorities devalued the Yuan against the USD, the stronger USD knocked down the Yen and the other currencies in the region. Stocks generally rallied in China and Japan, except for mining companies, which would be expected to do relatively poorly with a strong USD. China holds what, a billion USD in reserves? They need to support the USD at this point. The US is too big for them to fail.

BEIJING (XFN-ASIA) - The central bank has set the yuan central parity rate at 6.8197 to the dollar, according to the China Foreign Exchange Trading System.
The rate, published on the official Chinamoney website
(www.chinamoney.com.cn), compares with the midpoint of 6.8129 set the previous trading day.]

bsi87 - I'm curious about why sorry re: Marcy Kaptur.

I thought Rep Kaptur's speech accurately represented the undercurrent of taxpayer's feelings. I also think she correctly pointed to the heart of the issue - which is:

1. Profit for wall street and their appointed government cronies at the expense of the taxpayer.
2. Wall street and their appointed government cronies bear little risk and receive most if not all of the reward which is the exact opposite for taxpayers.

Found this video on youtube. Looks like an old one of Rep. Sanders skewering Greenspan on issues that seem pertinent to today:

http://www.youtube.com/watch?v=nBnKh6B2cMw

http://tinyurl.com/CHINA-SAYS-DONT-LEND-TO-US

listened to most of the session today on bloomberg radio. I am pleasantly suprised and i have a bit more trust in some of our elected officals.

i have more faith in the American worker and families to pick up the pieces, versus wall st crooks and bought politicians.

So let the cards fall where they may. TARP would help high society more than me personally. prob so for 99% of Americans. I can only speak for myself but i rather be a little bit poorer and for the system to be purged, than to pay for someone elses mistakes so i can be hit again and again like an atm machine.

Having said what I said I must also apologize to Bill. Whoever put that video together had the agenda, I have no problem necessarily with the representative's speech. However, that is a speech that has been, and will be repeated, throughout human history. Again, Bill, I hope you do not take my comment as aimed at you. I am very thankful for all you do.

Nemo

[Bill Cara note:

nemo, no need to apologize. I want you and everybody here to speak up if something I say or do offends you. I am just a monitor here, learning too. Why I inserted a comment is because I don't want people to think I am anti-Bush. I am already on record here as saying (i) I would have voted for him twice, and for his father twice (and Clinton once), and (ii) he's had a tough job, more even than the usual burden that comes with the territory. However, I feel he erred greatly by bringing a slew of Texans with him into the White House, and they had an agenda that was closed to free discourse. He also tends to make mistakes when he is making joking off-the-cuff comments, which I think is part of his basic shyness. That end of the clip scene was one of them.]

"The United States is fortunate in that our homeownership rate is at an all-time high," announced Dubya himself in June 2003, "and low interest rates continue to encourage millions of Americans to become first-time homeowners."

NYUgrad,

I'm not an American, but I too am impressed with what I saw today. Only in America would we see this overt, public, and civilized opposition and debate against the power-elites that, in others countries, would probably just send out the troops with orders to shoot-to-kill. For all of you that trash the US and its $ for its weakness, witness this - here is its value and strength being paraded in public for all the world to see.

Vinod Ref: post at 9:21- You have to wonder about the US strategy here. The US leadership seems willing to save foreign banks and investors at the expense of the country itelf. This is while the foreigners publicly deride the US as a whole.

[Bill Cara note:

The US is very much a creditor nation. When in debt and deep trouble, you too would probably kow-tow to your bankers in a similar situation. Congress spends the money, and that's the problem.]

I being an American, Mackinaw, it's arguable that the U.S. is the only country. Western Europe has similar parliamentary governments-I used to watch some of the parliamentary debates when I lived in Germany, and of course the House of Commons is famous in Britain. Unfortunately, politics is a profession of power, not of precision and politicians are subject to the same bell curve of intelligence and subject matter expertise as the rest of us. Frankly, in a matter such as this, that appears to require fairly swift execution-republican democracies rarely lend themselves to the requisite precision required. Let us hope, and I consider "hope" a dirty word.

I'm going to get real here.

President Bush will go down as one of the worst presidents in history, along with the likes of Hoover and Grant. His leadership skills, truth-telling abilities, and past "experience" and "education" are a complete joke even for a silver spoon trust fund baby.

The Paulson bailout is a 100% ridiculous failure that will destroy the remnants of capitalism and democracy as we know it. I'm very surprised anyone outside of HB&B would even think about supporting the bailout. $700 billion? Try trillions and trillions, like McDonald's gone very wild.

Cox is the railroader that is now being railroaded. Curious McCain didn't call for the resignation of Paulson or Bush. What's that saying, what goes around comes around. Karma strikes again.

Everyone thinks that a deal will be made on the bailout package. What happens in the unlikley event that no action is taken? What can we do now for protection against this hopefully unlikley event?

Michael Randalbard said:

"The United States is fortunate in that our homeownership rate is at an all-time high," announced Dubya himself in June 2003, "and low interest rates continue to encourage millions of Americans to become first-time homeowners."

I remember when this crisis started to unfold back in Fall 2006 I read somewhere that these Wall Street innovations (CDO's, etc), while being no doubt toxic, would ultimately allow approximately 1 million Americans own homes that would not otherwise be able to afford it. I remember, at the time, thinking back to the time of the LA Riots during Clinton's era and the aftermath when there was an overwhelming concern in America that SOMETHING had to be done to include many underpriviledged Americans in the prosperity that many Americans enjoyed. Remember that baseball commisioner guy being touted as the leader of this inititaive? What was his name.... Anyway, perhaps that was around the time that all this mess began ?

Change doesn't come easy....

I am definetly seeing a trend of accumulation going on amongst mid-tier gold/silver producers.

Aside from Fresnillo buying up shares of MAG Silver the other day, I just found that Red Back Mining has acquired a large amount of stock (12.8% interest) in Mineral Deposits Ltd, which has a fully financed gold project going into construction.

According to the pr, the shares were bought directly from (undoubtedly wounded) Ospraie hedge fund

http://tinyurl.com/4m7cfd

"RED BACK INVESTMENT IN MINERAL DEPOSITS LIMITED
September 24, 2008 (RBI - TSX) … Red Back Mining Inc. (the “Company” or “Red Back”) is pleased to
advise that it has purchased a strategic investment in Mineral Deposits Limited (“MDL”) (MDM – TSX, MDL –
ASX). Red Back now owns approximately 62 million shares representing 13% of the issued capital of MDL.
MDL is developing the 3.5 million oz Sabodala Gold Project in Senegal, West Africa. Construction is
advanced and first gold pour is expected at the end of December 2008. MDL also owns the Grand Cote
Mineral Sands project in Senegal and is targeting production in late 2009.
The acquisition cost of US$27.5 million was funded using a recently arranged debt facility with a leading
international bank."

Things are heating up in the mid-tier space. The kind of accumulation we are seeing is indicative that certain funds are capitulating b/c they can not drop enough volume onto the exchanges to cash out.......

"I'm not an American, but I too am impressed with what I saw today. Only in America would we see this overt, public, and civilized opposition and debate against the power-elites that, in others countries, would probably just send out the troops with orders to shoot-to-kill. For all of you that trash the US and its $ for its weakness, witness this - here is its value and strength being paraded in public for all the world to see.

Posted by: Mackinaw at September 24, 2008 11:41 PM [link]"

Thank you, Mackinaw.

That was one of the only items posted today that made me sit back and smile in agreement(from a patriotic perspective).

In the middle of a vast sea of my frustration a load of worry and burden is lifted by contemplating what opportunities I as an American, and our country, still have.

Here, Now and Future.

The past can not be changed. In the future it's repetition may be prevented or delayed.

Hmm....

China asks local lenders not to lend to U.S. banks:report
By V. Phani Kumar
Last update: 10:28 p.m. EDT Sept. 24, 2008
Comments: 75
HONG KONG (MarketWatch) -- Chinese regulators have asked domestic banks to stop lending to U.S. financial institutions in the interbank money markets to prevent possible losses during the financial crisis, the South China Morning Post reported Thursday. The China Banking Regulatory Commission's ban on interbank lending of all currencies applied to U.S. banks, but not to lenders from other countries, the report added, citing a source.

Johjo,

Thanks foe the video link.

Have a great day!

Cheers!

Short-Sale Ban Fails to Save Ambac, Farmer Mac From 50% Plunge

By Nick Baker and Eric Martin

Sept. 25 (Bloomberg) -- Ambac Financial Group Inc. and Federal Agricultural Mortgage Corp. tumbled more than 50 percent in the past four days. And you can't blame short sellers.

Their stocks are among 942 that the Securities and Exchange Commission prohibited investors from betting against because of concern speculators were unfairly punishing the shares. Of the total, 44 percent underperformed the Standard & Poor's 500 Index since the SEC unveiled the list of banned stocks Sept. 18, according to data compiled by Bloomberg.

``Taking the short sellers out of the market doesn't change the fundamentals,'' said Dean Gulis, part of a group that manages about $3 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. ``It's wrong to say that short selling of shares was the biggest contributor to the financial crisis.''

The SEC banned short sales, where traders sell borrowed shares with the hope of buying them back later at a lower price, on concern investors took advantage of the subprime mortgage market's collapse to drive stock prices lower. Morgan Stanley Chief Executive Officer John Mack blamed short sellers for ``driving our stock down,'' according to a memo to employees sent Sept. 17. Lehman Brothers Holdings Inc. CEO Richard Fuld told Wall Street executives he believed short sellers ``actively colluded'' to topple Bear Stearns Cos., CNBC reported April 1.

JPMorgan Chase & Co.'s purchase of Bear in March saved it from bankruptcy, while Lehman, once the fourth-largest investment bank, filed the biggest bankruptcy in history last week.

Trailing S&P 500

Altogether, 418 stocks on the SEC's no-short-selling list fell more than the S&P 500's 1.7 percent decline since Sept. 18. Bloomberg's index of all U.S. shares covered by the ban climbed 3 percent, helped by 23 percent increases in Goldman Sachs Group Inc. and American International Group Inc. and a 9.9 percent gain in Morgan Stanley. They are among the 40 heaviest-weighted stocks in the index.

Ambac, the second-largest bond insurer, declined 55 percent to $3.02 in New York Stock Exchange composite trading since Sept. 18, extending its year-to-date retreat to 88 percent. The New York-based company said at the end of last week that it may delay the start of a new municipal bond insurer after Moody's Investors Service said it's considering cutting the firm's financial- strength rating by several grades.

Almost one-third of Ambac's shares available for trading were sold short on Sept. 15, according to New York Stock Exchange data compiled by Bloomberg. Although existing wagers against Ambac and other companies on the no-short list were allowed to remain in place after the SEC ban, new bets are prohibited through Oct. 2.

`Everyone Wants a Villain'

Farmer Mac, as government-sponsored enterprise Federal Agricultural Mortgage is known, plunged 65 percent to $5.25 since Sept. 18. The Washington-based company said Sept. 22 that its reserves may fall short of federal requirements. Farmer Mac hired a financial adviser to assist in selling assets and common and preferred stock.

``Everyone wants a villain,'' said Brad Alford, the Atlanta- based head of Alpha Capital Management LLC who invests in hedge funds. ``It's obviously not the short sellers.''

Financial institutions plunged during the past 19 months as banks globally racked up more than $500 billion in mortgage- related losses and writedowns following the first nationwide decline in U.S. home prices since the 1930s. Banks and brokerages led financial companies in the S&P 500 to a 54 percent retreat between Feb. 20, 2007, and July 15, 2008. That's the steepest slump since at least 1962, according to data compiled by Birinyi Associates Inc., a Westport, Connecticut-based research and money-management firm.

Morgan, Goldman Rebound

New York-based Morgan Stanley retreated 50 percent to an almost 10-year low of $21.75 in the seven days ended Sept. 17. It rebounded 14 percent, helped by the Bush administration's proposal to spend $700 billion on troubled bank assets. Goldman, which lost 36 percent to $108 over eight days ending Sept. 18, has since rallied 23 percent, helped by a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc.

Conseco Inc., a Carmel, Indiana-based insurer that's also on the no-short list, retreated 40 percent to $4.78 since Sept. 18. Western Alliance Bancorp, a Las Vegas-based lender, plunged 43 percent to $14.68, while Ames National Corp., a bank based in Ames, Iowa, sank 37 percent to $26.71.

``It's a negative to have your name on the list because you're being branded as vulnerable,'' said Dan Genter, the Los Angeles-based president of RNC Genter Capital Management, which oversees $2.9 billion. ``If I were an investor, I'd want to be out of them.''

To contact the reporters on this story: Nick Baker in New York at nbaker7@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.
Last Updated: September 25, 2008 00:01 EDT

This is all so shocking. I mean the fall of the financial system and and its proposed redemption by bailout of the very sinners who caused the problems.

Two analogies come to mind. First, the "Shock and Awe" tactics of the US Military in order to "save" Iraq. Second, the Trickle Down Theory whereby economic benefits are given directly to the upper tier while stating it as necessary in order to save and benefit everyone else. All wrapped up in an emotional appeal designed to scare people, just as with the phony "War on Terror".

I can accept the strategic goals but the tactics stink.

I just watched a video clip of Marc Faber on CNBC Europe (picked up from Barry Ritholtz's site) where Faber stated:

"Well basically a financial crisis is a correction mechanism of excesses that occurred before the crisis. And the more excesses you had before the crisis, the heavier the crisis is, the more severe the crisis.

And I think the best is to let the crisis burn itself out and clean the system, even if it means some pain for some people."

There's more to what he said in the video.

http://www.cnbc.com//id/26848829

[Bill Cara note:

In theory, Faber is right. In practice, how many people here are ready for a Depression? Can you do without a job? Are you ready for paying a mortgage that becomes so much greater than the value of your house you want to foreclose like so many other of your neighbours? In theory, this is the wealth effect in reverse, and the public shouldn't wish for this. The public needs the fractional reserve system of the Fed to be stabilized, and Bernanke is saying that the Administration needs to reflate in order to avoid a devastating deflation. In theory, I disagree strongly with Faber on this point. I'm trying to be practical.]

Several questions have popped up here regarding alternatives to holding cash in money markets, and I will add to them -

I read about huge cash withdrawals from money markets - some $120 billion - in one week up to Sept 23.

Another thing - I can't locate any data outlining my fund's top 10 holdings and sector diversification anymore on their website. They're pretty reputable - but this lack of info bothers me.

Do I have anything to fear keeping my cash in these funds (like a devaluation below the std $1 share price)? And what is the suggested alternative - an FDIC-insured bank account?

Any thoughts would be appreciated. Thanks.

I am worried about my money market fund in my fidelity 401k. I asked this question before, but got comforts from the response. But I don't see the guarantee.

This weekend I thought:

"What they have done, to avoid a crash Thursday, is tell the general world public that the financial system is truly up to its armpits in alligators. The general public did not know this before, was not paying attention."

Unfortunately it is starting to look like I was right.

Will we now get to see a 100 year event - a run, not on a few banks, but on the whole world's financial system?

A run has started aginst Swedbank in Sweden, individuals withdrawing funds & theri interbnank cost of monety is up sharply.

This from another forum, re the escalating commercial paper debacle:

"I know of two medium size US software companies that have utilized revolving credit lines in the past who now find themselves, despite excellent financials, without a source of credit, the implications of not finding a credit source within 30 days would be a company collapse."

A news item of a run on a bank in Hong Kong.

My wife getting phone calls from friends asking out of the blue "what's up with the banks now, anyway?"

And this:

South China Morning Post
China banks told to halt lending to US banks
by Alan Wheatley and Langi Chiang
Sep 24, 2008 9:52pm EDT

BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to
stop interbank lending to U.S. financial institutions to prevent possible
losses during the financial crisis, the South China Morning Post reported on
Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.

A spokesman for the CBRC had no immediate comment.

(taken from:)

http://jessescrossroadscafe.blogspot.com/

American Public to Wall Street Banks: Drop Dead

Here is a grahic picture of commercial paper seizing up that some think is what spooked the markets last Thursday.

As posted previously, here is a chart of the NAVs of some closed end funds that invest only in senior bank loans - which is generally the cream of the corporate debt
market, as they have better security (usually "secured" by assets) than
preferreds & corporate bonds - even the AAA bonds.

PIMCO's PFL & PFN are big players here.
Note that their NAVs are marked to market weekly, which is why
they are flat during the week.
The others are marked to market every day, have resumed their nosedive.

http://tinyurl.com/458a59

Bill Cara just gave (copied below) some very good advice.

But I would not wait until Friday, Friday may be too late. Things are moving fast now.

[Bill Cara note:

There may or may not be an agreement this Sunday, but I think it's crucial to have one. If it still looks that way on Friday afternoon, I think a straddle on your biggest positions might be in order -- rather than just selling.]

looking at yesterdays action, not much seems to have happened at first glance.

IYR was down noticeably, but it was up Tues. when everything else was down.

Most everything seems to be holding on or around support, which is not usually bullish - bullish would have been to bounce strongly off of support.

SLW held the gap one more day, that is reasonably bullish.

re:Kaptur

Let's just say Ms. Kaptur and I disagree strongly on just about everything and leave it at that.

[Bill Cara note:

Thank you. This is not the time to dwell on history; this is a time for action.]

On the interview with Fox posted above, Ron Paul is saying that this bailout will not solve the crisis and will only prolong it, refers to the fiat system so alluded to by Kaimu. This man seems to know the causes and possible solutions. If he made a big fuss he may even get a chance to be President given that the real American people do not want this plan.

How about these execs and CEOs returning their fraudulent bonuses?

There were plenty of alternative solutions presented that did not involved saving HB&B and these people. I have not heard any of them shot down. Why doesn't congress look at them?

The American people clearly do not want this Wall St. bailout. Yet I read in the paper that "polls" say only 30% oppose it. Don't know where they get these polls, the representatives themselves say that 97% of calls are against it, on the WSJ site it's about 99% against.

[Bill Cara note:

I think the American people are saying they have no confidence in politicians and the current slate of Paulson, Bernanke and Cox to be able to successfully do the urgently required work-out.

What I think is needed here is (i) signing of a National Rescue Plan, (ii) the impeachment of the Treasury Secretary, and (iii) the appointment of 87-year old William Seidman to organize Resolution Trust Company (2008), with the same independence from Washington and Wall Street (as he had before to clean up the S&L mess) to carry out that National Rescue Plan.]

There has been a couple news reports about the bank in Hong Kong, the Chinese banks told to not lend to the US banks, and the Swedish bank that has customers withdrawing savings(aka a run on the bank"maybe"). I'm collecting the links to the news stories from trusted sources.

Chinese banks not to lend to US banks:
http://www.reuters.com/article/companyNewsAndPR/idUSPEK16693720080925

Bank Run on Swedbank:
http://www.stockholmnews.com/more.aspx?NID=1821
http://balticbusinessnews.com/Default2.aspx?ArticleID=c703b6bb-f6d4-406d-969a-419b85545117&open=sec

Hong Kong bank run on Bank of East Asia Ltd:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aII1tgrPIB.s&refer=home

Good morning.

Here are your Cara 100 Ratings Changes:

CCL - Downgraded to Sell @ Deutsche Securities

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

Have a great day.

Re the run aginst Swedbank, there are quite a few articles (in Swedish only) about it from various points of view at www.di.se Dagens Industri, the main financial newspaper in Sweden. I don't see any point in translating all of that, it's just not very informative.

As usual the bank and the financial Inspection deny there are any problems, while the most serious indication is probably that their interbank borrowing cost has gone up significantly.

Swedbank in Sweden is comparable to Bank of America in the US, i.e. it is the largest bank, so this is not a minor matter.

"The American people clearly do now want this Wall St. bailout. Yet I read in the paper that "polls" say only 30% oppose it. Don't know where they get these polls, the representatives themselves say that 97% of calls are against it, on the WSJ site it's about 99% against. "

Si02,

I'd guess the reason for this divergence is: from the public opinion research point of view, % of calls expressing certain angle is not a correct way to measure the response. People with negative opinion are usually more inclined to show initiative by calling or writing or showing up for protests. Providing the researcher is unbiased and follows correct methodology of polling, the results will reflect public opinion much better, in a sense of snapshot at the moment of polling.

Bill,

I disagree about strong action too. Leaving politics aside, Hoover did nothing, got blamed, etc. FDR's first programs failed and he retooled them.

I don't see the need to rush and institute programs/policies whose consequences haven't been considered.

Plus the guys that got us in this mess are gonna get us out?

Pass.