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Fear That Bear Stearns May Not Be Able To Honor Credit Default Swaps May Be Reason for Federal Reserve Bailout
Well Don, I was not too worried about Bear Sterns problems affecting a wider market until YOU said it could be a problem, then I read this today, and I am now TERRIFIED about Monday's opening bell!!!!!....; By Margareta Pagano, Business Editor Sunday, 16 March 2008 Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150bn) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns. One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed's emergency funding procedure was first used in the Depression and has rarely been used since. A Goldman Sachs trader in New York said: "Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we're just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow." In the UK, Michael Taylor, a senior market strategist at Lombard, the economics consultancy, said on Friday night: "We have all been talking about a 1970s-style crisis but as each day goes by this looks more like the 1930s. One of the problems facing the markets is that, despite the Fed's move last week to feed them another $200bn, the banks are still *****not lending to each other. "This crisis is one of ****faith. We are going to see even more problems in the hedge funds as they face margin calls," http://www.independent.co.uk/news/business/news/w…— March 16, 2008 12:52 p.m.
Fear That Bear Stearns May Not Be Able To Honor Credit Default Swaps May Be Reason for Federal Reserve Bailout
10) The Dow has just about completed a "head and shoulders" pattern. Technical analysts normally regard this as a very bearish sign. I'm not a technical analyst. I'm a fundamentals guy. The fundamentals are crappy as well! 11) The Fed has announced that it is going to loan the bankers at least 200 BILLION dollars within the next month in order to "inject liquidity" into the system. In exchange for this, the Fed will accept a bunch of CDOs and other insane "investments" held by the banks as "security" for the loans. I don't think that the Fed will actually make the banks pay anything back. The Fed will create more billions out of thin air when the current rescue plan fails. The loans will "revolve" into outer space! 12) The Fed creates all its "money" out of thin air. It isn't backed by anything of value. 13) Inflation is a monetary phenomenon caused when central banks and their member banks (through the fractional reserve system) increase the supply of currency relative to the available goods and services. This causes prices to rise. 14) Our government and its “information organs" such as the BLS are LYING to us about the real rate of inflation and money creation. 15) Most people have not done ANYTHING at all to protect themselves from the evil policies that are robbing the middle class of what little wealth it has.— March 16, 2008 12:34 p.m.
Fear That Bear Stearns May Not Be Able To Honor Credit Default Swaps May Be Reason for Federal Reserve Bailout
OK, I cannot take credit for this (a fellow JDUnderground poster made it up), but I found it pretty salient; 1) The US Dollar has lost more than 40% its buying power since 2000. It traded for about 120 on the US Dollar Index in 2000. It went below 72 yesterday. It is headed lower. 2) More than 7 TRILLION dollars of wealth has evaporated from the world's balance sheets SINCE 1/1/08. How much is 7 TRILLION? Is that a significant amount? 3) Gold has gone from around $250 per ounce in 2000 to around $1,000 per ounce since that time. Gold is a lousy investment, isn't it? It doesn't pay interest. You could be getting 3% interest from a CD! 4) Oil averaged about $28 per barrel in 2000. Can you say $110 per barrel? 5) Silver traded between $4 and $5 in 2000. It is now trading for more than $20 per ounce. 6) Real estate is doing GREAT, isn't it? Real estate always goes up, doesn't it? Actually, it went down during the Great Depression, and we might be about to get another Depression. How will real estate do if that happens? 7) The Dow hit a then all time high of about 11,717 in January 2000. On the day I wrote this, it closed just above 12,145. WOW! About 428 points since January 2000! BUY AND HOLD! Stocks always go up! Actually, they don't. People who bought the Dow in 1929 had to wait until the 1950s for their portfolios to get back to where they had been in nominal terms. People who owned gold mining shares during the 1930s got rich. 8) Most bonds are yielding NEGATIVE real rates of return when inflation is considered. 9) The total monetary supply is being expanded by over 16% per year in the US.— March 16, 2008 12:34 p.m.
Fear That Bear Stearns May Not Be Able To Honor Credit Default Swaps May Be Reason for Federal Reserve Bailout
There are $46 trillion of these swaps outstanding around the world. The total annual economic output of the world is $50 trillion. In short, this could be extremely serious. _________________________________ Yikes, those are scary numbers!— March 16, 2008 5:10 a.m.
Peters Hustles to Hustings; Long-Delayed 2005 Audit Delayed Again
#21. Leverage was less pervasive. By dbauder 2:37 p.m., Mar 15, 2008 ______________ ___ I just read an article that said Bear Sterns was leveraged 30 to 1, and that was common for ALL the big Investment Banks on the Street..........Don, is that true???????? BTW-you were 100% right about the healthy economy and Drexel. I did not take into consideration the healthy economy of the late 80's when Dexel folded when I compared it to Bear Sterns. On the flip this was also the time we had huge Savings and Loan failures (in large part by backing high yeild junk bonds for LBO take overs). I do agree that there is the potential for some very bad things to happen.— March 15, 2008 3:06 p.m.
Peters Hustles to Hustings; Long-Delayed 2005 Audit Delayed Again
Bear Sterns is going under. I do not think (hope might be a better word) it will create a ripple effect. They had too many of their apples wrapped up in the sub prime backed mortgage securities. They were not diversified enough. It will be a 2.0 version of Drexel (who had a La Jolla office in the 80's). Drexel was up to their eyeballs in high yeild "junk bonds", and when the market for those bonds collapsed (or the manipulation of that market by Michael Milliken collapsed), so did Drexel. Bear Sterns is similar to Drexel. Drexel's collapse did not cause a market meltdown, and neither will Bear Sterns. I am now certain Bear Sterns is history-too many people made a run for their money on Friday-they are done. Can Bear Sterns be bought out?? I don't think so, not enough capital in the market with the credit crunch. Time to take the medicine.— March 15, 2008 12:50 p.m.
Peters Hustles to Hustings; Long-Delayed 2005 Audit Delayed Again
When Greenspan sent rates all the way to 1 percent, economists feared deflation. They fear it again. Do we want what Greenspan wrought? Another bubble? Best, Don Bauder By dbauder 4:40 p.m., Mar 14, 2008 __________________________________ No, and we do not need any more cuts in the interest rate. We need to suck it up and take our medicine, which is a downturn. Our dollar is close to worthless, we have outsourced half the countries jobs, MS/Gates and other big busineeses are trying to increase the number of H1B visa's so they can cut out American workers, private sector pay has been STAGNANT since 2000, public sector pay has been increasing at 10% a year including benefits....man, this country has serious problems, and NO ONE is on track to fix any of them. We need soem leaders, and we need them now.— March 14, 2008 5:47 p.m.
Why Financial Reform of Near-Bankrupt City May Be Impossible: Aguirre Jeered Yesterday by Business, Labor Moochers
The ONLY reason DROP (scam#1) even appears to "work" is because of the artificially low retirement age (scam#2). I would like to see how many City workers would be using DROP if they worked to age 67, which is the age for FULL benefits in SS. Something tells me there would be no market for DROP then-call it a "hunch"......lol. So you have scam#1 synergizing itself with scam#2, both of which should be terminated. Hey JF, if DROP is such a great tool, how come NO ONE in the private sector uses it??????? Also, please show me a private sector employer that lets line, blue collar employees "retire" at age 50.— March 14, 2008 4:18 p.m.
Peters Hustles to Hustings; Long-Delayed 2005 Audit Delayed Again
Bernanke keeps lowering interest rates-just for Wall Street. Our currency is going to be valueless if he keeps it up. Close now. I wish I was in charge-it would be like this..."OK, time to take your medicine!"...............— March 14, 2008 4:12 p.m.
Peters Hustles to Hustings; Long-Delayed 2005 Audit Delayed Again
Oh, and in case I forgot; BERNANKE SHOULD BE FIRED!!!! He is making the dollar almost valueless by lowering inetrest rates while bailing out the rich and powerful. He is causing severe damage to our economy, and not just the US economy-because if the US economy gets a hiccup, the world's economy gets the flu. We need to take our medicine and let the chips fall where they fall. If Bear Sterns goes BK from bad/stupid investments then that is the way the cookie crumbles. That is the free market. No one is bailing out the little guy.— March 14, 2008 10:06 a.m.