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Nightmare On Wall Street Averted?


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HOLA441
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HOLA446
FFS - it won't be long before they start accepting IOUs scrawled onto the back of fag packets as collateral!

If you read the main bloomburg article we have a once in a lifetime opertunity to buy stocks! It will be like the 70's and early 80's where equties went nowhere (of we are lucky). Areguably it may be the only time where you you could be invested for so long with so little return!

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If you read the main bloomburg article we have a once in a lifetime opertunity to buy stocks! It will be like the 70's and early 80's where equties went nowhere (of we are lucky). Areguably it may be the only time where you you could be invested for so long with so little return!

Fogot to add this is all within 14 percent of an all time high as we embark on the next leg of the credit crunch.

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Fogot to add this is all within 14 percent of an all time high as we embark on the next leg of the credit crunch.

I looked it up the other day but can't remember what I found out! Getting old! Found a chart of the FTSE over last 10 years. If you had bought a FTSE tracker in (I think, don't quote me) 1998 - you wouldn't have made a penny. One of those rare, once in a thousand year, 10 year periods where the market does not rise.

Is this a new paradigm.

A lot of people will have endowments paying out in the next 5 years that will nowhere near repay their mortgages.

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Guest Bart of Darkness
Perhaps its just a bit of good news spun for the Easter holidays?

An appropriate time for a resurrection of the SM.

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From the Bloomberg article:

Central-bank officials are increasing efforts to ease logjams in credit markets that are exacerbating the economic slowdown by making it harder for companies and consumers to get loans.

It seems to me that herein lies the doomed-to-failure approach of the Fed.

It is not "log-jams" that are the problem - i.e. liquidity - such that by increasing liquidity the whole merry-go-round of ever-increasing asset prices, house prices in particular, can be restarted. The problem is that debt has hit a ceiling relative to ability to repay. One way or another, debt has to be amortised - either through default, or through inflating wages to allow debt to be rapidly repaid, or through accepting negative growth for years as debt is slowly repaid. It is impossible for interest payments on debt to exceed income either at personal, institutional or national level, which is what the Fed seems to be signalling by treating the present crisis as log-jams which, once unblocked, will allow a return to easy credit and compounding debt. It just ain't gonna happen.....

Edited for typo

Edited by Methinkshe
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A lot of people will have endowments paying out in the next 5 years that will nowhere near repay their mortgages.

Unfortunately the demographic shift of the baby boomers money into less risky investments for added security for retirement is bound to have a negative impact on US and UK stock market over the next 10 years and more. The current volatility will only speed up this process.

This is one of the reasons they are trying so hard to form a bottom in the US market, without this intervention it would have been the last nail in the US's economic coffin.

I don’t think they will achieve it but if they do it will cause the mother of all moral hazard stock market bubbles. If you can invest in the market and get a 100% return over 4 years then in a period of extreme financial turmoil only loose 14% of the value of you portfolio because of intervention of the scale we have seen it a no brainier and even I will go all in.

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I would like to apologize for any distress my earlier comment may have caused.

There is too much PC on this website, and posts like this merely encourage the attitude- must not offend!.

yours

disgusted

BL

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That's a really interesting thread you linked, Shedfish - only I'm only understanding about a tenth of what is going on and the implications. Would you, or some other kindly, knowledgeable person, be kind enough to do a summary and explain the implications and what is likely to happen next? I'd be ever so grateful.

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Guest Shedfish
That's a really interesting thread you linked, Shedfish - only I'm only understanding about a tenth of what is going on and the implications. Would you, or some other kindly, knowledgeable person, be kind enough to do a summary and explain the implications and what is likely to happen next? I'd be ever so grateful.

i struggled to understand a lot of it myself - but the gist i got was that an awful lot of 'smart money' was getting out, and probably going into T bills and cash, while the likes of CNBC helped hold the exit doors ajar for their mates. it all ties in well with this article (i believe Genesis is a mod. on tickerforum) which Bubble Turbo posted here

i'm not an expert... there must be a few on here who can cut this view to pieces - i just don't see Dow 15000 as a done deal

as to what happens next... well, if i knew that, i'd put my deposit on red 13.. as it stands, i'm sticking with a savings account :rolleyes:

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i struggled to understand a lot of it myself - but the gist i got was that an awful lot of 'smart money' was getting out, and probably going into T bills and cash, while the likes of CNBC helped hold the exit doors ajar for their mates. it all ties in well with this article (i believe Genesis is a mod. on tickerforum) which Bubble Turbo posted here

i'm not an expert... there must be a few on here who can cut this view to pieces - i just don't see Dow 15000 as a done deal

as to what happens next... well, if i knew that, i'd put my deposit on red 13.. as it stands, i'm sticking with a savings account :rolleyes:

Yeah, that was about what I got out of it....but I'd love to know more. It ties in with another thread I was reading on Market Ticker - to do with T-Bills shortage - another one I didn't fully understand nor the implications, except that they weren't good.

Maybe someone really knowledgeable would like to comment......

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HOLA4425
i'm not an expert...

Few of us are experts, but we are taking advantage of the information age that in the past would have left many of us as clueless as Joe public.

Here's reality - Bank Tier Capital - the measure of whether you are "well capitalized" or "dead" as a bank - includes common stock equity.

Specifically, Tier 1 Capital, the most important type for a bank, includes what is known as "Shareholder Equity" as well as retained earnings.

So consider this folks - you can sink a bank if you sink its stock price.

How? Simple - "Shareholder Equity" is not so simple as "stock price." However, the stock price has a major impact on it, because precipitous declines hit both intangibles (good will) and financing costs (in the other direction, raising them) which shrink Shareholder Equity from both ends of the candle at once.

Now do you get it? The Fed and the rest of the fools on The Street want to pump bank stock prices because if they sink sufficiently the bank can actually be declared insolvent as a consequence!

This also, however, means that our banking system is in fact 100% based on confidence and it is the clearest indication you will ever find on why we must have transparency in our financial markets, including an absolute and irrevocable ban on off-balance-sheet and other hidden crap, and forced mark-to-market.

http://market-ticker.denninger.net/2008/03...-and-raise.html

From your link it reconfirm something I raised last year when I notice how much SM (DOW) manipulation was going on. Information like this pretty much completes the picture for me all starting back this time last year.

This is how I see it and based on the observations of the DOW.

Beginning of March 07 the first realisation of the huge impact the US housing market was going to have on the financials and the stock market. We got the biggest 1 day plunge of the crisis so far, but even then they were ready for it and corrected a 200 point part of the plunge blaming it on a computer glitch.

March – Aug 07 the SM was ramped exponentially with talk of take overs/private equity buy outs (very few happened). This bought the stock market a 2000 point buffer which we still have in tact today.

Aug 07 to current, when the crunch came the market has be protected and shielded at every turn with big policy decisions such as interest rates at one level with day to day futures and market manipulation to nip any panic and fear in the bud before it gets out of control. Recently they have been so active and desperate to create a bottom at 12,000 from where they can pronounce all is well. Low and behold the market played ball at the end of the week and now we are getting the media doing their bit to say the worst is over and it is the buying opportunity of a lifetime.

The key to this is that back in the Autumn last year I was struggling with why there was so much intervention, after all they let the Dot.com boom/bust run its natural course and picked up the pieces with interest rates policies later. I read something at the time similar to the quoted article on Market Oracle, but lost the source. This time round things are so serious that they can not afford to allow the stock markets to fall because it would destroy the banks through the loss of value of their share and the shares they owned. Game over.

For those believing we are on strong platform to rebound, which is possible and what they are hoping for, it is always best to understand how that platform was formed, I personally would not trust one that has been created purely for the illusion.

Edited by Confounded
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