John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Stoctrash who wrote (9227)	4/2/2008 11:53:35 AM
From: ahhaha	Read Replies (2) of 33421

Fair question. So here we are a few weeks later, what you think now of the recent FED's use of new tools Necessary. the JMP/BSC deal/steal, Necessary. LEH's 4B deal just to "show you shorts a lesson" Trivial. and the 18B kitchen sink writedown. ..? Trivial. Did this break the MECHANISM? No. The MECHANISM is in limbo like just everything else. FED's auction facility associated Permanent sales reduced bank reserves that would be rising from bank exchange of non-marketable securities for Tpaper. Whereas, that's primarily a custodial action, it does take the wind out of the growing MECHANISM bubble that would have been further increased by the availability of extra reserves, at least for the limbo time frame. On the right path or just a quick fix? Not a desirable path at all, but a necessary one. It can't be a fix that drags on and on. The only thing that alleviates that possibility is if Congress gets out of the way and lets free market capitalism operate. That won't happen. In Congress' view( the 'crat view) it's better to chase after and punish the wealthy than it is to stimulate the economy. It is only letting people do business unimpaired that will resolve this financial crisis. I think not...but I was short for 400 pts in my face, so WTFDIK!!! You should get in cash and stay out of financial markets. You can't succeed where the only players are others like you. Dollar bounced...but nothing unusual..LT trend still down. The dollar walks randomly for all relevant money making purposes. The long term down trend is perfectly in line with randomness. So would an abrupt reversal to the upside be consistent with randomness. fwiw...I talked to fairly large CRE guy a few days ago...he wasn't phased a bit about this whole thing, biz as usual for him, but did say credit was getting a little tight. Who wants to lend when the prime lenders, the major banks, have difficult problems even if they have good overall balance sheets? I was a little shocked a smart guy like him doing deals with guys like KEY and C didn't have more to say. When in limbo there's nothing to say. In that place you have to shut down trading operations and take a vacation. What really blew me away was his comment on how it's just a "confidence thing" with the public and lenders....? That's trivially true. Confidence carries the basis of PE multiple or bond face. All the problems associated with illiquid securities is that there's no confidence that they will be bought. They have no price even though they have a call on real property. I didn't press any further after that remark. There's nothing to press. We're in a period much like that which occurred after the Panic of 1907. Until 1916 the environment could only be described as "dismal".

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