re: ["Mark to market rule?"] and other market noise...
hillgas,
With the public in uproar over the AIG bonuses, and things
getting ugly (fast) on a global basis, they have to take some
pressure off the public and the markets.
Mark to market's effect is more symbolic than real. Changing
mark to market rules and reinstating the uptick rule for
shorting stocks will be temporarily positive for
the markets.
(See my "PS" notes below for some comments on Geithner's plan)
And as far as how it relates to gold stocks?
The market got magically rallied today (Whodathunkit?),
as Obama is being featured on all the major networks, posing
for photo-ops while meeting with the Queen and G-20 leaders.
Fundamentally, it's immaterial to gold stocks.
Gold is rising because it's the only sane alternative
in a world of insane central banking, and mass looting.
The only thing that can stop gold, is massive intervention.
And if you anticipate that along they way, and refuse to
drink the kool-aid, or get too caught up in waving the pom
poms... you'll be able to keep it.
Remember: Making money in commodities has never been the
problem.
Keeping the money you made - is the problem.
Expect more shakeouts and manipulations, because like darkness
following light... it will come.
The real story is that not since the crash of 1929, when
Joe Kennedy, J.P. Morgan and Wall Street insiders made
fortunes by shorting the crash, has there been so much
insider trading, double-dealing, and market manipulation.
Remember all those deep, deep, deep out of the money puts
on Bear Stearns way before it failed?
The day the Fed came out with a $200 billion lending program
to prop up troubled banks, and with BSC trading at $62.97
someone bought $25 and $30 puts that expired 9 days later.
And soon thereafter Bear Stears was taken under.
Nothing happens by mistake in this market.
The single most under-reported story in this market, was the
take-under of Lehman Brothers.
Lehman's London office offered large U.S. Hedge Funds greater
leverage than they could get in the U.S. (Same with AIG's
London Office).
Lehman was "taken down" because insiders made a fortune
shorting the market, as Lehman's failure created a cascading
effect of forced hedge fund selling and liquidation. This
amounted to leverage x leverage x leverage on the downside.
The money that was made on that trade, made what John Paulson
made on shorting subprime mortgage bonds, look like chicken feed.
The same insiders profited by both Lehman's failure, and AIG's
bailout. And these guys aren't done gaming this market yet.
The pressure is off for now...and they're trying to suck Ma &
Pa Kettle back into the market.
The President even said what a great time it was to buy stocks...
Really?
Job losses were 742,000 last month.
Japan's exports have fallen 48% over the last six months.
The Baltic Dry index has rolled over again, down 30% over the last few weeks.
Home prices are still falling, down double digits year over year.
NuCor's CEO said steel production has "fallen off a cliff."
IBM just announced layoffs this morning.
CAT recently did a 2nd layoff (Remember the first? When Obama
lied, saying that the stimulus package would save CAT's layoffs,
only to have the CEO do a Press Conference that same day,
and have to say -- "no it wouldn't."
University of California economists just said the state's
unemployment rate would soar to between 12-15% by next
spring and remain in double digits through at least 2012.
ftalphaville.ft.com
Note: If California was a country, it's economy would be the
7th largest in the world.
Mortgage applications for "new" home purchases are still down,
even with historically low interest rates, rebates, and special
financing.
Ford's sales were down -41% year over year for March,
Honda's were down -31%, and Toyota's were down -32%.
And we are now only just entering the collapse of commercial
real estate, prime & jumbo mortgages, and consumer credit
defaults.
All this, just as Banks are turning off 50% of all existing
consumer credit. Credit, consumers badly need to replace
appliances, repair their homes, and fix their cars.
And on the note of it being a "good time to buy stocks,"
did you see what our Pension Benefit Guaranty Corporation (PBGC) has done?
Read Paul Krugman's piece below:
--------------------------------------------------------------------
krugman.blogs.nytimes.com
March 31, 2009, 10:01 am
“Dow 36,000? and your pension
So in 2007 the Pension Benefit Guarantee Corporation — which
stands behind corporate pensions — switched from bonds only to
lots of stocks, buying in at, natch, the peak of the
market. Oops. And this is big stuff: the Bush
administration may have left us all a gratuitous loss of
hundreds of billions...
----------------------------------------------------------------------
Remember: Nothing happens by mistake.
Social Security was never meant to be collected, and they
have no plans on the baby boomers ever receiving it, since
the lock box is empty, and unfunded liabilities are now
so large, we can't even pay the compound interest, let
alone the benefits.
They're blowing up both the PBGC, and the FDIC.
Both underfunded, bankrupt, and needing more of YOUR TAX MONEY.
Private pensions, as well as those of State & Local Governments
are bankrupt, and how will States like California, New York,
Michigan, and Illinois ever pay off their pensions?
...they won't.
People will receive "pennies on the dollar"... just as they
will for Social Security.
...all part of the "difficult choices" Obama will soon have
to make.
And now they've got the public so mad over the bailouts,
that they're sending death threats to AIG bonus recipients,
and doing bus tours to their homes... rioting in the streets
all over Europe, and vandalizing CEO's homes.
Again... nothing ever happens by mistake.
The bankers got the bailout money.
And the stimulus money went to bigger Government, and groups
like ACORN.
And when the next phase of this economic collapse unfolds,
we'll end up like Great Britain... out of money for jobs,
and for the people, when it's REALLY needed... because
Government and the Bankers will already have sucked the
Treasury dry.
Keep an eye on Great Britain people... that's their
beta test for America.
-- the guns are gone.
-- they've got camera's on every corner.
-- the police state is in place.
-- and they're bankrupt.
And now, they're getting "little black boxes" put in
their cars, so they can be taxed by the mile, and tracked
and data based...
-----------------------------------------------------------------
guardian.co.uk
The government is backing a project to install a
"communication box" in new cars to track the whereabouts of
drivers anywhere in Europe, the Guardian can reveal.
Under the proposals, vehicles will emit a constant "heartbeat"
revealing their location, speed and direction of travel. The
EU officials behind the plan believe it will significantly
reduce road accidents, congestion and carbon emissions. A consortium of manufacturers has indicated that the router
device could be installed in all new cars as early as 2013.
Details of the Cooperative Vehicle-Infrastructure Systems
(CVIS) project, a £36m EU initiative backed by car manufacturers
and the telecoms industry, will be unveiled this year.
But the Guardian has been given unpublished documents detailing
the proposed uses for the system. They confirm that it could
have profound implications for privacy, enabling cars to be
tracked to within a metre - more accurate than current
satellite navigation technologies.
The European commission has asked governments to reserve radio
frequency on the 5.9 Gigahertz band, essentially setting aside
a universal frequency on which CVIS technology will work."
-----------------------------------------------------------
And from the same people who stole your rights and shredded
the US Constitution and called it "The Patriot Act",
and who are now going to forcibly conscript your children
to a socialist indoctrination via new school curriculums,
and compulsory collectivist service to the state via the
"GIVE" act.... will soon come the final hammer:
Carbon Taxes.
Taxes for being an "eater, and a breather."
For being an enemy of Earth, and a burden on the State.
And people wonder why they're building all those FEMA Camps?
Soon, they'll know...
SOTB
PS: Regarding Geithner's plan...
More Looting by any other name, is still - more looting.
See David Kotok of Cumberland Advisors comments here:
cumber.com
"In a nutshell:
From a seasoned investor with skills in the mortgage arena:
“The current idea floated by financial institutions, and the
media in partner with them, is that these derivatives may
actually come back in value. That cannot and will not happen
for very concrete mathematical reasons. “
“A CDO built in 2005 is almost certain to contain mortgages
written with 105% financing with 50% DTI. Those loans are
blowing up at enormous rates. Hence, since the CDO’s return is
predicated on nothing more than a positive flow from the
underlying securities, every tranche containing blown
mortgages exceeding the modeled margin of default is a 100% loss. “
“Underwriting guidelines have almost returned to sane levels.
The banks are lending, but the new guidelines limit those that
are lent to. That has eliminated more than 50% of the possible
buyers which existed 3 years ago.”
“The only way for any of the CDO’s, CMO’s or CLO’s to retain
any value is if housing values go back to where they were in
Jan 2006, and soon, before any more mortgages in the
underlying MBS go into foreclosure. “
“My point is this: even the conduits are a time bomb, which
will realize near 100% losses, unless housing values
dramatically rise, right now, so no more houses (mortgages) in
the MBS go bad, and give the current mortgagees a way out
through sale for profit or true refinance. “
“Every credit derivative based on obscene underwriting
guidelines will eventually be a near 100% loss. For that to be
different, we need to let as many people back into the buying
market as were present then, to put upward pressure on housing
values. “
“The only way to do that is to adopt, again, obscene
underwriting guidelines. Because that will not happen, any and
all monies given banks to cover losses with credit derivatives
will be a total loss. I believe it is better the banks assume
the loss. There are several hundred middle-tier banks with no
credit derivative exposure, and little residential or
commercial RE exposure. They can and will fill the void should
some “big brothers” go by the wayside. “
“The PPIP is nothing but a shell game, and will drag this
country somewhere no one wants to go.”
From a stranger known only as JPM:
“Your explanation assumes that the buyer and seller are
unrelated and have no association. If they have related
interests, then it gets much much worse.
“There is nothing substantive in the Treasury Dept language
that prevents the seller of (say) MBS from creating an
“unrelated” third party, who can then compensate the buyer for
bidding face value of the assets. The PPIP is so easy to game
it ought to be DOA.” [insiders game the system for their own benefit]. |
