To Hell in a Handbasket.. Our economy

[Aufan 1983]

Wow, Yet another day of bleeding stocks led by financials. When does this end?

Here are some thoughts as I sit here....

First there has to be more regulations in place to control short selling and naked short selling. This has gotten out of hand and its far too easy for the heggies to continually short sell and drive the pps into the ground.

We are constantly fed how bad things are by groups like CNBC who I really think are in bed with the heggies. We get great news and they always finish it off with a BUT and then proceed to tell us why this won't help.

People are running scared from what were once our safest investments. Companies once thought to be the cornerstone of our financial system are now closing the doors. The U.S. governement has stepped in twice with taxpayer money to bail out companies and their ceos walk away with multi million dollar bonuses while the common shareholder and worker are screwed over once again.

I don't know the answers and its way above my head but I do know that we are on a slippery slope and this will take years to recover.

[3DCyclone]

Originally Posted by Aufan 1983

People are running scared from what were once our safest investments. Companies once thought to be the cornerstone of our financial system are now closing the doors. The U.S. governement has stepped in twice with taxpayer money to bail out companies and their ceos walk away with multi million dollar bonuses while the common shareholder and worker are screwed over once again.

I don't know the answers and its way above my head but I do know that we are on a slippery slope and this will take years to recover.

Did you take this part from a recent Obama speech?

I agree with you, we need improved regulation over shorting, but that will probably not happen over night either. Its been a crazy week to say the least.

[Aufan 1983]

Originally Posted by 3DCyclone

Did you take this part from a recent Obama speech?

I agree with you, we need improved regulation over shorting, but that will probably not happen over night either. Its been a crazy week to say the least.

Nothing from Obama will ever come from me

Think about how easy it seems to be for those that naked short sell. All they currently have to do is tell their broker that they have located shares to cover their short position. At this time there is no verification requirements which gives them the opportunity to short millions of shares that don't exsist.

I'm buying some financials today on these huge falls. I might as well wipe out the rest of my account.

[Grizzums]

Good thing Congress didn't listen to the "kook"...

"Fannie and Freddie

by Rep. Ron Paul, MD

Ron Paul in the House Financial Services Committee, September 10, 2003

Mr. Chairman, thank you for holding this hearing on the Treasury Department's views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today's hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

Dr. Ron Paul is a Republican member of Congress from Texas."

[TNTrader]

Originally Posted by Aufan 1983

Wow, Yet another day of bleeding stocks led by financials. When does this end?

Here are some thoughts as I sit here....

First there has to be more regulations in place to control short selling and naked short selling. This has gotten out of hand and its far too easy for the heggies to continually short sell and drive the pps into the ground.

We are constantly fed how bad things are by groups like CNBC who I really think are in bed with the heggies. We get great news and they always finish it off with a BUT and then proceed to tell us why this won't help.

People are running scared from what were once our safest investments. Companies once thought to be the cornerstone of our financial system are now closing the doors. The U.S. governement has stepped in twice with taxpayer money to bail out companies and their ceos walk away with multi million dollar bonuses while the common shareholder and worker are screwed over once again.

I don't know the answers and its way above my head but I do know that we are on a slippery slope and this will take years to recover.

Minor correction. The fed has stepped in a total of 11 times in the 9 months thus far this year. The total as of now is 900 billion that the taxpayer is on the hook for. 900billion. In 9 months. Many of the "sales" of financial companies were actually financed by the fed. In one instance, the sale price was 30billion with the fed putting up 29.9billion of the money. The American taxpayer now holds what essentially is over 75% of the financial sector.

The financial sector has been nationalized.

And the slide not only continues, but worsens with each interference.


Good Luck

[Aufan 1983]

Originally Posted by TNTrader

Minor correction. The fed has stepped in a total of 11 times in the 9 months thus far this year. The total as of now is 900 billion that the taxpayer is on the hook for. 900billion. In 9 months. Many of the "sales" of financial companies were actually financed by the fed. In one instance, the sale price was 30billion with the fed putting up 29.9billion of the money. The American taxpayer now holds what essentially is over 75% of the financial sector.

The financial sector has been nationalized.

And the slide not only continues, but worsens with each interference.


Good Luck

900 Billion? WOW I didn't realize it was that high.

I hate to keep beating a dead horse but today was a perfect example of what the shorts can do to a stock in just a few short minutes. GS & MS both have just yesterday reported solid numbers and today they lose 25%.

The SEC are meeting as I type to discuss more regulations to control the short frenzy. The ceo of GS & MS have made calls along with congress members including the one and only Hillary Clinton

[TNTrader]

Originally Posted by Aufan 1983

900 Billion? WOW I didn't realize it was that high.

I hate to keep beating a dead horse but today was a perfect example of what the shorts can do to a stock in just a few short minutes. GS & MS both have just yesterday reported solid numbers and today they lose 25%.

The SEC are meeting as I type to discuss more regulations to control the short frenzy. The ceo of GS & MS have made calls along with congress members including the one and only Hillary Clinton

Its not the shorts doing the damage. It is foreign banks exiting their positions and the mutual funds that can ,getting out. They are getting what they can from their common stock holdings before they are cancelled or so diluted that they lose even more.


Good Luck

[Grizzums]

Some symbols to keep an eye on in the mo's (years?) ahead...

RYJUX

TBT

PST

The budget deficit is very troubling both currently and especially forward looking. What are we now....$400Bln? Roughly anyway. Let's look into the future.... more war funding (regardless of whatever puppet sits in the oval office come next year), social security w/ increasing liabilities, FNM/FRE, AIG, future homeowner bailout (?), another round of (debt) consumer stimulus (?), auto loan guarantees (?) - btw, wonderful to see that great Republican panderer now agreeing to back this boneheaded future legislation *rolls eyes*, hmm....what other bailout can we foresee...oh yeah, what about an FDIC bailout....and....well, let's throw a future socialized health care program in there, just for fun. Who knows what other bailouts will be coming...obviously the FED will choose hyperinflation over deflation. A trillion+ $ deficit is easily coming.... did you say $900 Bln already TNT? Whoa .... I'm not sure how we get to that number, but I'm not questioning it.

The question I do have....when do foreign entities stop funding our ridiculous debt? When do they say....."ENOUGH IS ENOUGH". I imagine the Saudi's and co. will continue to buy up our treasury debt and Asia will too, but for how long? Until we lose our triple A rating? Is this even foreseeable or far-fetched? Perhaps other countries simply cannot take a chance of not buying our debt, if they do, the global economy would grind to a halt in a matter of mo's. I suppose the US current account deficit could be renamed, "The Great Liquidity Pump" (for the rest of the world). This leads me to another question...foreign CB US dollar reserves have grown faster than their respective trade surpluses....how? Do they buy up USD and sell their own currencies? If so, this would circulate into their own economies hence if our current account deficit shrinks, liquidity dries up overseas.....? Interest rates would then climb and other (Asian, Saudi, etc) currencies would come under pressure. Is this correct? Anyone...?

Regardless, I don't see how the USD can stay where its at nor do I see how treasuries can keep this rally forever. Give it another 6 mo's to a year and a short on treasuries seems like a decent play...perhaps paired with gold.

Thoughts....?

[TNTrader]

I wrote this about the takeover's in the financial sector.



Nationalizing the American Economy




Good Luck

[TNTrader]

Originally Posted by Grizzums

Some symbols to keep an eye on in the mo's (years?) ahead...

RYJUX

TBT

PST

The budget deficit is very troubling both currently and especially forward looking. What are we now....$400Bln? Roughly anyway. Let's look into the future.... more war funding (regardless of whatever puppet sits in the oval office come next year), social security w/ increasing liabilities, FNM/FRE, AIG, future homeowner bailout (?), another round of (debt) consumer stimulus (?), auto loan guarantees (?) - btw, wonderful to see that great Republican panderer now agreeing to back this boneheaded future legislation *rolls eyes*, hmm....what other bailout can we foresee...oh yeah, what about an FDIC bailout....and....well, let's throw a future socialized health care program in there, just for fun. Who knows what other bailouts will be coming...obviously the FED will choose hyperinflation over deflation. A trillion+ $ deficit is easily coming.... did you say $900 Bln already TNT? Whoa .... I'm not sure how we get to that number, but I'm not questioning it.

The question I do have....when do foreign entities stop funding our ridiculous debt? When do they say....."ENOUGH IS ENOUGH". I imagine the Saudi's and co. will continue to buy up our treasury debt and Asia will too, but for how long? Until we lose our triple A rating? Is this even foreseeable or far-fetched? Perhaps other countries simply cannot take a chance of not buying our debt, if they do, the global economy would grind to a halt in a matter of mo's. I suppose the US current account deficit could be renamed, "The Great Liquidity Pump" (for the rest of the world). This leads me to another question...foreign CB US dollar reserves have grown faster than their respective trade surpluses....how? Do they buy up USD and sell their own currencies? If so, this would circulate into their own economies hence if our current account deficit shrinks, liquidity dries up overseas.....? Interest rates would then climb and other (Asian, Saudi, etc) currencies would come under pressure. Is this correct? Anyone...?

Regardless, I don't see how the USD can stay where its at nor do I see how treasuries can keep this rally forever. Give it another 6 mo's to a year and a short on treasuries seems like a decent play...perhaps paired with gold.

Thoughts....?

It was 900billion yesterday,just in giveaways/takeovers to the financial sector. Much of it in under the radar deals such as the "sale" of Merrill Lynch to BofA for 30billion. BofA paid 100million, the taxpayer paid 29billion 900million.Add todays share of the 180billion to the European and asian banks and last nights 55billion in overnites and we have probably already passed the 1trillion mark. All deficit.

This article gives a synopsis of how much more the taxpayer may have to bear in this race to nationalism.

Stocks surge on report of entity for bad debt: Financial News - Yahoo! Finance

If such an entity is created, the taxpayer will be on the hook for every dime. True, a large part of it will be recouped but you must remember, all of this credit and mortgage debt is based on the way overvalued prices of the real estate boom. The underlying properties and bundled toilet paper based on those valuations are worth pennies on the dollar.While a resurgence of property values is simply a matter of time, the debt instruments will remain near worthless for all time.

As for how I arrived at the 900billion, I added up the published amounts myself as far as 654billion. Then I found a Reuters article that had done the same thing but included several items, such as the MER/BofA deal and the overnights to the foreign centrals, that I had not considered at that time.


Good Luck