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EJ
09-19-08, 07:01 PM
Many emails and posts today asking me what I think of the past two days' stock market rally. Only an investor who is still long stocks would ask this question. My position is well known.

I'll repeat what I said Aug. 2007 in A Financial Market Crash is a Process, Not an Event: (http://itulip.com/forums/showthread.php?p=13997#post13997)
Wave of Buying Sweeps Over Market as Stocks Swing Upward

Radio Flashes High; General Motors and Steels Soar

The atmosphere of doubt and caution which Wall Street in recent weeks has come to regard almost as habitual on Thursdays was swept away yesterday in a rush of buying...

Perhaps the market's own strength weighed as heavily with speculative minds as the logic of the situation, since the tape is the one institution Wall Street does not argue with. At any rate, the market appeared entirely confident from the opening gong. It was a firm, almost buoyant, opening, many initial transactions involving large blocks at sizable price advances...

The advance was one of the most vigorous of the year, amounting to a net gain of 6.97 points in the Dow Jones "average" of thirty representative industrial issues...
- The World, March 15, 1929
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Stocks Soar As Bank Aid Ends Fear of Money Panic

The stock market strode out from under the shadow of a panic in call money that so lately threatened, revived in all its old strength yesterday. Assured that the New York banks were ready with their boundless resources to prevent a money crisis, the public and the professional trader set out to repair the damage done to prices on Monday and the major part of Tuesday.

Stocks in the aggregate, though bucking a 15 per cent rate for loans, enjoyed the greatest advance they have known in a single day in the last two years. Not even the surging bull markets of the memorable year 1928 saw such a day of heavy buying.
- New York Herald Tribune, March 28, 1929
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Banker Says Boom Will Run Into 1930

That at least a part of the great amount of money in the securities market may represent temporary employment of funds eventually finding their way into business uses, and that the prosperity of the present business cycle will probably not end in 1929, is the belief expressed by the J. Henry Schroder Banking Corporation in the quarterly review of the London house of Schroder.
- The World, March 30, 1929
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Public Liquidation Spurred by Bears, Hits Low Market Scare Orders From All Over Country Halt Ticker an Hour in Feverish Day

With speculative nerves rubbed raw under the persistent hammering of bearish traders, a renewed wave of public liquidation swept over the stock market yesterday, depressing prices severely and hopelessly clogging the quotation ticker...

...To the majority of the market's followers, who now must be counted in millions, the most significant aspect of the decline is that it has carried the average level of the list to a lower point than was reached on Oct. 4 in the sharp break that climaxed a month of gradual recession.

This raises a pertinent question, whether the bull movement of the last five years has definitely given way to a liquidating market...
- The World, October 20, 1929
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Brokers Believe Worst Is Over and Recommend Buying of Real Bargains

Wall Street in looking over the wreckage of the week, has come generally to the opinion that high grade investment issues can be bought now, without fear of a drastic decline. There is some difference of opinion as to whether not the correction must go further, but everyone realizes that the worst is over, and that there are bargains for those who are willing to buy conservatively and live through the immediate irregularity.
- New York Herald Tribune, October 27, 1929
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Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Wall Street

Largest Financial Powers in the City Meet After Day of Hysterical Liquidation Sinking Prices Below Thursday's

After the stock market had come crashing down again in a veritable deluge of forced and hysterical liquidation, word sped through the financial district last evening that the largest banks in the city were prepared to exert their organized power this morning to prevent further disaster.

Arrangements described as "fully adequate" were completed at a conference at the offices of J. P. Morgan & Co. at Broad and Wall Streets...

Although no formal statement was issued, it was the consensus of those at the meeting that the worst of the liquidation is over and that a natural demand for investment stocks now available on the bargain counter should go far toward an immediate restoration of trading stability.
- The World, October 29, 1929
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You are here --->

Stocks Up in Strong Rally; Rockefellers Big Buyers; Exchanges Close 2-1/2 Days

Revived by spontaneous investment buying and declarations of large extra cash dividends by leading companies, and free of the delirium that has recently gripped share owners, the stock market yesterday received a fresh start and scored a record comeback. Volume on the Stock Exchange totaled 10,727,320 shares, the third largest day on record.

The high spot of the day from a stock market viewpoint was the statement by John D. Rockefeller that there was no need to destroy values and that he and his son, John D. Rockefeller Jr., had been heavy buyers of stocks for investment in the last few days, and would continue to buy at present prices...
- New York Herald Tribune, October 31, 1929
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Very Prosperous Year Is Forecast
Guenther Analyzes the Report of Mellon Covering 1929

That 1930 may be a very prosperous year, industrially and otherwise, without the peak conditions that made 1929 and exceptional year for business prosperity, is an observation made by Louis Guenther, publisher of the Financial World, in a statement based upon Secretary Mellon's fiscal report...

"To grow too fast is often unhealthy because of the suddenness with which a readjustment must be met. By far and large the country would be better off were further progress made along more normal lines...

Fortunately, we have returned to a more normal mind in appraising prospects. We are not looking for the Midas touch on everything to which we turn. That makes us more satisfied with normal incomes and normal profit returns."
- The World, December 15, 1929
1929 Headlines (http://www.pbs.org/wgbh/amex/crash/sfeature/sf_headlines.html)
Milton Friedman said, "Governments never learn. Only people learn."

Just because our government is run by idiots doesn't mean we have to act like idiots, too. Once markets get this broken, all the government can do is make the problem worse.

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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phirang
09-19-08, 08:22 PM
Couldn't we just move to a new trade model, where we export ownership of hard assets and equities in exchange for Hondas and oil?

zoog
09-19-08, 08:30 PM
I made a visual aid.:) Couldn't fit them all in neatly so chose a few.

http://img440.imageshack.us/img440/5061/29djiaheadlinesoo1.jpg (http://imageshack.us)

phirang
09-19-08, 08:40 PM
I made a visual aid.:) Couldn't fit them all in neatly so chose a few.

http://img440.imageshack.us/img440/5061/29djiaheadlinesoo1.jpg (http://imageshack.us)

Why would the market crash? Why withdraw capital from the market if the government removes the risk? If the fed cuts rates to 1%, why run to cash?

The real question, imho, is sorting out which SWF's get what in exchange for this bailout, or did the Fed just sell off gold in exchange? The US has desirable assets that our trade-surplus neighbors desire, and in an effort to recapitalize, we will sell them to Saudi, China, Japan, etc.

The US can finance more deficits handily if it allows DP to buy Longbeach, Russia to buy US Steel, China to acquire key manufacturing IP, etc. This would flow money into the capital markets.

I fear that reflation won't come from some grandiose, national re-industrialization: I think it will come from SWF's, but the deals will be sanitized by Anglo-Saxons in private equity firms and broker-dealers.

The Outback Oracle
09-19-08, 10:19 PM
Phirang said
Why would the market crash? Why withdraw capital from the market if the government removes the risk? If the fed cuts rates to 1%, why run to cash?

The real question, imho, is sorting out which SWF's get what in exchange for this bailout, or did the Fed just sell off gold in exchange? The US has desirable assets that our trade-surplus neighbors desire, and in an effort to recapitalize, we will sell them to Saudi, China, Japan, etc.

The US can finance more deficits handily if it allows DP to buy Longbeach, Russia to buy US Steel, China to acquire key manufacturing IP, etc. This would flow money into the capital markets.

I fear that reflation won't come from some grandiose, national re-industrialization: I think it will come from SWF's, but the deals will be sanitized by Anglo-Saxons in private equity firms and broker-dealers.

In my mind this is probably what will happen. In this case you follow the Australian model. Politicians will do ANYTHING. So your pollies will sell the country off and it will be portrayed as a positive thing that you have a great economy so all the world wants to invest in it. Much of the groundwork for this has already been laid. It has been sold as a wonderful thing that all teh world wants to buy your treasuries and dollars. so it will be a very simple step to convince the public that all these foreigners wanting to buy your assets is because you are such nice wonmderful people and it's a wonderful economy! That's the Aus model. Ahhhh expect the name for borrowings to be changed to "Capital inflow":mad:

Supercilious
09-19-08, 10:36 PM
I made a visual aid.:) Couldn't fit them all in neatly so chose a few.

http://img440.imageshack.us/img440/5061/29djiaheadlinesoo1.jpg (http://imageshack.us)

I believe, you are correct with the exception of that little black arrow pointing downwards in the lower right hand corner. If it was pointing at about 2 or 2:20 o'clock for a three year forward pointer (2011) I would agree completely

marvenger
09-20-08, 01:14 AM
Soveriegn wealth funds, governments and Fed's working closely together. There's a massive centralisation of power happening here. NWO here we come?

phirang
09-20-08, 01:29 AM
Soveriegn wealth funds, governments and Fed's working closely together. There's a massive centralisation of power happening here. NWO here we come?

symbols suggested another incentive, and it could be that the US is trying to force repatriation of treasuries to prop up our economy and further their(arabia, china, japan, esp russia) dependence on the US, thus ensuring the US is the dominant power going forward.

pretty f'ing brilliant, if it's true. From what I"ve been reading on the CFR website, seems plausible.

stop wasting time on kitco, and read the cfr:

http://www.cfr.org/publication/17144/sovereign_wealth_and_sovereign_power.html