``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

[Guest]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

I copy you 4X4.

http://www.itulip.com/forums/showthread.php?t=5033

I understand fully and i agree to an extent that this will not be the big way too obvious turn around. I too have been mauled blindsided by this correction, it doesn't bother me much i just watch the premiums and grab what i can at the lowest price i can. At this point, a dealers inventory is determining what price they are selling silver, more than the spot price in the market!

[icm63]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

Stocks are down pre monday opening. Consumer mortgages are on the way back up to over 6.2%
http://www.cme.com/trading/dta/del/globex.html
Bondscrashingafterhours001.jpg
Bondscrashingafterhours002.jpg
Bondscrashingafterhours003.jpg

So will the $700 BN work now ?

Also1 : Chriss Cox has twice turned may large winning short financial trades into small winning trades. What a tosser !

Also2 :

DEBIT GOVT CASH : $700,000,000,000
CREDIT BANKS (BAD DEBT) : $700,000,000,000

DEBIT BANKS CASH : $700,000,000,000
CREDIT GOVT BONDS : $700,000,000,000 (USA or FOREIGN BONDS ????)

CREDIT CONSUMER : $0

Thats what happened in Japan...
http://www.bloomberg.com/apps/news?p...avU&refer=home

When that country's real estate bubble burst, leaving a trail of bad real estate loans, officials flooded the economy with cash only to see banks hoard the money instead of lending it out. The result has been a series of recessions and persistent deflation for more than a decade.

``Although the government tried to debase the yen by printing a lot of government bonds, the economy went into a standstill,'' said Cheah, an official at the Monetary Authority of Singapore from 1991 to 1999 who manages $2 billion at AIG SunAmerica Asset Management in Jersey City, New Jersey. ``The banks used the money to buy safety. I see a repeat happening here. The banks will use it to buy Treasuries.''

But will it be USA bonds or SWISS or JAPANs or EURO bonds ???? Watching the USA 30 and 10 year will be interesting viewing !

[Jim Nickerson]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

http://www.bloomberg.com/apps/news?p...avU&refer=home

Treasuries Prove Irresistible as Deflation Bet Trumps Paulson

By Daniel Kruger and Sandra Hernandez

Sept. 22 (Bloomberg) -- As details of Treasury Secretary Henry Paulson's plan to revive the U.S. financial system by pumping as much as $700 billion into the markets emerged Sept. 19, bond investor Michael Cheah was reminded of Japan.

When that country's real estate bubble burst, leaving a trail of bad real estate loans, officials flooded the economy with cash only to see banks hoard the money instead of lending it out. The result has been a series of recessions and persistent deflation for more than a decade.

``Although the government tried to debase the yen by printing a lot of government bonds, the economy went into a standstill,'' said Cheah, an official at the Monetary Authority of Singapore from 1991 to 1999 who manages $2 billion at AIG SunAmerica Asset Management in Jersey City, New Jersey. ``The banks used the money to buy safety. I see a repeat happening here. The banks will use it to buy Treasuries.''

While U.S. bonds tumbled on the plan to buy soured mortgage-related assets from financial institutions in the most far-reaching federal intrusion into markets since the Great Depression, they still ended the week little changed.

To investors such as Cheah, that's a clear sign the economy is facing many of the same risks that have afflicted Japan. The yield on the benchmark 30-year Treasury bond, which stands to benefit the most of any government maturity from a drop in inflation expectations, fell to 3.89 percent last week, the lowest level since the U.S. reintroduced the security in 1977.

more...

``The current U.S. situation is the same as Japan's case,'' said Hiromasa Nakamura, senior fund investor at Tokyo-based Mizuho Asset Management Co., which oversees $36.5 billion as part of Japan's second-largest bank. ``The economic slowdown and credit crunch are creating a downward spiral.''

Nakamura, who correctly forecast the rally in Treasuries last year, said two-year note yields will fall to 1.1 percent by year-end, while the 10-year will decline to 3 percent. The 2.375 percent note due August 2010 ended last week at 100 11/32 to yield 2.20 percent, while the 4 percent security maturing in August 2018 finished at 101 10/32 to yield 3.84 percent.

more...

I don't know where anything is going right now--the next week or so, and my opinion is no one knows. My positioning is to sit tight and let some more of this debacle unfold.

[Jim Nickerson]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

It doesn't seem that any entity who has made loans is about to "melt down". Not if these bastards in Washington are not stopped today, and there is no way that's going to happen.

http://www.bloomberg.com/apps/news?p...i6Y&refer=home

U.S. Treasury Widens Scope of Bad-Debt Plan Beyond Mortgages

By Dawn Kopecki

Sept. 21 (Bloomberg) -- The Bush administration widened the scope of its $700 billion plan to avert a financial meltdown by including assets other than mortgage-related securities.

The U.S. Treasury submitted revised guidance to Congress on its plan, referring to its proposal to purchase so-called troubled assets, a change from its original plan for investments tied to home loans, according to a document obtained by Bloomberg News and confirmed by a congressional aide.

The change suggests the inclusion of instruments such as car and student loans, credit-card debt and any other troubled asset.

Firms that are headquartered outside the U.S. will now be eligible, in another change from the guidance sent to Congress yesterday, according to the document. The size of the plan remains unchanged.

This is good news, that is until the size of the plan is jacked up several fold.

[don]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

PARIS — The financial crisis that began in the United States spread to many corners of the globe. Now, the American bailout looks as if it is going global, too, a move that could raise its cost and intensify scrutiny by Congress and critics.
Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.


http://www.nytimes.com/2008/09/22/bu...hp&oref=slogin



Un-f**king-believable.

[icm63]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

Roubini was way on the light side !

What stupid idiot would buy usa bonds !

I would buy Aussie bonds as there wealth is out of the ground.
I would buy Japan bonds as their banks are the healthiest in the world ( after 20 years of cleaning)
If your real smart invest in Vietnam, that will be the new china in 5 years !

[Jim Nickerson]

Re: ``We are literally maybe days away from a complete meltdown of our financial system,'' NYTimes

Roubini was way on the light side !

What stupid idiot would buy usa bonds !

I would buy Aussie bonds as there wealth is out of the ground.
I would buy Japan bonds as their banks are the healthiest in the world ( after 20 years of cleaning)
If your real smart invest in Vietnam, that will be the new china in 5 years !

So why don't you put up your allocations and positions?

[aweber]

Re: "were literally maybe days away from a complete meltdown of our financial system"

It's the context. I haven't changed my tune. I wrote this to AO readers in 2005:

What I want to make sure I get across here, in case it's not obvious, is that I'm fairly certain that an unseemly economic turn of events is more likely to happen than not, probably in the next three years, and it's going to happen here, in the U.S. To us. To you and me. While it's likely to be worse than most of us are prepared for—that is, it will not be your average recession—it will not be the end of the world either, although there may be times when things look that way. It will certainly be the end of living high off the hog on other people's savings, and it will represent a transformation that we must go through to get to a different place.

Whether you experience the new place as better or not is going to depend on where you started and what's important to you. While periods of economic readjustment are never painless, it's important to keep in mind that the challenges we face as individuals represent nothing worse than those that 90% of the world's citizens cope with every day with grace, dignity, and humor. No one owes us a high standard of living, and most of the world gets by without one. Our main challenge will be to accept and deal with our problems effectively in the short term. It will require strong, honest leadership. In the long term, we can count on the United States' and its people's extraordinary ability to adapt to change and come out ahead.

Inflation is Dead! Long Live Inflation!

Readers have had a good three years to prepare.

Thanks for sharing your somber thoughts. The Oil agenda is receiving less attention than it deserves, the devil of the detail is there, if it stabilize at less than 100 the economy can go and the adjusts will be made.

[metalman]

Re: "were literally maybe days away from a complete meltdown of our financial system"

Hi EJ,

I'd like to quickly thank you for your dedication and hard work to educating those like myself about how we got here and what's the likely future of our economic and financial system. You have been more accurate than I could ever imagine and I still don't know how you do it. I'm 24 and I've been following Itulip for the last 3 years and I would be completely lost without your website and your incredible readers.

Regarding the aforementioned post, I'm a little confused about the panic that went on this week. The "Ituliper" in me wants to say, this is it, this is the financial panic that was in the works and I should expect it, however the contrarian in me is wondering if I should believe CNBC, Cramer, and all those political "strategists" in believing that had the government not stepped in this time, Bernanke would be right and Great Depression version 2.0 would be upon on us. I'm wondering if you believe this would have occured had the government not stepped in and said they would buy up some of these toxic securities.

Thanks again for all you've done.

-G-

not ej either but have noticed that questions are more reliably answered over on the Ask EJ forum. and i'd like to hear the answer, too...

[GRG55]

A Pig Without Lipstick...

Best descriptive one-liner I've heard so far of the Paulson Super SIV...

From Steve Benen at the Washington Monthly:

A PIG WITHOUT LIPSTICK.... I've been trying to find a credible voice on fiscal matters that believes the Bush administration's bailout is a good idea, and should be approved by Congress without alteration. I can't find one.
The plan seems to suffer more as the scrutiny grows more intense, but I'd go with the accountability/oversight problem as the most glaring.

The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
"He's asking for a huge amount of power," said Nouriel Roubini, an economist at New York University. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."

Atrios, after noting the $700 billion price tag, highlights this portion of the proposal: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
If we were dealing with a competent, capable administration, which had proven itself reliable in dealing with fiscal and budgetary policy, it would still be an extraordinary gamble to turn over hundreds of billions of dollars with no strings at all. But we're dealing with the Bush administration, which hasn't exactly earned the benefit of the doubt.
More...

[Jim Nickerson]

Re: A Pig Without Lipstick...

Best descriptive one-liner I've heard so far of the Paulson Super SIV...

From Steve Benen at the Washington Monthly:

A PIG WITHOUT LIPSTICK.... I've been trying to find a credible voice on fiscal matters that believes the Bush administration's bailout is a good idea, and should be approved by Congress without alteration. I can't find one.
The plan seems to suffer more as the scrutiny grows more intense, but I'd go with the accountability/oversight problem as the most glaring.

The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
"He's asking for a huge amount of power," said Nouriel Roubini, an economist at New York University. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."

Atrios, after noting the $700 billion price tag, highlights this portion of the proposal: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
If we were dealing with a competent, capable administration, which had proven itself reliable in dealing with fiscal and budgetary policy, it would still be an extraordinary gamble to turn over hundreds of billions of dollars with no strings at all. But we're dealing with the Bush administration, which hasn't exactly earned the benefit of the doubt.
More...

GRG, good article offering a perspective that suggests if Congress does extend all for which Paulson is requesting without oversight or legal recourse and without explanation for how Paulson will operate the plan, then we in the US without question have a democratic process that is proven efficient in election of buffoons.

[jtabeb]

Re: A Pig Without Lipstick...

then we in the US without question have a democratic process that is proven efficient in election of buffoons.

Wrong, we will have NO democratic process.

[GRG55]

Re: A Pig Without Lipstick...

Wrong, we will have NO democratic process.

Here's your chance to save the country [but maybe not the financial system]

You able to program in the coordinates of Hank's Treasury office in one of those devices you hang under the wing of that thing you fly?


Just askin'...:rolleyes:

[GRG55]

Re: A Pig Without Lipstick...

GRG, good article offering a perspective that suggests if Congress does extend all for which Paulson is requesting without oversight or legal recourse and without explanation for how Paulson will operate the plan, then we in the US without question have a democratic process that is proven efficient in election of buffoons.

Jim: I don't know how the US Congressional and Senate legislation voting system works...how many are needed for a quorum, what %'age needed to pass a bill, etc.

But if I had to guess, and if the system allows, this bill may set a record for absences or abstentions when it comes to a vote. I cannot see a large appetite amongs politicians seeking re-election in a few short weeks to want to carry the taint of this one.

[Jim Nickerson]

Re: A Pig Without Lipstick...

[quote=GRG55;49259]Jim: I don't know how the US Congressional and Senate legislation voting system works...how many are needed for a quorum, what %'age needed to pass a bill, etc.

But if I had to guess, and if the system allows, this bill may set a record for absences or abstentions when it comes to a vote. I cannot see a large appetite amongs politicians seeking re-election in a few short weeks to want to carry the taint of this one.[/quote}

To the contrary, these dudes may be clamoring to get their votes in "to save the US and the world" no less. I guess how this turns out might really be the final demonstration of just how screwed up we are, or perhaps a demonstration that enough of them are not buffoons so that they abdicate their responsibilities to an individual like Paulson.