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B4 The Bell Tuezelday October 19


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#361 PeakOil

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Posted 20 October 2004 - 12:41 AM

Helluva comeback by the RED SOX...just makin' it all that more painful for their faithful tomorrow??  If they lose this time..it will definitely rank right up there, eh?

Very entertaining - baseball 'on the edge'. Nice to see the umps get a couple of correct calls against the Yankees tonite. B)

#362 beardrech

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Posted 20 October 2004 - 02:10 AM

Why should the DXYO chart recapitulate the S&P 100 chart?

Monthly MACD crosses after significant lengthy declines are a major warning sign that the decline has run out of gas..at least on most of the charts I have looked at spanning the last hundred years or so anyway..it doesn't mean that price can't work it's way lower yet..it is just a BIG warning flag..one that was ignored by many stock bears to their extreme detriment in Mar 03..

If the monthly MACD can get turned down again, the dollar would most likely have another leg down, as the British Pound did in the early '90s..

We are at a pivotal area, with signs of a deflationary wave starting to crop up..a good time to exercise caution if you're short, that's all...

K way

Comments please on that cackling jackal Droke on Gold Eagle who mocks us bears by continually enunciating the 10 year bottom of the "non or micro recession

In light of youur warnings perhaps you have the scope to see what in the hell posesses this guy Do you see any evidence for his assertions

His mindless insouciance is getting under my skin

beardrech :ph34r: :ph34r:

#363 Basho

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Posted 20 October 2004 - 03:20 AM

Sorry to be so inexcusably late to this latest outbreak of the dreaded “inflation/deflation” debate. :P Even more sorry to see that Yobob is planning to pack it in and head off to the fastnesses of Idaho. If anyone is starting a bring back Yobob fund, count me in.

MH, your voice on this board has always seemed to me the matching bookend to Yobob’s . . . . equally spirited, funny, beautifully irreverent and intelligent while often drawing totally different conclusions. It’s been a great dialogue. Having said that – and while I hasten to add don’t think anyone can say with certainty how this mess will unfold -- I do fear you may be taking a bit of a simplistic approach to this ‘flation question.

Credit has a supply-demand curve. If "interest rates rise," more supply of credit will be forthcoming because the yield is more attractive.

Nothing about that process implies a deflation. Only widespread defaults, uncountered by gov't bailouts, would induce deflation.


So many assumptions are built into this assertion – and the ones that followed in later posts -- that I’m not sure they have a lot of analytical or predictive value. The most critical of these is the belief that lenders (and borrowers for that matter) will continue to behave as basic theory suggests when the macroeconomic environment is in a state of barely controlled chaos and no-one knows what real rates are today, forget about next year or – God forbid – in thirty years time. The Fed has a balance sheet of about $750 billion. If the wheels start to fall off the financial system, the sums involved would force the Fed to act on an unprecedented scale. Indeed your own views on the dollar and commodities seem in many ways to be premised on this very assumption. With net external indebtedness of $3-5 trillion (depending on how you account for ADRs), it’s also hard to be too sanguine about foreigners willingness to continue plugging the dyke. Again, I generally get the feeling your own market views assume an eventual meltdown on this front.

Why then should we expect lenders to step up their activity when rates rise in the face of such terminal uncertainty? They’d already be struggling with a rapid – and possibly breathtaking -- deterioration in the value of their existing assets while at the same time fighting to roll their liabilities, if they’re lucky at a rate that doesn’t have them losing every day on the spread. As for borrowers, as you readily acknowledge, they’d generally have more than enough horrors to deal with as the result of their idiocy to date.

Now I know at this stage of the argument you insert the deux ex machina of the government and its handmaiden the Fed. Eye poppingly large fully monetised fiscal deficits, helicopter drops, propping up weak links in the financial system, monetising all manner of assets etc etc etc. Now, they may well try to take this road when the crisis hits, although I think matters may have to slide quite some way before they summon the cojones – viz desperation -- to hit the full afterburners button. I confess my suspicion is they’ll find it was a whole lot easier to talk about all these powers they have at their disposal than to activate them in the near certain knowledge that success would mean the ground zero type destruction of the whole damn financial system.

I have no doubt they would act to try to stave off the collapse of any essential girders in the inverted pyramid. Given the nature of the system, they don’t really have any choice. Small ones, no problems. Well, not a lot anyway. Make it a big one – say a GSE for example or one of the major credit enhancers that enable the whole charade to still be played – and things get a lot more complicated. Sure they could buy whatever amount of GSE paper was needed to stop the system imploding, but what then? Say $250 billion was enough to stop the rot, for a while anyway. Now the Fed balance sheet is $1 trllion and there’s another $250 billion in reserves floating around the system. What do the sellers do with this liquidity? Merrily put it to work out there somewhere again in the hope the Fed will always catch them? Deleverage a bit just to be on the safe side? Deleverage a lot to get out of what has become a crazy lottery? Put it into commodities or other real things? And what if the sellers are foreigners? After all, just the official holdings of agencies alone are about $250 billion. Do they leave the proceeds in dollars; take them home; decide to sell even more dollar holdings because the game is no longer worth playing? Eagerly hand over freshly earned dollars to be even more egregiously mismanaged?

Hell, who knows? I surely don’t and that’s really my point. I don’t see how anyone can. It does seems only too easy, however, to imagine the first major bout of unconventional policy measures quite quickly leading to waterfall selling as players of all kinds try to reduce their risk profile in the face of growing chaos and the increasing possibility that there’ll be no end to monetary inflation. Whether the stampede would be to the short end, to cash, to real things, or simply to reduce leverage will remain something of a mystery until the fateful day arrives. One thing seems certain; given the size of the debt mountain, it wouldn’t take a particularly large percentage heading for the exits to present the Fed et al with an exquisite, immediate and quite possibly insuperable dilemma. We should also keep reminding ourselves that if it does start unravelling in this way the delightful, just in time environment with which Greenspan is so enamoured may not leave them much time to decide which weapons to roll out.

No, I think we're truly in uncharted territory. Historical analogues are undoubtedly of some value as is commonsense and even some economic theory. I don’t think any of it however can fully prepare us for the magical mystery tour that lies somewhere in our future. For what little it’s worth -- and as I’ve said from time to time in the past -- my best guess leans towards the deflation end of the spectrum with most financial and real estate assets eventually getting slammed while many everyday necessities – plus gold and maybe silver -- head higher. As for hyperinflation, I don’t think it can happen unless the authorities are willing to go the autarkic route; namely seal the borders, impose exchange controls and proceed to a form of socialism by reverse takeover.

And at that point, I guess market discussions would have become somewhat academic.

regards

Basho

#364 Jimi

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Posted 20 October 2004 - 04:08 AM

Bravo Basho.
Sure glad all my albums went GOLD.
"Ferdy-bee-bee-dee-ferbs."
Subscribe & Earn Karma Miles with Every Visit!
Rule #5 Professional Exemption.
Blind Follower, Just Think Positive Hyperinflation, I Get Paid 500 Quadrillion Dollars/Hour at 1000% Interest/Hour Compounding Forever Each Mouse Click Religion.
"I too observe 'flation.'"
I love you, TASR!
YOU MAKE KITTY SCARED
Tops Take Time
Postulate A Free Lunch Economy
Anyone, now, who is not genuinely afraid is a moran.
[T]housands of empty stucco crapboxes vacated after being circle-jerk sham-traded among corrupt borkers, uppraisers and loan officers from 100K up to 800K, then "nopay-walkaway" (with dirty loan cash in pockets)
Guess again, girlfriend.
Or, $2.7 million every effing day since the effing pinball machine.
Permabear Hysterian

#365 The brown one

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Posted 20 October 2004 - 05:20 AM

Excellent Basho!

#366

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Posted 20 October 2004 - 05:57 AM

yobob1, please come back!

Without you, I have no survivalist advisor!

Sherlock

#367

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Posted 20 October 2004 - 06:06 AM

DAL has cancelled their post-earnings conference call scheduled for this afternoon.
Assume bankruptcy. Another well run major American brand bites the dust.

Oil is the beach ball that keeps popping back up out of the water. Expect a move today. The attacks on Iraq's oil pipelines yesterday were explained away as no big deal...but it is.

Gold is pointing the way for oil.

The Ten Year Yield is another such beach ball, and I expect that one to get away today too.


The Three-Legged Stool of the US Market and Economy:

1. Heating Oil/Gasoline

2. Mortgage Rates/Home Values

3. Consumer Confidence

The stool is about to hit the fan.

Markets hate uncertainty, and a new NBC/WSJ poll out today show Bush and Kerry deadlocked.

The uncertainty is who will win...but the certainty is that the result will be protested. The markets will smell anarchy in the air.

#368 machinehead

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Posted 20 October 2004 - 06:32 AM

A disturbing inquiry in a sex advice column:

Dear Ms. Eitches,

I was watching the vice-presidential debate while reading your column, and now I have a disturbing homoerotic attraction to Dick Cheney. Whenever I hear ‘Halliburton’, I get an erection. Please help.

—J.K., Senator, Massachusetts

Greetings Senator, 

I have received many such concerns. I myself overcame such an attraction to Janet Reno as a young teen. Fear not, there is still hope. You must slowly wean yourself off the vice president’s undeniable sensuality by recasting him in your fantasies with a more culturally accepted penis hardener, like President Bush’s daughter (the hot one). Add aversion therapy as needed—reassociate the word “Halliburton” with corporate greed, or any other world woe. Be patient, these things take time.


Twisted affections
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
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#369 The brown one

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Posted 20 October 2004 - 06:38 AM

A disturbing inquiry in a sex advice column:

Dear Ms. Eitches,

I was watching the vice-presidential debate while reading your column, and now I have a disturbing homoerotic attraction to Dick Cheney. Whenever I hear ‘Halliburton’, I get an erection. Please help.

—J.K., Senator, Massachusetts

Greetings Senator, 

I have received many such concerns. I myself overcame such an attraction to Janet Reno as a young teen. Fear not, there is still hope. You must slowly wean yourself off the vice president’s undeniable sensuality by recasting him in your fantasies with a more culturally accepted penis hardener, like President Bush’s daughter (the hot one). Add aversion therapy as needed—reassociate the word “Halliburton” with corporate greed, or any other world woe. Be patient, these things take time.


Twisted affections

ROFLMAO :lol: :lol: :lol:

#370

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Posted 20 October 2004 - 06:46 AM

Nice rant Basho. Thanks for taking the time. You are correct that the contributions of MH and Yobob are of great value, as everything that challenges conventional thinking is welcome here...and unlike our Presidential candidates, we have enjoyed a great debate.

A SYSTEM has been in place that has fueled the economic fires of the American Consumer Society. This System has included brokers at the retail level pimping mortgage and refi cash to consumers. The brokers pass the paper work onto the mortgage lenders, who pass it onto a bagholder which frees up the opportunity to lend more. The bagholder passes it onto another bagholder in order to free up their own ability to acquire more mortgages...and ultimately the System has seemingly provided that all mortgages are bundled, repackaged and rocket-launched into outerspace, ensuring unlimited life for the System to function forever.

This entire system is dependent on the willingness of outerspace to accept new mortgage-laden rocketships. Remove the willingness of the Outerspace Bagholders to acquire any more mortgage paper, and the whole system becomes constipated (a stoolism).

Vacuum Cleaners operate perfectly until the bag becomes full...at which point the suction begins to diminish and the System grinds to a hault. The engine is running harder and harder, but the bag is full. You are here.

In this example, a new bag is required. In the real world, there are no more bagholders.

The SEC is launching a formal investigation into Fannie. There are no solutions to this mess. Outerspace is closed and the rocketfuel required to get there is too expensive any way.

Welcome to GAMEOVERVILLE!

#371 machinehead

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Posted 20 October 2004 - 06:58 AM

Sorry to be so inexcusably late to this latest outbreak of the dreaded “inflation/deflation” debate. :P Even more sorry to see that Yobob is planning to pack it in and head off to the fastnesses of Idaho. If anyone is starting a bring back Yobob fund, count me in.

If he doesn't show up in a few days, I'll give him a call.

His member profile shows email address "private."

I have a business-address contact for him though ...
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

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Posted 20 October 2004 - 07:10 AM

CNBS talking heads are jabbering about the "Spitzer Effect" this morning as the futures slide off the cliff.

Can you imagine the e-mail treasure trove to be found on the CNBS computers if Spitzer ever decides to go after the pimps and shills?

The whorer!





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