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Genesis Posts: 71359 Incept: 2007-06-26 
KD^2 
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http://market-ticker.denninger.net/2007/....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-13 17:24:55
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Brian Posts: 231 Incept: 2007-07-11 SoCal
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"if the dollar is allowed to flush (see above; I do not believe it will) he (Schiff) gets the rest" ok. You've probably posted this before here somewhere but, IF the dollar IS sacrificed to the porcelain gods Mr. Denninger, where would you be stashing yer cash ? just curious.... wouldn't the dollar just become a big green torpedo around the planet?
2007-07-13 17:50:30
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Genesis Posts: 71359 Incept: 2007-06-26
KD^2
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Yeah. That's the problem. There is no real safe haven. You can try metals, but no promises there. You might not get what you think. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-13 17:55:48
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Jazmia Posts: 347 Incept: 2007-06-26 
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"BUT - inflation is halted, and when the recession ends, we come out a stronger nation. Yes, equities will take a hit. A big one. 30%ish, probably. But if we do it now it will be over before the Presidential Elections and the economy will be on the mend!" You truly believe that if the Fed raises rates now we would only experiences a 30% correction? We would have a housing market underwater and how are the $1 Trillion of mortgages going to get refinanced? Think about all those CDOs and MBS, how on earth is that going to only amount to 30% losses. I wish it was true but I really dont see how. No matter what the fed does will stop this. They had your option in 2001 and Greenspan now admits in his new upcoming book he freaked after 9/11 and dropped rates to low for to long. Either way we will have catastrophic losses in all markets. The only difference to us Traders is when the Fed makes its move we have to be ready in either scenario. I was once a very bullish person on the economy. Over the last two years i have studied this like its my life(oh yea it is!!) and i cant see ONE way we can escape this coming category 5 hurricane. Its Katrina in the financial markets and we all saw how well the government reacted to that one.
2007-07-13 18:03:44
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Genesis Posts: 71359 Incept: 2007-06-26
KD^2
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You can't refinance them now. The point here is that we're going to have a meltdown in the housing market. No way out. We can still prevent it from being anything beyond a recession (albiet a bad one) but the clock is running on that. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-13 18:05:36
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Brian Posts: 231 Incept: 2007-07-11 SoCal
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i'd expect a more intensified war between the consumer and his currency to break out w. chuck slumming down his shopping dollars (as is happening now) or going on a spending strike.....i'm praying for deflation myself....
2007-07-13 18:05:48
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Jazmia Posts: 347 Incept: 2007-06-26
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So do you really think that it will only amount to a 30% drop? I have been in Real estate for 10 years and on the street prices are already down 30% in South Florida. Yes high end is still getting by but a good friend just bought a multi million dollar condo at a 25% reduction.
2007-07-13 18:11:28
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Genesis Posts: 71359 Incept: 2007-06-26
KD^2
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We're talking about the averages across the entire nation. In certain bubblicious areas (I live in Florida too!) it will be a 50-75% drop from the highs, but that still only takes us back to '00-01 prices. That's assuming we take the medicine NOW and defend the dollar. If we break 80 instead, we're ****ed. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2007-07-13 18:16:00 by genesis
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Jazmia Posts: 347 Incept: 2007-06-26
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First off I want to thank you for providing a place for all of us to talk. I would go weeks without having real discussions and it would drive me nuts... My way of looking at it is the housing market across the country is like the Nasdaq you have Fl, CA,NV,TX,NY and some other cities driving the market like Google and Apple. But once those places implode even other markets that didnt appreciate as much are going to get the downside of these markets. I just cant see how a house in OH or similar cities wont be down 60-70% no matter what. The reason I ask is I want to see if I am missing something or your use of 30% was not intended to be strongly thought. Thanks again for the forum..
2007-07-13 18:27:25
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Sondergaard Posts: 512 Incept: 2007-07-13 
Big Trees
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"This would literally threaten the economic and political stability of the United States, and the policy makers and administration know it." I wish I shared your confidence. I'm not convinced the adminstration really does know this, overflowing with yes-men as it is. But even if they do know it, I just can't imagine them cutting off the gangrene to save the patient. It's much easier to imagine that we will be told that everything is fine. All the way down. ---------- And it won't make one bit of difference if I answer right or wrong; when you're rich, they think you really know. --Fiddler on the Roof
2007-07-13 18:34:16
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Eleua Posts: 9906 Incept: 2007-07-05
N 47.72/ W 122.55
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I agree that RE prices in sexy areas will see a 50-80% drop off the peak. I said this over a year ago http://clearcutbainbridge.blogspot.com/2006/01/do-math-why-real-estate-will-get-cut.html I do think the recession will not work its way through prior to Nov '08. I don't think it would work its way through by 2010. Even if BB cranked rates to 12% tomorrow, we would not be done in 16 months. Chuckie is going to be hibernating for quite a while. We have the Mouseketeers that all think they are going to retire and live a Roman orgy of a retirement at gov't expense. Our Southern border is sending up tens of millions that will have their hands out. Can GenX pay all those bills? Count me as skeptical. If the DEMs do win the WH (and I don't count that as an absolute certainty), they will tax whatever is left standing. I think social/political unrest is inevitable. If BB cranks rates, the Mouseketeers' homes and 401ks are going to be worth 1/3 of what they now are. If he inflates, all the problems you listed will be a reality. This could EASILY be a 48 month recession, or worse. The 91 recession allowed rates to drop and reinflate things. Al.com bailed out the tech bust with housing, an option BB doesn't have today. I see the absolute best, miracle of all miracles, sugarplum dream scenario as being that of the early 80s recession - only longer. I think we will probably get a cousin of the 30s problem, and we will attempt to fix our situation with FDR's playbook (not that I think that is a good idea). Tax cuts will be off the table no matter who is in power. Yes, I like the Fair Tax, but that is a pipe dream. We will try tax-n-spend until we truly suffer. We will gets lots of tax and lots of spend. ---------- http://clearcutbainbridge.blogspot.com/
2007-07-13 18:36:18
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Ruffcut Posts: 2181 Incept: 2007-07-07 Mushagain Online
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Karl, You often say the worst for those are "last holding the bag". I have no idea anymore with the bull**** on how the financials will be affected. But, any chucky who bought a house in the last 4 years, is a great candidate for making a grasp for this exclusive "bag".... ---------- Support locally, and **** off globally!
2007-07-13 18:43:28
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Nasdevelopment Posts: 198 Incept: 2007-06-27 Nashville
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I don't know what the Fed will do. All that is known is that there sure is a lot of stress on the dollar. RYWBX. Has anybody looked at this ETF that claims to yield 2x the inverse of the dollar?
2007-07-13 19:03:07
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Otc_buzzard Posts: 655 Incept: 2007-07-13
Denver
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Nice forum and excellent discussion, thanks Genesis... Ok, that being said how to position ourselves for maximum profit even if the dollar gets flushed. Long oil, short selected equities... What else? ---------- Wallstreet is a corrupt insiders game. When they ask for a bailout tell them to **** off!! --- Everything I post is JMHO, take it as such.
2007-07-13 19:07:40
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Locosuerte Posts: 46 Incept: 2007-06-26
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On the financials reporting next week, I wouldn't be surprised if profits are still quite good, because very little of the subprime/ Alt-A mess has been marked to market. At this point, investors seem to be reacting to negative news only once it happens, not before. The bad loans probably won't show up on balance sheets en masse until next quarter or even January 2008. I've got a small put position in the XLF, but expect better entry points after a bunch of banks post good profits (and no realistic future guidance). All imho, of course.
2007-07-13 19:16:29
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Eleua Posts: 9906 Incept: 2007-07-05
N 47.72/ W 122.55
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Last quarter, WM pulled every stinky trick out of their anus to make the 1Q numbers. None of their dreck was market to market back then, so 2Q should be even worse. Just a guess. ---------- http://clearcutbainbridge.blogspot.com/
2007-07-13 19:40:39
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Brian Posts: 231 Incept: 2007-07-11 SoCal
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"We will try tax-n-spend until we truly suffer." Eleua-Genesis, i truly don't get it... Isn't a Liquidity (borrow and spend) Armageddon what we're discussing at the moment? It seems to me that if i HAVE the money (tax receipts) when i go shopping (gov. expenditures) that I'm in MUCH better shape than if I DON'T HAVE the money (i.e. debt) and go shopping with a big ole frickin charge card (i.e. Bush admin) I truly get the sense of casually dispensed political slur (tax 'n spend Libruls) at work here.... Again, say what u will about Clinton, but he did hand off a strong greenback to numb-nuts and Greenspend to fritter away.... So how DOES "borrow and spend" trump "tax and spend" anyway? Look at where we are now.... Last modified:
2007-07-13 19:50:10 by brian
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Mortgagefreakshow Posts: 1842 Incept: 2007-06-26
Northern NJ
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I am looking for some bad things also from WM. Their subprime company, Long Beach was mentioned in S&P downgrades.
---------- "Someone has to do something, and it's incredibly pathetic it has to be us." Jerry Garcia
2007-07-13 19:44:05
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Brian Posts: 231 Incept: 2007-07-11 SoCal
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mortgagefreakshow-you got a link there for a L.B. homeboy?
2007-07-13 19:47:38
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Genesis Posts: 71359 Incept: 2007-06-26
KD^2
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I don't know - we'll see. Part of the problem here is that we don't know when people start to 'fess on some of this. Theoretically Monday is "confession day" for the Bear Hedgie funds. That WILL hit the street 10 seconds after its given to anyone. But what else will come? As I noted, the PUT/Call ratio on the index is very, very high right now. But is that a valid indicator? Some examination over the last couple of weeks shows no solid pattern. While elevated ratios LOOK at first blush to be an indicator of a squeeze, it doesn't actually work that way. For example, the ration was high on 6/29, and on 7/2 we rallied. On 7/9 we got a small rally after the ratio likewise ticked up. But the monster that came on 7/12 was after the ratio actually dropped significantly from the previous day in all three categories! So while the ratio is elevated, especially on the index level, right now, I don't know that the pattern is there to hold up. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2007-07-13 19:50:43 by genesis
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Eleua Posts: 9906 Incept: 2007-07-05
N 47.72/ W 122.55
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I actually prefer "tax-n-spend" to "borrow-n-spend" because it has a more reliable feedback cycle than borrowing. Tax-n-spend shows up immediately (or pretty close to it) by decreasing economic activity due to the tax hikes, and it shows the spending to not be worth it. Borrow-n-spend actually increases the money supply and juices the economy, which makes expanding government seem like prudent fiscal discipliine. Those that get the spending, don't pay the eventual taxes/inflation. I oppose both. Taxing and spending will only serve to drive down the immediate economy, which will already be in the tank due to borrow and spending. I advocate fewer taxes and significantly less spending. That won't be happening anytime soon. As long as Congress is allowed reelection of any kind, we will never get a handle on spending, bad policy, immigration, or the dollar. "One and Done" along with the "Fair Tax" is the only way we right the ship of state, or the longterm economy. 
---------- http://clearcutbainbridge.blogspot.com/
2007-07-13 20:03:23
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Mortgagefreakshow Posts: 1842 Incept: 2007-06-26
Northern NJ
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No but it was Moody's not S&P and it was off of Bloomberg this morning, Article was by Jody Shenn. "Long Beach Mortgage owned by WAMU, and WMC, part of GE, along with two other lenders, New Century and Fremont made loans that back about 60% of the 5 billion in bonds the firm downgraded". I can't cut and paste as it is through company email but I am sure someone can find whole article.
---------- "Someone has to do something, and it's incredibly pathetic it has to be us." Jerry Garcia
2007-07-13 20:05:12
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Brian Posts: 231 Incept: 2007-07-11 SoCal
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ok eleua. That's about how i feel...except i'd prefer a "pay as you go" system to a "flat" (regressive) tax system
2007-07-13 20:15:17
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Pensicostreet Posts: 719 Incept: 2007-06-26
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Great reading in the ticker as usual, I might disagree with one point, if we take the medicine now and raise rates, I don't think recesssion ends by the election. In fact, think it is one of the reasons BB will do nothing. There are no Abe Lincolns any more. He's not going to do anything that looks like he caused the recession, because the public just doesn't understand what is going on.. He'll wait then react. There's really no talk of dollar collapse but of course this is huge, might it not crack under 80 but instead just do a slow burn down to the 65-70 level? I just can't see BB taking any action but can't put my finger on it, just maybe my knowledge of human nature. I don't think markets will go down on bad news of any kind right now, I simply think there has to be a liquidity/margin call type of crisis to force it down. Odds of that happening within two months I would guess at about 60-70%. Right now there is just too many people getting their statements and thinking they are geniouses. They have held through the dips before and will continue to do so until they get 3 months of down statements, or a panic crash.
2007-07-13 20:17:55
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Genesis Posts: 71359 Incept: 2007-06-26
KD^2
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The problem for Bernacke is that he has zero control if the dollar situation gets away from him. That's the argument for going after this rather than being forced. With that said 80 is extremely strong support. The problem is that with support that strong, if it cracks it is extremely unlikely to be "orderly." ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2007-07-13 20:27:09
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