Black Monday on Wall Street/London?

[thegame925]

Sign on Wall Street Yesterday

[harley quinn]

If they did presumably a Treasury official would be there to catch them!

[azza33]

(TTChang @ Oct. 03 2008,13:05)

(azza33 @ Oct. 02 2008,17:17) Why the fuss??

Keep watching, and you might just find out     Any bets on an interest rate below 2% in 12 months time?  

They can't afford to cut rates - that's the same mistake Japan did!

Keep rates on hold! That's a must!

If rates tend towards zero, like they did in Japan, the country will loose any ability to exercise monetary policy and consequently fiscal policy will become ineffectual - the result will be a lost decade - same as Japan suffered!

Does anyone remember the amount of cash Japan government spent and then borrowed to try and kick start its economy? scary stuff!

[azza33]

(jaymee @ Oct. 03 2008,15:20) Anyone wants to guess a bottom for Dow anyways for the fun of it

I'll punt 800-850 on the S & P 500!

My target on All Ordinaries in Australia has been 4300 for a long while.

If S & P drops to the level i suggested, then the All Ords 4000.

Anything below that and i really really don't want to look  

[azza33]

As an aside, generally when the masses are seemingly interested about something in finance, its often a sign that we are near the bottom or top of that current event.

Everyone is starting to talk about this for the past month of so....

[PigDogg]

The bill that passed the Senate just passed the House.

There will still be a worldwide economic slowdown but let's hope this prevents Armeggedon. I'm not convinced that this is enough. We'll see if the Libor rate returns to normal.

[katoeylover]

It could be enough if they use the cash the right way. and not use it to pay bad debts and big wages.

[jaymee]

(azza33 @ Oct. 03 2008,19:01)

(TTChang @ Oct. 03 2008,13:05)

(azza33 @ Oct. 02 2008,17:17) Why the fuss??

Keep watching, and you might just find out     Any bets on an interest rate below 2% in 12 months time?  

They can't afford to cut rates - that's the same mistake Japan did!

Keep rates on hold! That's a must!

If rates tend towards zero, like they did in Japan, the country will loose any ability to exercise monetary policy and consequently fiscal policy will become ineffectual - the result will be a lost decade - same as Japan suffered!

Does anyone remember the amount of cash Japan government spent and then borrowed to try and kick start its economy? scary stuff!

Well the difference between US and Japan is that the Japanese have savings.

Rates may go down, they seem to be throwing everything they have to bring down the LIBOR. It really is a confidence issue though.

The situation looks bad but I think one can even make a few bucks out of it

If rates go down, shorting the 7-10 year, ticker PST and 20 plus year USD treasury bonds, ticker TBT would be a good bet.

[azza33]

The situation looks bad but I think one can even make a few bucks out of it

If rates go down, shorting the 7-10 year, ticker PST and 20 plus year USD treasury bonds, ticker TBT would be a good bet.

Such a capitalist at heart it seems


I say let LIBOR run its natural course, eventually it will return and cost of funds will reduce.

I noted there seems to be a lot of settling of the CDS position in past 2 weeks....
This surely has to help some of the banking sector by injecting some much needed funds.
I am sure i read even Wachovia was getting cash back.... Maybe this is why Wells decided to outbid Citi ?


Patience is what is needed here.... they took 10 years to fuck things up this much... give it 2-3 years to try and fix itself.....

[pacman]

(azza33 @ Oct. 04 2008,06:02) Maybe this is why Wells decided to outbid Citi ?

I wondered how Citibank could possibly be buying Wachovia  given that they are completely & utterly bankrupt themselves.

I guess that before the Fed handed them the money they needed they had a quick look at Citi, or someone tipped them off, & without a word, the deal was off & Wells Fargo were given the nod.

Citigroup - the worst offender in all of this with liabilities estimated between half & 2 trillion dollars, much of it illegally guaranteed.

Expect many Citi execs to be locked up once the FBI finish with them.

[azza33]

Pacman, Citi was going to purchase Wachovia for $2.19 billion, with assistance from the government to cover the ordinary parts of the business and they stood to get the cash payments for the CDS payouts.

No wonder they wanted this apparent "basket case" and also why they are so pissed at Wells!

[jaymee]

(azza33 @ Oct. 04 2008,06:02)

The situation looks bad but I think one can even make a few bucks out of it

If rates go down, shorting the 7-10 year, ticker PST and 20 plus year USD treasury bonds, ticker TBT would be a good bet.

Such a capitalist at heart it seems  


I say let LIBOR run its natural course, eventually it will return and cost of funds will reduce.

I noted there seems to be a lot of settling of the CDS position in past 2 weeks....
This surely has to help some of the banking sector by injecting some much needed funds.
I am sure i read even Wachovia was getting cash back.... Maybe this is why Wells decided to outbid Citi ?


Patience is what is needed here.... they took 10 years to fuck things up this much... give it 2-3 years to try and fix itself.....

Mmm the Fed actually increased its existing currency swaps with foreign central banks by $330 billion to $620 billion.

It seems positive and provides reprieve for banks with regards to the LIBOR in the short term, but these swaps of foreign currencies for dollars are ironically what I think is a disguise to mask a run on the dollar.

The swaps are temporary; in order to "unwind" them where the Fed must obtain those currencies, and I'm curious what the ramifications and outcomes would be then.

[pacman]

I wonder if Citi will be considered too big to fail?

Now that Hank Paulsen has his hands on the 700 billion will he decide to save them or just let them collapse in a big stinking heap.

Citi were the first to start bundling all this sub-prime shit into enormous Collateralised Debt Obligations (CDO's) & proceeded flogging them off any place they could.

Throw in a little sweetener of some AAA debt & they hoped nobody would look too closely at the rest.

Trouble was they did, & when the sovereign iinvestment funds of various Middle East countries started to realise they had been caught, they came back demanding guarantees.

Against US law, Citibank signed illegal guarantees.

Now Paulsen has to decide whether to allow Citi to collapse, thus pissing off some very important allies, or attempting to prop them up.

The trouble is that Citi have in the meantime escalated the original loans multiple times over by engaging in these fiendishly complicated credit-default swaps, a veritable labrynth of deals, so complex that they cannot be unwound.

Considering that the current book value of Citi's & all the other swaps is 516 trillion, anyone who thinks the 700 billion is any more than just a way to stop the collapse occurring before the election is not paying attention.

It is increasingly obvious that this is all going to end very badly...

[azza33]

Considering that the current book value of Citi's & all the other swaps is 516 trillion, anyone who thinks the 700 billion is any more than just a way to stop the collapse occurring before the election is not paying attention.

Swaps are just insurance policies - don't get too spooked over the numbers.

eg. Goldman Sachs had a (say) $20Billion CDS position with AIG, and they also had a CDS for same on AIG itself... so we have $40 billion of CDS position here yet... only one paid.

BTW it was the government bailout of AIG which then paid out the 1st swap position (thank god for the tax payers GS is saying... easy cash) and so the second will never have to pay.

Like any insurance policy - some pay many just keep the premium.

So there is no point to compare swaps with the bailout - they really can't be compared.

[terryw]

The FTSE and all of the main European markets down 7% today. The Dow Jones has gone below 10,000.

European governments are behaving like headless chickens only interested in electoral survival.

It looks like there could be some opportunities for buyers.