Sunday, October 5, 2008

Why The Bailout Is 100% Doomed, In Under 1,000 Words.

The bailout legislation passed Friday is doomed to failure. It CANNOT succeed.

Why?

First, it is too little, too late. $700BB is only about 3.5% of the total housing stock of around $20TT.

Second, banks will have learned their lesson, and NOT lend to shaky credits. Or they will. And we will start this thing over, but there will be no accompanying price bubble. People will begin defaulting almost immediately because prices are falling.

What the bailout actually does is ensure The Worst Of All Economic Worlds: STAGFLATION.

The Cause Was A Price Bubble. The Cure Is Popping It. That's All.

This bailout is like "bailing out" the hamburger market that has recently gone to $30/lb. But now, it's FALLING, and it's at $20/lb! OH NO! Let's BAIL IT OUT! Let's get it back to $30/lb.!

Nonsense, of course. Goods that go to unsustainable prices must simply fall back to prices in line with incomes & substitutes. That means home must be in line with local incomes and must provide a comparable return as rentals. At the peak, Bend homes were priced at negative returns FOREVER. At the peak, 92% of all Bend homes were unaffordable to families making 120% of the median family income.

Prediction: Obama wins, and he will oversee The Worst economic malaise since the Great Depression. Question is, will he be a Carter or an FDR?

There is No Question, The Bailout Is Doomed. We will all begin to realize THAT in the coming weeks & months. There is ONLY ONE CURE: Home prices falling to parity with incomes. That's all. All else prolongs and intensifies the pain.

We are in a death spiral of bad loans, default, and foreclosure, a cycle that will repeat itself until we hit bottom. So, in addition to local incomes & rental return parity, people must Get Loans to buy houses, and that will NOT HAPPEN until it looks like housing has hit bottom AND is headed up. Believe me, Banks Will Not Loan Money At The Bottom. Only after a few years of stable to rising prices will they lend.

THAT Final Nail In The Housing Coffin is why home prices are headed LOWER than they were before this thing got started. That's why Bend could easily hit $120K medians AND STAY THERE FOR YEARS.

Prediction: Banks will HORDE this cash. The Gov't will ultimately have to INSURE HOME LOANS to get lending going again. But all this will be after a wave of foreclosures & continuing PLUMMETING of prices.

452 comments:

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Anonymous said...

HBM,

Talking about BROOKS getting KILLED, and about the BULL going down the tube, how in the fuck is the SORE doing these days??

Bewert said...

Re: It's been around forever BP, you like to create this myth that there was no human history prior to 1999, thats a recurring BP theme.

No, dumb fuck, it was legalized by the Commodity Futures Modernization Act of 2000. As the CFTC press release put it, it "...provides legal certainty for the over-the-counter derivatives markets."

You act like you know every fucking thing in the world. You don't.

Anonymous said...

Come on bruce, he has a new name. It's Fuckhead.

Remember when Fuckhead was telling us to buy crap-shacks, putting 30% down, so we could have the privilege of not covering our mortgage every month AND own a property that is loosing a few grand in worth each month?

Remember when Fuckhead was telling us to buy Euros? Back when it was about $1.50 for a euro? Now it's at $1.35. Why? Fuckhead is so myopic he doesn't notice that Europe is just as fucked, if not more than us?

Remember when Fuckhead admitted he just makes shit up? (about 10 posts ago?) Fuckhead.

Remember when Fuckhead thinks that anyone that posts here under Anonymous MUST be someone he knows, because there is only 6 people that use the internet?

Rembember when Fuckhead uses CAPS and FUCK and KUNT to try to prove his point, like the raving homeless lunatic in the park? While the rest of us shake our head in pity, because sadly he thinks he is normal, and right. He isn't.

He's a Fuckhead.

Anonymous said...

Colleges have become too expensive to be economically worthwhile, just the same as houses have.

Remember that for years we've heard complaints that "college is going up faster than inflation (wages)." How could that be? Same as houses.

The reason: easy money. Low-interest loans. When people put zero of their own money down for something and put off worrying about payment until later, the item they are buying can go up in cost almost arbitrarily.

Just as houses have to come way down to *really* be worthwhile, colleges have to come down to *really* be worthwhile.

Basically, your colleges have been reaming you and your kids. They've been building like crazy. Spending like crazy.

If easy credit is really over (and it seems to be), then everything has to be made more modest fashion. Houses, cars, and yes, college.

This is bad news for all the fluff staff that was added to your college over the last 20 years. Assistant director of recycling? Yeah, you probably can get some zealous green kids to do that for free.

Anonymous said...

I'm not really sure what college is for

To help people acquire information and thinking skills that will make them better people and better citizens? To broaden their perspectives beyond the place where they grew up and the circle of people they knew there?

Anonymous said...

>Come on bruce, he has a new name. It's Fuckhead.


Shhh.... watch out or he'll call you a NEWBIE!!!!!!

Anonymous said...

Got an email last night and was told the rumor about Norman is just that.....a rumor and he is alive. Who knows?

Got about 30 pounds of spuds off 3 plants. Just wait til next year when I plant 20 of those red babies.

Anonymous said...

all the home postings have expired!!!!get rid of it!!!!!!!

Quimby said...

(dueling banjos playing in background)

Looks like Brooks Resources is still spending
$$$ on NWX. Getting people in the "bluegrass" feel cuz that's what they soon will be: hillbillies!

Quimby said...

LOL! Northwest Holler

Anonymous said...

how in the fuck is the SORE doing these days??

I'm not privy to their financials. But their checks don't bounce.

Anonymous said...

Dow dives another 549 points, closes at 8709. We are in full-blown panic mode, my friends. Doesn't seem to be anything anybody can do to stem the hemorrhaging.

Where are all those assholes who a few years back were talking about "Dow 30,000"? If we can find ém they should be taken out and shot.

LavaBear said...

>>Dow dives another 549 points, closes at 8709.

It hasn't closed yet champ.

Anonymous said...

WSJ today announced the 'recession' trouble is it started May of 2007.

Well at least they announced it today, that means they'll announce the depression in two years.

***

The Wall Street Journal

Oct. 9, 2008

The U.S. economy has sunk into a recession and government action is critical to stem the damage, according to economists in the latest Wall Street Journal forecasting survey. On average, the 52 economists surveyed now expect gross domestic product to contract in the third and fourth quarters of this year, as well as the first quarter of 2009. If those predictions bear out, it would mark the first time U.S. GDP -- the total value of goods and services produced -- has contracted for three consecutive quarters in more than a half century.

Anonymous said...

Re: It's been around forever BP, you like to create this myth that there was no human history prior to 1999, thats a recurring BP theme.

No, dumb fuck, it was legalized by the Commodity Futures Modernization Act of 2000. As the CFTC press release put it, it "...provides legal certainty for the over-the-counter derivatives markets."

You act like you know every fucking thing in the world. You don't.

*

Well BP I know about 10000X more than you, but that is still a BIG zero.

BP you were talking about credit-swap-defaults, but your link is for derivatives. Are you now going to tell us that your SO FUCKING DUMB, that you think they're the same thing??

A derivative has NOT a fucking thing to do with CSD ( credit swap defaults ).

Sheeesh, all this educating, and BP takes us back to square fucking ZERO.

Anonymous said...

Yes, TT I agree that education is now tooooo EXPENSIVE, what's worse is what you get for all that money.


It's now much cheaper, simply to hire EINSTEIN to tutor your child in your home 24/7, than it would be to send him to college.

Like I said, in the old days all of math or science could be taught to a bright student in 1-2 years, NEWTON did this for pocket money.

This thing will return, given there are NO JOBS, scientists will once again tutor to pay for their research, the COLLEGE will die.

Anonymous said...

Remember when Fuckhead was telling us to buy crap-shacks, putting 30% down, so we could have the privilege of not covering our mortgage every month AND own a property that is loosing a few grand in worth each month?

[ Nope, fuckhead said only to buy when they're below $150k, so they can pencil, with your $1k/mo rent. Fuckhead said to wait until they're $150k, which will be one year. 30% is what businessmen have to pay down, I don't make the rules. ]


Remember when Fuckhead was telling us to buy Euros? Back when it was about $1.50 for a euro? Now it's at $1.35. Why?

[ No fuckhead, said you had to buy your EUROS's ( deutch marks ) 20+ years ago, today the play is to buy YUAN. The EURO play is long over. That said with the falling the dollar the EURO is a safety net, the US dollar is going to zilch. Right now my advice is chinese-yuan, at 8 to 1, you'll make 800X over the next five years. I bought ALL my DM (now euro) 20+ years ago. ]

Anonymous said...

No, dumb fuck, it was legalized by the Commodity Futures Modernization Act of 2000. As the CFTC press release put it, it "...provides legal certainty for the over-the-counter derivatives markets."

You act like you know every fucking thing in the world. You don't.

*

BP, this is terrible, I think you have gone retarded on us, your telling everyone to read about credit-swap-defaults ( insurance ), and when questioned on your 1999 date, you use a derivative law for reference, do you honestly think they're the same thing?? Are you this fucking retarded??

Anonymous said...

I feel like I'm home again, old times.

Timmy Twat is back, Homer is here, Marge, and the PUSSY has gone insane.

We're such a nice family here in Springfield, I mean Bend, California.

Anonymous said...

Today HBM ask's "Why the talk about money".

Well HBM, cuz this here blog is about the BEND ECONOMY, and that is about MONEY.

You didn't show up here until election season, and now your like BP whoring for that dumb OREO OBAMA who never says shit. He gave exactly the same information during the debate as McCAIN ZILCH.

Anonymous said...

Good piece in the NYT today about Greenspan and his role in the meltdown. The opening:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken.

The problem is not that the contracts failed, he says. Rather, the people using them got greedy.


Hello??? They GOT greedy? Like, the sumbitches weren't greedy to begin with? Does Greenspan think Wall Street is populated by a bunch of ascetic Buddhist monks?

Here's the problem with Greenspan: He's a clever guy, but his ideological blinders make him act like an asshole. The man was an ardent disciple of Ayn Rand, for Christ sake. Not just an ordinary follower, but a member of the INNER CIRCLE. Ayn Rand was a certifiable lunatic, and anybody who believed in her crackpot ideas past the age of 18 is a lunatic too and should be automatically disqualified from any position of trust or responsibility.

Unrestrained, unregulated capitalism always fails. It amounts to nothing more or less than a license to steal, and if you give people a license to steal many of them will.

Reagan appointed Greenie as Fed chairman but Clinton reappointed him, so Democrats share the blame for empowering this snake-oil salesman.

Anonymous said...

Lavabear: You were right, my bad. The Dow dropped 679 points, closed at 8579.

I'm about at the point of saying the government should just say fuck it all and let the thing crash and burn. It seems determined to do that anyway, and at this point it looks like we're just shoveling trillions of dollars down a fucking rat hole.

Anonymous said...

>>I'm about at the point of saying the government should just say fuck it all and let the thing crash and burn. It seems determined to do that anyway, and at this point it looks like we're just shoveling trillions of dollars down a fucking rat hole.

I as at that point *before* the bailout. I said it would be a lot of money to the taxpayer but wouldn't help the markets worth shit.

Anonymous said...



Nope, fuckhead said only to buy when they're below $150k, so they can pencil, with your $1k/mo rent.


Hey Fuckhead, I guess you forgot this, posted November 25, 2007 8:51 AM

"I don't think you can go wrong as long as you purchase 4X homes which is $160k-$240k, even at $240k with $48k, down with a $190k loan it will pencil, e.g. your renter is paying your MTG."

Fuckhead.

Anonymous said...

September 2, 2007 2:01 PM:

"I can rent little sweet Newport/Drake/Parilla homes anytime for enough to pencil a $250k home purchase even now, but you cannot pencil a $500k home out at Shevlin,..."

"I agree on buying, if you have the money and desire. I might add I have homes since February 2007, both inner town for less that $250k, and were having ASKS of +$400K during 2005, but these houses also had been bought in the 90's for less than $120k."

Fuckhead.

Anonymous said...

June 27, 2007 3:05 PM

"If a house meets my criteria I'll buy at $250k.

That criteria is ...

Off-street parking, 1/4 ac lot, old trees, nice 1200sqft house, fenced, big-garage, parking for RV off-street; 5min walking distance to Deschutes Brewery or Newport MKT."


Fuckhead
These make perfect rentals, and for $50k down, I can make them pencil and rent them all day long."

Anonymous said...

http://bendeconomy.informe.com/what-is-the-best-buy-in-bend-dt595.html

"I'm a landlord, and things have to pencil, right now in order to get a renter to pay a $180k mtg, I need $1200/mo, that said if you get a home for $220K, and pay $40k down, and borrow $180k, then you can at least be in the game and break even. I don't like doing this unless the house really is a $1200/mo house,, that would have to be clean and next to drake park. "

Fuckhead.

Signed- someone who has been reading your shit for waaaaaaay to long. And knows you are a fuckhead.

Anonymous said...

There is a PUSSY in Bend, having a hard day today.

I think that like in star-wars, when they blew the planet, luke said "I feel a loss in the force".

I think today all over Bend, kept-men, felt they had lost a man-wife.

How long have we warned the violence of a mad pussy?

Anonymous said...

HBM,

I normally fall into the trap of supporting the PUSSY's, but given that today BP has lost a man-wife, I read the SORE.

What struck me was the editorial my recurring them that DEM&PUG suck fucking dog shit from the depot.

I hear the kids saying that they now know that DEM&PUG are dog-shit eaters.

Anonymous said...

Duncan sez that all anonymous posting's for all time were written by 'buster'. Ok, works for me, I have always said that everyone is buster.

That said does this mean Marge looses cred, for passing the rumor about Mr. Barnwood having taken a bullet?

tim said...

>>I think that like in star-wars, when they blew the planet, luke said "I feel a loss in the force".

You would get a zero on a nerd test. I'm sure of it.

Anonymous said...

This years crop of Cascadian Pipe Weed is very good!!

The new Jubel 2008 @ Deschutes is also good.

Just to point out that NOT all is bad in ORYGUN.

bilbo

Anonymous said...

HBM,

Since your like the ONLY CUNTorKUNT that hasn't had an emotional brain-fart here.

Yes, SOROS is right.

Remember during the debate that OR-BOMB-EO was sucking BUFFET COCK, you must realize that OR-BOMB-EO is bought & paid for by those that created ALL the economic weapons of mass destruction.

Lastly, like I have said all along here BP is a paid HO by team-hollern.

His drift today about confusing credit-swap-default, and derivatives, is NOT pussy stupidity, or old fashion pussy moronity, it is distraction.

Lastly, HBM this is great depression II.

LavaBear said...

>>>I'm about at the point of saying the government should just say fuck it all and let the thing crash and burn. It seems determined to do that anyway, and at this point it looks like we're just shoveling trillions of dollars down a fucking rat hole.

The ol' law of diminishing returns. Save Bear Sterns and stocks popped for several months. Emergency rate cut this week and they popped for 30 minutes. Like I said before the bailout...we should save the cash because soon enough we are REALLY going to need it.

LavaBear said...

Bruce, I flew into Madison last week and spent a few days with friends. Then drove up to Green Lake and went to a wedding at the Heidel House on the lake. Good times.

Madison sure seems like a place a guy could live when this shit goes too far sideways. They have a world class university, state jobs, a multitude of employers, and one of the best school districts in the country. Chicago is a few hours south and up North is beautiful. Their housing didn't go bat shit. The whole Cali Banger attitude is hard to find. If you can survive the frickin winters, the quality of life is pretty damn high. It's just surviving those winters...

Anonymous said...

".we should save the cash because soon enough we are REALLY going to need it."

Yep. In Great Depression II we are going to have to pay for relief and WPA-style public works projects. So maybe we should stop pissing away trillions on bailouts and buyouts that don't seem to do any good anyway.

LavaBear said...

>>>Yep. In Great Depression II we are going to have to pay for relief and WPA-style public works projects.

And the Baby Boomer's that just started retiring this year watched their 401k's turn into 201k's in 1 years time all while their biggest "asset" their home has done the same. Fun times.

Anonymous said...

I just moved to Bend, and discovered this site.


It's simply marvelous. Bend is every thing they said it is, let's all get together for some wine.

Please.

Michelle

Anonymous said...

So maybe we should stop pissing away trillions on bailouts and buyouts that don't seem to do any good anyway.

*

Everything is going according to plan darth. The force is strong, the bailouts are secured.

The barn-wood toilets are ready for all in Bend, California.

Soon our place in the universe will be secure.

Anonymous said...

A few weeks ago we so all our old cunts have an emotional break-down over OR-BOMB-EO, and Palin.

Now its obvious that our Kept-Men aren't doing well, soon all our Pussy's will be gone.

What will come of this site if there are no pussy's??

Anonymous said...

Credit Default Swap ... looking for a good explanation of CDS.

Here are a few points I understood from the article.

1. CDS is insurance bought by lenders on debt.

2. CDS is unregulated and became some kind of speculative instrument for hedge funds.

3. The notional value of debt insured by CDS far exceeds the real debt!!! This means CDS sellers are guaranteeing debt that does not exists i.e. it is used for gambling not insurance.

4. Once a company default. Because of CDS the loss is highly amplified. If a company default on $1B in debt. The company issued CDS to insure this now has to pony up for the loss. Except that the total amount insured is $10B not $1B....because there is nothing to regulate the amount of CDS sold and it has become disconnected to the underlying debt it is suppose to insure.

CDS is like a financial bomb that can ignite and destroy a large number of financial institutions.

Anonymous said...

Derivatives massively leverage the debt in an economy, making it ever more difficult for the underlying real economy to service its debt obligations and curtailing real economic activity, which can cause a recession or even depression.[6] In the view of Marriner S. Eccles, U.S. Federal Reserve Chairman from November, 1934 to February, 1948, too high a level of debt was one of the primary causes of the 1920s-30s Great Depression.


Derivatives are often subject to the following criticisms:

Possible large losses

See also: List of trading losses

The use of derivatives can result in large losses due to the use of leverage, or borrowing. Derivatives allow investors to earn large returns from small movements in the underlying asset's price. However, investors could lose large amounts if the price of the underlying moves against them significantly. There have been several instances of massive losses in derivative markets, such as:

* The need to recapitalize insurer American International Group (AIG) with $85 billion of debt provided by the US federal government[3]. An AIG subsidiary had lost more than $18 billion over the preceding three quarters on Credit Default Swaps (CDS) it had written.[4] It was reported that the recapitalization was necessary because further losses were foreseeable over the next few quarters.
* The loss of $7.2 Billion by Société Générale in January 2008 through mis-use of futures contracts.
* The loss of US$6.4 billion in the failed fund Amaranth Advisors, which was long natural gas in September 2006 when the price plummeted.
* The bankruptcy of Long-Term Capital Management in 2000.
* The bankruptcy of Orange County, CA in 1994, the largest municipal bankruptcy in U.S. history. On December 6, 1994, Orange County declared Chapter 9 bankruptcy, from which it emerged in June 1995. The county lost about $1.6 billion through derivatives trading. Orange County was neither bankrupt nor insolvent at the time; however, because of the strategy the county employed it was unable to generate the cash flows needed to maintain services. Orange County is a good example of what happens when derivatives are used incorrectly and positions liquidated in an unplanned manner; had they not liquidated they would not have lost any money as their positions rebounded.[citation needed] Potentially problematic use of interest-rate derivatives by US municipalities has continued in recent years. See, for example:[5]

Anonymous said...

How big is the derivatives universe? As William Shatner would say: "Big, reaalllly big!" The scary thing is that the volume of derivatives trades is much larger than their underlying markets. To give you some perspective, here is a quote from economist Gary Novak, "The total annual product of the globe is around $30 trillion. I estimate that the total value of the global real estate is around $50 trillion. A few years ago, Alan Greenspan said the amount of derivatives on the books was $200 trillion. More recently, the figure was stated to be $300 trillion. Now, someone is saying $770 trillion." That's a lot of zeroes.

Anonymous said...

Before the 1999 LTCM debacle, there were some forewarnings of derivatives disasters:

* The 1994 bankruptcy of Orange County, to the tune of $1.6 billion, due to some incredibly naïve and foolhardy investments in derivatives by one man that handled investments for the county.
* The 1995 failure of the 233-year old Barings Bank, $27 billion in derivatives bets gone bad were reportedly the result of unauthorized futures and options trading by just one man, described as a "rogue employee."
* The Asian financial crisis of 1997, where derivatives "played a key role."

Anonymous said...

The Future

The global derivatives universe hums along nicely in times like these--in times like we've had since 1988. There are no nasty LTCM-type headlines. In such times market changes are gradual and incremental. For example, a derivatives trader makes a tidy profit when he bets that the Dow Jones will be 2.2% higher next year instead of the generally expected 1.9% Or another bets that higher fuel costs will put the pinch on bird guano miners in the South Pacific, curtailing their annual profits. What the hedge book boys have never encountered is a market with huge swings--something like the equities markets of the 1929 to 1935 era. If that volatility were to occur today, many derivatives traders would surely be wiped out. Their losses would be monumental. Again, we are talking about somewhere between $300 trillion and $770 trillion presently on the casino table. These are boggling figures. The risks, in absolute terms, are incalculable. Don't forget that directly or indirectly, central ("state") banks and national governments themselves are now inextricably tied to the derivatives trading universe. They are not just "dabbling in derivatives". Rather, they are in derivatives up to their necks. If and when the global derivatives bubble ever pops, it may topple not just trading companies like Goldman Sachs, or corporations like GM, Daimler-Chrysler, or RCA, but entire nations. I'm not kidding.

The derivatives market was relatively small when the U.S. markets had their last big hiccup in 1987, and it was even smaller when the commodities markets went through their last big spikes in 1978 to 1981. The whole derivatives universe has grown up since then. So we are in essentially uncharted waters, with no way to predict the effects of huge markets swings on the derivatives markets. The hedge boys will be entering terra incognita. The big market swings will blind-side the hedge traders. Some will get hurt very badly. The implications could be huge.

As another precursor of trouble ahead, the latest hedge fund fiasco was reported in September of 2006 by Bill Bonner and Lila Rajiva: "Hedge fund Amaranth Advisors [an Energy derivatives firm] managed to lose $4.6 billion - about half its entire value - in a matter of just a few days through a sensational miscalculation of the price of natural gas futures in the spring of 2007. Today's news tells us the figure has now grown to $6 billion."

Protect Yourself with Tangible Investments

This decade of the "Aughts" may go down in history as the decade of the Derivatives Implosion. Because of their derivatives books, some major corporations may go down in flames, wiping out investors. Entire currencies might even cease to exist. Protect yourself. Diversify out of dollar denominated paper investments. Hedge into tangibles like silver and gold. Buy some productive farm or ranch land with plentiful water where you'll fare better if the power grid goes down.

Anonymous said...

Asia votes to GIVE the USA its last Gold Coin.

*

Panic strangles Asia stocks, yen jumps

By Kevin Plumberg
HONG KONG, Oct 10 (Reuters) - Asian stocks plunged on Friday, with Japan's Nikkei down more than 10 percent, while the yen and U.S. Treasuries rose, as panic ripped through markets and investors shrugged off efforts so far to unlock credit markets.
A synchronised cut in borrowing costs by central banks around the world this week is seen as too little, too late, and investors doubt a meeting of the Group of Seven rich nations later on Friday can achieve much, with fears growing that the global economy is shifting towards recession.
U.S. government debt and the yen have become refuges from the worsening financial crisis that overnight knocked the U.S. S&P 500 stocks index down 7.6 percent to a 5-year low. But cash was ultimately king, with even Japanese government bonds being liquidated for funding.
Fears of a looming world recession that would sap demand for raw materials dragged oil prices down to a 12-month low below $84 a barrel.
"No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo, of the selloff in Japanese stocks.
The Nikkei share average was down 10.6 percent, bringing the week's losses to more than 20 percent.
Unlisted Yamato Life Insurance Co filed for bankruptcy protection because of market turmoil, shocking investors who had thought Asia's financial sector, especially Japan's, was relatively stable compared with Europe and the United States.
The MSCI index of Asia-Pacific stocks excluding Japan was down 5.7 percent to the lowest since June 2005, and has fallen 19 percent this week alone.
Singapore's Straits Times index fell more than 7 percent, its seventh consecutive day of falls, after data confirmed one of Asia's richest economies was in a recession.
The Chicago Board Options Exchange's Volatility index (VIX), seen as a fear index, hit an all-time high of 64.92, as investors scrambled to buy increasingly expensive protection against erratic price action.
With global equity markets declining with brutal swiftness, investors have rushed to U.S. Treasury debt despite weakness in recent days on expectations for a glut of new issuance.
The 10-year note rose 21/32 in price, taking its yield to 3.70 percent from 3.78 percent. Rates on one-month T-bills fell to just 0.045 percent, from 0.080 on Thursday and 1.55 percent as recently as Sept. 11, as the very short end of the market continued to act as a source of funding with other avenues all but shut down.
WHAT MORE CAN BE DONE?
Credit markets were nearly broken. The cost of protection against defaults in Asia's sovereign and corporate debt soared to record highs, traders said.
The iTRAXX Asia ex-Japan high-yield index a key measure of risk aversion for the region's "junk"-rated credit, soared about 90 basis points to a record 890/940 bps, a Singapore-based fund manager said. But traders warned of little activity in the credit markets, which tends to magnify price differences.
Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after a concerted round of cuts led by the Federal Reserve and European Central Bank. There were also reports the U.S. Treasury was under intense pressure to inject funds directly into commercial banks.
"It highlights the enormity of the issue and the problem faced by the G7," said Adam Carr, a senior economist at broker ICAP. "Given the muted response in markets, certainly I think more rate cuts are to come, as ineffective as they are proving. Lets hope the G7 propose a good dose of fiscal medicine to the real economy as well."
Whether or not global policymakers have anything more planned, time was running thin.
The spread of 3-month London interbank offered rates over the 3-month U.S. Treasury bill yield widened to 426 bps, increasing more than 300 bps in the last month, with cash being hoarded and practically no lending between banks.
Japanese government bonds plunged as much as 1.99 points to 136.47, with investors in a frantic rush to secure cash with domestic money markets succumbing to the freeze around the world.
The euro slid to a three-year low of 132.80 yen before trimming losses to 135.00 yen down about 0.6 percent from late U.S. trade.
The U.S. dollar hit a six-month low of 97.91 yen before clawing back to 99.40 yen down 0.5 percent on the day.
U.S. crude oil futures fell 5 percent to a fresh 12-month low in electronic trade on Friday on concerns the growing financial crisis would sap demand for fuel.

IHateToBurstYourBubble said...

hbm said...

".we should save the cash because soon enough we are REALLY going to need it."

Yep. In Great Depression II we are going to have to pay for relief and WPA-style public works projects. So maybe we should stop pissing away trillions on bailouts and buyouts that don't seem to do any good anyway.


What? What about Helping People? What about voting The Party Line? What about Freedom, and People Suffering and We Need Hero's, And Where Are The Liberals To Save Our Motherfucking Black Asses From Foreclosure?

What happened to all that?

IHateToBurstYourBubble said...

Dude, when 99.99999999% of The Dem's voted FOR The First Bailout, you were ALL FOR IT.

Now What?

Dude, this country needs HEROS (Libs). It also needs VICTIMS (blacks). We need speeches about how we're stupid fucking RePug's, and how you gots 2 1/2 yrs of Community College under your belt & you're ready to Solve World Hunger, and Keep Mr Bo Jangles in he house, and such.

That was just a week ago. Now you're agin' it? I thought The Bailout was The Great White Way? The Lib's would BAILOUT THE BLACKS & be carried away in a Million Man March. What happened.?

Anonymous said...

"My TWO favorite religions are MUSLIM & MORMONISM, they both believe a man should get all the pussy he can afford."

Yes, but the Koran says to cut off a man's hand if he steals, and I have a habit of steals pens from work.

Mormonism -- I wouldn't be able to handle the 10% tithing.






"This is bad news for all the fluff staff that was added to your college over the last 20 years. Assistant director of recycling?"

I agree there are some silly stuff at universities, but overall they are run very lean and efficient. They make their staff work in asbestos and buildings are cleaned regularly. I guess the money goes to benefits.




"Madison sure seems like a place a guy could live when this shit goes too far sideways."
I lived there 2003 - 2005 and froze my ass off in the winters. Every morning when I went to the throne I looked out the window and saw that it had snowed another 3 inches. Living there from June to September would be about right, however. Sounds like Bend, eh?

Anonymous said...

Bruce: RE: the Becker website you recommend . . .

Becker may have won the Nobel prize, and he's clever as hell, but I don't consider him trustworthy -- he's a 80-year-old Chicago-school academic ideologue ("government's ALWAYS the problem").

Some wiser words, in my opinion:


Moment of Truth
By PAUL KRUGMAN

Last month, when the U.S. Treasury Department allowed Lehman Brothers to fail, I wrote that Henry Paulson, the Treasury secretary, was playing financial Russian roulette. Sure enough, there was a bullet in that chamber: Lehman’s failure caused the world financial crisis, already severe, to get much, much worse.

The consequences of Lehman’s fall were apparent within days, yet key policy players have largely wasted the past four weeks. Now they’ve reached a moment of truth: They’d better do something soon — in fact, they’d better announce a coordinated rescue plan this weekend — or the world economy may well experience its worst slump since the Great Depression.

Let’s talk about where we are right now.

The current crisis started with a burst housing bubble, which led to widespread mortgage defaults, and hence to large losses at many financial institutions. That initial shock was compounded by secondary effects, as lack of capital forced banks to pull back, leading to further declines in the prices of assets, leading to more losses, and so on — a vicious circle of “deleveraging.” Pervasive loss of trust in banks, including on the part of other banks, reinforced the vicious circle.

The downward spiral accelerated post-Lehman. Money markets, already troubled, effectively shut down — one line currently making the rounds is that the only things anyone wants to buy right now are Treasury bills and bottled water.

The response to this downward spiral on the part of the world’s two great monetary powers — the United States, on one side, and the 15 nations that use the euro, on the other — has been woefully inadequate.

Europe, lacking a common government, has literally been unable to get its act together; each country has been making up its own policy, with little coordination, and proposals for a unified response have gone nowhere.

The United States should have been in a much stronger position. And when Mr. Paulson announced his plan for a huge bailout, there was a temporary surge of optimism. But it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Mr. Paulson proposed buying $700 billion worth of “troubled assets” — toxic mortgage-related securities — from banks, but he was never able to explain why this would resolve the crisis.

What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: The U.S. government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, in return for partial ownership. When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. And until two days ago, Mr. Paulson remained resolutely opposed to doing the right thing.

But on Wednesday the British government, showing the kind of clear thinking that has been all too scarce on this side of the pond, announced a plan to provide banks with £50 billion in new capital — the equivalent, relative to the size of the economy, of a $500 billion program here — together with extensive guarantees for financial transactions between banks. And U.S. Treasury officials now say that they plan to do something similar, using the authority they didn’t want but Congress gave them anyway.

The question now is whether these moves are too little, too late. I don’t think so, but it will be very alarming if this weekend rolls by without a credible announcement of a new financial rescue plan, involving not just the United States but all the major players.

Why do we need international cooperation? Because we have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together, and need a shared solution.

Why this weekend? Because there happen to be two big meetings taking place in Washington: a meeting of top financial officials from the major advanced nations on Friday, then the annual International Monetary Fund / World Bank meeting Saturday and Sunday. If these meetings end without at least an agreement in principle on a global rescue plan — if everyone goes home with nothing more than vague assertions that they intend to stay on top of the situation — a golden opportunity will have been missed, and the downward spiral could easily get even worse.

What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort.

And the time to act is now. You may think that things can’t get any worse — but they can, and if nothing is done in the next few days, they will.

Bewert said...

RE: His drift today about confusing credit-swap-default, and derivatives, is NOT pussy stupidity, or old fashion pussy moronity, it is distraction.

Dumb fuck, this here is the CFTC glossary entry for CDS's:

Credit Default Swap: A bilateral over-the-counter (OTC) contract in which the seller agrees to make a payment to the buyer in the event of a specified credit event in exchange for a fixed payment or series of fixed payments; the most common type of credit derivative; also called credit swap; similar to credit default option.

So I guess both me and the CFTC are idiots. Or you are a dumb fuck who doesn't know as much as he thinks he does.

Bewert said...

Buster, in case that didn't get through your thick skull, here is the definition of credit derivatives:

Credit Derivative: An over-the-counter (OTC) derivative designed to assume or shift credit risk, that is, the risk of a credit event such as a default or bankruptcy of a borrower. For example, a lender might use a credit derivative to hedge the risk that a borrower might default or have its credit rating downgraded. Common credit derivatives include credit default options, credit default swaps, credit spread options, downgrade options, and total return swaps.

Dumb fuck.

Anonymous said...

>So I guess both me and the CFTC are idiots. Or you are a dumb fuck who doesn't know as much as he thinks he does.

Fuckhead is so full of shit his back teeth are brown.

-Anonymous (not Dunc)

Anonymous said...

Bruce,

Your link was about 'derivatives'.

Yesterday we were talking about Credit-Default-Swaps(insurance).

GM ( general motors ) is a stock, that is listed on the market, but not all stocks are GM.

Credit-Default-Swaps, are a type of derivative, but NOT all derivatives are credit default swaps.

BP, we were talking about 'credit default swaps', which are insurance, and now your at least specifically mentioning 'debt deriviatives', so at least now your in the ball park.

Anonymous said...

Bruce: RE: the Becker website you recommend . . .


*

The problem in general with all BP's links is that he never reads them, and they never back up his assertion.

His technique is assert some stupid shit, and post a link, he assumes that nobody will read the link, and that the link gives his position authority.

I think we need to get back to BEND, and discuss how ALL our kept-men are going to eat, ... are the man-wives all going to co-opt one bike shop?? Where will they go?

Anonymous said...

What? What about Helping People? What about voting The Party Line? What about Freedom, and People Suffering ?

What happened to all that?

*

HOMER, HBM&BP are both part of the BEND cargo cult, and they still think if OR-BOMB-EO is elected, that a ton of cargo will come to Bend, Calif.

Anonymous said...

I drove through Sisters yesterday. What a sad fucking place.

All boarded up, with the exception of a few outfits selling clothes on the rack for under $10.

In all my years, I can hardly remember the general malaise in todays Sisters.

Sure its 5X the siz of itself say 20 years ago, but that just makes it look emptier.

The main hwy20 drag looks dead, now we have all the side streets full of shops as well. The new brewpub down by the theater might as well be in Siberia.

Anonymous said...

Jade Meyer, chief financial officer for Brooks Resources Corp., which has development projects throughout Central Oregon, expressed cautious optimism about September’s sales uptick.

“What’s killing us (in Bend) is that inventory” of homes on the market, he said.

Anonymous said...

Re: It's been around forever BP, you like to create this myth that there was no human history prior to 1999, thats a recurring BP theme.

No, dumb fuck, it was legalized by the Commodity Futures Modernization Act of 2000. As the CFTC press release put it, it "...provides legal certainty for the over-the-counter derivatives markets."

*

We were talking about 'credit default swaps', BP's original assertion of proof didn't mention 'credit derivatives', which is at least getting close to the right state.

The issue that got my goat is BP's assertion that NONE of this shit was going on pre 1999 ( or 2000 ), the fact is BP, this shit has been going on for 40+ years, this is how BUFFET made everyone rich who bought BERKSHIRE.

This is WHY OR-BOMB-EO is endorsed by BUFFET, this is why we'll get more of the same.

Anonymous said...

Buenas dias, fellow citizens of Banana Republicanland!

There's a document floating around on the Web that purports to show Sarah Sockpuppet's SAT scores from 1981. According to it, she scored 841 out of a possible 1600 -- 425 verbal, 416 math. I'm sure even Gee Dumbya scored higher than that.

Link: http://justjared.buzznet.com/2008/10/09/sarah-palin-sat-scores-841

Anybody know anything about the veracity of this? Snopes.com has nothing on it.

Of course if it's true it will only further endear her to the drooling cretins who make up the Republican "base."

Anonymous said...

Too many people, made too much money on their 'retirement' during the last 40+ years to let go of a false-economy.


The DEM's will drag the USA into the worse depression in history, in order to protect their campaign contributors.

HBM, I did read the SORE last night, and what struck me was the 'letter to editors' were saying that BOTH DEM&PUG were shit eaters, that we need a 3rd, and 4th party ASAP, .. that the DEM&PUG party's were finished, the mcSAME.

Anonymous said...

I'm sure even Gee Dumbya scored higher than that.

*

On that notion HBM, DUMBYA had about 20 pts higher on IQ than KERRY, given their service records.

DUMBYA had to go through pilot training and had was able to secure a seat in the program. KERRY's IQ score put him in infantry.

Not that IQ means a fucking thing, A high IQ doen't make a good pres, and certainly a high SAT is only an indicator of how you'll do in college, e.g. do you know basic math & english.

I'm sure WASILLA-HIGH didn't prep SABAR, so fucking what, this is a non-story.

How about FORCING OR-BOMB-EO to tell us how he is going to fix our broken economy??

How about OR-BOMB-EO distancing himself from BUFFET and the modern insurance racket that has decimated our economy??

OR-BOMB-EO seems real good about distancing himself from WRIGHT or AYER's, but embraces the same fucking tycoons as mcCAIN.

At the debate both the cretins were all over themselves blessing BUFFET.

Anonymous said...

Buenas dias, fellow citizens of Banana Republicanland!

*

We need to put a wrap together like ...

Banana-Bend-California-Pug

One short word that says it all, that 'BEND' is a pug paradise, so close to rush-limbaugh, but so far from orange-county. Banana's? Pug's don't need no banana's they'll borrow money to eat, and drive their Hummers, they'll borrow to play golf.

Anonymous said...

Dude, when 99.99999999% of The Dem's voted FOR The First Bailout, you were ALL FOR IT. Now What?

I've had second thoughts. Rational people sometimes do.

I didn't like the initial bailout proposal at all and was far from enthusiastic about the version that finally passed, but it seemed to be the only way we might have a shot at averting catastrophe. Now it looks like the catastrophe will happen no matter what -- or it already has happened -- so instead of using the money to prop up failed financial institutions maybe we should be using it to help actual people.

BTW there were quite a few Dems against the bailout.

how you gots 2 1/2 yrs of Community College under your belt

I think you have me confused with Sarah Palin.

Anonymous said...

In his blog yesterday Krugman had a comment on Gee Dumbya's coming address to the nation on the economy. The headline: "Please Go Away." Says it all.

Isn't there some way to make the Crawford Village Idiot go back to his "ranch" and stay there for the duration of his term?

Anonymous said...

Re: It's been around forever BP, you like to create this myth that there was no human history prior to 1999, thats a recurring BP theme.

No, dumb fuck, it was legalized by the Commodity Futures Modernization Act of 2000. As the CFTC press release put it, it "...provides legal certainty for the over-the-counter derivatives markets."

You act like you know every fucking thing in the world. You don't.


*

I know that 'derivatives' have been around forever, and putting them OTC for little people isn't what broke the USA camels back.

What broke the economy's back is that all the assets held by banks, insurance, and investment-houses are now holding $300TRILLION in worthless derivatives. Which means that the USA is insolvent, and the world economy for that matter.

People saw this coming two generations ago, the reason BUFFET is a BILLIONAIRE is because of this racket.

OR-BOMB-EO & McSame for that matter, are just more of the same, to keep the fraud moving forward. The trouble is its over, the system is collapsing.

The $700B bailout means nothing in a world of $300TRILLION of worthless paper.

More bailouts just mean that the US dollar more quickly becomes worthless.

This shit started in 1972, when NIXSON took the dollar off gold, ever since then the dollar has been going into the toilet.

IHateToBurstYourBubble said...

I've had second thoughts...

Yeah, I seem to remember reading something that I thought summarized things well in the title & opening sentence. What was it called...? Oh, right

Why The Bailout Is 100% Doomed, In Under 1,000 Words.

The bailout legislation passed Friday is doomed to failure. It CANNOT succeed.


how you gots 2 1/2 yrs of Community College under your belt

I think you have me confused with Sarah Palin.


Touche'

Anonymous said...

Not that IQ means a fucking thing,

Couldn't agree more. OTOH I don't think it's a good idea to have a certified moron as president. Somebody who scores 841 on the SAT isn't quite a moron, but they're pretty damn close.

Anonymous said...

Pre BUFFET insurance was a conservative play, where you took premiums, and charged on the basis of acturial tables which were purely statistical, not a romantic biz.

Then along comes BUFFET who bought BERKSHIRE INSURANCE, and said 'let use insurance premiums to play in the stock market', so that went on for years, and all was well, it didn't matter how much to charge for insurance, because you were no longer making money on a think actuarial margin.

Today AIG is gone, and AMBAC, ... everyone played the game, its the same reason health insurance is fucked, people like BUFFET bought all the med insurance companys and used their premiums to play the market. In lieu of reserve cash, the children learned to replace it with IOU's based on derivatives.

Today our banks, our insurance, and our investment houses are insolvent.

Today insurance racket is ... "Take premiums to play stock market, and deny claims". This is why we have a medical crisis. Is that sick people have to fight to get their bills paid.

It's all because of BUFFET, who is OR-BOMB-EO's biggest supporter.

Anonymous said...

Today I shredded my dick jacking off in a comic book.

Never try to roll up a comic book and make your own pussy.

IHateToBurstYourBubble said...

Son of a bitch, the VIX hit 70 this morning. It think it hit 110 in Oct 1987, and has never even come close again, not even post 9/11.

Shit. I wonder if this is the WORSE THAN YOU THOUGHT POSSIBLE stuff I've been hearing about....

Anonymous said...

BTW there were quite a few Dems against the bailout.

*

Yeh, the first time around almost all of Oregon's US congress was against it,

Remember DeFazio beating his chest.

Remember this shit happened under BUSH's guard, and its BUSH's job to fix-it.

Gingrich thought he was brilliant to blame the DEM's for the bailout, knowing it wouldn't do shit. Of course OR-BOMB-EO went along, cuz the bailout 100% goes to his MAN-WIFE BUFFET.

Anonymous said...

VIX and often called Wall Street's version of a fear factor, stood at a record 63.92.

Traders: 'We're in the 100-year flood'

October 10, 2008
BY DAVID ROEDER droeder@suntimes.com

The Chicago futures markets, where some traders eat fear for breakfast, has become a place of helpless uncertainty.

They've seen bear markets and even short-term credit crises before, but nothing like this. To them, the financial system has a confidence crisis and there's no telling when it will end.


THE WORST OF TIMES?
The Dow has lost 39% since it hit its high Oct. 9, 2007 -- its worst run since the two-year bear market that ended in December 1974, losing 45%. The S&P 500 is off 655 points, or 42%, since its high a year ago.

Prominent futures traders and brokerage executives reached Thursday didn't utter the standard advice about sticking with stocks through thick and thin. They said safety of cash is paramount.

Patrick Arbor, former chairman of the Chicago Board of Trade, said he's keeping money in short-term U.S. Treasury debt. "You want safety. You want comfort. The banks are probably secure" and investors should consider their certificates of deposit, but only in sound institutions, he said.

"Don't chase yield," Arbor said. Recall that over the last few months, the banks that paid the highest CD rates included Washington Mutual Inc., rescued by JPMorgan Chase & Co., and Chicago-based Corus Bank, staggering under losses from condominium loans.

The head of a trading firm here was frustrated by his own confusion. "The conventional wisdom is to ride these things out," he said. "The conventional wisdom doesn't work. We're in the 100-year flood."

He said he sought out advice from traders he respects, and "they don't have any better idea than you or I."

Anxiety spread across the La Salle Street financial community as the markets, late in a losing but drab session, nosedived in the last hour of trading. It left the Dow Jones industrial average with a decline of 678 points, the third-worst point drop ever, while sending the benchmark index below 9,000 for the first time in six years.

Stocks have fallen for seven consecutive sessions. The Dow is now off 21 percent in the four weeks since the Lehman Brothers Inc. bankruptcy and 35 percent for the year.

The losses and cash movements have caused sharp increases in futures volatility, including in such widely followed Chicago markets as commodities and interest rates. CME Group Inc., owner of the Chicago Mercantile Exchange and the Board of Trade, raised its margin requirements for trading Eurodollar futures by up to 50 percent.

Mike Manning, president of Rand Financial Services Inc., said he's been working with customers to adjust their strategies. "Most of them are scaling back their trading because the markets have just gotten too frantic. I think that's a good decision and I believe they will come back," he said.

At the Chicago Board Options Exchange, participants noted that its popular volatility index, known as the VIX and often called Wall Street's version of a fear factor, stood at a record 63.92. The VIX uses options trading to measure expected volatility in the Standard & Poor's 500 index.

Thursday's falloff occurred with volume somewhat lighter than usual because of Yom Kippur. But it continued a pattern of steep late-in-the-day declines, which some experts believe comes mostly from selling by individual sellers and mutual fund managers. The old saw is that large trading firms -- those that are left -- dominate morning trades.

IHateToBurstYourBubble said...

I have jumped into stocks in my ---Gulp--- taxable acct. First time since late 2001, 2002. I will double-down (so to speak) in the 6,000's...

My retirement is getting POUNDED, of course.

I notice Timmy has gone away...

tim said...

Yes, the securitized mortgage market really is disappearing...

"There was no Asset-Backed Securities (ABS) issuance this week. Year-to-date total US ABS issuance of $129bn (tallied by JPMorgan's Christopher Flanagan) is running at 26% of comparable 2007. Home Equity ABS issuance of $303 million compares with 2007’s $224bn. Year-to-date CDO issuance of $24bn compares to the year ago $286bn."

LavaBear said...

Goldman at $85. Proctor at $58. GE in the teens. I'm a fairly negative bastard and I'm thinking things are on sale. But so far everyone has had their head handed to them the past week. I even sold all of my SDS which I've been buying all year.

tim said...

You can't buy until you see where we're at when all the weak hands are out. And most everyone will be a weak hand this time.

Anonymous said...

Yes, the securitized mortgage market really is disappearing...

*

Yep, and this will lead to FULL real estate paralysis.

The GOVERNMENT will have to create a new agency just to hand-out MTG's.

Probably the one thing that was 'new' in the past 10-20 years was Wall-Street getting into the MTG biz, and horse trading 'tranches' of CDO's wrt home-mtg. That created all the easy-money, that blew up the bubble, now there is simply NOTHING to continue the bubble.

But RE-MTG is just frosting on the cake, and certainly not the cause of the problem.

The problem is confidence. The problem is that the USA is a nation of liars. The problem is that the world no longer is buying the bullshit that the USA dishes out.

Anonymous said...

Just yesterday at 9700 I asked you cunts, if anyone wanted to bet when we would be at 7500??

That to me was close to the post 911 low.

We may be there today, or by monday.

The way I look at things is that ALL US corporations are debt, for too long GM didn't make cars, but sold debt, this has been going on for 20+ years, they could only make 5% ROI on making cars, but could make 10-20% on credit cards, thus GM got into financing, ....

Today of course GM makes shitty cars, and their debt is astronomic. They're going down.

Lot's of US manufacturers got into the debt game, why make product, when the ROI was less than 10%, make shit in China, and put your cash in the DEBT market so consumer's could splurge, and pile on +20% debt, ...

Well that economic model is now over.

The rest of the world is no longer going to pay for the USA's party.

Like Bend, Calif is a city of kept-men, the USA is a nation of kept-men with Chinese money. The man-wife ( China, EU, ... ) has had enough and is tossing the kept-man ( uncle sam ) out the door.

Anonymous said...

How Low Can Stocks Go?

The Dow Jones Industrial Average has fallen to the lowest level in 5 years. Since its peak in October 2007, the Dow has fallen close to 40 percent. The worst financial crisis prior to the current one was the Wall Street Crash of 1929, which led to the Great Depression. Stocks started selling off in October 1929 with the big crash happening on October 29th of that year. Equities did not bottom out until July 1932, after the Dow lost 89 percent of its value. These are scary figures but it provides a perspective on how bad things have gotten in the past. We sincerely hope that this doesn’t happen, but the lower equities fall, the greater the decline in USD/JPY and carry trades.

tim said...

>>The problem is confidence. The problem is that the USA is a nation of liars. The problem is that the world no longer is buying the bullshit that the USA dishes out.

They may not buy the bullshit, but they are buying up the dollar like crazy. The Japanese Yen even more so.

Some of Asia and a lot of Europe is looking like crap right now.

Watch GM and Ford. If they go under, massive taxpayer liability for retirees.

All kinds of things to watch. It's like a circus, but with dobermans, pit bulls and rottweilers in tutus, rather than the poodles you're used to.

Anonymous said...

You can't buy until you see where we're at when all the weak hands are out. And most everyone will be a weak hand this time.


*

BUY WHAT TIM?

Everybody has a negative P/E ratio. Most companys OWE more than they're worth.

Certainly if the BIG booze, like BUD got cheap, ... they'll survive. This is going to be like the 1930's, its going to take a decade to recover the stock market.

Sure some shit will do well, but the Fortune 500 is fucked, they all played the game.

Certainly McSame&OR-BOMB-EO were both playing 'energy' as the next bubble in the debate. Certainly there will be tax incentives, and certainly that is the next engineered bubble, but how does one play???

Anonymous said...

They may not buy the bullshit, but they are buying up the dollar like crazy. The Japanese Yen even more so.

*

I think its the HERD of 'hedge-funds' playing the currency fluctuations that is buying/selling the dollars.

Arbitrage in currency, its not a reflection of US dollar safety.

There will be a 'flight to safety' which is what we should be looking at, but this time around, it will not be the USA.

Sure, day to day, US up or down, EURO, ... up or down. That is just traders riding the waves of fear & greed.

Long term trends are what we need to follow.

HELL YES, GM & FORD are going down, but WHO loses pension?? The pension guarantee corp, is just like FDIC, the money is almost gone, so fucking what.

You got a pension? Your fucked, they fucked that shit back in the 1980's, that's when the pension funds all got stuff with IOU's based on derivatives. Today is just the final implosion, they had been borrowing to pay for years, and now that you can't borrow, 90% of US corporations will BK.

We all saw this coming, ...

1.) Negative US savings rate.
2.) Dependency on foreign investment for our borrowing.

We all knew that if a 'black-swan' landed in this condition, that Great-Depression-2 would begin.

It's here.

Saving's Bonds is what rescued the USA in the depression of last, this time with negative-savings going in, I don't see the American people financing WWIII to get us out of the hole.

We need leadership, and it AIN'T the OREO, or any other of team-buffet's kept-men.

Anonymous said...

How Low Can Stocks Go?

The Dow Jones Industrial Average has fallen to the lowest level in 5 years. Since its peak in October 2007, the Dow has fallen close to 40 percent. The worst financial crisis prior to the current one was the Wall Street Crash of 1929, which led to the Great Depression. Stocks started selling off in October 1929 with the big crash happening on October 29th of that year. Equities did not bottom out until July 1932, after the Dow lost 89 percent of its value. These are scary figures but it provides a perspective on how bad things have gotten in the past. We sincerely hope that this doesn’t happen, but the lower equities fall, the greater the decline in USD/JPY and carry trades.

tim said...

>>BUY WHAT TIM?

No idea. I heard that the market for safes (the kind you put precious things in) is gangbusters right now.

I have no idea what you buy, I just know it's too early. There's plenty of time for buying later. And the ramp up will be exquisitely slow, as we'll have to buy with savings rather than credit.

We're going to go from 10-speed bikes to that pink Barbie banana seat bike with the streamers on the handlebars that your sister had in the 70s. We're going to be too embarrassed to wave at each other as we pass.

Anonymous said...

Couldn't agree more. OTOH I don't think it's a good idea to have a certified moron as president.

*

Bush has been acting like a moron for almost 8 years, and folks find it enduring and voted.

The US public HBM is what it is, and always has been so, being a penal-colony, this place was bred for intelligence. Just look at TV ( which is why I don't ), Jerry Spring 24/7.

The fact is stupid works. Palin plays 100% on the fact that she ain't media 'elite', aka 'educated'. The fact is she has a journalism degree, but that would hurt her admirers.

Winning public office in the USA is largely about convincing Ma&Pa TV, that your just like them. As this nation descends, I can see politicians dressing up in prison clothing, to appear more like the citizenry.

The USA gets the elected officials they deserve.

Bend gets the government it deserves.

Everybody loved a winner, everybody loves BUFFETT, cuz he made folks rich. People love this shit.

Like McCain always talking about USA having the greatest 'work force', albeit forgetting to mention, that the jobs have been sent to China.

OR-BOMB-EO is a kept man, his wife works as a lawyer, but he volunteered to be an 'organizer', and player in the DEM party. He is a kept-man, which is why BP&HBM love him.

Whenever the electorate seem themselves in a politician, that politician gets elected.

Palin is 100% USA, just too bad she got stuck with McCain.

Anonymous said...

We're going to be too embarrassed to wave at each other as we pass.

*

I was raised by DEPRESSION parents, 24/7 as a child, all I ever heard about is sharing soup pots with the neighborhood.

The simple fact is that AmeriKKKa needs this fucking CORRECTION, and bad.

You bring up BARBIE, I think that is the problem, the USA today is fixated on BARBIE dolls, .e.g. pornography, just fucking wasting money on instant gratification. Yeh, like driving around in a HUMMER and waving. Well nobody does that in BEND-CA, cuz nobody knows each other, cuz 50% just moved here in the last five years.

The Great-Dep-2 will make Bend a better place, and I see population 35K in two years.

Anonymous said...

Talking about DORN, did anybody see Fleetwood RV today, collapsing.

Anonymous said...

This WHOLE FUCKING RV craze, where OLDSTERS just drove around the western hemisphere, ... forever, by the 100's of thousands, ... is over.

The missing HELOC has destroyed a whole industry.

Anonymous said...

Goldman at $85. Proctor at $58. GE in the teens. I'm a fairly negative bastard and I'm thinking things are on sale. But so far everyone has had their head handed to them the past week.

*

But look at the EPS, .. negative, ... with a historic 12/1 P/E, eventually these fucking stocks have to mark to market, and this shit ain't coming back. Until there are solar powered RV's. Liquid Fuel isn't going to get cheaper as it becomes more rare.

Fleetwood Enterprises, Inc.
(Public, NYSE:FLE) - Add to Portfolio - Discuss FLE Find more results for FLE

0.530
-0.090 (-14.52%)
Real-time: 12:17PM EDT Open: 0.53 Mkt Cap: 40.42M P/E: - Dividend: -
High: 0.80 52Wk High: 10.00 F P/E: -357.00 Yield: -
Low: 0.52 52Wk Low: 0.50 Beta: 2.84 Shares: 76.26M
Vol: 202,611.00 Avg Vol: 613,000.00 EPS: -0.36 Inst. Own: 95%

Anonymous said...

Why would anyone own stock?

Given that most EPS is negative, that most companys OWE more than they're WORTH.

Sure you can argue that a company might improve, but hell, its going to get worse. Some of these company's can never pay off their debt, ever.

Sure you can argue that the USA will bail EVERYONE-OUT, but that is BULLSHIT. There isn't enough money to bailout every fucking under-water business in the USA.

Like this past week here in this FORUM, about debt, how all borrow to pay their comic-book payroll, .... That's NOT how its done.

Sure for golden-parachutes, and ME, ME, ME, you can BK a biz, and bail with a golden, but eventually something has to give. In the last 20-40 year EVERY company has been playing this game.

Let's talk about WHO has a real nice positive EPS??? My guess it is Proctor, and Busch, the sort of folks that make shit that people NEED.

Anonymous said...

Bush has been acting like a moron for almost 8 years, and folks find it enduring and voted.

Seen his polls lately? 25% approval.

Those are the same mouth-breathers who think Sarah Sockpuppet is "a real Amurkan."

Anonymous said...

This WHOLE FUCKING RV craze, where OLDSTERS just drove around the western hemisphere, ... forever, by the 100's of thousands, ... is over.

But at least the oldsters can live in their RVs after their houses are repossessed.

Hey, there's a solution to Bend's affordable housing problem: Buy up the local unsold RV inventory and park 'em out in the puckerbrush.

Anonymous said...

OK, PG is a GOOD COMPANY, one of the fucking FEW, but at 18 P/E, they can still go down 30% just to be historical, of course this will be an over-correction. Thus I can see a DOW of 4000, NO FUCKING PROBLEM. What does that mean??

It mean's that 80-90% of ALL US savings are gone, ...

The Procter & Gamble Company
(Public, NYSE:PG) - Add to Portfolio - Discuss PG Find more results for PG

57.98
-2.90 (-4.76%)
Real-time: 12:28PM EDT Open: 58.77 Mkt Cap: 173.99B P/E: 15.99 Dividend: 0.40
High: 60.44 52Wk High: 75.18 F P/E: 18.24 Yield: 2.76
Low: 54.92 52Wk Low: 54.92 Beta: 0.58 Shares: 3.00B
Vol: 21.21M Avg Vol: 18.95M EPS: 3.63 Inst. Own: 60%

Anonymous said...

OR-BOMB-EO is a kept man, his wife works as a lawyer,

So what does that make John McClown?

Anonymous said...

But at least the oldsters can live in their RVs after their houses are repossessed.

*

Many of these people SOLD their mcMansions to BUY a $500k RV, they don't own a home.

Many RV parks are now charging $100/day, ok if you got HELOC or income, but yeh, ... I concur time to park that RV out in the badlands.

Anonymous said...

>>I was raised by DEPRESSION parents, 24/7 as a child, all I ever heard about is sharing soup pots with the neighborhood.

What I meant is that it's going to take a huge pysch adjustment for us to learn to live in a world with less conspicuous consumption.

I agree the cleansing will be good for the soul. A move to, hopefully, a time when people value what matters more and value the superficial less.

Or we could all become a bunch of Mac Max rape monkeys. Not sure which is more likely.

Anonymous said...

OR-BOMB-EO is a kept man, his wife works as a lawyer,

So what does that make John McClown?

*

OF fucking COURSE, what did I say?? "THE USA IS A NATION OF KEPT-MEN".

McCain's wife has ownership of a $500M/yr BUD franchise. Yes, McSame & OREO are kept-men, which is why the PUBIC loves them.

McCain wouldn't be shit without his wifes connections and money.

Can you imagine BP, if his wife didn't pay the internet bill??

Anonymous said...

What I meant is that it's going to take a huge pysch adjustment for us to learn to live in a world with less conspicuous consumption.

*

Conspicuous consumption is VERY dangerous in hard-times even if you have money.

Mad Max vs soup-bowls?? Well given there will be no fuel, there will be no max, unless you vision tons of homeless on bikes roaming Bend?? I seen tons of people in line for soup.

One of the things in mad-max that is never clear, 'what did they eat', out in the desert just like Bend, Calif.

Nope, for those who don't have lots of money, they'll be in the food lines.

Anonymous said...

Mad Max vs soup-bowls?? Well given there will be no fuel, there will be no max, unless you vision tons of homeless on bikes roaming Bend??

Mad Max was such BECAUSE there was no fuel. Fighting over the last of it.

Anonymous said...

Then there is GM, with a negative 111 EPS, a fucking HUGE negative P/E. With NO fucking hope, without a HUGE fucking bailout, but WHY??

The trouble is now, the customer is GONE, the HELOC is gone, GM will BK. Why in the fuck buy?? Unless your BUFFETT, and can convince OR-BOMB-EO to bail them out and then you buy, this is why BUFFETT bought AIG, cuz he knew that the AIG bailout was a done-deal, becuase of inside government dealings.
***

General Motors Corporation
(Public, NYSE:GM) - Add to Portfolio - Discuss GM Find more results for gm

5.03
+0.27 (5.64%)
Real-time: 12:38PM EDT Open: 5.00 Mkt Cap: 2.85B P/E: - Dividend: 0.25
High: 5.40 52Wk High: 43.20 F P/E: 8.11 Yield: -
Low: 4.00 52Wk Low: 4.00 Beta: 1.75 Shares: 566.16M
Vol: 41.05M Avg Vol: 28.82M EPS: -110.89 Inst. Own: 95%

Anonymous said...

Mad Max was such BECAUSE there was no fuel. Fighting over the last of it.

*

I'll try this again, the cars ran on fuel, but people run on food.

The entire premise of 'max' was that they didn't need to eat, that all that mattered was fuel. This of course is BULLSHIT.

Like the people who made the oil, in the desert, how in the fuck did they eat? Given they were prisoners?

Civilization is generally only weeks or days away from cannibalism. Folks like to think that food doesn't matter. Bend has tons of fucking shelter.

But we're a CARGO-CULT desert ISL, and when money is worthless, nobody will bring FOOD to BEND.

Which gets back to marge and 'booze, bullets, & beans'

Anonymous said...

Ford & GM are NOW JUNK.

Ford Motor Company
(Public, NYSE:F) - Add to Portfolio - Discuss F Find more results for F

2.13
+0.05 (2.40%)
Real-time: 12:46PM EDT Open: 2.07 Mkt Cap: 4.82B P/E: - Dividend: -
High: 2.55 52Wk High: 9.24 F P/E: -3.48 Yield: -
Low: 2.05 52Wk Low: 2.03 Beta: 1.63 Shares: 2.26B
Vol: 75.59M Avg Vol: 67.68M EPS: -5.35 Inst. Own: 74%

Anonymous said...

GM and Ford should shut down and sell off their brands. Mustang, F-150, Chevy, Cadillac. Those can be made by someone else.

Anonymous said...

FORD just fired the CFO for losing $23B in FORD-HELOC's. Now why in the FUCK was FORD in the HELOC biz??? That's a rhetorical question. The reason was they're were expecting to make 25%/yr APR off the nigger's on their home Mtg's. Fuck cars, we're in the DEBT biz, its the AmeriKKKan way!!!!!!!! Well this SHIT is what kept FORD&GM stock alive for the past 20+ years, now they're dead!

*

The Wall Street Journal

Oct. 10, 2008

After a rapid drop in its stock price this week, Ford Motor announced today that Chief Financial Officer Don Leclair will retire Nov. 1 after 32 years. Leclair was seen as the architect of Ford's so-called home-improvement loan, the $23.5 billion in financing secured in 2006 to fund its turnaround plan. Lewis Booth, formerly executive vice president responsible for Ford of Europe, will be the new chief financial officer.

Anonymous said...

More Jim Rogers goodness. I had the pleasure of seeing this live last night on CNBC's live feed (they turn on International feed at night while CNBC US is game shows and abs machine ads).

http://www.cnbc.com/id/27097823

Anonymous said...

Leclair was seen as the architect of Ford's so-called home-improvement loan, the $23.5 billion in financing secured in 2006 to fund its turnaround plan.

*

$23 Billion here and there, adds up to real money?

Well like BUFFETT say's "when the tide goes out, you get to see who is naked".

Anonymous said...

Rather than OR-BOMB-EO praising BUFFET, this is the MAN, as always SORO's&ROGER's ARE RIGHT-ON the money.

***

We Are Facing an 'Inflation Holocaust': Jim Rogers

Markets do not trust the governments' plans to keep struggling banks alive and investors will only calm down when the companies with bad assets are allowed to go bankrupt, legendary investor Jim Rogers, CEO of Rogers Holdings, told CNBC on Friday.

"The way to solve this problem is to let people go bankrupt," Rogers said.

"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."

The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.

"We're setting the stage for when we come out of this of a massive inflation holocaust," he said.

And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.

"We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.

"Many people bought 4-5 houses with no money down and no job… you think we'll just say well, that's too bad, we'll start over and nobody loses their job? Be realistic."

People should not look to the upcoming G7 meeting with the hope that the leaders of the strongest economies will find a solution.

"What they (G7 leaders) need to do is go down the bar and leave the rest of us alone," Rogers said.

RELATED LINKS

Current DateTime: 03:50:25 10 Oct 2008
LinksList Documentid: 27112192

* Credit Freeze Overwhelms Monetary Easing
* Global Crisis Hits Japan's Financial Sector
* China Confident it Can Weather Crisis
* US Weighs Backing Bank Debt: Reports

Economies who did not take part in the subprime bonanza are likely to suffer along with Wall Street and the developed economies as the crisis unfolds, he warned.

"What about all the people in countries that minded their manners, saved their money, didn't get overextended and now all of a sudden they're being asked to bail out a bunch of guys on Wall Street who were incompetent at best and some of them crooks?"

"I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis," he said.

There are not many safe havens in the volatile markets, he said.

CNBC Special Report: Bank Crisis Strikes Europe

"I have an enormous amount of cash and I've been using it to buy more Japanese yen, more Swiss Francs, more agricultural products… there's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight."

"In a period like this the way you make money coming out of it is to own the things were the fundamentals have not been impaired," Rogers added.

Anonymous said...

Folks, the Ford Explorer sold more than 388,000 units in 2003.

This year it will be lucky if it sells 70,000.


August 2003: 50,021 Explorers sold

September 2007: 10,690 Explorers sold

September 2008: 3,498 Explorers sold (Taurus' sold even less)


You think the Japanese necessarily make better cars?

Here's Toyota: (autoobserver.com)

"September was disastrous for Toyota. Its sales nosedived nearly 32% from September last year."

Dealers reported that showroom traffic is dead. "Dealers can almost certainly get a customer in a car," he said, "if they would just show up."

Anonymous said...

I agree the cleansing will be good for the soul. A move to, hopefully, a time when people value what matters more and value the superficial less.

A nice dream, but unfortunately destined to remain just that -- a dream. The human being is a greedy and selfish creature by nature. This is where Marx went wrong: He believed capitalism made people greedy and selfish, when in fact people invented capitalism BECAUSE they are greedy and selfish. And that's not necessarily a bad thing. The trick is to have governmental/social mechanisms that keep the greed under some degree of control and mitigate the ill effects for those on the low end of the ladder.

Unknown said...

Mad Max rape monkeys it is then.

Anonymous said...

"I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis," he said.

Wow, the resentment boils over from that statement. Would it be okay if they were 49-year-olds driving Maseratis? 69-year-olds?

Nonetheless, I agree -- it IS outrageous.

Anonymous said...

You think the Japanese necessarily make better cars?

No, but it's going to be a shitty time for anybody trying to sell new cars or any other big-ticket item. Even if people are not seeing a decline in incomes (yet) the plunge in the value of their stocks and their homes makes them FEEL poor.

The mega-rich, of course -- the people who buy Bentleys and Lamborghinis for cash -- will keep right on buying. They're pretty well insulated from these little vicissitudes of the economy. If I had to choose I'd rather have a Bentley dealership than a Toyota dealership now.

Anonymous said...

>>Wow, the resentment boils over from that statement. Would it be okay if they were 49-year-olds driving Maseratis? 69-year-olds?

Obviously, yes. It's not outrageous that someone can afford an expensive car after many years of work. It is outrageous that someone can get one with their first year's Wall Street bonus.

Anonymous said...

Thomson Financial News
FXNEWS-Global bank holiday worth a thought-analyst

ct 10 (Reuters) - Foreign Exchange Analytics' David Gilmore says markets should prepare for another coordinated rate cut next week, and this time, he predicts Japan, with its 0.5 pct benchmark rate, will participate. He adds that 'while I would not (count) on a global bank holiday next week, one would make sense to me,' particularly with scheduled U.S. and Japanese bank holidays on Monday . 'Again this is a remote option, but not to be ruled out.' The main focus, he says, must be on 'government efforts to restore solvency in the banking system, and that process will be taking place in Washington not on Wall Street.'

http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/10/afx5536175.html

Anonymous said...

With the stock market falling this way, even 2001 house prices don't make sense anymore...

http://bubbletracking.blogspot.com/2008/10/whos-engine-now.html

Anonymous said...

The trick is to have governmental/social mechanisms that keep the greed under some degree of control and mitigate the ill effects for those on the low end of the ladder.

*

That is essentially a 'trick' that the kind of people employed by government will never learn.

If that 'trick' were known, then KATRINA would have never happened.

If that 'trick' were known, then GOVERNMENT wouldn't have said "GO SHOPPING" the day after 911.

No the problem HBM is NOT government, the problem is that OUR government is OWNED by mercantilists. It is NOT owned by the people. Until the people, who are incidently the problem this 'trick' you call 'fixing problems' will NEVER happen, because as now the solution ( $700B bailouts ) is actually MORE FUN for the ruling class, than even what they hauled during the bubble.

Anonymous said...

Besides proctor, here's another well run company, albeit they too got into way too much finance I mean GE-CAPITAL ( credit cards ... ) is now bigger than physical. That said BUFFETT just bought $3B of GE.

At least P/E is positive, and near 8, a very attractive historical price.

The problem here is that GE-CAPITAL's exposure to bad credit is horrendous, very risky.

***

General Electric Company
(Public, NYSE:GE) - Add to Portfolio - Discuss GE Find more results for ge

19.95
+0.94 (4.94%)
Real-time: 3:22PM EDT Open: 18.70 Mkt Cap: 211.39B P/E: 9.42 Dividend: 0.31
High: 20.64 52Wk High: 42.09 F P/E: 15.21 Yield: 6.16
Low: 18.40 52Wk Low: 18.40 Beta: 0.66 Shares: 10.50B
Vol: 201.18M Avg Vol: 126.46M EPS: 2.14 Inst. Own: 54%

Anonymous said...

The trick is to have governmental/social mechanisms that keep the greed under some degree of control and mitigate the ill effects for those on the low end of the ladder.

*

Prior to 1930's with FDR never in history did the USA government take care of people, that was the job of 'church', welfare, poor houses, ...

This US collapse will be so fucking BIG, that folks will be glad to get 10 cents on the dollar of their promised social-security let alone all kinds of new Pussy 'Cargo'.

There's an old saying "I'm from the government, and I'm here to help you". Most of us know to RUN, RUN LIKE HELL.

Anonymous said...

The trick is to have governmental/social mechanisms that keep the greed under some degree of control and mitigate the ill effects for those on the low end of the ladder.

*

The US government is a penal colony. Its a Hamiltonian Federalist Government. 100% owned by the owners.

Never in US history has those at the lower rung of the ladder mattered, except pandering to them during elections.

OR-BOMB-EO is bought & owned by BUFFET. He knows who owns the fucking OREO's ass.

Anonymous said...

HELL YES JAP car's are the best!!!!

The VTECH engine in HONDA's is the best gas engine ever made, reliable, the best.

The Prius hybrid albeit a pussy-mobile is a tech marvel.

HONDA makes the best on the road.

The problem with US auto, is they haven't invested a nickel since WWII. It's all a bad joke.

Luckily here on the west-coast we don't have to buy US, we all buy foreign.

I still like caterpillar and j-deere, cuz of the service. But for autos I want something that will go 200k miles with no cost, the vtech by honda fits the bill, at 1/10k inch tolerance in machining this engine technically only needs to have the oil changed every +20k miles.

US auto's and technology is SHIT.

Sure the cummins turbo is nice, but the german turbo diesel is better.

1940's & 50's were the finest day in the US manufacturing, since then nobody has invested, hell even our air-craft biz is being lost, cuz we refuse to invest in the US, ... some says its because of unionism, ... but whatever the fact is its gone.

So 20+ years ago they all, GE, FORD, GM, ... they all got into debt financing, and today the pile of paper at big as MT-B is worth NOTHING.

Anonymous said...

OR-BOMB-EO is bought & owned by BUFFET.

What, not HOLLERN? I thought HOLLERN was responsible for all the ills of the world.

Anonymous said...

HBM, COSTA, & BEND-CALIF are bought & OWNED by HOLLERN.

OR-BOMB-EO of chicago, is bought & OWNED by BUFFETT.

BUFFET is the biggest welfare WHORE in the USA.

Note that he's buying ALL these companys at bottom that he lobbied to be bailed out, and OR-BOMB-EO is calling for him to be at the helm of his admin!!!

Anonymous said...

Here's another VERY GOOD company, 3M, nice P/E, good company, didn't play games, and makes useful product.

***

3M Company
(Public, NYSE:MMM) - Add to Portfolio - Discuss MMM Find more results for MMM

54.78
+1.28 (2.39%)
Real-time: 3:53PM EDT Open: 51.83 Mkt Cap: 38.26B P/E: 10.54 Dividend: 0.50
High: 56.43 52Wk High: 97.00 F P/E: 16.78 Yield: 3.65
Low: 50.01 52Wk Low: 50.01 Beta: 0.82 Shares: 698.99M
Vol: 12.46M Avg Vol: 7.01M EPS: 5.19 Inst. Own: 67%

Anonymous said...

"I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis," he said.

Wow, the resentment boils over from that statement. Would it be okay if they were 49-year-olds driving Maseratis? 69-year-olds?

*

HBM, do you even know who Rogers is? HIM&SOROS are two of the richest men in the world, he could buy a ton of maseratis', this quote is out of context, listen to his entire speech what he said was, ...

"A bunch of wall street 29 yr olds robbed the street, and used the stolen funds to buy maseratis"

He has a good point, another reason that terminal amnesia worked, the mercantilists did the same in MTG, in 2001, they went to colleges and recruited children who didn't know the rules to write MTG's, this led to country-wide failure, ...

Wall St hired a ton of kids to rob the elderly all through 2001->2008, and paid them enough to drive maserati's, they were just stupid young kids fresh out of college. But ALL the money was ill gotten, and today we're seeing all the IOU's they put in place of pension cash, having been replaced by 'derivatives' of no value, now we're seeing everything implode.

Rogers is RIGHT ON.

Anonymous said...

HBM, COSTA, & BEND-CALIF are bought & OWNED by HOLLERN.

Damn HOLLERN that cheap deadbeat bastard, he hasn't sent me a check in YEARS.

Anonymous said...

"Wall St hired a ton of kids to rob the elderly all through 2001->2008, and paid them enough to drive maserati's"

Yes - you're absolutely right.

I have a friend from India who has worked extremely hard to get graduate degrees and be successful in pharmeuceutical science.

His little sister came to America, did a M.S. at Penn -- NOTHING to do with finance. But within a year she was hired by Goldman-Sachs to be paid many $$$ - many times more than her scientist brother who actually KNOWS shit.

Goldman-Sachs just looks for technically adept kids and teaches them 'what they need to know'. Work hard -- easy money.

But now I would guess it's all coming to an end.

Anonymous said...

Damn HOLLERN that cheap deadbeat bastard, he hasn't sent me a check in YEARS.

*

HBM after 20+ years of pimping for HOLLERN & the BULL, finally awakes from his fucking COMA, and realizes he's been fucked, welcome to Bend HBM.

Anonymous said...

Hey boyz, USA media got hammered today also, down 20-30%, ...

Cable is down 10% in one day, ...

This shit is going to be the first non-necessity cut.

Anonymous said...

Remember what's kept CACB alive for the past six months, buying their own stock, well this afternoon PAULSON has announced that the $700B will go towards buying goldman-sachs stock, "WHO WOULD HAVE GUESSED".

****

U.S. planning to buy bank stocks
Treasury planning a program to attract private capital alongside public capital to financial institutions.

Last Updated: October 10, 2008:

NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson said on Friday that the U.S. government was working on a plan to buy stock in financial institutions by using part of the $700 billion authorized by Congress to stabilize banks.

Anonymous said...

The bonds of GE Capital had rocketed:

The market was saying that the bonds of this great and storied company, one of only six corporations on planet Earth with a triple-A credit rating, were junk.

GE is finished.

Anonymous said...

The source of GE's strength - and its problems

To see how GE got so badly beaten up, consider first what the company really is. Its strength and curse is that it looks a lot like the economy. Over the decades GE's well-known manufacturing businesses - jet engines, locomotives, appliances, light bulbs have shrunk as a proportion of the total. Like America, GE has long been mainly in the business of services. The most important and profitable services it offers are financial. In fact, though the average citizen probably thinks of GE as a great industrial company, its industry classification in the Fortune 500 is diversified financials. It is by far the largest company in that industry group. The next biggest - and here we begin to glimpse GE's troubles - are Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

The reality is that for years, about half of GE's prodigious profits have come from General Electric Capital, a 100%-owned affiliate that files its own reports with the SEC. GE Capital, headed by 29-year GE veteran Michael Neal, has ventured into practically every kind of financial service, from making car loans in Europe to investing in commercial real estate in Florida. If you have a credit card from Wal-Mart or Lowe's, it's really from GE Capital. The business owns almost 1,800 commercial airplanes and leases them to 225 airlines. Until last year it made subprime mortgages in the U.S.

Anonymous said...

Well at 4pm when PAULSON announced that he was going to buy goldman-sachs stock with the $700B, he must have mentioned he would buy GE ( up 13% ), and WB ( up 30% ), nothing like knowing that BUFFET & PAULSON are going to buy your stock, to help wall street.

Of course this is all bullshit, so next week, the shit will hit the fan. We need to keep track of how the $700B has been promised. It's been now promised to so many people, that it would take $700TRILLION to meet all the bail-out promises and obligations.

Its rather clear that TEAM BUSH is having a complete fucking meltdown.

Anonymous said...

Alaska Supreme Court is supposed to release the PALIN report tonight, and it doesn't look good, considering the way PALIN is responding.

Anonymous said...

The following is from the FT in UK, its the best description yet I have seen of why the fraud of the last 30+ years in the corporate ( mercantile ) world is causing economic collapse today. Also addresses the issue of HOMER, and I concur, the stock market is FUCKED for a long time.


On Wall Street: Companies will pay for their binge on easy money

By Michael Mackenzie in New York

Published: October 10 2008 17:29 |

While bankers rightly take the heat, the worst financial crisis since the 1930s also implies a long period of pain for many companies. That in turn could well delay a meaningful recovery in equities once the dust from this week’s market crash settles.

Indeed, for all the obloquy hurled at banks for taking excessive risks with high levels of borrowed money, known as leverage, numerous companies have indulged in just that behaviour.

For corporations, borrowing debt and reducing the quality of their balance sheet has been the bedrock of the bull run in equities that began in the 1980s and which ended a year ago when the S&P 500 and the Dow Jones Industrial Average took out their prior peaks of 2000. The process was known as “de-equitisation”.

The trade-off between equity and debt explains why over the past three decades many companies willingly waved goodbye to top-notch credit ratings. Using debt was a great way to boost returns on equity. So far the great unwind of leverage has cut down investment banks, shaken commercial banks to the core and hollowed out modern financial engineering. As the banking system retrenches from risky lending and rebuilds sufficient capital reserves, many companies face a similar diet after years of bingeing on easy money and weakening the balance sheet.

Even cash-rich companies are going to find it tough going as consumers buckle. The debate over the economy now revolves around whether it suffers a true depression or just a standard recession.

This week, the Federal Reserve said consumer credit during August fell for the first time in a decade. This comes at a time when wealth is evaporating fast for debt-laden consumers.

After big declines in various cities, housing prices are set for at least a further decline of 15 per cent according to experts. Meanwhile, the stock market has fallen more than 40 per cent in the past year and the S&P 500 trades at levels experienced a decade ago. The hit for both company pension plans and retirement accounts has been substantial.

This week’s stunning decline in equities has been accompanied by calls from numerous pundits that on a long-term basis, equities are approaching bargain levels.

History has shown that out of every crisis springs opportunity, however it may pay equity investors to reflect on what a new world of banking and the use of leverage holds in store for companies.

Beyond the seizure in commercial paper, companies remain largely shut out of the corporate bond market. Analysts estimated at the start of September that about $200bn in new sales was required to roll over existing corporate debt.

This week, the S&P financial sector fell to its lowest level since 1997 as investors sensed that banks could now only turn to raising capital from the equity market. After the bankruptcy of Lehman Brothers, no risk-averse bond investor wants to hold debt issued by banks. Beyond the banking sector, it is highly likely that corporations will also pay down debt and turn to equity issuance in order to shore up their capital. Such a move would firmly close the curtain over the recent era of de-equitisation.

A prolonged period of companies reducing leverage, seeking equity funding and not raising debt via the capital markets, will exert downward pressure on many stocks.

At the very least, it promises to cap any major rally.

One senior credit analyst says lower rated companies will have no choice but to seek funding from the equity market and that we will see more equity financing from companies than in the past.

In recent weeks, longstanding principles regarding banking and the role of regulators and central banks in the financial markets have been thoroughly usurped. That makes predictions perilous at best.

But as companies face a deleveraging wave, it seems safe to think that the trade-off between debt and equity will fundamentally change.

At the very least there will be plenty of time before investors need to consider a long-term buying strategy in equities.

Anonymous said...

Here's a good article on how to invest in depressions, it uses the thought of 'buffetts' mentor Graham.

They also feel that today is more like 1938, than 1929, I concur that we're midway through the depression. That said, we have another 8 years, and toss in two for Bend, Calif's lag.

***

Long view: Heed the harsh lessons of history to find value

By John Authers, Investment Editor

Published: October 10 2008 18:48 | Last updated: October 10 2008 18:48

“A day like today is not a day for, sort of, soundbites, really – we can leave those at home – but I feel the hand of history upon our shoulders, I really do.”

Former UK prime minister Tony Blair

It is easy to see how Tony Blair felt as he responded to the agreement that led to peace in Northern Ireland.

It is now plain that we are living through what history will almost certainly call the second great crash in stock markets. The hand of history is so heavy on our shoulders that it is hard to respond with more than soundbites, or to see any opportunities that this appalling loss of wealth may have given us.

My life with Benjamin Graham over the past month illustrates this.

Graham was an academic at Columbia University in New York. In the worst days of the 1930s, he worked out a way to invest profitably in the stock market, now known as “value investing”. Rather than attempt to time the market, he said investors should look at exactly what a company was worth, and how much it would be worth if the worst came to the worst.

This meant you should look at a company’s assets on the balance sheet, and also look at its ability to produce cash. If the company is so cheap that its value would scarcely be less if it were to go out of business, then you have what Graham called a “margin of safety”. And if the company looks cheap compared with a conservative forecast of the cash it will generate, then the chances are that “Mr Market”, as Graham would say, has mispriced it, and that you will make a lot of money once that mispricing is corrected.

Thus you have an asymmetric bet; heads you win a lot, tails you do not lose much.

This was a great way to profit in the Depression. Confidence had collapsed, but in the process it had brought down the prices of many companies that were still healthy.

Value investing still has many adherents, but also detractors. The most common line against the strategies Graham, and his colleague David Dodd, laid out in a classic tome called Security Analysis, is that the measures he uses worked in the extreme conditions of the 1930s, but were no longer relevant.

To address this, a sixth edition of Security Analysis came out last week. Each chapter had a preface by a current-day investment manager on how to apply Graham’s insights today.

It was a big publishing event, but I could not get along to the launch. The book remains unread on my desk. The “hand of history” – watching the historic collapse in share prices – kept me at my desk.

This is ironic. The very extremity of last week’s crash made it hard to keep an eye out for bargains in the methodical way Graham laid out 75 years ago.

A deeper irony is that there may not have been any need to update the book. Stock market conditions look ever more like the 1930s.

The noughties are much more similar to the 1930s than commonly thought. In morning trading on Friday, the S&P 500’s fall for the decade was almost identical to its fall for the decade on the same date in 1938. The pattern of the two decades is freakishly similar, with a big sell-off followed by a prolonged rally and then a fresh bear market. The key difference is that the sell-off in this decade before the “fools’ rally” began was far less severe than in the 1930s.

This, we can now see, was because cheap credit had inflated a new bubble.

This is what followers of Graham had argued. They said the market during the twin lows of the WorldCom crisis in 2002 and the invasion of Iraq in 2003 was still not cheap. Dividend yields, for example, were still barely half their level of the mid-1990s, before the tech bubble took hold.

But the similarities between the market tops in 1929 and 2000 are compelling. Both saw wildly overvalued stock markets and economies that were still in decent shape.

Measures based on cash, such as dividend yield or cash flow multiples, show that the market is now much cheaper than it was during the false bottom of 2002-03, even if overall indices are still higher.

We are not, therefore, in a new 1929. Our position is more similar to that of the late 1930s. That is not so encouraging: in the decade after October 10 1938, the S&P gained 5 per cent.

But at least we have a clear historical comparison, and a clear guide for how to proceed. Providing you are not using borrowed money, and you can afford to wait a matter of years for Mr Market to thrash out his problems, then Security Analysis is all you need.

Do not try to to work out how long the market will take to recover or when it will hit bottom – that task is impossible. Use basic balance sheet methods to work out how much a stock is worth and how much it would be worth if the worst came to the worst. If that calculation leaves you with a margin of safety, then buy it. Don’t let the hand of history gripping your shoulder stop you.

Anonymous said...

"Troopergate" report says Palin "abused her authority." Newsweek poll gives Obama/Biden an 11-point lead. John McClown tells his supporters to be "respectful" toward Obama ... and gets booed.

The wheels are comin' off the Hate Talk Express.

See y'all tomorrow, cunts and pussies.

Anonymous said...

HBM/BP go have a BEER, its OFFICIAL PALIN is finished, she's fucked, she's going DOWN.

***

The Wall Street Journal

October 10, 2008

Alaska Gov. Sarah Palin violated ethics rules by trying to remove her former brother in law from his job as a state trooper, a highly anticipated legislative report into the matter has concluded. But she didn't break any laws in firing her public safety commissioner, who said he had been pressured to fire the trooper, the report found.

Anonymous said...

HBM,

There are ...

KUNT's - pugs, krusty ol curmudeon CUNT,

CUNT's - homer's children

Pussy's - naive bambist liberals

Anonymous said...

>HBM/BP go have a BEER, its OFFICIAL PALIN is finished, she's fucked, she's going DOWN.

With all the bad news on Wall St, its good to finish the week off well.

Anonymous said...

US planning to buy equity in financial institutions
Reuters - 1 hour ago
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Friday the United States was developing plans to buy equity in financial institutions if necessary to halt market turmoil.

*

So there NOW we have the truth, one week after the failed 'bail-out' the truth is known, this why no specifics were given, the money $700B will be used as a stock buy-back, with taxpayer money.

This is why they called it a 'bailout', and OR-BOMB-EO called it a rescue.

Anonymous said...

Lehman Auction Leaves Cloudy Picture For Banks

Forbes

Hedge funds and banks that bought insurance against a default in bonds of Lehman Brothers stand to be $365 billion richer. That's because derivatives traders, using an auction Friday, set the price of Lehman's bonds at 8.625 cents on the dollar.

Anonymous said...

PAULSON BITCH SAYS we MUST spend ALL of the $700B on goldman-sach's by monday. BUSH-TRIBE says Bankrupt the USA before OR-BOMB-EO takes over.

***

Paulson Indicates Need to Purchase Bank Equity `Soon as We Can'
Bloomberg - 41 minutes ago
By John Brinsley and Rebecca Christie Oct. 11 (Bloomberg) -- US Treasury Secretary Henry Paulson indicated that pumping government funds into banks is a priority and said financial markets will remain volatile.

IHateToBurstYourBubble said...

PAULSON BITCH SAYS we MUST spend ALL of the $700B on goldman-sach's by monday...

This does illustrate the logic to one of the strangest moments of the crisis... When Goldman said it would become a regulated bank.

Paulson probably told his buddies there that the AMERIKKKAN PEEPUL would not stand a bailout of Jewish Billionaires.

IHateToBurstYourBubble said...

Bend may have to get creative as city looks for ways to save

But in an effort to keep the revenue shortfall created by the building slump from cutting into police, fire and other city services, the city has taken a significant amount of money from the reserve funds intended to provide a cushion in the event of an unpredictable event that would soak up other revenue sources.

For example, the state recommends cities keep enough money in their building reserve funds for six to 18 months of work, said city Budget and Financial Planning Manager Sharon Wojda. Right now, the city is projecting it will end the year with just three weeks’ worth of operating expenditures for the building department — about $223,000.

Other reserve funds are also low. The city expects the water and sewer funds to each end the year with enough money for two months of expenditures, while engineering will likely be down to about $63,000 — enough for about nine days of expenditures.


We should be broke by Christmas.

IHateToBurstYourBubble said...

As a result, she said, it might take longer for police to respond to some calls.

“It is going to hurt, but we’ve got to do our best, especially at responding to serious crimes,” Baxter said. “With the lower-level crimes, it’s going to take a little longer.”


Hear that Mether's! You can go on your merry way car-jacking at Costco & setting people on fire! You're getaway time is now tripled!

Thanks to YOUR FRIENDLY LOCAL REAL ESTATE BUBBLE.

IHateToBurstYourBubble said...

King said officials are keeping a close watch on the city’s finances but know the bad news could keep coming.

“We’ve cut as much as we can without reducing levels of service for the community,” he said.

“It’s going to be a long haul. There’s no quick fix to any of this stuff.”


This is why I am blown away by the IDIOCY of our local officials.

The Bad Times "could keep coming"? Ya know, instead of ASSUMING THE BEST (a Kool-Aid side effect), why not assume The Worst, and assume the Bad Times WILL keep coming?

Because I guarantee you, They Will. For Years. Years & Years.

Note that King admits we are essentially broke by Christmas IF NOTHING ELSE BAD HAPPENS. Which is OF COURSE why we'll be bust before then.

Anyone up for a little Over/Under?

I'm betting The City of Bend will be BROKE ASS BROKE by Thanksgiving.

IHateToBurstYourBubble said...

“The current economy, nobody could have predicted, and hopefully it’s not going to become the norm,” she said. “Reserves are there to provide that cushion to weather the ups and downs.”

As always, my favorite OBLIGATORY CYA LINE.

"We had NO IDEA this would happen! It was IMPOSSIBLE TO PREDICT! Please DON'T FIRE US for having the ECONOMIC INSIGHT of a fucking ROCK! We're just dumbfucks groping our way around without a fucking clue in The World about what's happening or what's coming! AHHHHH! We're HELPLESS!"

IHateToBurstYourBubble said...

But in an effort to keep the revenue shortfall created by the building slump from cutting into police, fire and other city services, the city has taken a significant amount of money from the reserve funds intended to provide a cushion in the event of an unpredictable event that would soak up other revenue sources.

Another Costa Special. Sucking The City of Bend's Cock.

Read close: He's rationalizing essentially the misappropriation of money from the general fund. Note the use of the term UNPREDICTABLE EVENT over and over and over.

They're buttering us up here folks for the BK of The City of Bend. Everyone in CYA Mode now.

"Didn't see it coming. Impossible to predict. Don't blame us."

BROKE BY THANKSGIVING.

I've had "The City of Bend - Going Flat-Ass Broke" as #6 on the RIP list forever. Jeez. I don't know shit, and even I KNEW this town was spending itself into BK. WTF? I can only surmise this is being done INTENTIONALLY, but who benefits by this? Knife River? Hooker Creek? I mean, they have spanked Bend HARD for money over the years, but BK-ing the place is like killing the Golden Goose. I'm sort of left with no other conclusion other than this place is being run by 1,000,000,000% RETARDS. Fucking morons. I am a COMPLETELY UNINFORMED CITIZEN, and I saw this BK 5 billion miles away.

IHateToBurstYourBubble said...

“It is going to hurt, but we’ve got to do our best, especially at responding to serious crimes,” Baxter said. “With the lower-level crimes, it’s going to take a little longer.”

I said this long ago, and I think Timmy concurred: Bend will go down The Super RE Black Hole Shitter, BECAUSE NO ONE WILL WANT TO LIVE HERE WHEN ALL IS SAID & DONE.

This place will be a crime-ridden fucking ghetto. Eastside STD's = Meth Shacks. Bend Pine Nursery = Meth Acres.

Note that KTVZ starts every broadcast with 4-5 stories about LOCAL VIOLENT CRIME, and completely skips The Financial Implosion till 15 minutes in.

Bend is reverting to its MEAN. Yes, I mean that BOTH WAYS. It's steady-state, natural equilibrium is a LOW WAGE CRIME-RIDDEN SHITHOLE WITH A VIEW. Always has been, always will be. The last 10 years have been a never-to-be-repeated anamoly.

That's why so much here now, will NOT be here in 3-5 yrs. 75-80% of what you see around you was built by BUBBLE BUCKS, and can only survive in a BUBBLE CREDIT-FUELED ECONOMY. Most of Bend's current businesses are 100% UNTENABLE. Most will go broke in 3-5 years.

Note The Paper Place, the place the owner was willing to sell for "$1", had NO TAKERS? Of course, it is because she wanted her purchase price for the inventory. She wanted to be made whole on that. No dice. 90% of Bend businesses are the same. Couldn't get book value. The Paper Place is simply liquidating now, and that lady is losing her ass in a mad rush to downsize. Look at that scenario to be repeated over & over & over. No one can or will buy, everything in MASS LIQUIDATION, whether it's greeting cards, SUV's or homes.

40-50% vacancy downtown by 2012.

Anonymous said...

CEO PAULSON Goldman & US Treasurer converts Goldman to 'BANK'. 01oct08

US Treasury Secretary Henry Paulson indicated that pumping government funds into banks is a priority and said financial markets will remain volatile. 10oct08

PAULSON BITCH SAYS we MUST spend ALL of the $700B on goldman-sach's by monday... 11oct08

This does illustrate the logic to one of the strangest moments of the crisis... When Goldman said it would become a regulated bank. 11oct08

*

This thing is getting SO FUCKING HILARIOUS. Now we know WHY there were NO DETAILS in the 'bailout plan'. Given that entire goal all along was to support Goldman-Sachs volatility, why in the FUCK did congress support it? Like FULD of LEHMAN said, "Why is Goldman getting bailed out, and NOT ME???".

Lastly, CONGRESS has now postponed all bailout hearings until after the election.

The OR-BOMB-EO is now the #1 supporter and enabler of the plan. It should be called the BUFFET/PAULSON golden parachute rescue. It's NOT enough $$ to fix the USA, but its enough money to save BERKSHIRE.A ( BUFFET ), and GS ( goldman aka paulson ).

Where is CHENEY today?? ALL of HALIBURTON has moved to Dubai.

Anonymous said...

WHO WOULD HAVE GUESSED????

***

Morgan Stanley, Goldman May Gain Investment From US Treasury
Bloomberg - 9 hours ago
By Christine Harper Oct. 11 (Bloomberg) -- Morgan Stanley and Goldman Sachs Group Inc., the biggest independent US investment banks, may reap cash infusions as part of Treasury Secretary Henry Paulson's plan to buy stakes in financial institutions, ...

Anonymous said...

Another Costa Special. Sucking The City of Bend's Cock.

*

HOLLERN owns the BULL, HOLLERN in the last few months now that SDC's are zero, has accelerated building at NWXC.

"SAVE BROOKS RESOURCES, THEY'RE DYING"

This is the order of the day.

If Brooks goes down, then so does all of Bend's electable crony's.

Knife-River has mostly pulled out, moved most of the equipment elsewhere, they know the golden goose is long dead.

Today there is ONLY ONE GOAL, life support of Brooks Resources, at any cost.

Anonymous said...

"Keep in Mind, that nobody knows where the money for GS is going to come from" ( Bull fucking shit we don't know )

***

Goldman Sachs Files To Raise Cash (GS)

Goldman_sachs_logo It has long been thought that Goldman Sachs Group Inc. (NYSE: GS) was going to escape this credit crisis mostly unscathed and that the firm would never have capital issues. The good news is that both of those may still remain true. The bad news is that the (now) bank holding company has just filed a shelf registration statement with the SEC to allow it to raise funds for itself and its units.

Warren Buffett recently made a key investment in the company, but shares have continued to slide since then. The bulge bracket broker filed for unspecified amount of securities sales to allow it to sell any combination of Debt Securities, Warrants, Purchase Contracts, Units, Preferred Stock, Depositary Shares. It lists the units as being The Goldman Sachs Group, Inc. and some of its "Capital Units".

Keep in mind that this does not say how much the firm plans to raise. In fact, it may not sell any securities to the public. The firm lists the use of proceeds as "to provide additional funds for operations and for other general corporate purposes."

The recent ratings agency comments did bring up issues, but there is also the belief that Goldman Sachs is going to begin buying up deposit base assets as banks and depository institutions in the U.S. have to pay for their sins of this decade.

Anonymous said...

Here is WHAT is really going on, GS owes is employees ten's of Billions that it stole from them, and they have no cash to pay the court order. Paulson ordered the FUCK, and PAULSON is using USA taxpayer money to rescue his fucking company.

***

Goldman Sachs To Pay Broker $1 Million

A panel of securities industry arbitrators has ordered investment banking giant Goldman Sachs (NYSE: GS) to pay one of its former brokers $1 million following an investigation into the company's compensation system.

Greg Fullmer, 49, of Los Angeles, worked for Goldman Sachs for 11 years until the company fired him in 2004, according to the claim filed with the Financial Industry Regulatory Authority (FINRA) in Los Angeles. During Mr. Fullmer's employment, Goldman Sachs restructured its compensation plan for brokers, and began withholding a portion of brokers' commissions and converting them to restricted stock accounts that would pay out over time. Doing so saved the company approximately $250 million annually.

But when Goldman Sachs fired Mr. Fullmer, the claim states, it refused to pay him that money, saying he had forfeited his pay by soliciting firm employees to work elsewhere. In the decision handed down late last night, the FINRA panel ordered the company to pay Mr. Fullmer $1 million.

"This ruling fully vindicates Mr. Fullmer and restores his hard-earned good reputation," says attorney Rogge Dunn of Clouse Dunn Khoshbin LLP in Dallas, who represents Mr. Fullmer. "Obviously, he earned these commissions, and this award recognizes that."

Mr. Dunn says the Goldman Sachs deferred compensation plan is a classic case of "golden handcuffs." He says the company's restrictions on the deferred funds and attempts to force brokers to forfeit them are designed to keep brokers from taking their business to other firms. -- Clouse Dunn Khoshbin LLP

Anonymous said...

Now that GS is falling like a rock, and the employees were given stock in lieu of cash, and can't sell the stock all employees are FUCKED.

DOES THIS SOUND LIKE ENRON???????

THE real fucking problem is that CONGRESS has let PAULSON steal $700B of taxpayer money to stop his ENRON implosion.

SOMEBODY HAS GOT TO IMPEACH BUSH/PAUSLON ASAP.

Anonymous said...

Goldman-Sachs executive selling 5.9 acres on Nantucket for $55 million
Daily News Tribune - 20 hours ago

[ exec's selling their BEND-CALIF second homes ... ]

Why No Insider Buying At Morgan Stanley and Goldman Sachs (MS, GS)?
StreetInsider.com (subscription) - 22 hours ago

[ BUFFET buys preferred GS we're told, but NOT exec's??? They KNOW the bitch is going down. ]


WILL PAULSON RESCUE HIS FUCKING SPECIAL NEEDS CHILD???

Anonymous said...


Why No Insider Buying At Morgan Stanley and Goldman Sachs (MS, GS)?

With Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) in free-fall, one has to ask "Why aren't there any insider purchases of the stock?"

Maybe they know something that we don't. These are supposed to be the best and the brightest, yet they won't touch their own stock.

Come on Johh Mack and Lloyd Blankfein, buy your own stock. Only you can instill the much needed confidence.

MS is down 39% and GS is down 23%.

Anonymous said...

WHY aren't insiders buying GS?? Because that is what taxpayer money is for, that is what Paulson is for.

BUFFET even bet $5B of his own money that GS would get bailed out, and he has OR-BOMB-EO in his pocket.

This whole fucking election is a SETUP.

Anonymous said...

Remember the first draft of the PAULSON/GS bail-out, 'no court reviewing', note below one of the biggest law firms in NY has came out and asked GS investors to come forward for a class action suit on the loss. PAULSON & Crony's MUST be going out of their MINDS - "RESCUE GS STOCK PRICE, EVEN IF IT BK's THE USA"

Note here is another reason that GS is NOW a bank this week, cuz 'investment banks' are going to get their ASS sued.

****

Investors With Losses in Large Goldman Sachs Positions Should Consider Their Legal Options, Announces The Securities Law Firm of Klayman & Toskes

NEW YORK, Oct. 10, 2008 (GLOBE NEWSWIRE) -- The Securities Law Firm of Klayman & Toskes, www.nasd-law.com, announced today that amidst the decline in the stock market, investors who maintained concentrated Goldman Sachs positions should consider all of their legal options. Klayman & Toskes has pioneered the representation of both retail and institutional clients who sustained losses as a result of holding concentrated positions in a single security or sector. ( Like Banking, or investment Banking )

Specifically, Klayman & Toskes' claims focus on the mismanagement of concentrated portfolios given the fact that there were risk management strategies available that would have protected the value of the concentrated portfolios to the downside. Such risk management strategies include stop loss and limit orders, protective puts and collars. Whether the broker recommended that the client purchase a concentrated position, or the concentrated position was transferred into the account, the brokerage firm had a duty to make suitable recommendations to diversify away the risk.

Anonymous said...

Here's another take of why the GS 29 yr old Maserati CRIMINAL class of Goldman-Sachs are selling their NANTUCKET estates at fire-sale prices, ...

To get the $$$ out of DODGE ASAP, those BILLIONS of ill gotten gains, the lawyers on behalf of share-holders are coming after the crooks.

Today's ORDER is SHIFT your assets outside of USA jurisdiction.

Anonymous said...

Goldman Sachs & "The MOTHER of ALL Bank Runs" ... Coming to a theater near you.

****

Roubini Misreads Goldman
Lucas van Praag 10.10.08, 12:01 AM ET

Sir:

Nouriel Roubini offers no evidence to support his curious assertion that most of Goldman Sachs' (nyse: GS - news - people ) lines of business are losing money ( "Next: The Mother Of All Bank Runs?" Oct. 2, 2008). As a result, we're left to assume that it's a gut reaction. Unfortunately, it appears that Mr. Roubini did not look at our recent earnings release, which shows that we reported a quarterly profit in a very difficult environment. In fact, we've reported a profit in each quarter since the credit crisis began more than a year ago.

Mr. Roubini does not distinguish between the differing performances at various firms. As a result, he fails to acknowledge that the difference in performance is clearly a function of different business models, risk management practices and decision making.

For example, Bear Stearns had a narrower business model, concentrated in fixed income, particularly in mortgage-related businesses. Lehman Brothers (nyse: LEH - news - people ) also had a business model more focused on fixed income and had a real estate portfolio that was very significant in relation to its capital.

Both had very different funding and liquidity profiles from Goldman Sachs and Morgan Stanley (nyse: MS - news - people ). He also doesn't explain why Merrill Lynch (nyse: MER - news - people ) decided to merge. His readers might have been interested to know that, in addition to significant concentrated exposure to the mortgage market, the firm had a large amount of debt to be refinanced this year.

Mr. Roubini asserts that Goldman Sachs needs to raise more capital. Has he looked at any of the relevant capital metrics that demonstrate that Goldman Sachs has one of the strongest balance sheets in the financial services industry? Has he compared the quality of our balance sheet to those of the banks with whom he thinks we should merge?

Insightful opinion plays an important role, particularly in disrupted markets, but Forbes readers deserve more than a "fire, aim, ready" approach.

Sincerely,

Lucas van Praag
Managing Director
Goldman Sachs & Co.
85 Broad St.
New York, N.Y. 10004

Anonymous said...

In spite of $300B treasury infusion, GOLDMAN-SACHS is GOING DOWN. To be SOLD.

***

Next: The Mother Of All Bank Runs?
Nouriel Roubini 10.02.08, 12:01 AM ET

It's plain that the current financial crisis is worsening in spite of--or perhaps because of--the Treasury rescue plan.

The strains in financial markets are becoming more, rather than less, severe in spite of the nuclear option of a $700 billion package: Interbank spreads are widening and are at a level never seen before; credit spreads are widening to new peaks; short-term Treasury yields are going back to near-zero levels as there is flight to safety; credit default swap (CDS) spreads for financial institutions are rising to extreme levels as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package.

Financial institutions in the U.S. and in advanced economies are going bust. In the U.S., the latest victims were Washington Mutual (nyse: WM - news - people ) (the largest U.S. savings and loan) and Wachovia (nyse: WB - news - people ) (the sixth largest U.S. bank). In the U.K., after Northern Rock (other-otc: NHRKF.PK - news - people ) and the acquisition of HBOS by Lloyds TSB (nyse: LYG - news - people ), you now have the bust and rescue of Bradford & Bingley; in Belgium you had Fortis (other-otc: FORSY.PK - news - people ) going bust and being rescued over the weekend; in Germany, Hypo Real Estate, a major financial institution near bust, has also needed rescue.

So, this is not just a U.S. financial crisis. It is a global crisis hitting institutions in the U.K., the Euro-zone and other advanced economies (Iceland, Australia, New Zealand, Canada etc.).

The strains in financial markets--especially short-term interbank markets--are becoming more severe in spite of the Fed and other central banks having injected $300 billion of liquidity in the financial system last week alone, including massive liquidity lending to Morgan Stanley (nyse: MS - news - people ) and Goldman Sachs (nyse: GS - news - people ).

In a solvency and credit crisis that goes well beyond illiquidity, no one is lending to counter-parties as no one trusts any counter-party (even the safest ones), and everyone is hoarding the liquidity that is injected by central banks. And since this liquidity goes only to banks and major broker-dealers, the rest of the shadow banking system has no access to this liquidity as the credit transmission mechanisms are blocked.

After the bust of Bear and Lehman, and the merger of Merrill with Bank of America (nyse: BAC - news - people ), I suggested that Morgan Stanley and Goldman Sachs should also merge with a large financial institution that has a large base of insured deposits so as to avoid a run on their overnight liabilities. Instead, Morgan and Goldman took a cosmetic approach, converting themselves into bank holding companies as a way to get further liquidity support--and regulation as banks--from the Fed and as a way to acquire safe deposits.

But neither institution can create, in a short time, a franchise of branches, and neither one has the time and resources to acquire smaller banks. And the injection of $8 billion of Japanese capital into Morgan and $5 billion of capital from Warren Buffett into Goldman is a drop in the ocean, as both institutions need much more capital.

Thus, the gambit of converting into banks while not being banks yet hasn't worked, and the run against them has accelerated in the last week: Morgan's CDS spread went through the roof on Friday to over 1200, and the firm has already lost over a third of its hedge-fund clients together with the highly profitable prime brokering business (this is really a kiss of death for Morgan). And the coming roll-off of the interbank lines to Morgan would seal its collapse. Even Goldman Sachs is under severe stress: Most of its lines of business (including trading) are now losing money.

Both institutions should stop playing for time, as delay will be destructive: They should merge now with a large foreign financial institution, as no U.S. institution is sound enough and large enough to be a solid merger partner. If John Mack and Lloyd Blankfein don't want to end up like Richard Fuld, they should do a John Thain today and merge as fast as they can with other large commercial banks. Maybe Mitsubishi (other-otc: MSBHY.PK - news - people ) and a bunch of Japanese life insurers can take over Morgan.

The only institution sound enough to swallow Goldman may be HSBC (nyse: HBC - news - people ). Or maybe Nomura in Japan should make a bid for Goldman. Either way, Mack and Blankfein should sell at a major discount before they end up like Bear and are offered, in a few weeks, only a couple of bucks a share for their faltering operation. And the Fed and Treasury should tell them to hurry up, as they are both much bigger than Bear or Lehman, and their collapse would have severe systemic effects.

When investors don't trust even venerable institutions like Morgan Stanley and Goldman Sachs, you know that the financial crisis is as severe as ever. When a nuclear option of a monster $700 billion rescue plan is not even able to rally stock markets, you know this is a global crisis of confidence in the financial system.

The next step of this panic could be the mother of all bank runs, i.e. a run on the trillion dollar-plus of the cross-border short-term interbank liabilities of the U.S. banking and financial system, as foreign banks start to worry about the safety of their liquid exposures to U.S. financial institutions. A silent cross-border bank run has already started, as foreign banks are worried about the solvency of U.S. banks and are starting to reduce their exposure. And if this run accelerates--as it may now--a total meltdown of the U.S. financial system could occur.

The U.S. and foreign policy authorities seem to be clueless about what needs to be done next. Maybe they should today start with a coordinated 100 basis points reduction in policy rates in all the major economies in the world to show that they are starting to seriously recognize and address this rapidly worsening financial crisis.

Anonymous said...

When investors don't trust even venerable institutions like Morgan Stanley and Goldman Sachs, you know that the financial crisis is as severe as ever. When a nuclear option of a monster $700 billion rescue plan is not even able to rally stock markets, you know this is a global crisis of confidence in the financial system.

Anonymous said...

The next step of this panic could be the mother of all bank runs, i.e. a run on the trillion dollar-plus of the cross-border short-term interbank liabilities of the U.S. banking and financial system, as foreign banks start to worry about the safety of their liquid exposures to U.S. financial institutions. A silent cross-border bank run has already started, as foreign banks are worried about the solvency of U.S. banks and are starting to reduce their exposure. And if this run accelerates--as it may now--a total meltdown of the U.S. financial system could occur.

Anonymous said...

Goldman's outlook revised to negative by Moody's
October 10, 2008 7:33 AM ET

NEW YORK (AP) - Credit ratings agency Moody's Investors Service late Thursday said it placed a negative outlook on the long-term rating of Goldman Sachs Group Inc.

Goldman Sachs currently carries a senior debt rating of "Aa3," which is considered investment grade.

The outlook is a long-term view on the company's rating. The long-term outlook was changed because Moody's expects the current downturn in capital markets activity to continue for an extended period, which will cut into Goldman Sachs' revenue and profit through at least 2009.

Goldman Sachs will also need to adjust to its new status as a bank holding company, which it switched to last month, Moody's said in a statement.

Last month as the credit crisis worsened and competitor Lehman Brothers Holdings Inc. filed for bankruptcy and Merrill Lynch & Co. was sold to Bank of America Corp., Goldman Sachs changed its status to a bank holding company, which will allow it to create a large deposit base.

The change was precipitated by fears that stand-alone investment banks might no longer be viable operations as credit markets continue to worsen.

IHateToBurstYourBubble said...

As quickly as GS declared themselves a REGULATED BANK, to get their mits on the $700BB, they, at some point, will SWITCH BACK.

"Wow... you know this "bank thing" isn't working out for us. See, we have NO BANK BRANCHES, NO LOAN OFFICERS, NO NOTHING. We got RICH FUCKING JEW CLIENTS who wanted a piece of that $700 bill, and Paulie Paulson told us the ONLY WAY that could happen is a quicky change in our charter to a regulated bank, and BushCo to do a quickie UNLIMITED COVERAGE for money markets. But now that we have the money, screw you guys, we're going home."

Anonymous said...

Now seriously, why would Paulson allow the nationalization of a
company that he owns 3.2 million shares of? Don't you find it funny
that the govt is now going to buy shares of Goldman and MS? MS is a
cover for the help the govt is giving GS. Hank has to make sure his
ass is covered first. This is the same convenience of timing that he
showed when GS started to get hit by the naked shorts.

Corruption at it's finest. Right up there next to the theft of WM by
the FDIC and JPM.


Welcome to the new OR-BOMB-EO government it's HERE!!! Corruption at it's finest.

GE is now controlled by BUFFET, who controls CNBC, who CONTROLS OR-BOMB-EO. Everything is going according to plan.

Anonymous said...

Now seriously, why would Paulson allow the nationalization of a
company that he owns 3.2 million shares of?

*

This comment matches perfectly with what HOMER says above. With 3.2M share's PAULSON has every intention of making the killing of the century.

With the 100% support of OR-BOMB-EO & BUFFET. He'll even get away with it... God Bless AmeriKKKa.

Anonymous said...

A week before the 'bailout' Buffet said "He wouldn't have bought $5B of GS preferred, if he didn't KNOW the bailout would go through".

This is the same guy that owns OR-BOMB-EO, and CNBC.

BUFFET is the NEW CHENEY that will run OR-BOMB-EO from behind the curtain. Buffet/OREO will keep PAULSON around, sadly, no just kidding, like homer say's GS will revert to an investbank, and with his 3.2M shares at $500 PAULSON will go back to GS and be a KING.

Today the plan of GS ( if they don't BK ), is to BUY all the deposits they can, in order to secure unlimited cash.

Anonymous said...

"Wow... you know this "bank thing" isn't working out for us. See, we have NO BANK BRANCHES, NO LOAN OFFICERS, NO NOTHING. We got RICH FUCKING JEW CLIENTS who wanted a piece of that $700 bill, and Paulie Paulson told us the ONLY WAY that could happen is a quicky change in our charter to a regulated bank, and BushCo to do a quickie UNLIMITED COVERAGE for money markets. But now that we have the money, screw you guys, we're going home."

*

Who says that OR-BOMB-EO doesn't love jews??

Anonymous said...

NORTH KOREA TO BAIL OUT THE USA!!!! WTF ...

The Wall Street Journal

Oct. 11, 2008

The U.S. said that North Korea has been removed from a terrorism blacklist after Pyongyang agreed to nuclear verification demands.

North Korea will allow atomic experts to take samples and conduct forensic tests at all of the North's declared nuclear facilities and undeclared sites on mutual consent.

tim said...

http://online.wsj.com/article/SB122368241652024977.html?mod=googlenews_wsj

Shiller in today's WSJ.

But when the stock market moves away from historical norms, it tends to overshoot. The modern low on the Graham P/E was 6.6 in July and August of 1982, and it has sunk below 10 for several long stretches since World War II -- most recently, from 1977 through 1984. It would take a bottom of about 600 on the S&P 500 to take the current Graham P/E down to 10. That's roughly a 30% drop from last week's levels; an equivalent drop would take the Dow below 6000.

Could the market really overshoot that far on the downside? "That's a serious possibility, because it's done it before," says Prof. Shiller. "It strikes me that it might go down a lot more" from current levels.

In order to trade at a Graham P/E as bad as the 1982 low, the S&P 500 would have to fall to roughly 400, more than a 50% slide from where it is today. A similar drop in the Dow would hit bottom somewhere around 4000.

Anonymous said...

Well we have marked-to-market, and the value?? 8 cents on the dollar of CSD. US portion $55Trillion, 8% is $4T. It's all funny numbers, but one thing is clear, somebody has to pay $600B on this insurance policy. Right now nobody knows who is on the hook, that ball will drop next week. This is just the tip of the iceberg. At the very least 300 banks just lost $1-2 Billion on just this one deal, keep adding this shit up, and you have real money.

CSD market face biggest-ever payout over Lehmans

Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. will have to pay holders 91.375 cents on the dollar, setting up the biggest-ever payout in the $US55 trillion ($82 trillion) market.
An auction to determine the size of the settlement on Lehman credit-default swaps set a value of 8.625 cents on the dollar for the debt, according to Creditfixings.com, a Web site run by auction administrators Creditex Group Inc. and Markit Group Ltd. The auction may lead to payments of more than $US270 billion, BNP Paribas SA strategist Andrea Cicione in London said.

While the potential payout is higher than 87 cents on the dollar suggested by trading in Lehman's bonds yesterday, sellers of protection have probably written down their positions and put up most of the collateral required, said Robert Pickel, head of the International Swaps and Derivatives Association. More than 350 banks and investors signed up to settle credit-default swaps tied to Lehman. No one knows exactly who has what at stake because there's no central exchange or system for reporting trades.

Anonymous said...

This market is worse than a divorce. I've lost half my net worth, yet I still have my wife.

Anonymous said...

In order to trade at a Graham P/E as bad as the 1982 low, the S&P 500 would have to fall to roughly 400, more than a 50% slide from where it is today. A similar drop in the Dow would hit bottom somewhere around 4000.

*

Tim, that was my prediction yesterday, using the same historical reasoning, ... so fucking what I'm not in the market.

Anonymous said...

Tim,

We have had to have this correction for a long time, we simply can't have a DOW with Negative P/E.

Things right now are simply, on a very orderly basis being 'market to market'.

Yes, historical low of 6, and average of 12, but never had there been a sustained HIGH DOW with a negative P/E.

Today we have the HIGHEST corporate debt in history, and the future is FUCKING bleak, we 90% dependent on consumer mercantile spending, and that will plummet, with the demise of credit-card, heloc, ...

This had to happen, what goes up, always comes down.

GOD BLESS PHYSICS. YOU CAN'T FUCK NEWTON, EVEN THOUGH YOU CAN FUCK THE AMERIkkkan people.

Anonymous said...

In order to trade at a Graham P/E as bad as the 1982 low, the S&P 500 would have to fall to roughly 400, more than a 50% slide from where it is today. A similar drop in the Dow would hit bottom somewhere around 4000.

*

What's good about this, is once again 'value investing' will be the rage.

The recent post 20 yr history of short-term is toast. With the depression 'GRAHAM' will once again be KING, e.g. Solomon.

This all couldn't be happening to a nicer bunch of crooks, to see PAULSON & BUSH go down, to see the fucking mercantile empire implode. The ENTIRE world including Russia is saying that the USA is going down, and will NEVER EVER again rise from the ash, Russia recovered cuz they have OIL, the USA of today has NOTHING except lots of dirty coal. Which they can market, but nobody wants.

Bewert said...

Reserve Auction
October, 15 2008
Tower Theatre Bend Oregon

Current Property List

Also there are 5 New Properties that just came in and did not make the list…

Visit web site for complete details.

www.bidpremier.com The only way to bid!


Preview/ Open House TODAY! Sat. Oct. 11th 11:08-4:08

The following Properties are open for preview!

Check website to down load property info for FREE!


22820 Stone Wall Ct Bend, OR 97701

(Spectacular Pronghorn Lot 0.63 Acres) Some one will be at the gate to get you in and give you info on the property.

63820 # Quail Haven Dr. Bend, OR 97701

(4 Bedroom 4 Bath 5,798 SQFT. Lot size 5.02 Ac. 3 Ac Irr.)



1968 NW Jack Lake Ct. bend, OR 97701

(Gorgeous 4 Bedroom 3 1/2 Bath 4,285 SQFT.)



63575 Cricketwood Bend, OR 97701

(5886 SQFT. 5 Bed 4.5 Bath 3 car RV on 19.54 Ac. 12 Ac. COI Irr.)



2044 NE Wells Acres Bend, OR 97701

(3 Bedroom 2 1/2 Bath 1581 SQFT. 0.20 Acres)





20297 SCHAEFFER DR BEND, OR 97701

( 3 Bedroom 2 1/2 Bath 1473 SQFT.)



19959 Ashwood Dr. Bend, OR 97702

(2 (RS) Zoned Lots 0.30 Acres & 1.59 Acres)



5431 SW Helmholtz Way Redmond, OR 97756

(1,188 SQFT. 3 Bedroom, 1 3/4 Bath 0.77 Acres)



173 SE 16th St. Bend, OR 97702

(3 Bedroom 2 Bath 1156 SQFT. Lot 0.17 Acres)



1346 NW Galveston Ave. Bend, Or 97701

(commercial lot w/building, business not for sale)



1366 NW Galveston Ave. Bend, OR 97701

(2 Bedroom 1 Bath Commercial Zoned 704 SQFT. 0.13 Acres)



Bare Land To Be Sold

Drive by and see any time.



1433 SW 27th St Redmond, OR 97756

(Six Peaks Phase 4 Urban lot 0.17 Acres)



1447 SW 27th St Redmond, OR 97756

(Six Peaks Phase 4 Urban Lot 0.17 Acres)



1962 NW Jack Lake Ct. Bend, OR 97701

(Residential Lot 0.72 Acres)



1400 NW Fresno Ave. Bend, OR 97701

(Urban Lot 0.11 Acres RS Zoned)



17750 Fireglass Ct Bend, OR 97707

(Caldera Springs Phase One Lot 0.54)



10270 Sundance Ridge Lp. Redmond, OR 97756

(Eagle Crest Lot 0.38 Acres)



22820 Stone Wall Ct Bend, OR 97701

(Spectacular Pronghorn Lot 0.63 Acres)



1234 NW Galveston Ave. Bend, OR 97701

(0.13 Acres Commercial Zoned Lot)



56 NW Mckay Bend, OR 97701

(0.10 Acre Lot RM Zoned)

Bewert said...

If this BULL article had been written a year ago, we would have been in much better shape right now:

Bend may have to get creative as city looks for ways to save

By Erin Golden / The Bulletin
Published: October 11. 2008 4:00AM PST

With city reserves dwindling and another round of budget cuts under way, Bend officials are looking for new strategies to keep city services running in tough economic times — a difficult task they say isn’t likely to get easier anytime soon.

Late last month, the city announced that development fees generated in July, August and September — typically the busiest time of year for construction — were down by about 50 percent from what the city had projected for the period. Shortly thereafter, the City Council voted to lay off 11 planning and engineering employees and decided to hold off on filling another 19 vacant positions in the police, fire, public works and other departments.

City officials say they’re hopeful that the cuts will be enough to tide the city over for the rest of the year. But they’re still looking for more ways to save, keeping a close watch on how many people pay their taxes and fines, analyzing fee levels and considering new revenue sources, like a gas tax or transportation utility fee.

Many ideas are on the table, but City Manager Eric King said officials will be careful to gauge public opinion before making any big decisions that could make residents tighten their belts even further.

“We want to be careful when we talk about new revenue sources to not just throw something out there. ... We want to be thoughtful about any new revenue because it’s a really tough time for everybody right now,” he said.

Shrinking resources

In the past year, the city has cut 31 jobs and left another 36 positions unfilled. It has cut employee functions, switched from new vehicles to used and installed energy-saving computer systems, among other budget-related changes.

But in an effort to keep the revenue shortfall created by the building slump from cutting into police, fire and other city services, the city has taken a significant amount of money from the reserve funds intended to provide a cushion in the event of an unpredictable event that would soak up other revenue sources.

For example, the state recommends cities keep enough money in their building reserve funds for six to 18 months of work, said city Budget and Financial Planning Manager Sharon Wojda. Right now, he city is projecting it will end the year with just three weeks’ worth of operating expenditures for the building department — about $223,000.

Other reserve funds are also low. The city expects the water and sewer funds to each end the year with enough money for two months of expenditures, while engineering will likely be down to about $63,000 — enough for about nine days of expenditures.

Wojda said the city doesn’t like to tap into its reserves, especially in departments like building and engineering, which are largely funded by user fees. But she said the downturns in the local building industry and in the national and global economy have forced officials to make tough choices between making major cuts or using money from the reserves.

“The current economy, nobody could have predicted, and hopefully it’s not going to become the norm,” she said. “Reserves are there to provide that cushion to weather the ups and downs.”

What’s ahead

Over the next few months, King said the city is planning to take a closer look at some solutions that could save money or bring in additional revenues.

The planning, building and engineering divisions are set to complete a fee audit similar to recent studies done in Redmond and Prineville that could result in changes in the way development fees are assessed.

A full-day financial strategy session has been planned for city staff and the City Council in January and finance officials have begun preparing quarterly financial briefings for council members.

In the meantime, King said officials are exploring ideas for new revenue sources and will likely assemble community groups to weigh in on those ideas once they’ve been narrowed down.

And across the city, department heads like Police Chief Sandi Baxter are looking for ways to keep services intact on tighter budgets but also warning residents that there could be some changes in store. The last round of cuts included a freeze on filling three police positions — two officers and one records specialist.

Baxter said she’s glad the department hasn’t had to lay anyone off, but said officials now have to work harder to maintain service levels with fewer people because they can’t fill open slots.

As a result, she said, it might take longer for police to respond to some calls.

“It is going to hurt, but we’ve got to do our best, especially at responding to serious crimes,” Baxter said. “With the lower-level crimes, it’s going to take a little longer.”

King said officials are keeping a close watch on the city’s finances but know the bad news could keep coming.

“We’ve cut as much as we can without reducing levels of service for the community,” he said.

“It’s going to be a long haul. There’s no quick fix to any of this stuff.”


Yep Butter, no one could have predicted this economy. A year ago I made an impassioned plea to not sell a $5M bond for money to build infrastructure in the Juniper Ridge tarpit-and was pointedly ignored. The city, staff and councilors alike, only really listen to the develpment community.

Which has led directly to this present mess.

Anonymous said...

>>“The current economy, nobody could have predicted, and hopefully it’s not going to become the norm,”...

Oh that burns me up.

A whole blogfull of people were predicting all this stuff two and a half years ago.

Bewert said...

Dumbfuck, here are just a couple of the stupid things you've said in the last few days:

CDS's not derivatives

Go remind the CTFC of that fact. The CDS's have been by far the fastest growing derivative class since the CFTC was passed.

You are right about the catastrophic effect this giant pile of flaming shit is going to have on the world economy, though.

Buffet loves derivatives, it's made BH rich.

Buffet has railed against them since at least 2002. This is one of your absolutely dumbest assertions.

Butter, I missed your putting up the BULL article. But it's so fucking rich we may as well post it twice. Enough bitch, I'll delete mine.

Anonymous said...

Hey I have an idea. Let's subsidize the builders with a gasoline tax!

Bewert said...

And the TED spread is an astounding 4.64, almost twice any prior value.

That is fucking scary. This credit crunch is nowhere near over.

Anonymous said...

>>Buffet has railed against them since at least 2002. This is one of your absolutely dumbest assertions.

While that's true, he doesn't always do as he says. He's been known to make currency bets, commodities bets, options and futures bets. The kinds of bets he chides others for making.

I think his angst at unwinding the General RE derivatives was mostly caused by them being foolish bets which he personally didn't make, and he thought they were foolish and complicated. There was more pragmatism than principle involved.If they had been "good" bets would he have continually complained?

It's not that he's dishonest, I believe. Instead, I think that he communicates general beliefs, but when there's a specific mis-pricing, it's in his blood to go for it even if it is counter to his general principles.

Note that the whole insurance business is essentially a derivative. It can blow up. That's why he has good people running those businesses. You don't take every policy you can get. You have to do the math.

A lot of AIG's problem stems from the fact that insurance companies all have to follow Buffett. He revolutionized the business by having the balls to invest float more aggressively than his competitors did. Watch the insurers. They are almost all smaller than Buffett, less careful than Buffett, and worse investors than Buffett. They can blow up just like a hedge fund does, and that's, essentially, the fault of Buffett and the regulators that allow him to do it.

Anonymous said...

>>TED spread

"Be gentle, Mr. Grant."

Anonymous said...

Oh. I should mention that what Buffett REALLY hates is a business proposition he doesn't understand But what you have to remember is that he DOES understand all kinds of crazy finance (like the warrants he gets when he comes to the rescue of a company). These warrants are essentially derivatives.

Remember his long involvement with American Express an his deals with investment banks.

A lot of time people mistake his proclamations for simplicity as a kind of folksy back-to-basics businessman. But that's not what he is at all. He's really a walking HP12-C who can make a deal on a handshake over over the phone because he knows how numbers work.

What he really MEANS when he says he won't invest in something he doesn't understand, think tech companies. He famously couldn't bring himself to invest in Microsoft because he didn't know what challenges it would face and what its prospects would be in the long term. People thought he was silly to miss out n those big gains, but look at MSFT since it joined the Dow. I think it's where it was 10 years ago. BKRA isn't.

Anonymous said...

Bonjour, cunts and pussies! The following is offered for your entertainment and edification:

The Stock Market Explained

Once upon a time, a man appeared in a village in India and announced
to the villagers that he would buy monkeys for $10 each.

The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.

He further announced that he would now buy at $20. This renewed the
efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so meager that it was an effort to even see a monkey, let alone catch it.

The man now announced that he would buy monkeys at $50 each. However,
since he had to go to the city on some business, his assistant would
now buy on behalf of him.

In the absence of the man, the assistant told the villagers. 'Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.' The villagers rounded up with all their savings and bought all the monkeys.

They never again saw the man nor his assistant, only monkeys everywhere.

Now you have a better understanding of how the stock market works.


I swiped this from a poster on another blog.

Bewert said...

Timmy, let me revise my remark slightly: What Buffet has been railing against is the use of derivatives as ever more speculative investments rather than their traditional use as a hedge. And the associated rapid growth, with many of the same counterparties trading them back and forth between each other, with an utter lack of transparency.

LTCM back in '98 was the first victim of this, long before it exploded to the size it is now. What's amazing looking back it the passage of the CFMA two years after the LTCM collapse, compeletely legitimizing trading all derivatives among qualified parties (i.e. assets over $5M) with no transparency.

They were big boys, they knew the risks. And now they are fucking over the entire world, starting with the US taxpayer.

Anonymous said...

Yes, he has. I agree.

I've read everyone one of his annual letters (an I held some BRKB for quite a few years), and he's made the point for quite some time that the derivative market is simply too big.

By the way, you can't have people just hedging (and not speculating) and have a liquid market. You have to have speculators as well.

And occasionally speculators will blow up. All the gov't should be doing is making sure that the size of the blowups can't take out the economy.

The problem with LTCM (you should know this if you've read Lowenstein's account of the debacle) was not only derivatives an their downfall due to Russia's default and the Asian contagion, but also the fact that Meriwether's traders had degenerated into making directional stock bets and doing traditional arbitrage n merger deals--in other words ignoring the Nobel winners they used to sell the fund.

And what helped push them under was actually transparency, not the lack of it. Because wall street banks were big customers of LTCM, the banks knew Long Term's positions and took advantage of the knowledge to choke them. If the positions had not been know (though some of them were obvious), LTCM might have limped along.

In my opinion, the only really bad thing the gov't has done wrong regarding derivatives is this--they didn't do anything to address the size of the derivatives market. It's the size of it that creates the risk, which is counter-party risk. Otherwise all the derivatives should cancel out in the long run.

And his name is "Buffett," not "Buffet."

Bewert said...

RE: And his name is "Buffett," not "Buffet."

Sorry, I don't always get full contact on the second "t". I'll double check from now on just so you don't get irked.

I agree on the size issue, but disagree on the transparency issue. The gridlock on lending between banks right now is directly attributable to lack of transparency. No one wants to be in the position that Lehman's counterparties were when it went down, and no one has much of an idea of what the others hold. So no one will lend to each other.

This can be seen in the LIBOR-Treasury spread in the banking sector and the TED spread in the commercial sector, both of which are at histroically astronomical levels. Everyone is going to ground with short-term Treasuries, which at a .18 yield on 3-month, .81 yield on 6-month, and 1.03 yield on 12-month, are effectively providing negative returns after inflation. Treasuries are still perceived as safe.

Now if that ever changes...

I'm jealous of your BRKB holdings. Ever get to the annual meeting?

Bewert said...

Mish's latest over at http://globaleconomicanalysis.blogspot.com/ is pretty fucking funny.

"My Comment: I commit to praising motherhood, apple pie, and world peace."

Anonymous said...

Well, anyway, LTCM's problems were not lack of transparency. People use LTCM as an example for all kinds of things without knowing hat happened to it in detail, even though Lowenstein spelled it all out in detail almost day by day.

But I think I get your point on the banks.

I guess one problem I have is I don't know what a bank is, anymore.

The investment banks had trading arms. Usually, when you trade you don't want your positions known, because people will screw you if they know.

Regular (regulated) banks should absolutely have transparent positions. But that wouldn't really fix the problem we have now because even if you know what the other guy's holdings are, you don't really know the risk. Say bank A wrote insurance to bank B against a GM bond. As GM started to fall, maybe that pitiful income from that contract started to look like it wasn't worth the risk anymore and bank A went to bank C to offset the risk with another contract.

All of the sudden it's pretty damned near impossible to say what happens to the banks, even with all cards on the table.

We have this multiplied by 100. Lehman goes under. What does that mean? As we've seen, it means confusion, missing money, lawsuits about valuations.

Longer term, it may force a hedge fund down that forces a bank down that forces a hundred hedge funds down. Even with complete transparency.

I guess transparency is an issue, but I don't think it's THE issue.

I think it's more the case that the banks KNOW they are all screwed. They aren't wondering what the other banks have. They KNOW the other banks are fucked.

Anonymous said...

Someone said that Iceland had been a hedge fund masquerading as a country.

Anonymous said...

In hindsight, everything that has happened should have been foreseen once we saw that there were bonds that were rated AAA only because there was insurance on them to make them so.

We should have looked at the bonds and the insurance companies an the rating agencies and realized the situation was utterly hopeless.

As has been pointed out before by many people on this blog and elsewhere, it's not the bust that kills you, it's the bubble. The winners of 5 years ago were mostly dead men walking once they started playing the bubble's game.

Anonymous said...

HOMER thinks the $750B bail-out is for HOUSING, silly goose. OR-BOMB-EO always intended that the $750B go to PAULSON & BUFFET.

****

Obama welcomes Paulson plan to buy equity in firms
Reuters - 19 hours ago
PHILADELPHIA (Reuters) - US presidential candidate Barack Obama on Friday welcomed a plan by Treasury Secretary Henry Paulson to buy equity in financial ...

Anonymous said...

Well HBM is right, BUFFETTTTTT has sold the village idiots a ton of monkeys, and soon they'll be running around Bend, and nobody will ever again buy them.

Anonymous said...

Berkshire Hawthaway Seeks to be Classified as Bank

Reuters - 1 hour ago

Warren Buffet today changed the legal status of Berkshire.A to a bank. Upon the change Treasury Secretary Paulson has approved a purchase of $180 Billion dollars of Berkshire(BRK.A).

When asked about the modification of status presidential candidate Barack Obama said it would be the wisest move to date in fixing the housing crisis.

Anonymous said...

I find this group very frustrating.

The seven years old I teach part time as a volunteer believe everything I tell them.

On the other hand this group is like talking to a wall.

I much prefer to be around young boys.

Anonymous said...

In hindsight, everything that has happened should have been foreseen once we saw that there were bonds that were rated AAA only because there was insurance on them to make them so.

*

You have seen anything yet, all these people who sold these policy's on the market now own dozens of Trillions of dollars.

The pain & suffering has not even started.

Who would have guessed AIG, LEHMAN, GS, ... GE, FORD, GM, would have gone down??? People have been selling CSD's for these like it was easy money. They bet wrong.

Somebody stands to make +20Trillion, and also lose. The press is just now saying it will be a zero-sum game, ... No the game is rigged in BUFFETTTTTT's favor.

TEAM-OR-BOMB-EO ( BUFFETT ) has just fucked the entire world forever.

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