Wednesday, November 19, 2008

Jousting with Windmills

Lyceum, Don Quixote
Fine Art Print
by William Nicholson Pryde
item #: 10029378A

I'm hearing more folks talking now, not of the bottom that seemed to be called with such confidence on the 'successful' retest last week, but rather of another leg down to go. Though I've never witnessed true 'capitulation', as I was only a look at my statement when I had time. But last week, I never 'felt' that we had capitulation. It is starting to feel so ominous now, that I feel that we may be due for a body blow. Perhaps I'm just projecting.

The selling today in the financial stocks was relentless. I must admit that I found it surprising. I'm also finding all of this depressing.


nice said...

If a bottom were to come - no one would believe it

If a market rally were to occur - no one would believe it

If we just keep going down - no one will believe it is happening...

Markets do strange things...


Oddly only 160 stocks up on NYSE today - with everything else down - Volume was not large..


Been thinking...

Paulson isn't dumb.

I wonder if he never had any intention of buying toxic assets with the bailout (the one he originally called TARP)

Prior to TARP - what the market was worried about was that everyone (pensions, lifeco's, other banks, HF's etc..) were going to have massive losses from FNM FRE LEH AIG and all the rest.

He conconcted the TARP idea merely as a way to buy time and ram the markets higher (since everyone now had the impression that there would be no more writeoffs.)

Notice when the TARP plan was announced the prices of anyone holding toxic assets (lifeco's etc) soared..

It was a bull trap.

Since then these companies have been collapsing - everyone figured out that TARP was a bluff.

So it was an exit point for some very smart money.

Now all these companies have to take the toxic losses - that is why we are dropping...



The entire basis of the US power is essentially its currency.

The USD began to collapse right after FNM and FRE

I believe that Paulson and Bernanke then were in a state of panic.

They had no choice but to save the USD.

The only way to save the dollar is to precipate (or at least exaggerate) a crisis - that would cause a massive flow of money into the USD.

They have unleashed a deflationary force - with the only beneficiary being the USD.


now maybe my tinfoil hat is on a little too tight tonight - but one has to admit that Paulson's actions jive very cleanly with all of this...


Leisa said...

Nice, a very clearly stated case. I see that the Prince is bellying up to the C bar again.

nice said...

One thing I will say is that if the corporate bond market etc.. doesn't start working again - then we are in deep do do...

In fact, I hear all the central bankers coming on and saying that 'the market is not working'...

But maybe it is working!

Just not the way they want.

It's kinda Orwellian really...
When prices start dropping and no one wants to buy these pieces of paper - they say the market is not working... when of course in fact it really is...

They seem to be entertaining this fantasy that the market is only working when prices are going up LOL! (this is what bull markets do to people)

-->In fact the market really has been working all along - but planners are fighting it.


I am still really puzzled by everyone (bankers, commodity CEO's etc.. the GE CEO etc..) all coming out and saying that they did not see any of this coming.

What are these people paid for?

If a little peon like me can figure out that at 130 Oil it is in a bubble - and we would go back near 40 (because history shows that oil always returns near to its previous spike ie: Gulf War '91) - why couldn't any of these geniuses figure this out.

Why the heck was Imelt buying his own stock (both personally and probably coporately) at prices 2-3x higher?

And why would a financial firm use 10,20,30,50 even 100x leverage and not think there would be any consequences???

A lot of this is water under the bridge now...

The real question is - how bad is the collateral damage?

Doesn't look pretty...