The New Wall Street

peternap · September 22, 2008, 05:25:24 AM

This was a big weekend for the Government. LOTS of changes plus GS and Morgan Stanley became banks. Money market accounts are now insured but only if it rxisted on Friday

Lots of things happened. I'm not sure any of it good. I;ll let muldoon give his take on the whole nightmare. It may make sense then.

BUT....it looks like the NEW IMPROVED WALL STREET, will open down this morning. Why?

Well..........Most of us older folks remember the 70ish Maverick automobile. It was an inexpensive piece of junk!
Then they came out with the super sport Maverick package. It included a spoiler (really needed that) fancy interior, snazzy paint job, chrome wheels, wide tires with raised white letters...so on. $:-\$

But underneath all that new improved glitter......it was still a Maverick!

It;s still Wall Street!

So here are the market symbols:
Bear market ......

Bull market........

And the new improved market:

muldoon · September 22, 2008, 10:30:47 AM

Quote from: peternap on September 22, 2008, 05:25:24 AM
This was a big weekend for the Government. LOTS of changes plus GS and Morgan Stanley became banks. Money market accounts are now insured but only if it rxisted on Friday
Lots of things happened. I'm not sure any of it good. I;ll let muldoon give his take on the whole nightmare. It may make sense then.

Here's my take.
step 1: create panic
step 2: grab power in claims of fixing panic
step 3: repeat.

The plan is doomed from the beginning because it does not address the underlying problem. This new plan allows the treasury to purchase up to 700billion in assets at a time. (The at a time part is key here because it means that this bill is not limited to 700billion, it is infinite). When I read between the lines I see this - cycle through fanny/freddy's 5.3 trillion 700 billion at a time by buying the assets at 70 cents on the dollar and selling for 10 cents on the dollar. Reload and repeat. Then move on to Citibanks portfolio, then goldman, then whoever is next. They are no longer persuing loans because the borrowers no longer have collateral, it was never about needing to borrow and a lack of funds in the market to do so; it was about bleeding cash and not having cashflow to keep solvent. Giving money to someone without a job is always a bad idea, no matter how much you give them -- they will never be able to repay.

Quote
BUT....it looks like the NEW IMPROVED WALL STREET, will open down this morning. Why?

Well..........Most of us older folks remember the 70ish Maverick automobile. It was an inexpensive piece of junk!
Then they came out with the super sport Maverick package. It included a spoiler (really needed that) fancy interior, snazzy paint job, chrome wheels, wide tires with raised white letters...so on. $:-\$

But underneath all that new improved glitter......it was still a Maverick!

It;s still Wall Street!

There are a few reasons for the markets to be down. Most importantly is that the rules have changed. If I buy a fund with a prospectus that says I'm 70% long, 30% short ~ hedged to handle up or down. Now if the fund cannot short, and its effectively 100% long... that's not what I signed up for - give me my money back. Or lets say your a trading desk, a normal operation is to remain risk neutral, you buy a stock at 50 and hope its going up BUT to protect yourself you also buy an option put at 55, so that if the stock falls you still make money. Without the ability to protect yourself from downswings maybe you just dont play this market at all. Were seeing alot of people simply say I'll take my ball and go home because I cant win if the rules can be changed at any time for no reason without warning.

Some of the things going on in the last few days/weeks should scare any investor. FNM, FRE, AIG, LEH all wiped out. Even if you held preferred stocks, not just the common, you got nothing. They were simply declared by the government to be zero'd. Keep in mind that only a few days before we had the same government saying these firms are strong and well capitalized. They did not declare bankruptcy - they were simply siezed. Now they are zeroes. Can you believe ANY thing? How can you play this game when the rules are changed daily, the losers dont have to pay, and any winnings can be seized and destroyed. I have commented in the past that people are looking for a safe place to put money and that is the core of this problem. Until fraud is removed significant money will NOT come back in.

September 22, 2008, 11:00:29 AM

I general I see it this way - after sleeping on it.

Bush and the elite - ceo's etc stole all they could steal as people were actively investing and walked away with the money. Just as they have done with the unending fake war on terrorism where the debt is being increased into future oblivion to fight it, (again all the real dollars going into their pockets and debt to our children to pay)...

Now they are saying they did things wrong and that will have to be corrected in the future but lets just forget the past and get on with this bailout -- it is what the American (sheeple) people want.

So now they again want to be paid off - kept in business on the backs of the far future taxpayers with the bailout and somehow the elite keep their stolen money , their current income and have it all paid for by the lower class Americans in the future.

Yes - no more middle class or even upper middle class -- all lower class peasants and elite from now on.

Seems it is time to just shoot it and put it out of it's misery...... hmm

desdawg · September 22, 2008, 12:37:41 PM

I shot it this sweekend. Pulled everything out of the brokerage account Friday. I think I will go buy another rental house with cash flow and get deeper into that. I have one cheap that is a seller carryback at 6% interest. 6year balloon payment. I don't know if that is enough time the way things are lined out right now. Maybe I will wind up just renting it and subleasing it for 6 years. At least it is a market I understand and it isn't manic depressive with daily mood swings based on tall tales validated by the press.

glenn kangiser · September 22, 2008, 01:43:15 PM

I think that is more reliable, des.

At least the bankers will not (immediately) run off with your rentals. You can likely rent it to someone out of work and homeless from the financial system. Check their future means of support though.

September 22, 2008, 02:19:43 PM

I had an update but I just cant bring myself to submit it. hang on tight.

whatever you do dont look at the price of oil (up 16% the largest single day gain ever) or try to log on to bank of america (you cant). also hope you dont have any money in ameritrade money market (its apparently frozen now).

exits getting clogged up. too many people trying to use them.

peternap · September 22, 2008, 04:11:47 PM

Been watching all day with an end of the world size popcorn bag.
There's a bargain out there somewhere but damned if I can find it.
I had to quit day trading, I was declared a pattern daytrader and they wanted mr to bring my account to 25k.I've been pulling it out as fast as I make it si I;m not going to put any back.

ScottA · September 22, 2008, 04:33:47 PM

The market will fall hard every day until the bailout is passed by congress. This has turned into blackmail. They will blackmail congress into passing this coup. If you can, get out and stay out of the market. Smart move getting your money out peter. What will you do for fun now though? Maybe golf? lol

peternap · September 22, 2008, 04:40:46 PM

Quote from: ScottA on September 22, 2008, 04:33:47 PM
The market will fall hard every day until the bailout is passed by congress. This has turned into blackmail. They will blackmail congress into passing this coup. If you can, get out and stay out of the market. Smart move getting your money out peter. What will you do for fun now though? Maybe golf? lol

From the 2end through the middle of February.....hunt!

September 23, 2008, 01:50:45 AM

Quote from: ScottA on September 22, 2008, 04:33:47 PM
The market will fall hard every day until the bailout is passed by congress. This has turned into blackmail. They will blackmail congress into passing this coup.

I was thinking the exact same thing earlier today. That this is simply economic extortion; a power grab and hissy fit roled into one. If they dont get their plan they tank the markets to crank up the fear and volatility index a bit. I have changed my mind abit tonight. I'm beginning to think that hard crash may indeed be the best case scenario here. That these declines are not inflicted for the purpose of creating leverage for these thieves and liars, but simply a factor of the crises were in. I said last week I thought the situation had reached that point. I have seen nothing (and I mean nothing) to change my mind on it. If the thought of a crash being best case is valid, then what a pill it is to swallow. Hard crash is best case, that means that with or without the bailout were going to lose many pieces of the economy and American way of life. The only question is if we let the banks fail, can we rebuild? If we decide to go forward with this bailout can the US keep from being bankrupted with it? At this point, I am not certain it can. Who will continue to buy this debt from us? Look at the dollar today to get an idea of what the world is telling us. Hard crash may be unavoidable, do we want to lose the financial sector, or do we want to lose our country?

glenn kangiser · September 23, 2008, 02:56:37 AM

Aren't we yoking our children to poverty and near slavery if we allow this bailout to continue? - can we stop it? hmm

I see third world countries are now welcoming us to their realm. They say the dollar and pound are toast. The Euro has major problems.

I think we need to kill it and start from scratch. The criminals who stole it all want us to pay again - I say we bring them down to our level. Make them peons too.

desdawg · September 23, 2008, 10:51:48 AM

Quote from: glenn kangiser on September 22, 2008, 01:43:15 PM
I think that is more reliable, des.

At least the bankers will not (immediately) run off with your rentals. You can likely rent it to someone out of work and homeless from the financial system. Check their future means of support though.

It came with a renter already in place. I am supposed to close on Friday.

desdawg · September 23, 2008, 11:02:10 AM

Quote from: muldoon on September 22, 2008, 02:19:43 PM
I had an update but I just cant bring myself to submit it. hang on tight.

whatever you do dont look at the price of oil (up 16% the largest single day gain ever) or try to log on to bank of america (you cant). also hope you dont have any money in ameritrade money market (its apparently frozen now).

exits getting clogged up. too many people trying to use them.

I wrote a check on my Ameritrade MM on Friday. I just looked and it has been posted. Then I checked the bank I wrote it to. Posted there as well. So hopefully I got it through in time. Maybe I was part of the clog at the exits. Fingers crossed smiley needed.