Imminent and severe market correction

[Bushman]

FYI

From The Economist

CFO's are paid to be pessimists. That is what controlling a balance sheet requires. Worst case scenarios like, err, a credit crunch. Centro is what happens when they become optimistic. Why oh why Romano did you not see the CMBS markets closing down? Boo hoo...

Anyway if I was a CFO at the moment, I would be seeing a yawning chasm about to decimate American GDP growth, and my company's profitability with it, for a few years to come. That's why it is called risk management. Will this happen is the question? Maybe ask the CEOs - surely they can be trusted at the bottom.

Just don't go asking an economist or anything silly like that...

 

[wayneL]

CFO's are paid to be pessimists. That is what controlling a balance sheet requires. Worst case scenarios like, err, a credit crunch. Centro is what happens when they become optimistic. Why oh why Romano did you not see the CMBS markets closing down? Boo hoo...

Anyway if I was a CFO at the moment, I would be seeing a yawning chasm about to decimate American GDP growth, and my company's profitability with it, for a few years to come. That's why it is called risk management. Will this happen is the question? Maybe ask the CEOs - surely they can be trusted at the bottom.

Just don't go asking an economist or anything silly like that...

I think the chart disproves your hypothesis.

 

[explod]

CFO's are paid to be pessimists. That is what controlling a balance sheet requires. Worst case scenarios like, err, a credit crunch. Centro is what happens when they become optimistic. Why oh why Romano did you not see the CMBS markets closing down? Boo hoo...

Anyway if I was a CFO at the moment, I would be seeing a yawning chasm about to decimate American GDP growth, and my company's profitability with it, for a few years to come. That's why it is called risk management. Will this happen is the question? Maybe ask the CEOs - surely they can be trusted at the bottom.

Just don't go asking an economist or anything silly like that...

]
Yeh, they cant be trusted and we are not at the bottom

But we will see

 

[Kauri]

]
Yeh, they cant be trusted and we are not at the bottom

But we will see

FT ... suggesting that the current optimism in the equity markets towards the financial sector may be premature. Bank"s borrowing costs continue to rise, despite the new actions of the central banks last week. Spreads climbed in London, and auctions were highly over subscribed in Europe and the U.S. Unless the situation eases, the recent gains in the financial sector in the equity markets may be short lived....
Cheers
.........Kauri

 

[wayneL]

Here is a rather excellent article written by Todd Harrison of Minyanville.com regarding the "privatize profits and socialize losses" policy of the current Fed.

Chasing liberty
Commentary: Facing a critical juncture in financial engineering
http://www.marketwatch.com/news/sto...x?guid={22E814E7-51D9-430C-A955-89A3287BD009}

It's an excellent article in that it not only dovetails neatly with the views of the more sober bears on this site, but also it contains rare balance for an article written by an American.

Worth following this chap. IMO

 

[wayneL]

Along the same lines, this article from Jeff Randall of the UK Telegraph takes a more cynical, though no less accurate look at the bankers obnoxious duplicity.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/ccjeff126.xml

When the going gets tough, banks yelp for nanny

By Jeff Randall
Last Updated: 8:16am GMT 26/03/2008

Bank customer: "What's the difference between a recession and a depression?"

Bank manager: "In a recession, you lose your job. In a depression, I lose mine."

Remarkable, isn't it, just how quickly champions of laissez-faire solutions can become advocates for state intervention. All it takes is for their gravy-train to break down.

When freedom to play with barely any restrictions was making them rich beyond imagination, big-shot financiers applauded "light-touch" regulation. The looser the rules, the louder they cheered.

Now, however, as credit is crunched, losses mount and prospects for lucrative employment come under threat, many titans of unfettered enterprise are suddenly crying out for nanny.

Not for them the tough love of supply and demand. No, sir. These are desperate times, requiring generous measures of tender, loving care.

The essential plumbing of commerce, it is alleged, has become dysfunctional. Or, as Josef Ackerman, chief executive of Deutsche Bank, said: "I no longer believe in the market's self-healing power."

Why ever not? Nowhere on the tin does it say that markets will correct themselves without someone being hurt. Indeed, for markets to function properly, pain, somewhere along the chain, is inevitable.
advertisement

Markets work because they create winners and losers, not jobs-for-life security. Financial Darwinism doesn't just underpin the survival of the fittest, it ensures the extinction of pea-brained dinosaurs.........http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/ccjeff126.xml

 

[ithatheekret]

Yes , they're still struggling and we haven't even touched base with domestic debt as yet . In fact it seems to have been sidelined . High inflation has a distinct affiliation with defaults . As inflation creeps higher the regions with the highest will show greater ranges in defaults .

The quirk in the plans set to play by the Fed and Co. are pointless in many ways , but the easiest way to show the ignorance of the basic facts , is to use their own theories to show the blindness of perception . The Keynesians are ignoring their bible .

You see when rates are pushed low , monetary policy is useless and the enviroment turns into a massive liquidity trap . That's what's happening in financials now , but the relevance of what it will become has largely gone unnoticed .

The no recession out there call could very well be true . It could be a depression .

 

[explod]

Here is a rather excellent article written by Todd Harrison of Minyanville.com regarding the "privatize profits and socialize losses" policy of the current Fed.

Chasing liberty
Commentary: Facing a critical juncture in financial engineering
http://www.marketwatch.com/news/sto...x?guid={22E814E7-51D9-430C-A955-89A3287BD009}

It's an excellent article in that it not only dovetails neatly with the views of the more sober bears on this site, but also it contains rare balance for an article written by an American.

Worth following this chap. IMO

Yep its al there.

Wayne, your take on a "sober bear" ?

 

[wayneL]

Wayne, your take on a "sober bear" ?

Ones that agree with me.

No, just a joke.

A sober bear is one that has come to his or her view based on actual analysis/experience etc... a bit of hard graft so to speak, rather than those motivated by jealousy of those who have done well in the boom.

 

[ithatheekret]

When the credit spreads between the lower rated bonds and treasuries start to hug and keep hugging the financial crisis will be on the way to being over .

The leveraging missions being carried out will become costly , and they had better understand it soon . The width of the spread is wide enough to put a semi though sideways rig and all , so say the corp. bondholders anyway .

I can't remember yields this high , so risk demand for cash is an expensive ask nowdays , but bondholders look to demanding even higher yields yet again .

The last readout I saw had one set pinging well above 300 and rising , which for myself signals no let off or barleys for financials yet .

Treasuries have just seen their rough patch , most look to be trending south , bar the Aussie 10yr , which whilst volatile , looks to still be trending north .

Now watch inflation get hyperactive .

 

[chops_a_must]

As soon as I saw Rick Santelli on again this morning, I knew the market would be down.

Bludy downrampers!

 

[Aussiejeff]

....
The no recession out there call could very well be true . It could be a depression .

*GASP*

Isn't there a world-wide forum BAN on the use of the dreaded "De-Word"??

Double-*GASP*


AJ

 

[ithatheekret]

*GASP*

Isn't there a world-wide forum BAN on the use of the dreaded "De-Word"??

Double-*GASP*


AJ

Must be my bad then , I missed that memo

 

[wayneL]

Must be my bad then , I missed that memo

Get with the program itha.... it's "slow-down". Depressions and recessions only ever happen in history books. LOL

 

[ithatheekret]

I'm too busy watching other indicators like the VTI ( core stock index ) , lovely V between two peaks , looks like a double top whatever they call it nowdays , not a blow off , had formed and is now in decline , which we'd expect under the current build up of movie scripts , I mean financial crisis dilemas . I think it's an MSCI index , but I can't get it up in the format I have it in . Anyway a double something , and the trend looks to be pointing to a long term sequence in matching data .

I know you can get the VTI up elsewhere though .

 

[ithatheekret]

I forgot to ask ...... does anyone else think we'll have a 4800 retest on the ASX200 ?

 

[chops_a_must]

I forgot to ask ...... does anyone else think we'll have a 4800 retest on the ASX200 ?

Of course.

The only question is when.

Looking for at least 4300 to be honest...

 

[Kauri]

I hear that S+P has dropped GMAC's rating... a bit more confidence whittled away... until the "Talking Heads" get cranking again..

and Iceland playing Icarus may cause more than thier ice-sheets to melt...


and from the Guardian.. http://www.guardian.co.uk/
Nationwide raises mortgage rates


UK's biggest building society to add almost 0.6% to cost of some fixed-rate and tracker deals

• No crunch for banker paid £36m

and the ever-present rumour mill in the US.... Rumours of a US banking wobble have returned with L%^^@**s Bank noting a share price fall of over 8%. Stock options are cited behind the speculation but amid the current conditions any trigger could force a whippy short-term reaction. However, whether any positions are in fact open to take advantage of the chop remains the more interesting question.

WSJ... http://online.wsj.com/article/SB120660493325368265.html?mod=hpp_us_whats_news
being eyed by the derivatives market is a blowout in Clear Channel credit default spreads after a Texas judge ruled that the consortium of investment banks must back the $19.4 bln buyout. The consortium includes Citi, Morgan Stanley, Deutsche, Credit Swiss, RBA and Wachovia. With current market conditions, the decision is seen as a negative for the financials.

Cheers
..........Kauri

 

[wayneL]

until the "Talking Heads" get cranking again..
Cheers
..........Kauri

That'd be the PPT's Psych Ops, right? :

 

[Kauri]

That'd be the PPT's Psych Ops, right? :

I think he's called the Chairman of the First Directorate... or is that my wifes title??

also re L%^^@**s Bank... from Rooters..

Cheers
.........Kauri