Imminent and severe market correction

[wayneL]

I actually think this would be good. Its a bit hard to mark to market when there is no liquid market and every asset parcel is slightly different.

Wasn't it the change in policy late last year that caused most of this ****?

No, It was mark to model (AKA mark to fantasy) that resulted in mis-priced risk.

Mark to market just meant shareholders and creditors had to be told the truth.

 

[Uncle Festivus]

It would make for a great Monty Python sketch if it weren't so serious.

Let's change all the rules like, now, instead of when the gravy train was going full tilt boogie into oblivion. I can see why they dont want to mark to market when it's worth a big fat zero, or worse, they have a liability as well!

These clowns - The Fed, Treasury and the politicians don't have clue! Well actually I think the Fed does, but will look after their own ilk ie JP Morgan, Goldman Sachs etc and the faceless men with old establishment money. The very existence of the Fed itself is at stake so they won't go down without a fight.

The ban on short selling really worked a treat - the biggest points fall in the Dow ever. So now we have these unrestrained gyrations up & down until eventually the system gets so out of balance that, in spite of the miracle cure the bail out package is supposed to be, there is going to be the mother of all crashes, instead of just a severe correction?

How safe is your/our money? The CBA has $16B in derivative exposure!!

 

[communique]

It would make for a great Monty Python sketch if it weren't so serious.

How safe is your/our money? The CBA has $16B in derivative exposure!!

Uncle, you always seem to have knowledge of matters at hand. I do get alarmed about your comments about our banks. I am not asking for advice, I just want to know in your considered opinion.
1. Is there government backed deposit insurance in this country?
2. Do you have any comment on the lender of last resort facility for Australia?
Many thanks in advance.

 

[Trembling Hand]

How safe is your/our money? The CBA has $16B in derivative exposure!!

Uncle that is very mischievous of you. What are the derivatives??

I would guess that 98% of them are just the run of the mill exchange listed derivatives. Mostly being hedges to hard assets.

The other thing is when a derivative is taken out the reported exposure is not what is at stake. Its in a very simplistic way the margin.

 

[refined silver]

I actually think this would be good. Its a bit hard to mark to market when there is no liquid market and every asset parcel is slightly different.

Wasn't it the change in policy late last year that caused most of this ****?

Legislating lying in accounting rules is not the way to economic prosperity!!

It won't fix anything, just postpone it slightly and make it worse.

Think about it for a moment. Legislating that companies can lie on their balance sheet, is absurd. Where does it stop?

Thats why there's already no trust between banks etc, cos they know each other are lying.

 

[bas]

How can it make it worse? Valuing potentially good assets at distressed prices doesn't seem to be helping anyone.

 

[chops_a_must]

I tell myself everyday, reality is a bitch.

 

[nomore4s]

How can it make it worse? Valuing potentially good assets at distressed prices doesn't seem to be helping anyone.

lol, yeah valuing potentially crap assets at over inflated prices has worked a treat so far.

 

[Uncle Festivus]

Uncle that is very mischievous of you. What are the derivatives??

I would guess that 98% of them are just the run of the mill exchange listed derivatives. Mostly being hedges to hard assets.

The other thing is when a derivative is taken out the reported exposure is not what is at stake. Its in a very simplistic way the margin.

That could very well be the case, just passing on what I heard on Radio National this morning. The trouble is apparently it is impossible to know just what they are from the published info?

 

[Uncle Festivus]

Uncle, you always seem to have knowledge of matters at hand. I do get alarmed about your comments about our banks. I am not asking for advice, I just want to know in your considered opinion.
1. Is there government backed deposit insurance in this country?
2. Do you have any comment on the lender of last resort facility for Australia?
Many thanks in advance.

Sorry to alarm you, but it's best to be forewarned?? FYI, I have my money with CBA.

Banks to bail out fallen rivals David Uren and Richard Gluyas
| June 03, 2008

THE nation's big banks could be forced to bail out the customers of a failed rival - and will be prevented from merging with each other - under the Government's new plan for the sector.

Wayne Swan said yesterday he would maintain the Four Pillars policy, which prevents the nation's four biggest banks from merging but will not stop the planned $19 billion takeover of St George by Westpac.

The Treasurer also unveiled a scheme to protect the deposits of bank customers in the event their institution collapsed - bringing Australia in line with almost all developed countries.

Announcing the scheme, which will cover deposits of up to$20,000 in banks, building societies and credit unions, Mr Swan said customers would get their money back, paid by the government, within a week of their institution collapsing.

Depositors with larger amounts caught in a collapse would get their first $20,000 back, but would then have to wait for the institution to be liquidated or taken over before they got the rest.

If there was a shortfall, other banks could be charged a levy to make up the difference.

The Treasurer said 80 per cent of Australian bank customers had deposits smaller than $20,000, though he noted that the smaller number of customers with larger deposits made up more than half the bank deposit base. The policy is designed to avert the sort of bank run that threatened to send the British building society, Northern Rock, to the wall last year.

http://www.theaustralian.news.com.au/story/0,25197,23801057-5013946,00.html

DYOR to be sure.

 

[Kauri]

The Securities and Exchange Commission told banks that, despite fair-value accounting regulations, they did not have to use fire-sale prices to value bad assets . The Dow closed closed down 7% on Monday, after the House of Representatives surprise rejection of the Bush administration"s $700bn TARP.
The US Senate will voted on the TARP later today, after accepting tax breaks and a higher limit for insured bank deposits in a bid to win House of Representatives approvals by the end of the week .
The UK Treasury is working on a proposal that could insure a total of GBP 1.9bn trillion in deposits in UK banks and building societies, according to officials . UK PM Gordon Brown, meanwhile, is "personally fighting" to save the GBP 12bn proposed rescue of HBOS by Lloyds TSB. HBOS"s current market value is GBP 6.45bn, 35% below the value of the Lloyds TSB bid.



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

 

[chops_a_must]

The Securities and Exchange Commission told banks that, despite fair-value accounting regulations, they did not have to use fire-sale prices to value bad assets .

Lol.

I'm twice the Enron that you'll ever be.

 

[kransky]

Sorry to alarm you, but it's best to be forewarned?? FYI, I have my money with CBA.
DYOR to be sure.

WTF, i thought the first 100k of all bank deposits was insured by the govt. This 20k talk is news to me!

and bad news. i have all mine in the CBA too

might be worth spreading some in 20k lots to anz and nab

bloody hell US and UK public are protected to 100k!

 

[Aussiejeff]

[size=+2]** NEWS FLASH **[/size]

Media experts report DOW Futures down 70 points so far tonight on speculation by speculators that speculation by speculators that Congress might or might not pass "something" on Thursday is mere speculation by speculators....



[size=-4]I'd make a great headline boy in a glam paper, huh?[/size]

 

[MrBurns]

I'm almost sick of this now, what I was expecting for the last 3 years has happened now it will be just share market fluctualtions, one day up one day down.

I'm busting to get into the market but I'm not a day trader so i'll wait another month to see what happens, when the market settles I'll go in , it may be a lot longer than a month though.

I have to comment on the bulldust that's fed to the public via the media. it's absolute crap with no depth whatsoever, I guess that means that those on this forum have the inside edge as it seems the average Aussie is almost clueless.

 

[nioka]

I guess that means that those on this forum have the inside edge as it seems the average Aussie is almost clueless.

Some of the "call themselves experts" on this forum are very, very average. Don't underestimate the average aussie.

 

[Nick Radge]

MrBurns,
In the 1970 - 1974 bear market it took the ASX 4-years to hit the bottom, some 64% from its highs. We've only been going 18-months or so but I don't think the depth of the decline did the damage back then, but the time it took. In the 1987 - 1993 bear market the ASX traded in a 30% range for 6-years. I personally think that's what we're seeing now. Somehow another month of patience may not make the grade.

Nick


This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

 

[communique]

WTF, i thought the first 100k of all bank deposits was insured by the govt. This 20k talk is news to me!

and bad news. i have all mine in the CBA too

might be worth spreading some in 20k lots to anz and nab

bloody hell US and UK public are protected to 100k!

It has been reinforced daily by PM and Treasurer that our big 4 banks are strong with solid books and can whether the financial storm. For the sake of not eating baked beans we all have to believe this and not panic on what is happening in a country with poor regulations, too many banks and suffering a major property crash. I still can't believe they had interest rates of 1 and 2%

It is interesting to note that in the latest US "bailout" package they have increased the deposit guarantee to $250,000 from $100,000 but in Australia it is only $20,000. I suspect that ours would magically increase rapidly to instil stability in our banks if there was a hint of anything wrong with our banking system.

Thanks Uncle for the article.

 

[wayneL]

Some of the "call themselves experts" on this forum are very, very average. Don't underestimate the average aussie.

Nokia obviously "considers himself" an expert on experts.

 

[MrBurns]

MrBurns,
In the 1970 - 1974 bear market it took the ASX 4-years to hit the bottom, some 64% from its highs. We've only been going 18-months or so but I don't think the depth of the decline did the damage back then, but the time it took. In the 1987 - 1993 bear market the ASX traded in a 30% range for 6-years. I personally think that's what we're seeing now. Somehow another month of patience may not make the grade.

Nick

SIZE][/I]

Appreciate the insight.
So leave cash in the bank I guess, this is getting boring, a little less boring than counting your capital losses.