Imminent and severe market correction

[gfresh]

I am not even sure the $20k is a law yet, I think it's still pending? $20k is not much for most people even with a vague amount of cash, meaning the inconvenience of multiple accounts.

Ruddy was asked tonight about it.. Was pretty vague (as usual ). He was going on about the usual "strength of our big 4", so why not the reassurance of a guarantee?

wiki:

According to IADI, as of June 2006, there are currently 118 countries with a deposit insurance system in operation, pending, planned or under serious study (i.e. 95 in operation, 11 pending, 12 planned or under serious study).

In reality, it would probably pan out like the US with their banks - other bank takes the deposits, or the other valuable divisions they want, leave the rest. After all, deposits are extra capital.

 

[nioka]

Nokia obviously "considers himself" an expert on experts.

Derinition of an expert;

Ex ... Something that was

Spurt.,.... A drip out of control.

No I don't go anywhere near being an expert, actually the oposite. The older I get the more things I find that I don't know. Something the young guns here have yet to learn.

One thing I do know though is that if I don't agree with some of you then I become the moron because you can't possibly be wrong. The more I point out the ethics of living and investing, the more some get upset. I wonder why.

 

[rub92me]

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

Q: Where does the average aussie get the majority of their data from about the health of the financial system?
A: Headlines and soundbites in the media.
Q: What is the merit/quality of 99% of these headlines and soundbites?
A: Absolute and utter cr@p.
Q: What is the most likely information output if the input is cr@p data?
A: Even the average aussie know the answer to that one.

 

[MrBurns]

Ruddy was asked tonight about it.. Was pretty vague (as usual ). He was going on about the usual "strength of our big 4", so why not the reassurance of a guarantee?

I saw that ........Rudd is clueless.

The interviewer was running out of time but should have nailed him on that issue.

 

[Trembling Hand]

The more I point out the ethics of living and investing, the more some get upset. I wonder why.

Not sure if I'm getting upset but you are yet to show how your "investing" is any different to my trading.

 

[Whiskers]

Derinition of an expert;

Ex ... Something that was

Spurt.,.... A drip out of control.

No I don't go anywhere near being an expert, actually the oposite. The older I get the more things I find that I don't know. Something the young guns here have yet to learn.

One thing I do know though is that if I don't agree with some of you then I become the moron because you can't possibly be wrong. The more I point out the ethics of living and investing, the more some get upset. I wonder why.

Hey, TH... re XAO post, that's why I'll never claim to be an ex spurt.

I agree nioka. I may not be as 'matured' as yourself, but these young upstarts brimmin with testosterone sure are bludy cocksure of themselves.

I think there's an old sayin about that somewhere too.

 

[dhukka]

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 ****?

Oh Jesus, here we go again. First it was the short sellers and now it's the accounting rules. Funny how the accounting rules were working fine when the banks were making money.

For the record banks do not have to mark all their assets to market. There are essentially 3 buckets called level 1, 2 and 3. Level 3 is mark to fantasy and companies like Citigroup have tens of billions in level 3 assets.

Do you think if they suspend mark to market rules that will create more confidence? Will banks be more willing to lend to one another knowing that their counterparty has dodgy overvalued assets on their balance sheet? We hare so much about the need for more transparency, this is the complete opposite of transparency, it's obfuscation.

Be careful what you wish for. One of the reasons that Japan endured the 'lost decade' was because they did not force their banks to own up to the losses on their balance sheets. That helped create a reluctance to lend and hence Japanese banks earned the name 'zombie banks'.

Some great quotes from Calculated Risk:

"Suspending mark-to-market accounting, in essence, suspends reality."
Beth Brooke, global vice chair at Ernst & Young LLP, WSJ, Sept 30, 2008

"Blaming fair-value accounting for the credit crisis is a lot like going to a doctor for a diagnosis and then blaming him for telling you that you are sick."
analyst Dane Mott, JPMorgan Chase & Co.,

"Suspending the mark-to-market prices is the most irresponsible thing to do. Accounting does not make corporate earnings or balance sheets more volatile. Accounting just increases the transparency of volatility in earnings."
Diane Garnick, Invesco Ltd.,

 

[Macquack]

Oh Jesus, here we go again. First it was the short sellers and now it's the accounting rules. Funny how the accounting rules were working fine when the banks were making money.

Notwithstanding its shortcoming's, I have always been a fan of Historical Cost Accounting. At least you knew how much was actually paid for an asset at a point in time.

 

[Julia]

I saw that ........Rudd is clueless.

The interviewer was running out of time but should have nailed him on that issue.

I've posted about this interview on the "Rudd - I'm pissed off" thread.
I think she couldn't have gone any further without being downright rude.
The viewers of the 7.30 Report would not have failed to realise that Rudd was dodging the issue. Silly of him, really.

 

[chops_a_must]

No I don't go anywhere near being an expert, actually the oposite. The older I get the more things I find that I don't know. Something the young guns here have yet to learn.

One thing I do know though is that if I don't agree with some of you then I become the moron because you can't possibly be wrong. The more I point out the ethics of living and investing, the more some get upset. I wonder why.

You realise you don't know something about something, yet are prepared to make a judgements about said somethings? Why is that? Wisdom is knowing when you don't know something, and it's something you haven't grasped. I may be as opinionated as all hell, but there are a lot of things I don't know, and I make no calls about them unless it is to ask a question.

Some of us here (like myself) do make calls on ethics in investing and trading. The difference being we know the inherent problems with such a standpoint. Some would argue that trading like you are doing here, like basically everything else anyone does here, is unethical to begin with. Ethical dealings in the market are a rather large paradox...

 

[rhen]

I've read somewhere here Schiff referred to as Dr Doom. This is some Freudian defence mechanism? I feel perhaps a Dr. "Right up til now and perchance the future" is much more appropriate. Don't get me wrong...he'll be making squillions right now from his book and investment service...he's there for the money too.
But, watch this clip and make up your own mind who has the voice and manner of reason.

http://www.youtube.com/watch?v=knJudP7QgyY

 

[rhen]

Here's a real "DR Doom".
Have fun!?

http://www.youtube.com/watch?v=XtXtuoRPpGY

 

[white_goodman]

bailout bill passed

 

[wayneL]

bailout bill passed

Only the senate, still has to go back to the reps.

 

[white_goodman]

Only the senate, still has to go back to the reps.

oh i see, when does this happen?

 

[rhen]

This arrived this morning. I apologise for its length.
Ooops...
Sorry...it exceeds ASF length constraints.

Summary of the email from van tharp...impossible, but here goes:
cash is king until it's worthless
the king is dead (maybe soon?, but when/if it is)
long live the king...
gold

this, of course, is written for the US market.
(Oh, and I get the impression he doesn't like the bailout)

one man's opinion...please don't shoot this messenger!

A sample from the email:

What you should do?
• Obama has suggesting raising the amount of FDIC insurance. You need to make sure that you have no more cash in banks than the amount of insurance you have. To date, as far as I know, bank failures have not cost any depositors money. The FDIC has not had to pay out any money to depositors, but that’s why banks disappear overnight as they absorb into another bank. However, the change in rules that allows banks to use depositors’ money to secure their investments could mean that some bond holders could have first priority over your money.
• Money market funds, although not insured, are generally safe. There are a few instances where because of runs, they could only pay depositors 97 cents on the dollar. But that’s not a huge loss.
• Watch the stock price of your bank. Wachovia’s price looked awful. However, it was taken over by Citigroup whose price looked much worse until recently.
• If you are a value player, be very careful. Classic contrarian, David Dreman, had a huge play in Freddie Mac and Fannie Mae and wiped out about 30% of his fund when the Fed took over 79% of them. And how many people had stock in Wachovia and Washington Mutual and watched their values disappear overnight?
• Develop a game plan and a worst-case contingency plan to help you get through this safely, just as we teach in our Blueprint workshop. I cannot stress the importance of having a worst-case contingency plan under these conditions. The worst thing you can do is listen to CNBC, CNN, or any other news channel for information about what to do. These people do not know and the “talking heads” are full of misinformation.
• As I’ve been saying since I wrote Safe Strategies for Financial Freedom, we’re in a secular bear market. Phase II is now waking up from hibernation. This one could last a while. There will be many, many opportunities for those who survive it, but the word now is survival. And expect the entire bear to last at least another 10 years. Remember that we still haven’t seen the effect of the baby boomers getting well into retirement and needing to withdraw their retirement money from the stock market yet.
• Long-term, I would expect the government to default on many of its future contractual obligations. How can it honor over $100 trillion in unfunded future obligations? This is just my opinion, but do you really trust the government? Remember what I said earlier””the government can change the rules any time it wants.

Last month I said that we were experiencing a deflationary credit contraction. September has been disaster after disaster. Let’s hope that next month is much, much better. Until October’s update, this is Van Tharp.

 

[bas]

Do you think if they suspend mark to market rules that will create more confidence? Will banks be more willing to lend to one another knowing that their counterparty has dodgy overvalued assets on their balance sheet? We hare so much about the need for more transparency, this is the complete opposite of transparency, it's obfuscation.

Banks aren't lending because they are worried their counterparty won't be there tomorrow. What is causing the counterparties to fail- writedowns eroding capital. If their capital is preserved, less chance of falling over and more chance of borrowing from other banks.

Its obviously a bit of a bandaid fix, but we are in a perfect storm at the moment- delaying the supposed inevitable might actually end up solving some of the problems longer term.

And i fully understand the views of others who think mark to market is the only true valuation- i'm just putting this out there a bit to promote a bit of discussion

 

[Whiskers]

oh i see, when does this happen?

Seems like it may happen Friday, there... Saturday morn here.

 

[Whiskers]

Banks aren't lending because they are worried their counterparty won't be there tomorrow. What is causing the counterparties to fail- writedowns eroding capital. If their capital is preserved, less chance of falling over and more chance of borrowing from other banks.

Its obviously a bit of a bandaid fix, but we are in a perfect storm at the moment- delaying the supposed inevitable might actually end up solving some of the problems longer term.

And i fully understand the views of others who think mark to market is the only true valuation- i'm just putting this out there a bit to promote a bit of discussion

Yeah, I'm inclined to agree with you bas... at least to the extent that the US gov was always going to intervene if for no other reason than political expediency and to buy some time as you say to let things work out in a more orderly fashion.

I don't see the logic of the 'idealistic' arguement that everything should be mark to market and left to it's own devices.

The notion of 'mark to market' in accounting and stock exchange listing requirements isn't a consistant standard across the world anyway.

It seems to me that until every country fully adopts the IASC standards and then equivilant exchange reporting rules, then the notion of mark to market is itself a variable concept in an international sense.

 

[dhukka]

Its obviously a bit of a bandaid fix, but we are in a perfect storm at the moment- delaying the supposed inevitable might actually end up solving some of the problems longer term.

The exact some reasoning that Japan used and looked what happened to them. A recent study of numerous banking crises presented in the October Liscio Report poited out a few crucial lessons from the past, chief among them:

One crucial lesson stands out: speed matters. This is obvious to anyone who followed Japan's dithering in the 1990s; standing aside and hoping the problem goes away is not a good idea. Relatedly, "forbearance" --regulatory indulgence, such as permitting insolvent banks to continue in business-- does not work, as has been established in earlier research. As the authors say, "The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance." This suggests that suspending mark-to-market requirements is not a good idea.