Roubini is on fire in his latest piece. Here is a teaser; go read the whole thing:
If you enjoy the content at iBankCoin, please follow us on TwitterThis is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).
haha, nice
The trigger on the FRE/FNM credit default swaps is a whole ‘nother kettle of fish.
The litigation on that one is gonna be huge. Rumor has it the notional amount of swaps dwarfed the actual outstanding sub-debt by a wide margin.
I’m waiting to get long until Friday 3:30 when the next intervention is scheduled. The only problem …. who will it be … WM, WB, LEH, …. maybe BBY so we all get large flat screens for the weekend games
Maybe Premier Paulson will force the hand of Goldman to take under Lehman. I can see that happening. As a result, men in florescent pink jump suits will bid up stocks with great fervor.
As an aside, what do you think Thomas Jefferson or John Adams would say to these bastards.
Does anyone think Alexander Hamilton would approve?
Forrest Gump: I agree, the paperwork trying to settle all of the CDS could be a nightmare since it is a pretty new structure.
Jefferson and Adams are all action and would appear on the doorsteps of the politicians with their militias, wielding “bazookas” of course.
Some 15 months ago I thought Roubini was an asshat. I now long to lick his boots. He has been dead on thus far (along with Gary Schilling and Joe B). His theories, once thought gay, are now most decidedly hetero…
I once shot a man in the White House lawn for treason. Guess what I’d do with Comrade Paulson?
Sarah Palain In A hot Pink Glowing jumpsiut?
Roubini thinks like GW….Attica, Attica,….
I hope this comes crashing down upon their heads.
Let history show the stupidity that has fallen upon us.
“Crash & Burn…when will I learn?”
I told you so.
foreigners have pwned the usa gubmint for many years. why does everyone act surprised?
OK. You’ve convinced me. I’m buying LEH tomorrow. GS is Premier Paulson’s white knight.
With government backing breaking out all over, how can anybody lose?
The Founding Fathers insisted that citizens have the right to bear arms. Not to protect them from criminals, but rather from their own government. (Maybe the same thing here.)
I read Roubini’s piece. This thing can spin completely out of control from this point unless we play our cards perfectly. The chances of that are slim and none with both Obama and McCain being clueless. We’re f’ed.
Oh well, we can save ourselves i.e make a few reminbi on the way down.
Thomas J–
I never shot a man, but one time I did tell a guy that he had to make his mortgage payments on time, or he’d lose his home. I think that was back in 1991.
Alexander Hamilton would be so pissed, he’d team up with Aaron Burr to go “30 paces” with Comrade Soviet Supreme Commander Paulsen.
__
You know Stalin is “high fiving” Lenin in Hell right now…
Dooood! That “sell them the rope,” thing?? That was SPOT ON, dooood!
(Um, Lenin, dude? Um, like, your waistcoat is on fire again, man.)
_
Bailing out the ChiCom and Soviet Governments for their losses on Phony and Fraudy would probably fall under the Alien and Sedition Acts of 1798, Comrade Fly.
Fly can you believe they cancelled Journeyman?
Quick, futures are down, call in the PPT. Somebody needs a bailout!
In other news, how about them booze-cruising oil company reps!? It’s like college athletic recruitment, but with more money, better drugs, and ‘experienced’ women.
My take is that WM is probably done for and LEH – it’s not looking good. I think they’re gonna get toasted.
Find the banks with the largest amount of SWF holders. (~340bln China held re: FNM/FRE) That’s the one that will be saved – the rest are fuel for the fire.
UUP looks good here – but I’m not sure.
I believe it was on this site that I was called a “commie pinko” when I said FNM and FRE would be nationalized.
This is only the beginning. As Alan Greenspan stated, you cannot privatize profits and socialize losses. Eventually, the public will notice.
The key word is “eventually”, because by that time Comrade Paulson and Bush will be long gone.
Incredible rant by Nouriel . I’m quite surprised he hasn’t been on the Lawrence Kudlow Fantasy Hour to debate the likes of Lawrence & Don the Dodo Luskin.
Those two hold themselves up to be Great Americans, while they’re actually commie tools, pleading with the unwashed masses to invest their life savings into the market inferno. In effect keeping them under indentured servitude to the state for their entire miserable lives.
MER below its backstop print of 21.71 from late July. There could be a market flush. Welcome to the crash of 08, maybe.
Goody Goody!
from Fleck –
“. I know the silver trader at THE biggest bullion bank, and he is aggressively long….these manipulation stories are nonsense…I think the lows are close in time, but who knows where price may go on a stretch…but I think silver holds 10 bucks, it’s why I started nibbling today.”
Who wants to watch football with me this weekemd?
why is the flight to safety trade going into dollars??
why not gold?
WTF —
That’s deflation, as all the air comes out of these questionable assets via debt destruction (read: Buy Skiffles!). Wait for the rate cuts, then buy the gold.
Or just buy it anyway.
__
Tuck in Lehman… it’s going to bed.
Down 45% pre market.
-DT
crack spread is exploding to the upside.
crude- flat
gasoline- + 6%
Jake,
Besides real estate, what is deflating?
The Fly is God.
Take a look at SKF–over 124 this am.
Hell of a gap up. Could be reversal day though.
WTFDIK?
The Fly is God.
I think the forefathers made to clearly state that all currency should be backed by silver and gold, any offenders should be penalized by death.
I say we need a few more lynchings
Dr Seuss’s new book. Run Ben Run! and
Redstate Gold state, star state cold state”, and perhaps “I do not like comunism and bans, I do not like them damn those men”
Post toasties and a bottle of flat monster soda 🙁
Who just hit the 40 bid on LM
KRE and RKH accelerating to the downside as I type.
Looks like the time machine is out of the repair shop.
wtf:
Gold is a commodity. No commodity is safe as hedgies unwind their positions.
CASH is king.
Finding the Low on Gold
By Helene Meisler
RealMoney.com Contributor
9/11/2008 9:18 AM EDT
I’m not going to bore you with the same old stock market statistics again. I haven’t changed my mind — or perhaps I should say the indicators haven’t changed much. We’re still oversold enough to bounce, but the intermediate-term indicators are simply not lined up for more than an oversold bounce at this point.
What I thought was most fascinating about Wednesday was that once again bottom-calling became fashionable. It was absent during Tuesday’s decline. It’s pretty clear to me that the desperation to call for a market bottom remains alive and well.
I would make one other note, and it’s regarding volume. In the past two days, total volume on the NYSE has been over 7 billion shares, whereas floor volume has been under 2 billion. So I wanted to see if the statistics, in terms of upside and downside volume, were similar and just the size was different. The two charts below tell a very different story.
The first chart below (NYSE volume) shows floor volume only, and in this case it’s the downside volume as a percentage of total volume. Notice how ‘steady’ it has been since March on the downside. But the second chart is total volume, which includes all the volume that is on the floor as well as off the floor. Notice that during the June decline it fell but from the July low it picked up steadily, in a major uptrend.
The only rationale I can come up with is that so many of the commodity names reside on the NYSE, and yet so many of the financial names do as well. This tells us the selling pressure in the commodity names off that July low far outweighed any buying in the financials. And vice versa in the June-July decline.
Apart from the stock market, I was asked to comment on gold, something I haven’t done in quite some time. There is a double top present on the gold chart. I’m using a weekly logarithmic chart, since it shows the moves more clearly.
As a refresher, a double top occurs when there are two peaks of similar price with a valley between. When that valley between the two peaks is broken, the double top is confirmed. When gold broke $875 in early August, it confirmed that double top.
We measure a double top the same way we measure most patterns. We take the high of the pattern ($1,025, or $1,000, depending on which peak we want to use — it’s an art, not a science) and we subtract the low between the two peaks, or the valley ($875). We get either $150 or $125, depending on which peak we use.
We then subtract that difference from the breakdown ($875). So $875 minus $150 equals $725, or $875 minus $125 equals $750. You can also see on the chart that there are two support lines that come in around $750 (a flat line from the previous breakout and an uptrend line). Therefore, I would say somewhere between $725 and $750 is where gold should find some sort of low.
As for oil, it is still hanging around that trend line on the chart in my Monday column, but it hasn’t been able to bounce. So let’s look at oil’s weekly chart on a logarithmic scale to see if it yields a different view. (For those who don’t know, an arithmetic chart shows every dollar move the same, so a move from $100 to $110 is $10, or 11%, while a move from $50 to $60 is also $10, but 20%. A log chart shows the move from $50 to $60 as greater than the move from $100 to $110).
I still come up with the same area: $100 to $105 as the level from which we should have a bounce. I could draw in the more standard uptrend line and show a support level around $90. But for now I will stick with my view (which so far has been wrong) that we are due for a bounce in oil.
I would note that if we do a small swing measurement of that midpoint rally back in mid- to late-August we get a target down in this $100 to $105 area as well. On the chart you’ll see I’ve calculated it by taking the high of that swing (near $122) and subtracted the low ($112) to get $10. I then subtracted $10 from the breakdown ($114) to get a target near $104. Keep in mind these targets aren’t meant to be precise, just areas where you might start from to expect a rally.
There is one thing I would point out, on an anecdotal basis, and that is that everyone is still so keen to catch a bottom in commodities. When they are going down relentlessly, folks seem to back away and get scared. But as soon as they have a day where the selling abates the question is asked again: Is it OK to buy commodities? For some reason, investors have never learned from Mark Twain’s cat who sat on the hot stove!
Bennet Sedacca
09:16:53 AM
position in LEH options
What I am watching this morning…
Washington Mutual (WM) and Lehman (LEH) paper are trading in ‘integers’. Not on spread. It’s not a great sign, but we will see.
WM stock is trading with a 1 handle.
WM hybrids (fixed to floating rate preferreds) are trading around 5 cents on the dollar.
AIG (AIG) is plummeting. The issue with AIG is that it can’t be ‘stuffed’ into anything, it is too big. So if they need $25 billion, there is no way they can sell debt and no way they can sell hybrids or preferred. Which leaves selling 1.5 billion shares at 16. But they only have 2.7 billion shares outstanding. Which leaves selling off units. But we saw LEH try that.
Like I have said, AIG concerns me the most. Its counter-party risks and CDS are so gigantic that it could be the ‘Big Kahuna’.
As a reminder of common courtesy; last one out, please put the toilet seat down.
Thankyou,
Plunge Protection Team.
Fly:
Don’t be friggen silly. Roubini is talking through his friggen hat and ought to be fucking ashamed of himself but then again what do you expect from a former Clinton administration official?
look the US government always had an implicit guarantee on Freddie and Fannie. It was always there. The paper traded like it was a US government bond. The fucking government had decades to verbally remove that and fucking chose not. So in a sense there was a verbal contract. Roubini should also mention that the government was also extremely active in taking out the assets from the early 90’s S&L fiasco so in a sense the government is acting just as socialist as they were then. In fact the shit they took out at the early stages was supposed to be about %400 billion… much , much bigger than it is now as a % of GDP.
Stop listening to fucking idiots and worry about trading.
Are you still bullish material stocks?
J:
Put your stupid party hat down and wise up. Fannie and Freddie bond holders and sub ordinated bond holders should NOT come before the tax payer.
Do you even know what you are saying?
sold my SKF this morning. it was a ‘avenge last week’ trade, so i wanted to keep my profits at all costs, since i’m not going to be home later today to watch the market. looks like people are trying to bounce the banks for whatever reason, and i didn’t get a good feeling.
I took off my stupid hat and gave it to you fly.
That shit your spouting is like analogizing you make a verbal commitment but refuse to make good because your family comes first. Verbal commitments count for something.
The US government had fucking decades to remove the implicit guarantee and didn’t do a thing. The US government is elected by the people (the taxpayer) and they are therefore responsible for putting the clowns in office that allowed that fucking crap to go on.
I don’t walk away from my debts, I would never walk away from my debts and that means the US Government/ the taxpayers shouldn’t be allowed to shirk on an verbal/ implicit guarantee. let me know next time I can spot you 50 bucks because you’re short. But don’t worry if you didn’t make money trading that week because your family first. Great Fly. Good thinking.
Juice:
Gold is heading to 500/600 bucks. We have a full blown deflation going on and the CBs are going to be too slow in lowering rates. The world is fucked. Gold has to be the worst investment going. Stop adding and minusing shit when that crap is tanking as you’re going to lose good people money.
Money is is short supply and when money is in short supply gold gets it up the arse.
people, don’t listen to him and buy gold on his recommendation. The guy is taking you to the slaughter house. Sell the shit, but don’t buy it.
J:
In the Fannie Mae prospectus, there is no writing that says the U.S. Gov’t guarantees the bonds.
We have different opinions.
I believe the subordinated debt should be canceled and the senior notes given a hair cut. They ARE NOT Treasuries.
The company should be reorganized and reintroduced to the NYSE, letting those who took haircuts receive common stock, as a bone.
Instead, under this plan, we have the Gov’t owning more than 75% of the mortgages and the taxpayer making China and Russia whole on their “investment.”
There are no guarantees.
.
Well you didn’t say that, first fly, but i agree with pretty much what you said, except the haircut for the senior debt. The sub can go and get fucked.
Look, it wasn’t written in the prospectus, but it traded a fraction off treasuries and the Fed and treasury knew exactly why. They decades to clarify the position.
The government was in on it and the electorate was in on it because they were getting cheap loans. I live in Aus: our housing market is down about 15% and no one is that worried simply because we never had the distortions created by those two fucking monsters.
I think Paulsens plan isn’t that bad. At least they now show they are recognizing the guarantee problem.
J:
The major problem with the plan, like many others, is lack of an exit strategy.
Keep in kind, they made the sub debt holders whole.
And, they now own the U.S. mortgage market. This is a disaster. They need a plan to reorg the companies and spin them off.
My fear is that they will keep them and milk them at a later date, sort of like the Social Security program.
I know, fly. it is a fucking problem becasue they can’t be trusted.
There was a hedge fund dude spouting what they should have done which I thought was a terrific plan. Bill Ackman (?) was essentially suggesting the same thing.
My big concern is that they’re stopping things from cleaning themselves out so you end up in night of the living dead movie for years like the Japs.