Gross is spot on. This deleveraging and asset deflation
will be devastating. The free market will not solve this
problem - I don't like it but housing prices need to be supported
by the US gov't balance sheet. Otherwise we are in
depression.
Posted by treid4dou on 4th of Sep 2008 at 06:41 pm
Unfortunately..the only way to clean the house and the
mentality.....is to allow assets to deflate and the economy to
deleverage.....including some Banks go bankrupt.....if any
way.....they are giving the money to save them...and not to the US
citizen. They made the wrong rules...let them pay for
that....
This debt deflation will cascade into all asset classes, as it
already has, and then into the real economy, which it already is,
and then further into all asset classes, and so on and so
forth. We are talking systemic financial meltdown the likes
of which we have never seen before unless there is some support for
housing. This isn't fantasyland - this is real hard
economics. Moral hazard is real and true but we are past the
point of making moral hazard an issue. Housing and asset
inflation overshot on the upside and unlike extraordinary measures
are taken housing and all asset classes will overshoot on the
downside. The market along with the Fed have failed and we
cannot just wash our hands and think this is going to go away
without incredible long term effects on the real economy.
Booms and busts occur - but this is the greatest financial and
ECONOMIC crisis ever.
Posted by treid4dou on 4th of Sep 2008 at 09:31 pm
When these things happen...its a matter of who pays the bill.
Banks/Brokers should. Not the individual. Any hyperinflationary
measure will empoverish the individuals while saving the monies of
the crooks who engineered the huge leverage and derivatives. Let
them go bankrupt...and be liable for their responsibilities. Let
them return all the Bonuses they took home......let them have 20
years of earnings paid to their customers/depositors.....not the
shareholders...not the bondholders....those are big guys......let
the big guys learn their responsibilities. If not...they will
get away....once again. And they start all over again.
Come on......how come LEH be talking of a Bad Bank/Good Bank....to
lay off the toxic assets in the first one and keep quoting as if
nothing happened...!!!!!!!! .....in the other.... This is not
serious....Regulation regarding Level 3 accounting should
have been enforced a year ago.....thats what real....and the cro*ks
got away with a waiver......
I know this is a short-term trading blog for many people - and I
daytrade myself. But its also good to remember that the big
money is made by seeing a trend and committing to it. Selling
shorts yesterday afternoon or evening out of fear that the market
might gap up today is very short-term thinking -- good to
realize that. From an intermediate perspective it makes
little sense to sell when the market has just given such strong
confirmation of its downtrend.
I am a scaredy cat who has been burnt recently trading the gold
stocks, so preservation of capital is almost as important to me as
the profits.
You are very right and clearly more experienced - I am learning
and fortunately or unfortunately I sold out of SDS @ $69.00 after
having bought it @ $64.00 when S&P was at 1300.
One of the reasons I like this site is there are savvy guys here
who speak intelligently and calmly like yourself.
Please keep us relative newbies abreast of when you entry new
trades and what stops you use as this can be very helpful. I
am in the hole way too much from getting burnt on gold stocks so I
am really hoping to make a couple of good trades with shorts during
this next bear leg. I would like to get in again at some
point when the market rallies so I can participate and make some
money.
yankee -- one thing I would say, is you have to be clear when
you go in, what your time-frame is and what losses you can
tolerate. I started scaling into precious metals about three
weeks ago which was way too soon! and I'm way down. But I
made the decision to give these positions very wide stops because I
know that with sentiment toward gold so totally negative, the
sector can't just keep falling, there will be no one left to
sell. Yesterday my DGP position was down 20%. And its a
moderate-size position - 1500 shares. But I knew I simply was
not selling it. In fact I added to SLW yesterday and bought
GDX.
I've learned from my mistake and hopefully will not enter a new
position so early next time. But selling is not
necessarily the answer if you believe the trend is still up and do
not really need the capital for other trades. I am a lot in
cash, so I figure it can sit in that position until it comes back,
which it will.
Housing prices can not be artificially supported. I know I hear
this very day but they need free markets to work themselves out.
With Unemployment still rising, rates rising and credit tightening
how can people afford artificially supported prices. In my area
they built huge 750K/1M dollar homes where salaries can not support
them especially when you need 20% down compared to 5% 2 years
ago....
I don't see how this will help....only prolonging the
inevitable...
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Yes, I know what Bill
Gross predicts Dow 5,000 September 6, 2002 (CNN/Money) The manager of ...
Posted by dodgerdog on 4th of Sep 2008 at 05:09 pm
Yes, I know what Bill Gross wants and this makes a great deal of sense. Let's see how things play out.
Gross
Posted by yankee19 on 4th of Sep 2008 at 05:57 pm
Gross is spot on. This deleveraging and asset deflation will be devastating. The free market will not solve this problem - I don't like it but housing prices need to be supported by the US gov't balance sheet. Otherwise we are in depression.
Unfortunately..the only way to clean
Posted by treid4dou on 4th of Sep 2008 at 06:41 pm
Unfortunately..the only way to clean the house and the mentality.....is to allow assets to deflate and the economy to deleverage.....including some Banks go bankrupt.....if any way.....they are giving the money to save them...and not to the US citizen. They made the wrong rules...let them pay for that....
Ugh
Posted by yankee19 on 4th of Sep 2008 at 09:11 pm
This debt deflation will cascade into all asset classes, as it already has, and then into the real economy, which it already is, and then further into all asset classes, and so on and so forth. We are talking systemic financial meltdown the likes of which we have never seen before unless there is some support for housing. This isn't fantasyland - this is real hard economics. Moral hazard is real and true but we are past the point of making moral hazard an issue. Housing and asset inflation overshot on the upside and unlike extraordinary measures are taken housing and all asset classes will overshoot on the downside. The market along with the Fed have failed and we cannot just wash our hands and think this is going to go away without incredible long term effects on the real economy. Booms and busts occur - but this is the greatest financial and ECONOMIC crisis ever.
When these things happen...its a
Posted by treid4dou on 4th of Sep 2008 at 09:31 pm
When these things happen...its a matter of who pays the bill. Banks/Brokers should. Not the individual. Any hyperinflationary measure will empoverish the individuals while saving the monies of the crooks who engineered the huge leverage and derivatives. Let them go bankrupt...and be liable for their responsibilities. Let them return all the Bonuses they took home......let them have 20 years of earnings paid to their customers/depositors.....not the shareholders...not the bondholders....those are big guys......let the big guys learn their responsibilities. If not...they will get away....once again. And they start all over again. Come on......how come LEH be talking of a Bad Bank/Good Bank....to lay off the toxic assets in the first one and keep quoting as if nothing happened...!!!!!!!! .....in the other.... This is not serious....Regulation regarding Level 3 accounting should have been enforced a year ago.....thats what real....and the cro*ks got away with a waiver......
Gross
Posted by yankee19 on 5th of Sep 2008 at 05:24 am
This has only begun. The real economic impact hasn't hit the masses - yet.
I hate to be a doomsdayer - this whole thing sucks. And you certainly need to be careful with sohrts here - tight stops rule the day.
This deleveraging and forced sell in all risk asset classes is and will be devastating.
I know this is a
Posted by Michael on 5th of Sep 2008 at 08:37 am
I know this is a short-term trading blog for many people - and I daytrade myself. But its also good to remember that the big money is made by seeing a trend and committing to it. Selling shorts yesterday afternoon or evening out of fear that the market might gap up today is very short-term thinking -- good to realize that. From an intermediate perspective it makes little sense to sell when the market has just given such strong confirmation of its downtrend.
Michael
Posted by yankee19 on 5th of Sep 2008 at 09:09 am
I am a scaredy cat who has been burnt recently trading the gold stocks, so preservation of capital is almost as important to me as the profits.
You are very right and clearly more experienced - I am learning and fortunately or unfortunately I sold out of SDS @ $69.00 after having bought it @ $64.00 when S&P was at 1300.
One of the reasons I like this site is there are savvy guys here who speak intelligently and calmly like yourself.
Please keep us relative newbies abreast of when you entry new trades and what stops you use as this can be very helpful. I am in the hole way too much from getting burnt on gold stocks so I am really hoping to make a couple of good trades with shorts during this next bear leg. I would like to get in again at some point when the market rallies so I can participate and make some money.
yankee -- one thing I
Posted by Michael on 5th of Sep 2008 at 09:52 am
yankee -- one thing I would say, is you have to be clear when you go in, what your time-frame is and what losses you can tolerate. I started scaling into precious metals about three weeks ago which was way too soon! and I'm way down. But I made the decision to give these positions very wide stops because I know that with sentiment toward gold so totally negative, the sector can't just keep falling, there will be no one left to sell. Yesterday my DGP position was down 20%. And its a moderate-size position - 1500 shares. But I knew I simply was not selling it. In fact I added to SLW yesterday and bought GDX.
I've learned from my mistake and hopefully will not enter a new position so early next time. But selling is not necessarily the answer if you believe the trend is still up and do not really need the capital for other trades. I am a lot in cash, so I figure it can sit in that position until it comes back, which it will.
Well said Michael
Posted by jcomptonod on 5th of Sep 2008 at 09:07 am
I'll bet most of us have been guilty of that, including myself.
so gross, what a befitting
Posted by dallahoo on 4th of Sep 2008 at 06:40 pm
so gross, what a befitting name, is out asking for things to be done so that the average person is shielded from a depression? what a nice guy he is!
Papa Theresa maybe
Housing prices can not be
Posted by dylan398 on 4th of Sep 2008 at 06:13 pm
Housing prices can not be artificially supported. I know I hear this very day but they need free markets to work themselves out. With Unemployment still rising, rates rising and credit tightening how can people afford artificially supported prices. In my area they built huge 750K/1M dollar homes where salaries can not support them especially when you need 20% down compared to 5% 2 years ago....
I don't see how this will help....only prolonging the inevitable...