ch.annel2-i.s-n.ow-a.ngry

Found via CR’s blog - but the main part is in images so i’ll just quote a bit from those, but really this is pretty fucking amazing:

Madoff [stated] that his investment advisory board was a fraud. [He] stated that he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically, a giant Ponzi scheme.” … [He] also stated that he estimated the losses from this fraud to be at least approximately $50 billion.

That’s only one hedge fund, hopefully the other were more scrupulous, but considering how much fallout there’s been in the hedge-fund industry…

China’s stimulus plan comes on top of more than $4 trillion in government pledges around the world for bank bailouts, credit guarantees and fiscal spending to contain the damage from the worst financial turmoil since the 1930s Great Depression.

It pains me to trot out that old warhorse again but ‘a few trillion here, a few trillion there, now you’re talking about real money.’

Trillions of dollars shouldn’t even come up in polite conversation, but now it wont go away. Oh well, win big, fail big. Swish! 25% of the world’s economy, 25% of it’s fail. Oh well, as long as money is a made up concept, we can just make up some more of it to FIX EVERYTHING.

EVERYTHING!

I wonder how the election is priced into the market futures. I’m guessing Monday and Tuesday will see one of two things, either crazy volatility (the norm in these interesting times) or relative stability as everyone holds their pants before shitting bricks on Wednesday morning as panic sets in as the election drags on. You don’t honestly think this is going to be resolved quickly after the last two elections.

And really, in one month the stock market dropped from 2006 levels to 2003 levels - and we’ve heard cries of bottom the whole way down to the 2006 level. I find it astonishing that people still say “wow things are so cheap” without discerning what that ‘cheap’ is relative to. You can spend $100 on a stock that’s selling for a penny a share, and still lose money as that stock dips down below a penny. If you don’t consider carefully your investments, and consider whether you’re trying to make quick money vs. support a company you believe in for the long haul (though if you think about this - 5 years of stock gains, mostly wiped out within a month? ) you might find out just how worthless a stock can be.

The current predicament was not caused by insufficient government regulation and the risk of future disruptions will not be mitigated by increased government regulation. The mortgage market was already heavily regulated prior to the crisis, but had it been even more regulated and had the regulations severely crimped, rather than boosted, the abilities and desires of financial corporations to expand the supply of mortgage-related instruments, then the focal point of the boom would have shifted; however, bubbles would still have formed somewhere and these bubbles would subsequently have burst, leaving financial wreckage and major economic dislocations in their wake (the bust is always and everywhere a consequence of the preceding boom). The reason is that the boom was caused by the central bank fixing the price of short-term credit at an artificially low level for a prolonged period, thus encouraging trillions of dollars of investments and new business ventures that should never have seen the light of day. In effect, the central bank created an environment in which prudent lending practices were punished and reckless lending practices were rewarded.

And the Fed, through it’s control of the interest rate, is inherently socialist.

superpoop.com

For the record, that looks fake, but still fun as shit all get out.

Nationalization of banks and announcements of unlimited liquidity measures are not good things. However, but we have seen this playbook before. The futures are jumping once again during options expiration week.

It is likely the move off Friday’s low started wave 4 of 3 up. Please see S&P 500 Crash Count for a reference.

However, a more important thing to look at is in the context of the E-wave there referenced by the ‘wave 4 of 3 up’ statement, which won’t make any sense until you look at the graphics in this essay by M. Shedlock. Especially anyone looking for the bottom to jump into investing, you would be wise to read that last link, written by an investment advisor at one company not sunk by credit or mortgage woes.

In short, if you jump in now, expect the rally to last a month or two and be prepared to cash out before the next downswing. Stay alert. It’s rallying because things are starting to get done, what remains to be seen is how well these things will work now that they’ve started.

I blagged about this a while back, the net motion of the dow over the term of Bush’s reign. Now that said economic indicator has gone on a raging NyQuil bender the past two weeks, I think it’s time to revisit this again. As little as a few days ago I heard that this was a correction or capitulation of some sort, and the bottom would be in. Will it?

The trendline shows the Dow’s net motion from the start of the chart until today. We are very nearly at the bottom of recessionary levels of post Afghani war Dow. If you chanted the mantra “the market always wins in the long run” you will likely not be retiring anytime soon. If you’re money’s still in, how much longer until 50% is gone. How much lower can this go?

superpoop.com

 WSJ: Paulson to Tap Adviser to Run Rescue Program 

Treasury Secretary Henry Paulson is expected to tap Neel Kashkari, a key adviser on whom he has come to rely heavily during the financial crisis, to oversee Treasury’s $700 billion program to buy distressed assets from financial institutions, according to people familiar with the matter.

Mr. Kashkari, 35 years old, a Treasury assistant secretary for international affairs and a former Goldman Sachs Group Inc. banker, is expected to be named interim head of Treasury’s new Office of Financial Stability as early as Monday.

Cronyism - Mr. Paulson was CEO of GS from 1999 to 2006 - from when the Dow hit 10,000 to when the subprime crisis started to make waves. Notice how Goldman Sachs has been conspicuously absent from the subprime woes that Paulson and Bernanke said weren’t any big deal. I don’t know if it really means anything, but why not tap Warren Buffet for this job. He could probably do it in a spare hour a day and get far better deals than these jokers that didn’t see a problem coming for the last year when respected economists have been predicting at least a trillion dollars in losses (who have since revised their opinions upwards to at least two trillion in losses).

Well, a ‘trillion dollars worth of wealth’ was wiped out in the stock market with a 5% drop last monday. It’s sitting at -4.7% (and that’s the smallest index drop, the Dow) with three and a half hours to go, and has been falling most of the day. I guess that’s another trillion dollars, “gone.” Where does that money go? I mean, someone is buying on the way down, and selling on the way up. Everyone is trying to, which of course is a butterfly effect. Some big players are booking profits from the selloff though, you can bet.

So if that was wiped out of US wealth, does that mean it’s gone to foreign interests?

The dow is already off almost 500 points this morning. (as of 9am PST, so it would be noon Dow time) In fact, my entire ghost portfolio is a redbath this morn. 

But the Failout has passed. So what now?    

Calculated Risk found this gem from 1999: