Cara's Commentary & Community Chat, Wed., Mar. 11, 2009

Dr. Strangelove,

"Any thoughts on the affect the reinstatement of the uptick rule would have on the massive Comex paper and gold shorts by our fearless leaders?"

It seems to me that with our system based on hundredths it will have far less effect than when it was in eighths.

Barney just wanted a bit of TV attention, IMO.

The long, slow way down... (Just one guy's opinion.)

What we see as traditional measures and signals — oversold, fair value, CPI, PPI, — are all textbook measures from our life experience or recent history. I go back to my designing days and try to imagine "What if?"

What if the global economy is only beginning a complete revision? What if this is November and we are the turkeys in Taleb's Black Swan scenario?

I truly believe those in powerful positions who think they can control this crisis are all going by those out of date textbooks. While they tinker with Keynesian vs Friedman philosophies conditions are so different that none has the time nor capacity to deal with the speed and scale of events.

Many people will find themselves tapping their savings and 401(k)s to survive. A massive transfer of wealth has already taken place — some CEOs have been sucking out 500 times what their lowest employees made. The spendable income of the middle class American has dwindled through increased taxes, assumption of health care and retirement responsibilities, extended working years, since the mid 1970s.

The information is there for anyone to access (US Census Bureau, Bureau of Labor Statistics and other independent sites) but is daily obscured by media and gov. noise.

Bottoms are likely to be temporary landings on a down staircase for years yet.

ALOHA !!

I hear you Bill ...

"And by the people, I mean the independent and objective financial editors and market analysts who are the centers of influence who the people are looking to for direction."

Then just how "independent" and "objective" are they actually? I believe they are all selling a product essentially based on preserving the status quo! If you want to buy a Harley you go to a Harley dealer not a Kia dealership! Where do most Americans go to get info when they want to buy stocks? They don't go to People magazine! Just exactly who does speak the truth in DC and Wall Street? We have had more than 90 years of lies and the "long train of abuses" just gets longer each day! The solution to this entire mess you speak to Bill is written for all to see right in the Declaration Of Independence ... that has nothing to do with "conspiracy theories" that is the REAL DEAL! Problem is do Americans really care about true freedom any more or are we all settling for the watered down statist version? I actually think the majority prefer American Idol and Monday Night Football! Just tune out the noise!

As a point of fact many more people turn to alternative sources of political and financial analysis, like the Bill Cara Blog and others like Catherine Austin-Fitts, GATA, Sinclair, Mises ... off the beaten trail of business as usual "agendas" ... With the help of the internet the "little guy" is actually getting a better view of this crisis than all other crisis before. Crisis 101 is now realtime!

In my view we are still under the PLANNED CHAOS rule ...

IT ALL WORKS UNTIL ...

I'm with you on the danger of giving the Fed that much authority, Bill. But are you also opposed to Geithner with regard to stronger oversight of financial markets and institutions that would become "too big to fail"?

Thanks, Bill. And yep, you saw these storms coming long before the first drop of rain fell.

Also, I've seen some chatter about reinstating the uptick rule. I wonder if anyone on this esteemed forum agrees that the elimination of this rule has been a contributing factor in the steep and swift drop in market prices. In other words, while the bear would have growled in any case, would this rule have helped ease the pain of its bite?

[I'm feeling metaphorical today ;)]

http://www.boston.com/news/local/massachusetts/art...

Arthur Levitt commented and said the uptick idea is for politicians that don't understand the markets and that penny spreads pretty much make the uptick rule an anachronism.

He said it would be a mistake to re-introduce the uptick rule.

In all seriousness, does anyone think the uptick rule would have prevented C from going to $0.98? BAC to $2.53? Of course not. This is excuse making 101 for crooks.

are we bottoming out yet? thoughts on NG...

BA - numbers lowered at UBS to $30. Estimates also cut, as the company is not cutting production in the face of lower demand, which could hurt cash flow. Sell rating.

MCD - target cut at Morgan Stanley to $64. First-quarter earnings could be hurt by the strong dollar. Overweight rating.

NUE - Upgraded at Goldman Sachs to Buy from Neutral. Expect earnings to benefit from low and variable cost structure and diversified product mix. Note strong balance sheet and conservative investment policy. Price target lowered to $38 from $43.

ORCL - estimates, target cut at Barclays through 2010. Channel checks suggest a weak close to the latest quarter. Even so, the stock looks attractive to buy ahead of earnings. Overweight rating.

UTX - numbers cut at Barclays to $50. Estimates also lowered, to match the company's new guidance. Overweight rating.

buy stop 56.50/limit 57.50.

Nuthin's changed IMO.

another buy stop at 66 and change, 3PM price yesterday.

Happy TCK this morning. Up +0.25 in premarket and nice buying at the open. In fact, the last 4 days have looked brighter than normal. Another rescued "investment" - at least as of today I'm in the green.

The Democrats have seized the "crisis" as the political opportunity of a lifetime. OK, so I'm not surprised. The Repubs did the same with the 9/11 attack to set up shop in Iraq.

Yesterday I was hit by a totally unexpected form of protectionism "for my own good."

My broker called to tell me that Raymond James has judged any form of 2X or 3X ETFs as "too risky" for their clients! He explained that many people have been burned using these without understanding the "possible consequences". To which I say, "They will learn in a very short time."

I have NEVER, with this broker, or any other gone whining to them with claims they should have stopped me from making a "risky" investment.

Un— — — — ing believable!

They have probably received my e-mail by now in the form of an ultimatum — I DECIDE how, what and where I will invest MY MONEY! They can bend their rules or it's Adios to all my accounts!

I have been trading these, with some welcome success and ended 2008 down a paltry .003% — I wager most who followed their "safe" strategies did less well.

I will wear my mandatory seat belt, struggle with the childproof RX caps, and all the other stuff "protections" we should be able to decide for ourselves — this is too up close and personal to tolerate.

I think they may notice just how this edict has riled me.

Go long Grym.

Listen to the experts and go long...

;)

I think all the ST negativity we're going to see was priced in at DJIA 6500 and XLF 6.

Thanks Bull for your work...save me a lot of time and energy...much appreciated.
S

Just a personal note: Last March I had the same argument with RBC. Some young person giving me the line "stay the course...blah blah blah". I didn't..got totally into cash. The galling part was that I had to threaten to get her supervisor before she would sell all accounts!

Thank goodness there are independent thinkers here; ones not lead around by the nose...thank goodness for this site (and that means you too Bill!)

With gratitude,
S

Well there are many detractors on the uptick rule being reinstated which IMO are missing the point. The uptick rule does not stop the shorting of a stock. it does provide some order however. Basically the repeal of the uptick in conjunction w/naked and illegal shorting (shorting more stock than the float) is the reason there was so much chaos in the markets. The trend is down, I get that but there was a ganging up like a pack of hyenas on any stock that was targeted. The other issue is Glass-Steagall, many think it hasn't made a difference in our current state. Again, separating deposit taking spread oriented institutions from risk taking IB's etc. would have went a long way to containing the credit bubble. I am a free market kind of guy but recognize some framework is necassary but you need to enforce those regulations that are on the books. Many parallels will be made on this time in reflection of the '30s repeal of the uptick and Glass-Steagall should have been the canary in the coal mine.

yesterday's buy at 5.92..

great trade 2nd. I was waiting for a gap to fill and missed out entirely. Oh well...
S

trailed a 1/3 10 day ATR stop. added at 55.60.

Still have a buy stop above 3PM price from yesterday.

C hitting 7 day RSI 50.
BAC diverging on hourly chart.

We'll see how she closes.

Do ur own homework.

I put a limit buy on GDX in premarket, but it narrowly missed. It was a good call but bad execution (as usually). Not going to chase it though.

day job is getting in the way of my trading. LOL

What is your target for FAS and/or SP500?

FD: long at a moment, but looking for good exit points, thinking 5-6/750-800?

have a sell limit order in at 92.38 which is half of the gap down opening yesterday.

Rally was either 1st or 2nd story on the national news last nite. Ditto this AM. Barton Biggs, biggest bear during Naz bubble, on Charlie Rose, saying this is a buying opportunity.

There are tradeable bottoms quite often. Significant bottoms are made in terms of price and/or time. Former is something like '87 where everyone pukes up their positions. Later is where the market trades sideways for a significant time period. Scare u or wear u out.

IBD looks for sideways action on days 2-3 and day 4-10, need to see 1%+ price movement on volume 1.5X the preceeding. There'll be time to get long. (And I have long positions already).

SPY max pain for March is 80 and 75 for April.

Heh,heh,heh.....

Taking off 3/4 of SLW @ $6.25....if 2nd is selling and I had a slightly better basis then it's time to fold em'....although I do wonder about that FAS call. :>) But I am looking for dips ala Bill's call. 666 bottom...who would have thought? It's a sign!

Keeping an eye on GE, looking soft here.

Could be a harbinger....

I especially like a senator who inserts his earmark into a bill and then rails against that same bill because it has earmarks in it. Talk about calling the kettle black!!

Too bad the media seems bought and paid for!!! Otherwise we might have to learn the hard way... Whatever happened to mainstream investigative journalism?

No, not yet. But then again when I signed up I made my position VERY clear: "This is my money, not yours. When I want or need your help I will ask for it, not before. I will tolerate no interference from you whatsoever. If there is, I'm gone."

I think they got the message. (Wrong)
S

EDIT - Bad miss! missed an important word...'I don't think they got the message'. I left and moved to TD Canada Trust. So far they seem to have listened.

SLW - out at 6.25

from 5.70

TOO MUCH PEER PRESSURE!!!!!

:)

guygrand - "there could be a lot of LNG looking for a market. Be cautious."

US is already awash in NG with nowhere to go, ie: shuttering production. Where is the excess LNG coming from?

Middle East - apparently lots of it available - excess to Europe's consumption ends up in US - sorry, can't remember where I saw this.

One piece at a time.....now XOM, GM, CAT.

Great trade was FAS if you traded it @ 4.35 (me) and bought FAZ (not me).

sold DZZ near the open, long DGP at 19.218

CAD

Last night I saw this as part of John Murphy's write up. He address the current wave we are in.....

~~~~~~~~~~~~Elliott Wave ~~~~~~~~~~~~~~~~~~~~~~~~~
A CLOSER LOOK AT WAVE FIVE... Chart 5 shows the last downwave that started in early January. The current downwave should complete major wave 3 from last May which could give way to a more substantial bear market bounce. The question is whether the current downwave is complete. It doesn't appear to be. Each downwave should take place in five waves. The numbers in Chart 5 show only three clear waves so far. If this is just a minor wave four bounce from the January high, the S&P 500 should meet resistance in the 38% to 50% Fibonacci retracement zone. That would leave room for one more dip into new lows which would bring us closer to the 62% retracement target in Chart 1. The bottom line is that the market appears to have entered a short-term bounce which could retrace 38% of its decline since January. Another dip into new lows (or a retest of the March low) could then set the stage for a more meaningful (bear market) rally which could carry all the way to the January high. The good news is that the S&P 500 appears to be at or very close to a meaningful bear market bounce. The bad news is that there may be another downleg after that.

------------
[Long FAZ @ 53.45 Target 150 if I have the courage]

Placed a stop order just in case.

Entering FASsle II @ 3.90

nice pop in gold and the miners today.

what i find encouraging is the strong volume today on the miners and their move relative to gold is up.

if we can move into the close on this gain and follow through we will
see a dramatically different technical picture than from yesterday.

resistance in gold from my own view is in the $920 area. with the way gold has behaved we can get a good idea of the sustainability of a potential run with how it behaves at past consolidation levels. if it bursts through the low-mid 900's with the shares in tow on strong volume, then $1000 will be history fast. imho.

that being said we arent out of the woods yet. we had a huge move down in the miners yesterday so this move up isnt unexpected. the EOD is critical, to see if these moves have some juice to them. even better if this happens while the SPY rally starts to falter.

my long side interest is a few more sessions away from a bullish crossover ;)

and running she is...

Thanks

I started with my current broker's father in 1969, then his secretary got her license and took over upon his retirement and finally with the son.

We've always had a good relationship, and I followed when the made the switch to Raymond James. I'll soon see if his new company is able to wave their policy.

I ran my own business based on the idea that I would offer my opinions, but he who pays the freight gets the final decision. I expect no less.

There might be more to this. I believe brokers are required to inform their clients of strategies that might pose exceptional risk. Once that conversation is had, the client may then proceed and the broker is cleared of having been neglectful. Perhaps Bill can shed more light on this.
-MK

Is it just me, or is there an uncanny resemblance?

http://en.wikipedia.org/wiki/Timothy_F._Geithner
http://en.wikipedia.org/wiki/File:MargaretHamilton...

http://en.wikipedia.org/wiki/Ben_Bernanke
http://en.wikipedia.org/wiki/Bert_Lahr

The Gartman Letter,... announced the elimination of its last gold unit today, citing poor momentum." good contrary indicator

So is Peter Munk when he talks about the price of gold, Barrick almost always falls significantly afterwards, and let's not forget Cramer of course.

Dr.
First off thanks for your submissions over the months. They have been most helpful. A question: I realize you are talking from a technical picture, but from a more fundamental one if the SP runs, could it be that the 'hot' money will migrate from gold (all pm's?) for the fast buck on the index? IF that happens it seems to me we'd see a quick whoosh. What are your thoughts on the possibility/probability of this happening?
S

Mr. Frank is a disgrace to the Congress both as a person and his actions while in office. He is a dysfunctional person and one only has to listen to him speak to question the foundation of what he is saying. The American people should demand that Frank, Dodd, Pelosi and a host of other disgraces in Congress be brought to justice for abusing the fiduciary trust. All members of Congress should work to have the United States achieve its optimum potential as a country among the nations of the world, instead of feathering their own nest and self-engrandisment. In Mr. Frank's America be very careful when you attempt to pick up the soap.

There is so much FAIL in this comment that it's difficult to pick any one section.

looks like bottom just DROPPED out of INDU

Any indication which way mark-to-market accounting issue will be decided? Will really affect FAS/FAZ hmmmm?

This is from today's SEC talk, including on M2M:

SEC'S SHAPIRO: THERE IS 'CLEAR INTEREST' FOR RESTORATION OF UPTICK RULE; FASB WILL PROVIDE MARK-TO-MARKET ACCOUNTING GUIDANCE IN Q2; AND SEC DOES NOT SUPPORT SUSPENSION OF MARK-TO-MARKET RULES - Q&A
- Notes that it was not the SEC's intention to have hard to value assets marked to fire sale levels.
- Says that she hopes to get the uptick rule out in April.
- SEC will write the rules for TARP's executive compensation limits, rules to address disclosure and say on pay issues.
- Says SEC may need more authority over the ratings agencies; review whether more regulation is needed for ratings agencies.
- Sees some logic to the idea of merging the SEC and CFTC

MRCDH,

While Barney Frank's policy positions are fair game here, please refrain from making attacks on his personal life. It isn't appropriate, and it doesn't further the discussion. I'm sure there would be plenty of people who would be willing to take up the other side regarding his life choices, and that's an argument that could quickly drown out relevant discussion.

Personal attacks on others on the site also need to be avoided, though in this case I understand you probably felt attacked first. But let's stop it there before I have to start deleting posts (or worse).

I'm posting this as a public comment because these rules apply to everyone.

Jeff

[Edit: looks like Bill beat me to it!]

Thanks for sharing. I was going to wait for at least 740-750 or get stopped from my longs.
But sounds like FAZ is working for you (and bsi381). Good luck.

Does anyone care to opine or any comment on why CU is down mostly and FCX is up around 3%...they gather primarily CU and not Gold?

Bsi381,
does your screening system work for inverse securities like FAZ?
I figured that in this market, playing from a long side is not a good idea and I'm not good at shorting.

Team, no worries. Small positions are all I allow my self! Though its up 11% at moment. And with a tighter stop than you I maight add.
Thanks Bill and Korvus for providing a good place to chare

I second this. Why people are so bigoted, sexist, and racist is beyond me. What makes people feel they are better than others?

Note that a double bottom seems to be forming on the price charts, with support slightly below the 0 level on the DOW chart. If the stocks start rallying now, then I might buy something since it would look like the double bottom has held.

The Treasury secretary also said that the IMF’s lending capacity could be boosted by as much as $500 billion and that the Obama administration soon will push Congress for legislation that allows the fund to “mobilize” its stockpile of gold, the world’s third largest.
http://tinyurl.com/d9mw7v

I'm going to be screening for insurers that I think are being mispriced in this downturn (either from the long or the short side). A quick screen that I think works in hinting at management conservatism, which is so very important in this economy, is looking at total assets relative to equity (i.e., leverage). Here are just a few examples I'm looking at...these figures are as of 3/31/08 to give us a sense of how forward looking this could be.

MKL: 10.2 Bn Assets / 2.6 Bn Equity = 3.92; stock price dropped 58% from highs
AIG: $1.05 Trillion/79.7 Billion = 13.17; stock price dropped 99% from highs
CB: 51.1 Billion / 14.3 Billion = 3.57; stock price dropped 40% from highs
TRV: 114.1 Billion / 26.4 Billion = 4.32; stock price dropped 41% from highs
HIG: 344.2 Billion / 17.8 Billion = 19.33; stock price dropped 95% from highs
MET: 557 Billion / 33 Billion = 16.9; stock price dropped 80% from highs
PRU: 478 Billion / 22 Billion = 21.73; stock price dropped 87% from highs
ALL: 152 Billion / 20 Billion = 7.6; stock price dropped 77% from highs

Granted this is simplified analysis. But in hindsight, we could have seen which ones were the riskiest just by comparing their assets to their equity. To me it appears that PRU might have the biggest risk of default or massive dilution. Should that get a nice bounce I wouldn't be opposed to shorting it.

In looking at these numbers it is quite clear how much fluff was put into the system. All of these assets were brought on through leverage. We're talking trillions of dollars worth of assets. If this doesn't make crystal clear to everyone that the majority of all financial companies were way way way too leveraged, I don't know what will. In PRU's case, a drop of 5% in their asset values completely wipes out their equity because they are leveraged 22 to 1. Think about if you had $1,000 in your investment account and leveraged it up to $22,000 using margin. If you bought the safest stock you can think of, say MSFT, at $16.00, and it drops to $15.20 (or 5%) you're completely wiped out. This is no different.

yes, it works. Works better when the ETF has traded long enough to have a 7 month RSI and there's an option traded for it.

glad i moved my stop down as the market has done what i expected. i believe this is a temporary downward fake before the market goes to 800.

The 26 week EMA's for all the major indices are still in downtrends. Per Elder, one would look for shorting opportunities - if u are trading in the daily time frame, weekly being the trend, daily being the countertrend, and hourly being the entry/exit.

Looking at SPX, the index was up 33.81 in the first 30 minutes and 7.35 in the last hour. My preference is to see the last hour generate more points than the first half hour. And I don't chase gap up openings.

FAS gapped up at the open yesterday, gaining .55 in the first half hour and a nickel in the last hour.

See how they close, the "most important hour of the day." ;)

And FAS languished at 3.73 while the XLF made new intraday highs in the last hour. Good observation.

I vote for a rally into close.

To be clear, I'm absolutely open to discussions about conflict of interest.

"Sometimes I think the media go out of their way to give this guy a pass. They shouldn't. That's what equality is all about, right?"

Exactly, the media are conflicted as well and they are paying the price. Hopefully they'll rise to the challenge, the successful ones are....

ALOHA !!

I will be presenting at the upcoming CTAB Conference at the end of the month on the topic of Investing In Gold And Silver. As you may guess, that will require some more research on my part and I am putting together a CHECKLIST spreadsheet on various "pros and cons" of the investment strategies of the global bullion vaults.

First let me say that "I AM 100% SURE THERE ARE NO 100% GUARANTEES"! If you go to this link you will see a reason why I say this. Stick with this small video clip and you will see why we are in this financial crisis ... Simply put we "believe without question what we are told" in the statist system!

Link: http://tinyurl.com/cbejn3

Now I have been questioned many times about the need for bar serial numbers and why would I even question the integrity of audits at such bullion vaults as GoldMoney and BullionVault.

EXHIBIT #1: The audit report called "Quarterly Metal Reconciliation Reports" at GoldMoney. The gold grams are audited by EURO-DUTCH TRUST COMPANY BAHAMAS. Here is a link to one of their reports dated Jan 2, 2009.

Link: http://tinyurl.com/avnwqo

Their disclaimer is that they take no responsibility for the accuracy of the total gold grams and silver grams listed at GoldMoney, but instead it is the responsibility of Net Transactions Ltd, the systems operator. So who is Net Transactions Ltd? Its GoldMoney! So in essence these report assign the accuracy and responsibility of audits to GoldMoney. How is that an "external audit" then? This is confusing and a conflict of interest. Just who outside of GoldMoney will hang their hat on these audits? Who will take the fall if grams are missing? I have to ask GoldMoney management, "With a disclaimer like that why bother hiring EURO-DUTCH?"

Then there is this with regards to insurance ...
"Evidence of Insurance

VIA MAT insures the vaults against risks such as theft so that your precious metals are protected. The insurance is underwritten at Lloyds of London. Note that the evidence of insurance states coverage for "USD 400,000,000 any one loss for property in any one location", which means that each separate vault location is covered for $400 million of insurance individually. Should the total value of metal in any one vault reach this amount, additional insurance coverage will be provided."

Why do I bring this up? Well, Lloyds is in trouble so who will underwrite VIAMAT then? More than likely the British government will!

But then we are right back to the "100% guarantee" statement I made ...

"I AM 100% SURE THERE ARE NO 100% GUARANTEES" ...

This is fiat ... this is life ...

QUESTION AUTHORITY!

Dr C,

I agree with your comments. I don't believe in Chiropractors either.

Basically sold 1/3 position bought this morning for 3.80 for 4.23. Holding rest over night.

dow5300 - "XLF has created an interesting pattern today"

You can do the same chart with JPM's daily chart as well. It has the same doji, but it's trendline intercept point is 23, and JPM right now is trading at 20.35. JPM could be an interesting proxy for "the strong banks" since it isn't trading for the price of a latte at starbucks.

Bill's tell was Goldman Sachs. I like yours too. If the banks can't break out of their seemingly straight line ride to the bottom, then what has really changed here?

Looks like Adobe finally got their act together and released a fix for the vulnerability that was found in Adobe Acrobat Reader a few weeks ago.

I suggest anyone who uses Acrobat Reader (most people) run it and go to Help->Check for Updates. I'm in a corporate environment right now so I can't test it, but it should bring up an upgrade to Acrobat Reader 9.1, which fixes the security problem.

Information: http://www.adobe.com/support/security/advisories/a...

Well, I was thinking out loud yesterday that BAC might make 5. Certainly did that, yet I didn't have the confidence to hold beyond 4.61.

Today I'm left holding the rotten egg - C - and wondering if I'm going to be rewarded or punished for risking another overnighter.

Another morning gap up like that tomorrow and I'll be sorely pressed to think about holding until Friday. I think after today I'd rather have a bird in the hand.

We shall see.

(Who's left to leak a 'feel good' report to the media?)

Thanks for encouragement. I partially did it by taking a small position in DGP at 19.2. Unfortunately my SLW bid did no catch below 6. I did not short oil though.

Thanks for doing the study on the RSI Screen tool. I like the results of long/short outperforming long only, as I suspect this is the way to go (or even short only in falling markets). The real life results will be obviously somewhat worse.

I wonder if one put this system into use and how it performs with stop loss.

I think so, I can't count the number of times I have been stopped right at my trigger price only to reverse higher instantly. Anyone know more about this or what to avoid doing?

I like to use hard stops when up on a position to guarantee a profit when I cant moniter the tick.

I works for that purpose, but its frustrating when you get stopped only to see things go much higher. Kinda like FAS at 3.28 yesterday for me.

Well if you had sat in a Fannie Mae Freddie Mac 'New Guidelines to Sponsor American Home Ownership" Conference back in 2004 you would swear they were doing it all for the good of underprivileged Americans. Is anyone suggesting there was a conflict of interest WAY BACK THEN...like...this was part of a grand plan to make the wealthy wealthier? O MY GAWWWDDDD!

Greenspan’s editorial today in the Wall St Journal, where he pleads not guilty for causing the housing bubble.If we continue to have to fight revisionist history, how can we develop workable solutions and allow for the average person to understand the problem?
What we should know now on is Economists serve a useful role in society. They help fill an oversupply of endowed chairs at prestigious universities, and they are able alchemists for the aristocracy.

"Is anyone suggesting there was a conflict of interest WAY BACK THEN...like...this was part of a grand plan to make the wealthy wealthier? O MY GAWWWDDDD!"

It was either a conflict of interest, or a huge mistake!!! Either way, it reflects poorly on Barney Frank IMO.

http://tinyurl.com/cssazz

"The Republican Study Committee, a group of conservative GOP lawmakers, believe that instead of pumping billions to bail out banks, lawmakers could save the economy by simply eliminating controversial mark-to-market accounting rules, which require daily revaluing of assets.
"The panel's effort failed last year as Congress approved $700 billion for banks in October. However, seven months later, their efforts seem to be advancing on Capitol Hill.
Indeed, even fierce opponents to changing the methodology are now beginning to think about some mark-to-market alternatives."

"Proponents of abolishing or modifying the rules say that assets owned by troubled banks have become impossible to value, as the market for these assets have frozen up due to the financial crisis. Uncertainty about what banks such as Bank of America
are worth, they argue, is at the core of the financial crisis.
"Changing the accounting methodology, even if it is done for a temporary period of time, would restore confidence in banks and result in more lending by financial institutions, they say. In short, a modification of the rules would be the big first step needed for the economy to turn around, they say."

"Lawmakers are considering a wide variety of options.
"One alternative would be to allow banks to develop a model and analysis of what they believe their illiquid assets are worth and what they forecast the securities will be valued in the following quarter. In this approach, a bank must also explain the asset's value if sold today, said Brian Battle, vice president at Performance Trust in Chicago.
"One hypothetical scenario: A bank produces analysis and documentation that its asset is worth $80, its value will be $90 next quarter and it can get $50 in the market today. Analysts and investors would become more or less confident in a bank's asset valuations, as it becomes clear whether or not they meet these estimates.
"Some banks will become known as sandbaggers while others would be perceived more favorably because they met their modeled forecasts," Battle said.
However, critics argue that many retail investors aren't sophisticated enough to make investment decisions based on complex intrinsic value analysis."

I think most hard stops are visible to specialists, But if you use a trailing stop that is not visible - your broker keeps track and implements your order when the stop condition is met, either as a market or limit order. Vad can expand on this for sure.

http://news.yahoo.com/s/ap/20090311/ap_on_bi_ge/st...

IB's Trader Workstation allows you to specify, if you wish, that your stop (or limit) order be hidden from view.

Yeah, we exchanged about that a short while ago. I'll quote the relevant part:

"Hard stop placement is being accomplished by one of two means, depending on particular software: broker side or client side.

In the former case your stop is actually submitted to a broker and yes, a subject of "espionage". Advantage is, no matter what happens with your internet connection or computer, your stop is already in.

In the latter case your stop order resides on your computer up to the moment it's being triggered. Then the sell (or buy to cover) order is being submitted. This kind is not in danger of being peeped by a broker; disadvantage is, if your connection goes down or computer crashes, your order is not going to be sent when the triggering event happens.

There is not much need in "espionage". Stop gunning can be done successfully without all that cumbersome and illegal stuff by simply understanding where the most participants place their stops. Actual and real difficulty in executing successful stop gunning is not in knowing where particular traders placed their particular stops - it's in finding the opportunity to trigger them without committing too much capital, lest stop gunner gets steamrolled."

What does a man like Stanford see when he looks in the mirror? Most of the time he probably sees the man he wants to be. This can be accomplished (a) through denial (a highly effective psychological defense), (b) through rationalization (eg, I can easily see a man living under his father's shadow and/or insecure for any number of reasons doing whatever it takes to 'succeed'), (c) under the influence of one or more substances, or (d) when one actually aspires to be a con man. We know nothing about him, of course, so it's all speculation. But it always helps to try putting yourself in someone's shoes. Most of us wearing his shoes would probably be saying we "don't see the man we wanted to be," but there's something about having a lot of money that causes those around you to validate whatever opinion you choose to have of yourself; after awhile you start to believe them. Whether or not "the love of mammon is the root of all evil" is debatable, but it certainly ranks high in its power to corrupt (it's not money itself, of course, but the love of money that corrupts). Bad cops, bad judges, bad politicians, bad bankers. Does everyone have a price? No, I don't believe that. But for those who can be bought, there is no limit (no end, really) to how far they will go. I think that partly explains the insane amounts some of them accumulate. It gets out of control, and continuing the fraud becomes an end in itself- what else, after all, can they possibly find pride in? I feel sorry for guys like that- they may as well hang a shingle outside the walls- Stanford and Madoff, L(ame) L(osers) C(lub)...

I don't doubt that "pricing illiquid toxic assets" would be a difficult undertaking, but is it impossible? Aren't there sharp minds in the accounting profession up to the task?

NYU- PLEASE forward the video once it is available!

Mark to ?, lets hide the negative,I look at this as just another smoke and mirror trick. Simple supply and demand says bring the assets to a price where they will sell on the open market and lets move on. First problem with mark to mark is what is the worth of the institution holding the assets. What is only temporary? How can we move on if the housing sector is not based on the free market? What now, estimate what the house will be worth in 10 years. With the unemployment numbers spiking daily it will be a long time before houses start to go up to their previous price.
My son has tried to buy three houses in the last 3 months. $500,000 dollar house, 50% down, great credit score,(over 750). He never gets the house, if the bank gets more than 5 bids they take the house off the market and a week later it is back on the market for $600,000. How can they do this? Government money (tax dollars) will keep them going until they can sell there inventory for more dollars than their worth now or in the near future. Is the tax payer obligated to fund the banks until the supply/demand curve equals the loan they have on the house?

http://tinyurl.com/avhqyt

Is China really going to just print it like the U.S?

Vinod,

I read that today and couldn't bring myself to complete it... threw up a bit in my mouth.

Yet, I don't think we have to worry too much about revisionist history. The man's own hubris has ensured his fate... there will be plenty accurate accounts for history to consider.

Frankly, I find it a bit sad. His desperation is obvious, and he's only fooling himself!

ALOHA !!

ChrisM ... This is right off Lloyds Of London Insurance website which I posted here over a week ago from their last Interim financials dated June 30, 2008. Their next report comes out March 24th. When I discuss Annuities with my broker he reports that insurance companies need to make a 7% ROI to stay afloat.

Here in these challenging financial times Lloyds comes out with a 1% ROI announcement nearly a year ago. Now have monetary and financial conditions improved since then?

FROM LLOYDS REPORT 2008:
"Lloyd’s, the world’s leading specialist insurance market, today announced an interim profit before tax of £949 million (US$1,889 million) for the six month period ending 30 June 2008. The result reflects a softening in market conditions and a rise in attritional claims.

A conservative investment mix has resulted in a positive return of approximately 1%, which outperformed many peers, but showed the impact of the extreme volatility in the capital markets, with both equity and bond holding adversely affected."(end)

Link: http://tinyurl.com/abhjcd

I would not hold my breath that Lloyds will pull off some miraculous stellar financial reports come March 24th, but on the other hand they could "accidentally" leak an employee memo that will save them!

That is just what my research indicates ...

Still global insurance companies are not much better off than global banks, which is why I liquidated my annuities back in 2006/2007!

I prefer more than one layer of guarantee on gold bullion vaults outside US borders.

ALOHA !!

"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

You can always count on Americans to do the right thing—after they’ve tried everything else."

-- Winston Churchill

>"Well if you had sat in a Fannie Mae Freddie Mac 'New Guidelines to Sponsor American Home Ownership" Conference back in 2004 you would swear they were doing it all for the good of underprivileged Americans."

I think it was Bill Moyer who remarked that subprime entered the arena in 1999 when Congress sought, through an ideological agenda, to ensure the housing market was affordable to all. As Vad mentioned elsewhere, ideology and stupidity can be as much to blame in politics as outright greed.

"Only reason i used a real stop order vs mental one, was i knew i would have spotty reception on Amtrak to boston."

The trains aren't wired in the states?

Obama's got plenty of upgrading to do...

ALOHA !!

"Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted."

-- Alan Greenspan, May 20, 1999

ALOHA!!

"It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change."

-- Charles Darwin

ALOHA !!

I guess there is nothing new under the sun! Obama could use this speech!

"The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn't want to go bankrupt. People must again learn to work, instead of living on public assistance."

-- Cicero, 55 BC

ALOHA !!

Now this is exactly why politics controls your portfolio!

"When buying and selling are controlled by legislation, the first thing to be bought and sold are legislators."

-- P.J. O'Rourke

Yes indeed. My intuition at the time produced prickles up my spine that these grinning fellows were a tad too slick--the room had a familiar Paco Rabane stench. Thanks for the reference material.

ALOHA !!

“Our society is run by insane people for insane objectives. I think we're being run by maniacs for maniacal ends and I think I'm liable to be put away as insane for expressing that. That's what's insane about it.”

-– John Lennon

Flights from Vancouver to Freeport are prohibitively $$$! Beam me up and over?

""Well if you had sat in a Fannie Mae Freddie Mac 'New Guidelines to Sponsor American Home Ownership" Conference back in 2004 you would swear they were doing it all for the good of underprivileged Americans."

I think it was Bill Moyer who remarked that subprime entered the arena in 1999 when Congress sought, through an ideological agenda, to ensure the housing market was affordable to all. As Vad mentioned elsewhere, ideology and stupidity can be as much to blame in politics as outright greed."

Geez....I said in this blog a few months back, that the seeds of this were in racial/class politics/warfare...and I got my head handed to me. Simple fact...race is a huge factor in this country, combine it with class warfare, rich against poor-which has been a factor in civilizations throughout time, mix in legislation that allows everyone access to the programs, which allow people all along the financial eco system to make serious money. Hell, everybody's interest is served...until the bill comes due.

Now, is that the only component...No...the CDS debacle is there and is huge, but, to be politically correct and ignore important origins of the problem, is to be intellectually, and morally dishonest.

nemo - "Geez....I said in this blog a few months back, that the seeds of this were in racial/class politics/warfare...and I got my head handed to me."

My sense is, the stated policy of making the "housing market affordable to all" was merely a convenient fig leaf behind which the Dems could cloak themselves and justify receiving those campaign contributions from Fan & Fred. The Repubs didn't need the fig leaf - "everyone knows" they support big banking. The only true impact I think "affordable housing" had was the result that nobody was minding the store in Congress. Everyone was bought off, each in their own way. Very clever from the point of view of the purchaser (Fan & Fred), but the real motivation behind the purchase was just plain and simple greed.

Hypocrisy knows no party bounds, I think.

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