March 9, 2009

It hath been foretold

· The upswing usually starts with an opportunity - new markets, new technologies or some dramatic political change - and investors looking for good returns.

· It proceeds through the euphoria of rising prices, particularly of assets, while an expansion of credit inflates the bubble.

· In the manic phase, investors scramble to get out of money and into illiquid things such as stocks, commodities, real estate or tulip bulbs: 'a larger and larger group of people seeks to become rich without a real understanding of the processes involved'.

· Ultimately, the markets stop rising and people who have borrowed heavily find themselves overstretched. This is 'distress', which generates unexpected failures, followed by 'revulsion' or 'discredit'.

· The final phase is a self-feeding panic, where the bubble bursts. People of wealth and credit scramble to unload whatever they have bought at greater and greater losses, and cash becomes king.



Anonymous said...

Is the captain suppose to go down with the ship.

Citi executives sell shares worth $9.7 m in two days

At a time when owning a Citi share costs you a little over a dollar, top executives of the battered entity have sold stocks valued at $9.7 million in just two days.

Five executives including Citi's board member and former chairman Sir Win Bischoff have offloaded more than 7.7 million shares valued at $9.7 million.

The transactions were done on March 2 and 3, according to the company's filings with the Securities an d Exchange Commission.

Anonymous said...

Why are you still holding those corporate bonds.

Curtain is drawing on Citigroup and BofA

The writing is on the wall for shareholders and executives of Citigroup Inc. and Bank of America Corp.

It also means that shareholders, and most bond holders, will be wiped out.

Anonymous said...

What will happen to all those pension funds that are tied to Citi, if Citi fails.

Will Citi Be the Next Big Bank to Go Under?

Not a goldbug but gold may be the answer said...


Can you give us a history lesson?

Where does the term "Cash is King" come from. Who coined the phrase and when.

Does someone want you to feel that "Cash is King"?

Don't forget the golden rule.

He who has the gold makes the rules. And I'll bet you they make the rules regarding "Cash" also.

Mitesh Damania said...

I believe we're going to see massive massive deflation in everything. And we have only begun. Everything is going to look like that Baltic Dry Index.

Mitesh Damania said...

Go Bernie Sander!!!

Mitesh Damania said...

As to that Bernie Sanders video, I have 2 observations:

1) Why do the banks need money from the Fed if they are solvent?

2) It seems like the fed is loaning out money that's collateralized by good assets, and the US Treasury aka the US serf is getting rotten apples for collateral.

Anonymous said...

Baby boomers started the "Equity Cult" in the 80's and now on frantic selling mode. Money coming home from all risky assets in deglobalisation process. Those financial pimps who peddled high equity allocation in Baby Boomer's Portfolios will lead to their clients misery in old age. This whole financial planning/pension fund/401K is a ponzi scheme designed by the Wall street to loot money from the naive ones.

Anonymous said...

Give it a rest. Only when Americans are stopped from driving their cars and suv's aimlesly around will this country collapse. It's all about cars period. Forget the stock market. housing market, 401k's. savings accounts and Wall Street. If Americans cannot drive their cars then it's over.

Wind Farmer said...

Today you have 2 choices:
Buy Gold or
Buy Food

My friend said she would not buy gold now, she would buy food. If she has enough extra food, she can sell the food for gold. In the end, she'll end up with extra food AND the gold, too. So, if you want gold, buy food.
(Evidentally, this is an old parable, but I hadn't heard it before)

Wind Farmer said...

I read an article by Ralph Nader yesterday. He coined a phrase that I hadn't heard before:

"Casino Capitalism"

That about sums it up.

Anonymous said...

Cleveland Commercial Loan Delinquencies Signal More Declines

Cleveland and Detroit lead the U.S. in commercial mortgage delinquencies, a sign the housing crisis that brought down Wall Street is spreading beyond the residential market.

Office, retail, apartment and industrial properties with mortgage payments 60 days late or more rose to 3.93 percent as of March in the Cleveland area and to 3.75 percent in the Detroit area, according to data compiled by Bloomberg. The North American commercial property delinquency rate is 1.1 percent, according to Standard & Poor’s.

Miss Goldbug said...

Stocks started their long bull market in the 1980's.

Isnt it a coinsidence at the same time, 401k's were introduce as a better option than pensions plans?

401k money is invested in mutual funds. Remember how companies first encouraged employees to partispate in these new 401k plans - they matched contributions. Years later, most companies stopped matching altogether, but still pushed these 401ks- telling employees it's good for them because it invested with before tax dollars.

All this cash has been going into the stock market for 25 years.

401k investments gave us the illusion companies were stable, had value and making money.

We're about to implode.

Anonymous said...

Whew. At least the executives got some of their money out of that sinking ship. However, I feel bad about the rest of you suckers.

never_forget_y2k said...

"It hath been foretold"?

You alternatingly apply this catch phrase to this quote that ends with 'cash becomes king' and Bernanke's speech indicating that cash will be devalued and the hyperinflation monster unleashed.

These would seem to diametrically opposed events. So, which one is it that 'hath been foretold'?

VectorzSigma said...

This is just my opinion but I believe in the stock market we are at near panic levels. Not quite there but really really close.

However, on the housing front we are nowhere near panic yet.

Btw, we are no where near depression either. I see too many homies driving around for us to make an assumption that we are in one.

Anonymous said...

Well the housing bubble is over, the energy bubble popped, the financial market bubble is starting to implode.

What's next?

Gold bubble? Maybe.

The TAX bubble! Yes We the living shit out out of everything that moves. After all who dare question the Great One, we must not let our corporate comrades down.

We need multinational banks and insurance companies like we need tits on a bull. This has gotten absolutely insane.

k.w. - Southern Ca. said...

We'll have massive deflation, then followed by massive inflation on all daily living necessities - this will be the big killer for many folks, and what will spark riots in our streets eventually.

Here in HB Ca. (as well as Seal Beach, Belmont Shore, etc..), I've never seen such a group of scared residents - all of which thought this was "those people's problems".

Massive excess in all it's forms is now ending for most folks, which is a good thing in many ways - it's long overdue.

Anonymous said...


Anonymous said...

keefy, you have to watch this video!

Ross said...

Things are starting to get weird here in AZ:

Anonymous said...

It really is hilarious to listen to CNN now since ALL THAY TALK ABOUT is what we have been talking about and predicting since late 2005.

I just wanna puke when I listen to MSM

Anonymous said...

"...Specter, R-Pa., said the nation's economic situation is more dire than the public has been told..."

IF ONLY we had elected McCain, none of this would have happened.

wallstreetveteran said...

yeah yeah, so what do we buy? whats the next cycle? lets discuss that, not the fact that the process has occured.

Anonymous said...


Any thoughts about getting a Junior Keith to help you out while you're traveling?

I'd bet it's not just me (the Anonymous POS that I am) that gets sorta depressed when the flow of things all of a sudden comes to a screeching halt.

I'm also thinking it's sorta like:

Anonymous said...

Concentration Camps in the USA

Anonymous said...

Is there enough bail out money to save the five big banks

Too big to fail? 5 biggest banks are 'dead men walking'

America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives - insurance-like bets tied to a loan or other underlying asset - surged to $587 billion as of Dec. 31.

Buried in year-end regulatory reports that McClatchy Newspapers has reviewed, the figures reflect a jump of 49 percent in just 90 days

Anonymous said...

Do you think the bail out plan will work or just encourage more borrowers to run their accounts 90 days delinquent in order to qualify for certain modifications.

The percentage of loans 90 days or more past due jumped sharply in the fourth quarter.

Subprime ARM loans and prime ARM loans, which include Alt-A and pay option ARMs, continue to dominate the delinquency numbers.

Nationwide, 48 percent of subprime ARMs were at least one payment past due and in Florida over 60 percent of subprime ARMs were at least one payment past due.

In addition, the delinquency rates continue to climb across the board for prime fixed-rate and subprime fixed-rate loans, loans whose performance is driven by the loss of jobs or income rather than changes in payments.

In addition, some servicers report an increase in borrowers running their accounts 90 days delinquent in order to qualify for certain modifications.

Anonymous said...

The people in the business changed their positions a long time ago . Its only the sucker public that is surprised by the happenings .

CDO's were suppose to spread out the risk ,but the elite got to heavy into them . The Global money game got out of hand .

The concept of easy money became a
Investment right in many peoples
mind and the system allowed the illusion .

Selling tents might be a good line right now .

Wind Farmer said...

Reversal of Fortune:
I think this is ironic...everyone who bought houses via NINJA loans or lied (overstated) their income to get a mortgage will now have to understate their incomes to get the next housing bailout.

This from the WSJ...
To find out whether you qualify for the bailout, check your financial statements and do the math. Under the current proposal, you'll only qualify if your monthly payments are at least 38% of your income. Some people may have an incentive to quit their jobs, or at least dump their second job, to hit this threshold, because this bailout can be valuable."

INCENTIVE to quit their jobs!!!!!
This just gets crazier and crazier.

Anonymous said...

Citigroup Having bEsT qUArTeR SiNcE 2007!

I bet; with ALL THAT CASH they took out of our pockets.

I'd be having a pretty good quarter too.

k.w. - Southern Ca. said...

Since so many of the pension funds are tied into these "too big to fail" failers, the government has taken upon themselves - without the tax-payer's consent - to flood these institutions with an endless supply of devaluating US currency.

Of course, this will lead to massive hyper-inflation down the road, with the added bonus of all these institutions failing at the tax-payer's expense anyways.

There will be a tax revolt in this country coming since the government (our employees) have decided to remain reckless even in these worst of times.

Miss Goldbug said...

On the Savage show the other day, he said there were 27% less millionaires. Wealth vaporized into nothing in less than a year.

How much more wealth will vaporize by the end of this year?

What's going to happen to all these bad mortgages resetting in the next few months? Whats going to happen to the stock market come Oct?

Pretty ugly stuff coming up in the next 8 months.