Posted on 10/09/2008 12:05:59 PM PDT by pissant
8995. Wow, I'm impressed how well socialism has helped the markets.
Could the grocery stores be empty ?
I'm asking seriously.
These equities are not going to bounce back for years.
Did you all get you money into a safety deposit box yet? Or are you waiting for the run on the banks? If you are responsible for children, you are not all that smart leaving your cash in a Money Market.
You should all have as much cash as possible in a safety deposit box RIGHT NOW. When the Cash only signs are in the windows, and that debit card gets turned off with a balance in your account, when your credit card does not work you will remember reading this post.
I agree. Did you see the one-page ad that a Texas venture capitalist, Bill Perkins, put in the NYT a couple weeks ago? Accompanying the graphic (The New Communist), he said: "Let me know if I'm going into a business where I'm going to be competing against the government. I need to get out of that business." He nailed it, IMO.
Yes, banks don't know what their debt obligations are going to be from playing in CMO's and they don't know what any other bank's obligations are going to be - so they don't want to chance a loan to them.
Here’s a chart that puts a picture to your words:
http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP%3AIND
Absolutely no question about it. Almost all grocery stores use JIT (just in time) inventory strategies now, so grocery store shelves can be emptied very quickly.
Don't wait. Buy now and rotate your food storage to keep things fresh.
No offense, but this is bad advice. If a bank holiday is declared then your cash will be inaccessible. Every needs at least two months of cash-on-hand at home. If things keep going the way they are then I'm going to change that to "all" liquid assets keep at home with just enough left in checking to pay your rent/mortgage, car insurance, etc.
It means that 98% of the American public is clueless as to the power of a Credit Derivatives Market gone astray.
Tomorrow will be the day when prices are attached to Lehman's Brother's CDS contracts. It is a day that scares the living daylights out of Wall Street.
Be prepared for what's coming.
I'm hoping that people will listen...
I dissagree. A liquidity crisis is not something you want to leave to the free market, because the market will crash. And it's completely unnecessary. It's the nature of a fractional reserve banking system, when the reserves have been allowed to go too low to maintain depositor confidence.
The market can weed out a weak competitor without going into a liquidity crisis or depression. A depression doesn't do the market or anybody else any good.
What is McCain if he isn’t a socialist in government?
TED spread.
http://en.wikipedia.org/wiki/TED_spread
LIBOR
http://en.wikipedia.org/wiki/LIBOR
Both numbers are absolutely terrible right now. That means that no matter how much liquidity they have been given by the FEd, they ain’t lending the money to anyone. Also, the stock market went down, and the 10 yr treasury yeild went up. Double bad news. Depression bad news. Not only are people bailing on the market, the are bailing on bonds too. Tomorrow is D-day. Lehman has its auctions.
Are we taking any wagers on how long it will take to trip the breakers tomorrow? I think Brazil has the record at 18 minutes this week. I think we may break 8000. I’ve always been a glass is half full kind of gal...
There credit system is sort of like water and a series of dams on streams.
The Fed is the big lake (think of one of the Great Lakes in size) all the way up at the source of the water - they control how much liquidity gets put into the economy.
So the very first dam (at the lake) is the Fed’s control over interest rates, how much liquidity they’re injecting via other means (TAF, PDCF, CPFF, etc).
Next down stream is a bunch of big-ish lakes. Think in terms of something about half the size of the Great Salt Lake - but a bunch of them. These will be your big banks, dealers in the Treasuries/bills, etc. Goldman, Merrill, Citi, Fannie/Freddie, etc.
These all have dams on their outlets - this is how these banks control their lending to each other and smaller banks down the line.
Further downstream there are smaller ponds and pools - in great number. Some of these will be mortgage lenders, some will be consumer credit, some will be outfits like Ford or GM motor credit, American Express, Mastercard, Visa, etc.
Downstream of these guys will be regional banks and local banks.
When you see the water stopped up at the first set of lakes downstream of the Fed, there’s still water in the stream, running downhill. You hear about them shutting their floodgates, but you still see water in the stream downhill of your credit card pond or your local bank pond.
What I’m trying to illustrate is that there’s some slop and inertia in the system upstream of you. But if this mess continues long enough, you will see the stream running by your front door dry up, or you’ll be paying a LOT for that ‘water’ (ie the interest rates on new loans will be ferociously high).
The other thing that people need to understand is that this is coming on us at warp speed. It has been only a month+2 days since we seized Fannie/Freddie. It has been less than a month since Lehman went down. And less than that since AIG went down.
Many of the consumer lenders haven’t formulated what they’re going to do in response to this yet. And some of their PR/ad campaigns are outsourced to some direct mail outfit - under a contract. The direct mail outfits are under obligation to fulfill the contract unless the advertiser fails to pay them. The lender might have to buy out the contract or otherwise take yet another hit to stop that ad mail.
GMAC has severely cut back on auto leasing. Chrysler has stopped all leases as of Aug 1.
Here’s where you can see the consumer credit tightening up in the Fed’s report on same. NB that this data is for August, before the melt-down really began in earnest.
http://www.federalreserve.gov/releases/G19/Current/
We farmers like to tell people that there’s only about three day’s of groceries in any urban area. ie, if trucks and rails stop moving, you’d better get your buttocks down to the store ASAP, because the stores will run out of food at a NORMAL rate of consumption in about 3 to 5 days.
The American people are really so blissfully ignorant of how many gears, levers and interlocking pieces there are to keep them supplied with stuff.
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