Posted on 10/10/2008 2:41:48 AM PDT by DoughtyOne
Edited on 10/10/2008 2:49:43 AM PDT by Jim Robinson. [history]
Bloomberg television states Bush to address the public later this morning.
Bloomberg states: “Bush to assure the American Public he’s going to do all he can.”
10:25am EDT
Now, there were several things that troubled me. One the hedging was crazy. Second of all, when I raised some queries on sustainability issues I was given answers that were not, shall we say, exhaustive. Third of all the risk modeling was filled with best case assumptions, and when I raised it with several of the exec VPs (who i was quite close pals with) they would just smile and say everything is alright. It was a house of cards ...just waiting for a conflagration to come through and blow everything to smithereens! Thus, 4 months after the guy I was working with decided to quit (even though he was educated in Yale, he actually left to get into the shoe business!!!), I decided it was also time for me to call it a day and head to Africa. One I was home sick, two I really wanted to see if I could crystallize things with my girlfriend back home (we broke up after a year LOL), and third I was trying to get ahead of the wave as the economy started to improve (that has worked quite well ....I am earning several multitudes what i was earning before).
I knew something was going to hit, the only thing is I didn't know how hard the hit was going to be. I honestly do not think anyone really knew how hard it would be, but quite a number of people could see the water receding from the shores as the tsunami started gearing up. However no one thought it would be a 150 footer ....at most people thought maybe a 30 footer.
If the credit derivatives market goes belly up, then the tsunami will be a 300 footer. The level of global cross-linking is insane, and I can tell you that the 'decoupling' nonsense people were talking about was utter nonsense. At best it is delayed-coupling ....everything is connected.
Case in point, even though our frontier market fund has been spared (in some cases even make very good money during the worst of things), just this Thursday a major American (former) investment bank (I will not mention names, but it has 2 original names followed by the name of the bank that bought it) started selling a certain stock called Safaricom in one of the countries my Fund invests in. They were selling it BELOW IPO price. One of the brokers had asked them what price they were willing to sell at, and they simply said 'market' and offloaded several million shares. They were selling that thing at the equivalent of 5 US cents on Thursday, and apparently this was being done in various other markets where they were selling their foreign holdings. This was, I believe, simply for liquidity reasons since they were selling at a (substantial) loss.
A friend of mine who manages one of the larger funds in India told me that the level of fund repatriation back to the US has been huge over the last several months, and they have really suffered. Same thing in China (actually Asian emerging markets have been smacked hard). In my case, the frontier markets have not been hit as hard, but when I saw what was going on in Asia I simply looked at the counters I held that were also held by the 'Big American Boys' and started selling, and boy that saved my hide! As I said, decoupling is a myth. At best it is delayed coupling, and all the people who are laughing at the US and the pain it is in should realize that all they are looking at is a preview of what could easily be coming to their front door! Everything is linked! Everyone is linked!
Anyways, what Jim Noble is saying is true. It is not as simple as people think, and while confidence is a critical factor, there are other MAJOR issues behind the scenes that have been festering for a long time, and are only now starting to break the surface. The level of liquidity sterilization means that any bailout will get mopped up so fast (sterilized) as institutions simply hoard.
Anyways, when you see a major American institution (the investment bank that has 2 names followed by its acquired) starts selling a stock at the equivalent of 5 US cents, that is when you know that this went beyond simple quite some time back. People are padding up as they prepare to (try and) weather what might very well be the beginning of a perfect storm.
What will happen? I don't know. However, when the skies clear, the global fiscal-economic model could very well be quite different. Governments almost always over-react to crises, and just like the League of Nations and the United Nations followed WW1 and 2 respectively, I believe there shall be some sort of one world 'financial UN-esque' organization that shall arise. Will it be socialist ...you can bet it! Will it be benevolent? Depends on what you understand by benevolence. However, pain is coming to a number of people, and that is not due to the media hyping anything up. To be honest with you, no one has even come close to talking about what might happen if the worst-case scenario takes place and this really begin to unravel.
I am not a conspiracy theorist either which leads me to believe my suspicions might have some basis in fact.
The way the bailout proposal was handled from the start to the present day tells me that there was a lot of unnecessay theater involved.
The collapse was ready to happen any time within the next year or less.
Knocking the house of cards over now gives an immense boost to Obama's election chances.
It also prevents the collapse from happening during his term if he is elected.
Then he can cruise at least 4 years on the claim he inherited a financial meltdown from Republicans.
If McCain is elected democrats have the satisfaction of knowing the meltdown made it rough for him and they can use it to cripple his administration for the next 4 years.
I guess knee jerk reactions DO have consequences.
Stuck in an office. Has he spoken? What has he said?
>“...Congress and Bush should just shut up and let the free market work itself out...”
I second that!
And urge everyone to call WH/Bush and demand he stop nationalizations and spending our money on banks!
>Bush, Paulson and others should be tried for treason and >hung.
>Save our country from socialism.
At least they should be investigated..
So this is at 9:25 Central Time?
The address from President Bush?
“QUIT THE ACCOUNTING GAMES. IT’S DESTROYING OUR REPUBLIC RIGHT NOW. JUST TELL THE BANKS TO TELL THE TRUTH AND THAT MEANS GETTING RID OF MARK TO MODEL ACCOUNTING AND ALL OFF-SHEET-BALANCE TRANSACTIONS RIGHT NOW!!!!!”
What do you mean? The government does exactly the same thing. Wasn’t the bailout bill “off budget” as are the continuing resolutions to fund the Iraq war?
It’s hard to have faith in anything these days...
McCain has spent the last 8 years doing just that!
What has it helped?
Well, if he spoke it didn’t help. Dow down 10 % in the first minutes.
Just like after 9/11, he’ll tell America to go shopping.
The Yahoo DJIA page had it down 800 + when I first opened it at 9:32, now it shows the days low as where it is now, down 400 something. Probably happening too fast to rely on the number at that point. But, thats what I saw.
Opening bell on Wall Street and 7 minutes in to the day, DOW down -681 and dropping like a rock.
( sarc.)
For those interested.
Has the President spoken yet?
So how many more minutes until the market is shut down?
It looks like it should have tripped the 10% circuit breaker for the quarter.
What time does the President speak? 9:45 central time?
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