Gold trader
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Conservatively, their reserves are worth $5B.
Debt is $1.6 B.
There market cap should be at least $3.4B or 6 X the current price
$82M was received for 10% of Gomez. That represents .5% of ATPG's proved and probable reserves. That would imply reserves worth north of $16B. As a conservative estimate, assume that ATP's reserves are only worth $5B. $5B - $1.2B {net debt}= $3.8B $3.8B/35.9M shares= $105/share.
Just marked your board.
What do you see for ATPG ?
Incredibly cheap in my book.....
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32598239
US banks borrow record amount from Fed
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4872458.ece
Remember AUTO (Ameritrade) stop trading GBDX back in June.....
For the same reason (heavy artificiel naked shorting).
How can we defend ourself now ?
Totally right.
If you analyse the chart and the volume of the green candles and the red candles, It's crystall clear.
What can we do now ?
The nice thing about being in gold as opposed to dollars right now is that the dollar is very much in heads the dollar loses, tails gold wins territory right now. Bonds are expensive, the dollar is overvalued. If things improve, the risk aversion tade will unwind. If not, the horrifying balance sheet of the US Treasury will come into play. It's impossible to imagine the dollar doing well in this market, at least relative to gold (which is the one true store of value and thus the only thing that matters). The euro may well do even worse, so by all means short it, but overall the only thing you want to own right now is gold. And keep shorting Treasuries - supply is going higher no matter what.
The fact is that it is getting more and more difficult to find new sources of oil, and the existing sources are being depleted at an alarming rate. We are still getting close to peak world-wide oil production. Yes, Congress has now allowed the oil companies to 'drill, baby, drill,' but what are they going to drill with, a Craftsman cordless?
Drilling rigs and the experienced crews to man them remain in short supply. Even assuming that we find pretty significant amounts of oil in the eastern Gulf of Mexico, it will not be available for several years and will not make a significant change in the world-oil picture. There is both a real need and the cash available to build new and upgrade existing drilling rigs, which means that business will remain very strong for a firm like National Oilwell Varco (NYSE: NOV - News).
http://biz.yahoo.com/zacks/081002/15028.html?.v=1
BROKE THE 200MA
Trailing P/E (ttm, intraday): 9.77
Forward P/E (fye 31-Dec-09) 1: 6.87
PEG Ratio (5 yr expected): 0.41
Price/Sales (ttm): 1.75
Price/Book (mrq): 1.65
Trailing P/E (ttm, intraday): 11.09
Forward P/E (fye 31-Dec-09) 1: 3.00
PEG Ratio (5 yr expected): 0.28
Price/Sales (ttm): 0.90
Price/Book (mrq): 1.92
Las Vegas Sands (LVS) Chairman/CEO Adelson Sinks $475M Into The Company
http://www.streetinsider.com/Insider+Trades/Las+Vegas+Sands+(LVS)+ChairmanCEO+Adelson+Sinks+%24475M+Into+The+Company/4029375.html
29-Sep-08 HAMM HAROLD
Officer 50,000 Indirect Purchase at $34.78 - $35.93 per share. $1,768,0002
10-Sep-08 HAMM HAROLD
Officer 50,000 Indirect Purchase at $35.05 - $36.6 per share. $1,791,0002
9-Sep-08 HAMM HAROLD
Officer 50,000 Indirect Purchase at $35.32 - $37.69 per share. $1,825,0002
Yep...
Short the Dollar and jump on Gold + Silver.
Gold or Dollar Part 1
Gold or Dollar Part 1
Dryships
Dryships [DRYS: 35.45, -0.04 (-0.11%)] is an interesting play because it is no longer a pure-play bulk shipper. Dryships recently acquired Ocean Rig and has entered into the ultra deep water drilling market. This separates them from the rest of the competition, and in theory this acquisition should actually make the stock less volatile. In most cases dry bulk shipping companies will hedge a much smaller percentage of their revenue than drilling companies. This component should be able to tame the rapid movements of Dryships after the integration is complete. The long term fundamental outlook for the deep water drilling industry looks strong, especially since the Brazilians and Petrobras [PBR: 43.48, -0.47 (-1.07%)] have not be able to contract enough drill ships to fully exploit their deep water reserves. This transition will not be easy, the deepwater industry is controlled by the big three; Transocean [RIG: 106.10, -3.74 (-3.40%)], Noble Corp. [NE: 42.96, -0.94 (-2.14%)], and Diamond Offshore [DO: 100.35, -2.71 (-2.63%)].
http://www.bullishbankers.com/whats-next-for-the-bulk-shippers/
Gold $5000.00 By 2012 ? Dollar Never Recovers?
Better here.....
Gold $5000.00 By 2012? Dollar Never Recovers?
Folks, don't forget that DRYS will have his ultra deep oil drilling (Norvegian Ocean Rig) company spinoff next year.
This should support the price at a certain point.
http://seekingalpha.com/article/78739-dryship-s-transformational-ceo
I will not be so sure they will pass it.
This will not avoid the crash and will increase the debt.
Gold and silver dealer reports an ‘unprecedented’ shortage of metals
Sunday, September 28, 2008 By David Clerkin, Markets Correspondent
A surge for demand in gold and silver has resulted in an unprecedented shortage of the metals for retail investors in recent days, according to Gold and Silver Investments, a Dublin-based firm that allows retail investors to speculate on movements in the value of precious metals.
Gold and Silver Investments director Mark O’Byrne said the supply of gold and silver available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies.
‘‘It’s absolutely unprecedented,” said O’Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.
http://www.thepost.ie/post/pages/p/story.aspx-qqqt=MARKETS-qqqm=nav-qqqid=36223-qqqx=1.asp
Gold and silver dealer reports an ‘unprecedented’ shortage of metals
Sunday, September 28, 2008 By David Clerkin, Markets Correspondent
A surge for demand in gold and silver has resulted in an unprecedented shortage of the metals for retail investors in recent days, according to Gold and Silver Investments, a Dublin-based firm that allows retail investors to speculate on movements in the value of precious metals.
Gold and Silver Investments director Mark O’Byrne said the supply of gold and silver available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies.
‘‘It’s absolutely unprecedented,” said O’Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.
1:44PM General Electric announces common stock offering; Warren Buffett announces investment in GE (GE) 23.63 -1.87 : Co announces plans to offer at least $12 bln of common stock to the public. The offering is expected to be priced prior to tomorrow's market open in the U.S. In addition, GE announced that it has reached agreement to sell $3 bln of perpetual preferred stock in a private offering to Berkshire Hathaway (BRK.A). The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 bln of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term. "The economic environment remains volatile. However, the company's performance remains on track with the earnings guidance we provided last week for 2008, including third quarter financial services earnings of ~$2 bln and industrial earnings growth of between 10 and 15%, excluding our Consumer & Industrial business." (stock halted)
Wealthy investors hoard bullion
By Javier Blas in Kyoto
Published: September 30 2008 19:00 | Last updated: September 30 2008 19:00
Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.
Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.
http://www.ft.com/cms/s/bf8246aa-8f13-11dd-946c-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fbf8246aa-8f13-11dd-946c-0000779fd18c.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fgata.org%2F&nclick_check=1
Wealthy investors hoard bullion
By Javier Blas in Kyoto
Published: September 30 2008 19:00 | Last updated: September 30 2008 19:00
Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.
Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.
http://www.ft.com/cms/s/bf8246aa-8f13-11dd-946c-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fbf8246aa-8f13-11dd-946c-0000779fd18c.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fgata.org%2F&nclick_check=1
Wealthy investors hoard bullion
By Javier Blas in Kyoto
Published: September 30 2008 19:00 | Last updated: September 30 2008 19:00
Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.
Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.
http://www.ft.com/cms/s/bf8246aa-8f13-11dd-946c-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fbf8246aa-8f13-11dd-946c-0000779fd18c.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fgata.org%2F&nclick_check=1
Radio interview about the huge shortage of gold and silver, and inflation. This is from about 3 weeks ago, and these guys seem to know whats happening before it happens. Some of us are too young to remember the 1960's london gold pool, but it's being done over again. Gold is getting in very short physical supply. Listen to the first 25 minutes or so on gold, then listen to 38:50 and on; an inteview with Ian MacDonald, Executive Director - Gold & Precious Metals Dubai Multi Commodities Centre. Nobody wants to sell any gold or silver, and the buyers are piling up. It's about an hour, throw it on while your relaxing tonight..."even a kindergardener can figure out where gold is going"
Windows media player:
http://www.netcastdaily.com/broadcast/fsn2008-0906-3a.asx
MP3:
http://www.netcastdaily.com/broadcast/fsn2008-0906-3a.mp3
RealPlayer
http://www.netcastdaily.com/broadcast/fsn2008-0906-3b.ram
Folks, If gold go to 2000$/Once, as I presume....
FCX is a gift.....
Keep my eye on it.
If needed, I will sell my gold coins to buy FCX.
5 Reasons Why the $700B Bailout Could Translate to $250 Oil
I’ve been predicting record oil prices for a number of years now, so when crude oil prices recently plunged from their record highs, I warned investors and consumers that the decline was nothing more than a temporary respite.
But now it’s clear that the fallout from the $700 billion banking bailout pact will virtually guarantee that my prediction will come true.
As the curtain closed on the third quarter yesterday (Tuesday) - leaving many investors worried that the long-feared "Super Crash" was imminent - crude-oil futures were staring at their first decline in seven quarters and their biggest quarterly decline in 17 years, thanks to worries that a slowing economy would curtail global demand. As of early afternoon yesterday, crude oil for November delivery had dropped $39.36 a barrel - or 28% - during the third quarter to close at $100.64 yesterday afternoon.
It’s been a volatile market, too. Oil traded within a $56 range in the quarter, reaching a record $147.27 a barrel on July 11 and retreating to as low as $90.51 a barrel on Sept. 16, Bloomberg News reported. Oil futures moved 5% or more during one quarter of the trading days.
Analysts said this decline was merely the beginning, and that with a global economy that had been severely singed by the U.S. credit crisis, oil prices had nowhere to go but down.
But I continued to make the opposite argument. And a week ago, the markets made my point for me. On Sept. 22, crude oil futures for October delivery soared $16.37 a barrel, or 15.7%, to close at $120.92, after trading as high as $130 a barrel - thanks to a steep decline in the U.S. dollar and to speculation that the Bush administration’s plan to bail out the financial sector might actually jump-start the U.S. economy, fueling inflation in the process. The gain surpassed the previous record single-day-price gain of $10.75 a barrel, a move that occurred on June 6. [The biggest-ever percentage gain in a single day - 20.9% - was recorded on Jan. 3, 1994, according to FactSet Research Systems Inc.]
This record one-day surge caught many by surprise and jump-started speculation about whether oil prices will rise or fall from here.
For you disciples of doubting Thomas out there, you only have to look at the reaction to the different phases of the bailout negotiations this week to see that the market has spoken again. Crude oil for November delivery dropped $10.52 a barrel, or 9.8%, to close at $96.37 on Monday after the House of Representatives rejected a Bush administration bailout plan. But that was a knee-jerk reaction to a worry that the lack of a bailout pact might spawn a recession.
Yesterday, however, crude oil futures rebounded $4.27 a barrel, or 4.4%, after analysts realized, upon reflection, that the U.S. economy - together with the global demand for oil - wasn’t about to just disappear. And that was without the benefit of even a bailout proposal. When a pact is signed - as most analysts figure it will be - crude prices will likely rebound even more.
The Outlook for "Black Gold"
In the extreme short term, oil’s probably going to bounce around the psychologically important $100-a-barrel mark, - if not a little higher - as the U.S. government works to sort out the financial crisis.
The reason is that any "recovery," or bailout, is intended to strengthen the flagging U.S. dollar. And a rising dollar tends to push crude prices lower because crude is traded mostly in U.S. dollars around the world.
So, as much as most of the world looks to Organization of the Petroleum Exporting Countries (OPEC) to determine the price of oil, the more important influencers in the near term actually are U.S. Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry M. "Hank" Paulson Jr. - the Batman and Boy Wonder of Washington’s bailout set.
The $700 billion banking bailout package proposed by this "Dynamic Duo" directly impacts the flagging U.S. dollar. And the dollar, for reasons we’ve just explained, helps determine oil prices.
There are exceptions, of course, but the relationship between currencies and oil prices generally suggests that 90% or more of the decline in price that crude oil has experienced since mid-summer can be accounted for simply by how much the dollar has risen since July.
But here’s the trick - the reverse is also true.
We mentioned inflationary pressures before. Well, if Congress actually passes the bailout plan, another $700 billion would be pumped into the world financial system. And that would mean far higher prices are ahead. We’re talking Econ 101 here: Every one of the bailout bucks dilutes the buying power of every other dollar already in circulation. That erosion in buying power is the textbook definition of inflation.
In fact, that’s just how it played out this week. When the bailout plan was rejected Monday, meaning those bailout bucks wouldn’t be joining the financial system, oil prices fell precipitously, since there would be no additional inflationary pressures. But when investors started to rethink that thesis Tuesday - meaning they believed some sort of new bargain would be reached - oil prices reversed course and rose in anticipation of that money possibly being pumped into the financial system.
While a bailout could jump-start the financial markets for a while, history suggests that over time the "cost" of the liquidity Bernanke and Paulson have cobbled together may manifest itself in the form of far higher oil prices. Other commodities would rise significantly, too. Investors have only started to see this outcome.
So, what happened back on that Monday, Sept. 22, when oil prices made that record one-day run?
My experience as a professional trader makes me think that somebody simply got trapped on the wrong side of the markets and was trying to cover a humongous position at any cost.
And what I saw on my screens seems to confirm that. It was a late-session spike at a time when traders either had to get in line for delivery or unwind their positions before the October crude futures contracts expired. With a mere 30 minutes remaining, there were no sellers to balance prices, while the market makers who normally would provide a modicum of orderly behavior were nowhere to be found amidst the chaos.
Five Points to Bank On
What’s likely to happen longer term? Simple. In fact, here are five points you can take to the bank.
* First, global oil demand is still accelerating and, according to the United States Energy Information Administration [EIA], will reach more than 115 million barrels per day by 2030 - even with conservation efforts and high prices stunting demand.
* Second, daily production has probably peaked right now at nearly 90 million barrels a day, or will peak in a few years at the very latest. While experts once debated the reality of the "Peak Oil" concept, they now accept it and only question when it will take hold.
* Third, the world’s fastest growing economies, China and India, are still increasing consumption at double-digit rates, and that more than offsets any conservation efforts that are under way elsewhere around the world. And their governments want to buy oil at any cost - even if that means there’s none left for us.
* Fourth, the world will learn one day - probably sooner rather than later - that Saudi Arabia’s vaunted reserves are nowhere near what it claims them to be, and those reserves are certainly not at the levels long held as "gospel" in the oil business. Matthew Simmons, chairman of the Houston-based investment bank Simmons & Co. International and author of the seminal 2005 book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," has been most vocal about this alleged shortfall, and I respect his work, especially since I’ve spoken behind closed doors with several OPEC figures who privately acknowledged that this may be their worst nightmare. Simmons recently predicted that oil prices would rally to $500 a barrel.
* Fifth, Bailout Ben has dropped trillions into the system to stabilize the Wall Street while Paulson has broken out his bazooka which suggests that as much of 95% or more of oil’s price drop can be attributed to nothing more than the dollar’s rise since July. Nothing else has changed.
Should traders see through the smoke and mirrors or simply decide to run for the exits, we can expect to see the dollar shrink to new lows and oil to rise to new highs in a perverse flight to quality.
Only this time, this "quality" is literally quite crude …
http://seekingalpha.com/article/97976-5-reasons-why-the-700b-bailout-could-translate-to-250-oil
TGR: What percentage should an investor have in bullion and in what form?
JE: Central Fund of Canada Limited (AMEX: CEF) and Central GoldTrust (AMEX:GTU) are really excellent vehicles in which to hold gold. I’m very leery of funds that have no allocated gold. Whereas, in Central Gold Trust, which I'm involved with, it's a sort of sister company of the Central Fund— so I know the Spicers that run it very well. I know for a fact that you can go look at gold in the vault. So they are perfect vehicles in this environment. If the worst happens and everything goes to hell in a handcart, you want bullion. So the core of your portfolio has to be bullion. Depending on how much money you’ve got, you can decide what percentage you want to wager on the upside. If the gold price goes where I think it’s going soon—to $2,000—then some of these gold stocks will look pretty good. They’re depressed enough that they will move faster than gold. They could go up three to five times when gold goes doubles.
http://seekingalpha.com/article/95291-john-embry-when-the-gold-s-all-gone-the-market-will-go-nuts?source=yahoo
FB: I like Central Fund of Canada (AMEX: CEF) quite a bit. It’s a closed end fund that owns physical bullion and they have the gold, they have the silver. They have 50% gold, roughly 50% silver. The mix changes a little bit. But if you go to their website you can see the exact number of ounces and they price out the NAV for you. That’s an outfit that has the goods. They have the physical metal. If you don’t feel like going out to a coin dealer and haggling over Eagles or other various types of coins, this is a great way to own metal and own it where you don’t have to worry about the storage because they take care of that for you. It’s a very convenient way to own precious metals. I think the management is doing a great job and for me I think that’s a core holding. I really think most investors should have some money in CEF and that is one where I would definitely be backing up the truck on this correction.
http://seekingalpha.com/article/92863-frank-barbera-precious-metals-heading-to-all-time-highs?source=yahoo
We will be ok Sumisu !!
Nice, will follow your pick !
The U.S Mint said Thursday it was temporarily suspending sales of American Buffalo 24-karat gold one-ounce bullion coins because strong demand depleted its inventory.
http://www.canada.com/topics/news/world/story.html?id=7ef5202a-15d8-4a2e-ae85-4128914674e1
I've closed all my accounts in Euros and bought GOLD coins.
I belive we go to 2000$/once by end 2009
I've closed all my accounts in Euros and bought GOLD coins.
I belive we go to 2000$/once by end 2009
The US and global financial crisis is becoming much more severe in spite of the Treasury rescue plan. The risk of a total systemic meltdown is now as high as ever
Nouriel Roubini | Sep 29, 2008
It is obvious that the current financial crisis is becoming more severe in spite of the Treasury rescue plan (or maybe because of it as this plan it totally flawed). The severe strains in financial markets (money markets, credit markets, stock markets, CDS and derivative markets) are becoming more severe rather than less severe in spite of the nuclear option (after the Fannie and Freddie $200 billion bazooka bailout failed to restore confidence) of a $700 billion package: interbank spreads are widening (TED spread, swap spreads, Libo-OIS spread) and are at level never seen before; credit spreads (such as junk bond yield spreads relative to Treasuries are widening to new peaks; short-term Treasury yields are going back to near zero levels as there is flight to safety; CDS spread for financial institutions are rising to extreme levels (Morgan Stanley ones at 1200 last week) as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package (US market are down about 3% this morning at their opening).
Let me explain now in more detail why we are now back to the risk of a total systemic financial meltdown…
It is no surprise as financial institutions in the US and around advanced economies are going bust: in the US the latest victims were WaMu (the largest US S&L) and today Wachovia (the sixth largest US bank); in the UK after Northern Rock and the acquisition of HBOS by Lloyds TSB you now have the bust and rescue of B&B; in Belgium you had Fortis going bust and being rescued over the weekend; in German HRE, a major financial institution is also near bust and in need of a government rescue. So this is not just a US financial crisis; it is a global financial crisis hitting institutions in the US, UK, Eurozone and other advanced economies (Iceland, Australia, New Zealand, Canada etc.).
And the strains in financial markets – especially short term interbank markets - are becoming more severe in spite of the Fed and other central banks having literally injected about $300 billion of liquidity in the financial system last week alone including massive liquidity lending to Morgan and Goldman. In a solvency crisis and credit crisis that goes well beyond illiquidity no one is lending to counterparties as no one trusts any counterparty (even the safest ones) and everyone is hoarding the liquidity that is injected by central banks. And since this liquidity goes only to banks and major broker dealers the rest of the shadow banking system has not access to this liquidity as the credit transmission mechanisms is blocked.
After the bust of Bear and Lehman and the merger of Merrill with BofA I suggested that Morgan Stanley and Goldman Sachs should also merge with a large financial institution that has a large base of insured deposits so as to avoid a run on their overnite liabilities. Instead Morgan and Goldman went for the cosmetic approach of converting into bank holding companies as a way to get further liquidity support – and regulation as banks – of the Fed and as a way to acquire safe deposits. But neither institution can create in a short time a franchise of branches and neither one has the time and resources to acquire smaller banks. And the injection of $8 b of Japanese capital into Morgan and $5 b of capital from Buffett into Goldman is a drop in the ocean as both institutions need much more capital. Thus, the gambit of converting into bank while not being banks yet has not worked and the run against them has accelerated in the last week: Morgan’s CDS spread went through the roof on Friday to over 1200 and the firm has already lost over a third of its hedge funds clients together with their highly profitable prime brokering business (this is really a kiss of death for Morgan); and the coming roll-off of the interbank lines to Morgan would seal its collapse. Even Goldman Sachs is under severe stress losing business, losing money, experiencing a severe widening of its CDS spreads and at risk of losing most of its values most of its lines of business (including trading) are now losing money.
Both institutions are highly recommended to stop dithering and playing for time as delay will be destructive: they should merge now with a large foreign financial institution as no US institution is sound enough and large enough to be a sound merger partner. If Mack and Blankfein don’t want to end up like Fuld they should do today a Thain and merge as fast as they can with another large commercial banks. Maybe Mitsubishi and a bunch of Japanese life insurers can take over Morgan; in Europe Barclays has its share of capital trouble and has just swallowed part of Lehman; while most other UK banks are too weak to take over Goldman. The only institution sound enough to swallow Goldman may be HSBC. Or maybe Nomura in Japan should make a bid for Goldman. Either way Mack and Blankfein should sell at a major discount of current price their firm before they end up like Bear and be offered in a few weeks a couple of bucks a share for their faltering operation. And the Fed and Treasury should tell them to hurry up as they are both much bigger than Bear or Lehman and their collapse would have severe systemic effects.
When investors don’t trust any more even venerable institutions such as Morgan Stanley and Goldman Sachs you know that the financial crisis is as severe as ever and the fear of collapse of counterparties does not spare anyone. When a nuclear option of a monster $700 billion rescue plan is not even able to rally stock markets (as they are all in free fall today) you know this is a global crisis of confidence in the financial system. We were literally close to a total meltdown of the system on Wednesday (and Thursday morning) two weeks ago when the $85 b bailout of AIG led to a 5% fall in US stock markets (instead of a rally). Then the US authorities went for the nuclear option of the $700 billion plan as a way to avoid the meltdown together with bans on short sales, a guarantee of money market funds and an injection of over $300 billion in the financial system. Now the prospect of this plan passing (but there is some lingering deal risk the votes in the House are not certain) -as well as the other massive policy actions taken to stop short selling “speculation” and support interbank markets and money market funds - is not sufficient to make the markets rally as there is a generalized loss of confidence in financial markets and in financial institutions that no policy action seem to be able to control.
The next step of this panic could become the mother of all bank runs, i.e. a run on the trillion dollar plus of the cross border short-term interbank liabilities of the US banking and financial system as foreign banks as starting to worry about the safety of their liquid exposures to US financial institutions; such a silent cross border bank run has already started as foreign banks are worried about the solvency of US banks and are starting to reduce their exposure. And if this run accelerates - as it may now - a total meltdown of the US financial system could occur. We are thus now in a generalized panic mode and back to the risk of a systemic meltdown of the entire financial system. And US and foreign policy authorities seem to be clueless about what needs to be done next. Maybe they should today start with a coordinated 100 bps reduction in policy rates in all the major economies in the world to show that they are starting to seriously recognize and address this rapidly worsening financial crisis.
Well...
After this terrible news, I expect european markets to be killed today.
We're all playing with fire.
Very very dangerous game.
Stunned traders on the floor of the New York Stock Exchange, their faces tense and mouths agape, watched on TV screens as the House voted down the plan in mid-afternoon, and as they saw stock prices tumbling on their monitors. Activity on the floor became frenetic as the "sell" orders blew in.
The Dow told the story of the market's despair. The blue chip index, dropped by hundreds of points in a matter of moments, and by the end of the day had passed by far its previous record for a one-day drop, 684.81, set in the first trading day after the Sept. 11, 2001, terror attacks.
The selling was so intense that just 162 stocks rose on the NYSE -- and 3,073 dropped.
It takes an incredible amount of fear to set off such an intense reaction on Wall Street, and the worry now is that with the $700 billion plan fate uncertain, no one knows how the financial sector hobbled by hundreds of billions of dollars in bad mortgage bets will recover. While investors didn't believe that the plan was a panacea, and understood that it would take months for its effects to be felt, most market watchers believed it was a start toward setting the economy right after a credit crisis that began more than a year ago and that has spread overseas.
"Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group. "This isn't a market for the timid."
The plan's defeat came amid more reminders of how troubled the nation's financial system is -- before trading began came word that Wachovia Corp., one of the biggest banks to struggle due to rising mortgage losses, was being rescued in a buyout by Citigroup Inc. It followed the recent forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies -- Bear Stearns Cos., Washington Mutual Inc. and Lehman Brothers Holdings Inc.; all of them were felled by bad mortgage investments.
And it raised the question: Which banks are next, and how many? The Federal Deposit Insurance Corp. has a list of over 110 banks that were in trouble in the second quarter, and that number surely has grown in the third.
Wall Street is contending with all these issues against the
Stocks tumble as bailout plan fails in House
Stocks plunge as financial bailout plan fails in House vote; Dow falls more than 735 at lows
NEW YORK (AP) -- Wall Street's worst fears came to pass Monday, when the government's financial bailout plan failed in Congress and stocks plunged precipitously -- hurtling the Dow Jones industrials down nearly 780 points in their largest one-day point drop ever. Credit markets, whose turmoil helped feed the stock market's angst, froze up further amid the growing belief that the country is headed into a spreading credit and economic crisis.
backdrop of a credit market -- where bonds and loans are bought and sold -- that is barely functioning because of fears that anyone lending money will never be paid back. The evidence of the credit markets' ills could again be found Monday in the Treasury's 3-month bill -- investors were stashing money there, willing to take the tiniest of returns simply to be sure that their principal would survive in what's considered the safest investment. The yield on the 3-month bill was 0.15, down from 0.87, and approaching zero, a level reached last week when fear was also running high.
On Wall Street, according to preliminary calculations, the Dow fell 777.68, or 6.98 percent, to 10,365.45. The decline also surpasses the 721.56-point intraday decline record also set during the first trading day after the terror attacks. Still, in percentage terms, the decline remained well below the more than 20 percent drops seen on Black Monday of October 1987 and the Depression.
Broader stock indicators also tumbled. The Standard & Poor's 500 index declined 106.85, or 8.81 percent, to 1,106.42.
The technology-heavy Nasdaq composite index fell 199.61, or 9.14 percent, to 1,983.73.