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Old 22-11-2008, 15:46   #151
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Tao and Ex-Calif both made a truly "piece de resistance" on this thread, thank you both.
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Old 22-11-2008, 15:52   #152
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Oh yeah ... leverage!!! Just ask MS/GS/LB and then talk to CountryWide, FannieMae, FreddieMac, then try WaMu, IndyMac, Downey Savings and Loan, PFF Bank & Trust and 18 other failed banks (just in the US). They can tell you ALL about leverage. Oh wait... they can't any more. They went out of business; leveraged up the waaho.

Edit: Oh yeah - and these were the PROFESSIONAL people doing this. You can tell they were professional, because THEY made 10's of Millions, and everyone else lost.
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Old 22-11-2008, 21:58   #153
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Have peoples' opinions changed since the economic crash?

Wondering if opinions expressed here on this thread have changed since the economic crash???

Looks like a lot of the money being socked away in stocks or real estate has disappeared recently. Anyone who is now in their late 20's or 30's has probably lost a good deal, if not most of, the money they were working so hard to save for the "future". Along with the cash, they have lost a good chunk of the best years of their lives.

I guess out advice is to now is to tell them to work twice as hard in their late 30's and 40's??? Maybe get back to where they thought they'd be by 30 already??

Not dumping on anyone here, just bringing the point up that life throws us curve balls, and all the calculations on what might or should happen, or what previous history "tells" us will happen to your investments, is all just conjecture. The one thing we DO know is that time won't stop and you WILL get older.

Live your life now, while you have it. Not recklessly, but with passion and daring. Don't wait until you are 55 or 65 or whatever age your "plan" says, if that time comes and if your money is there you may find it too difficult to even try to start living that life.

Do it now....

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.”

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Old 23-11-2008, 01:14   #154
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Yeah Leverage... S/V ELUSIVE

Your correct, of course, however all the afore mentioned characters are all part of the corrupt Banking system.Fractional Reserve Banking.

How can a Privatley owned, Profit only making operation, which soley makes money by keeping everyone who is not part of it, in debt & highly Taxed. Be relied upon to build you Wealth.?....IT JUST IS NOT IN THEIR INTEREST!!!.
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Old 23-11-2008, 09:53   #155
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Wondering if opinions expressed here on this thread have changed since the economic crash???
Well I have always been the glass half full guy to Tao's glass half empty. He's been warning people here about the crash for at least this entire year.

I submitted that a lot of the problem was "attitude" and that if people kept their heads and kept the money circulating life would be good. I am man enough to admit that Tao was right and that we are in deep doo doo right now. We have not yet felt the unemployment effects of this crisis. It's gonna get real bad.

I do think that the crisis is one of liquidity. The USA basically has run out of credit and our consumerism is fueled by credit. When we stop consuming the world melts down.

However painful this is going to be, it is long needed. The wake up call that the US is getting is important. We overconsumed and undersaved for way too long.
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Old 23-11-2008, 11:43   #156
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THE fOREX NEVER SLEEPS

The more volatile the economy the more movement, money is made good or bad. If you have a £1m Gbp you can earn exceedingly high returns, I wonder where the previously described "Professionals" Stashed their cash?? In a Bank?? Naahh!! its all sitting pretty out there in offshore hedges. The rich get richer & the poor get poorer.
are you like me? not got the required million Gbp? have a snoop at my club, as Im new here I wont be crude & advertise it, but if 8.25% COMPOUNDED MONTHLY does`nt grab ones curiosity........I will very Happily send you details if your interested.TERRY.
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Old 23-11-2008, 11:47   #157
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P.S The picture in previous post

forgot to label, well thats my craft at the moment , but its a start...
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Old 23-11-2008, 11:54   #158
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T
are you like me? not got the required million Gbp? have a snoop at my club, as Im new here I wont be crude & advertise it, but if 8.25% COMPOUNDED MONTHLY does`nt grab ones curiosity........I will very Happily send you details if your interested.TERRY.
If it sounds too good to be true, it probably is. There's one born every minute etc., etc. I'm happy with 4% annual on CD's or GIC's as we call them here. That was a few months ago when I got out of the market, now I'd be lucky to get 2%.
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Old 23-11-2008, 12:07   #159
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Agreed, Ex-Calif.

I pulled my investments late in the spring. Still down for the year, but slipped into CD's for the time being. I'm not a long term type if cash out performs the markets...

I won't get back in until there is some positive news, that someone, somewhere is making and selling goods to buyers paying with new money. Not credit, not old contracts but cash. No sense hopping in and riding the wave down. Some dividend paying stocks are looking more appetizing, I'll sacrifice some return and purchase after the turn around. No sense being greedy, when one can sit on their laurels...

I'm waiting until after January 20th to see which way the wind is going to blow. I see no reason to be in the market prior to Obama's plan to allow 10k to be pulled out tax free from retirement accounts. While a good short term stimulus, I think it is a potential shot in to the foot of retirees... Lots and lots of struggling families with retirement plans that will take advantage of that. It does not take all that many multiples to further devalue the markets, along with the funds that hold their money.
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Old 23-11-2008, 12:12   #160
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Too good to be true??

This club has been going for over 4 years and records its performance every month, the WORST month ever recorded on the FOREX was Oct 08,... they only made 1%. mmmm thats i% compounded, worst way 12% pa. I challenge you to find a compound calculator. they aint easy to find cos most people dont understand or require one.

p.s It was bl**dy Snowing here today. happy sailing...Terry U.K
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"Those who understand compound Interest Earn it. Those that dont Pay it".

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Old 23-11-2008, 13:45   #161
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Well I have always been the glass half full guy to Tao's glass half empty. He's been warning people here about the crash for at least this entire year.

I submitted that a lot of the problem was "attitude" and that if people kept their heads and kept the money circulating life would be good. I am man enough to admit that Tao was right and that we are in deep doo doo right now. We have not yet felt the unemployment effects of this crisis. It's gonna get real bad.

I do think that the crisis is one of liquidity. The USA basically has run out of credit and our consumerism is fueled by credit. When we stop consuming the world melts down.

However painful this is going to be, it is long needed. The wake up call that the US is getting is important. We overconsumed and undersaved for way too long.
While the "glass half full / half empty" analogy is, I suppose, one way of looking at it, for me it's more like the difference between getting informed and taking action to preserve the glass and as much of its contents as possible, or cluelessly wondering what's going on as those contents are siphoned off and the glass is smashed against the wall.

Yes, private consumption is said to represent 70% of the US economy, and consumers are now desperately reducing their spending to the extent possible and even (gasp!) actually beginning to save. Businesses consume, too, of course, and they have likewise cut way back as a result of their customers sitting on their wallets. But remember, one man's saving represents another man's loss of income, so he, in turn, saves instead of consumes.

Such actions compound, of course, and inflationary expectations are replaced by deflationary expectations. Before you know it, the economy is deeply mired in a liquidity trap.

Beware of the liquidity trap - Opinion - Editorial - General - The Canberra Times

Any economy would feel the effects of such actions, but one based on consumption, with a negative savings rate, indebted at a staggering level and only just beginning to swing from greed to fear is in for a very difficult time. The irony, in my view, is that American consumers were practically force-fed credit at unrealistic rates for far too long, and it was living on credit that produced the illusion of prosperity.

The latest data I've seen shows total credit market debt of $51trillion. In an economy with a $14.3trillion GDP, that represents a debt to GDP of 356%. As I wrote, staggering.

Dan has mentioned that he sees it as a liquidity problem. The inference, I guess, is that if the Fed and Treasury monetize the debt of the major banking institutions (buy up their bad debts), this will provide capital (liquidity) and things will return to normal. Unfortunately, Paulson has already indicated that he has abandoned this approach and the Treasury will not inject capital and accept the suspect CDOs (collateralized debt obligations) as collateral.

That was the original plan when he and Bernanke were begging the Congress to provide the $700billion bailout. When that was finally passed on the second try, it had been laden with pork and was an $850billion bailout. The reason that Paulson backtracked, I believe, is that it is impossible to place a value on something for which there is no market.

The only instance I know of where an entity has agreed to take the toxic debt off someone else's hands took place at about 8 cents on the dollar. Subsequently, the only offer I'm aware of was at 2.5 cents on the dollar. If the burdened institutions sell at those prices, they will quickly cease to exist.

Without debating whether that's a good thing or a bad thing, Paulson has concluded that saving these institutions is the vital first step in stabilizing the financial system. His current method for doing that is to purchase preferred stock in the troubled institutions, taking an ownership interest, and pretending that the toxic debt on the books will someday be worth something.

This, very likely, is a pipedream and they know it. What to do? Believe it or not, there is serious consideration being given to changing the accounting standards back to what they were; i.e. marking these "assets" to model, rather than marking to market.

If the institutions can carry this crap on their books at 100 cents on the dollar, they can present a glowing financial health report, et voila, happy days are here again! Suddenly, the trillions of dollars of losses they were facing are gone, their capital requirements are magically met, the credit markets thaw and everyone starts borrowing and spending again.

All it takes is one little white lie.

TaoJones
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Old 23-11-2008, 14:17   #162
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Dan has mentioned that he sees it as a liquidity problem. The inference, I guess, is that if the Fed and Treasury monetize the debt of the major banking institutions (buy up their bad debts), this will provide capital (liquidity) and things will return to normal. Unfortunately, Paulson has already indicated that he has abandoned this approach and the Treasury will not inject capital and accept the suspect CDOs (collateralized debt obligations) as collateral.
The root question is whose liquidity? At the macro economic label we mortals hear of 700 billion, 850 billion and 1 trillion (and more) dollar bailouts. I certainly have difficulty getting my head around this sort os scope.

Then everyone has thier favorite theories of economic stimulus, how to spend the money, followed by economic stability, government meddling in capitalism.

I am more of a nuts and bolts guy and was really referring to personal liquidity.

I currently carry some credit card debt, like everyone else. I also have investments. Although mine have taken a net 40% hammering since September. That said as bad as things are I am liquid and solvent. I could pay off my revolving debt with a phone call and a check. There is no better savings than eliminating debt so I am faced with selling a few assets and paying the card off or simply holding tight in the hopes that the eventual return of the market outpaces my interest charges. I would hate to be underwater right now.

To me bailing out banks is like bailing out criminals. They obviously aren't good stewards of the economy.

Why not give the money directly to the people who will:

a) pay off debt
b) save it in a bank
c) spend it

In case a and b the banks eventually get the money and in the transfer some personal debt is gone. The bank can loan it to someone else or buy a failed bank if they choose.

In case 3 we get an economic boost from that as well.
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Old 23-11-2008, 14:24   #163
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Interesting post, as always
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Originally Posted by TaoJones View Post
and pretending that the toxic debt on the books will someday be worth something.

This, very likely, is a pipedream and they know it. What to do? Believe it or not, there is serious consideration being given to changing the accounting standards back to what they were; i.e. marking these "assets" to model, rather than marking to market.

If the institutions can carry this crap on their books at 100 cents on the dollar, they can present a glowing financial health report, et voila, happy days are here again! Suddenly, the trillions of dollars of losses they were facing are gone, their capital requirements are magically met, the credit markets thaw and everyone starts borrowing and spending again.

All it takes is one little white lie.

TaoJones
I think that is the only option (even at 60 cents in the dollar all we get is a normal recession, even if a long one) simply because nobody has the money to replace all those missing "assets" (LOL) if at 2 cents in the dollar (or less). Whether it works or not is another question. the aim should be to buy time (years) to let the bad stuff work through the system without breaking the system.

IMO we are way beyond Capitalism, pragmatism is the only game in town.
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Old 23-11-2008, 14:52   #164
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Money as debt

The problem with giving money to banks or A.,B.,or C. is that our government has to borrow that money(in our name) that they give to us. That money is really debt. Here is a site that might help us to understand it better... . I'm not saying that this is right but it will give us another point of view.

Fair winds,

Pappy Jack

P. S. It's going to get even worse in about 6-8 years. That is when the first baby boomers have to start selling their 401k stock...but time will tell on that.

P.P.S. It takes about 20 sec. for the vid to start.
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Old 23-11-2008, 16:05   #165
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<snip>

I am more of a nuts and bolts guy and was really referring to personal liquidity.

I currently carry some credit card debt, like everyone else. I also have investments. Although mine have taken a net 40% hammering since September. That said as bad as things are I am liquid and solvent. I could pay off my revolving debt with a phone call and a check. There is no better savings than eliminating debt so I am faced with selling a few assets and paying the card off or simply holding tight in the hopes that the eventual return of the market outpaces my interest charges. I would hate to be underwater right now.

<snip>
I feel your pain, Dan. Virtually no one came through the last three months unscathed.

For what it's worth, in any three month period (or less) where the S&P 500 Index lost at least 40%, there has been a subsequent bounce. For example, the last time it happened (late 1937), there was an 11.3% bounce off the low.

Prior to that:

* In June, 1932, a 42% decline was followed by an 18.4% bounce.
* In early October, 1931, the SPX bounced 30.6% off a low in about five weeks.
* The crash of October, 1929, found its first swing low in November of that year, then rose 46% over the next five months.

Who knows if something similar will happen this time? And, of course, what's left out of the foregoing stats is the fact that after each of those bounces the markets headed lower once again. Unless one is particularly lucky - and very disciplined - and sells the rally at the top of the bounce, further heart-rending losses await after the bounce loses steam.

As always, your mileage may vary.

TaoJones
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