anyone else notice 16 new Buy Alerts listed in the Daily Report? is that a one-day record?

Well, Bill may not be present in word, but his trading system lives on. Picked up some RIO this a.m. based on the buy alert yesterday.

After using the RSI(7) system for a while, I've noticed a tendency for a pullback after the buy alert is triggered. To be conservative in these volatile times, I've started placing buy limit orders quite a bit below the buy alert price.

Example, Cara 100 RIO:

The RSI buy alert for RIO triggered yesterday, so today I placed my buy limit at 18.33. It got filled, and so far has moved up nicely. I guarantee this results in fewer trades, but the comfort level tends te be a little greater.

Jock, re. FT article, while they are publicly calling for the bailout, they are grabbing all the physical gold they can behind the scene, and have been doing do for quite some time apparently. Since this bailout won't solve anything, maybe it just gives them more time to grab more gold?

And, in fine fashion, RIO has reversed itself while I typed the message above. So, whatever Mr. Market. ;-)

Wow, that was a $15 rocket launch in gold. Maro's call yesterday is looking prophetic.

What do you guys think about APWR?

The question is whether gold's recent explosive move was the start of another leg up in an ongoing secular bull market or a counter trend rally in a cyclical bear market.

http://garyscommonsense.blogspot.com/2008/10/gold-pros-and-cons.html

Here are the Positives:

Gold has rallied strongly back above the 75 week moving average.

The COT recently gave us an extreme bullish reading.

Physical gold and silver are in short supply.

The Gold:XAU ratio is at levels that have signalled good buying points for miners in the past.

Now the negatives:

Gold is still clearly making lower lows and lower highs.

The 50 DMA has plunged below the 200 DMA unlike any other time during the secular bull market.

The dollar rallied strongly yesterday possibly changing the 19 week cycle low to come in at a much higher level than I previously thought. I also thought the dollar would test the 200 DMA before moving higher. Now it looks like it wants to break out to new highs.

Gold tested and was rejected by the 62% retracement level.

The current trading cycle is only 13 days old. Most trading cycles last 18 to 28 days. With yesterdays decline gold is already close to testing the major support level of $850. If this level fails there will probably be heavy liquidation in the gold market. Gold needs to hold above this level and it needs to do it for the next 5 to 15 days.

The XAU rallied 36% from bottom to top, so the gold:XAU signal could already be considered to have worked, so to speak. Now the XAU and HUI are both trading back below the 200 week moving average.

Gold and the XAU have both broken back below the 10 day moving average. The miners are threatening to break below the 20 DMA.

Finally Platinum which has led the precious metal bull both up and down broke through the 06 lows yesterday.

There you have it. The pros and cons for precious metals. Everyone can make their own decision as to how they think this will play out.

Bob Hoye

http://www.safehaven.com/article-11415.htm

Gold Sector: After a brief correction the real price (relative to commodities) has rallied. Our gold/commodities index rallied to 234 with the July crisis and then slumped to 211 in early September. In jumping to yesterday's 254 it is reflecting a sharp increase in investment demand that typically accompanies a financial panic.

This is back to the cyclical high set in June, 2003 when the late boom was launched. The low was 143 set in May last year when the late boom began to expire.

The real price is indicating a substantial improvement in operating margins and is on a cyclical uptrend. Typically this can run for two to three years during the first cyclical post-bubble contraction.

We have been advising buying senior gold stocks into late October weakness. A week and a half ago the juniors, as represented by the Toronto Venture index, registered a Downside Capitulation on the daily reading. This index doesn't have a long enough history to make some key comparisons. However it dispassionately confirms what everyone knows - it's crapped out.

Most small-cap golds have impossible liquidity, but veterans in this sector can begin accumulation.

After the enormous rush to 74 the gold/silver ratio needed correction. So far, it has made it back to 65. This is healthy and the 50% retrace is at 63. Once it broke above 54 our target has been around 100, which was the level reached with the last bad banking crisis that ended in late 1990.

Silver crashing relative to gold is typical of a severe liquidity crisis and the value of this indicator is enhanced by silver "experts" having trouble explaining it. Today's Wall Street Journal has a storyline: "Persistent Allegations of Manipulation Are Now Taken Seriously". Well whatever, this phase of the crisis is not over and when silver starts another dive it will indicate more distress in the financial markets.

Bob Hoye

http://www.safehaven.com/article-11415.htm

Stock Markets: It is a privilege to live in such interesting financial markets. It is like being in the fall of 1929, or 1873, or even 1825. The reason for the comparisons is that each of these disasters is well-documented with heroic beliefs that nothing could go wrong. Or if the markets turned down policymakers would end panics or prevent palpably bad conditions from getting worse. An essay is attached.

What's next? We have been using the 55-day plunge as one guide to the probable end to this phase of the liquidity crisis. This has been backed up by the usual seasonal forces whereby a period of heavy liquidation can complete by late October. Sometimes this can be accompanied by the final arrangement of a rescue package. This occurred in 1907 when J. P. Morgan is widely considered as single-handedly ending the panic. No, by the time he got the pool of credit together the panic was at its natural exhaustion.

This will likely be the case this time around.

Technically, the senior indexes are not yet at an oversold that would prompt a meaningful rally.

Fundamentally, there is a new influence in the equity markets. The long bond is now in a significant downtrend. The importance is that with long treasury rates rising, which with widening spreads will really ramp up the cost of corporate funds. Also money market spreads have been devastated, which increases the cost of short-term funds - if available.

So far, those inappropriately leveraged in credit spreads have been the main culprit of this severe liquidity crisis. They are now about to be joined by those who have been aggressively, but inappropriately, playing the curve.

In the meantime, there could be a couple of opportunities. The Consumers Staples sector has been doing well and is rolling over. The exchange-traded fund is XLP. Consumer Discretionary has enjoyed a sharp rebound and seems vulnerable. An ETF on this index is XLY. Both have options.

Much less than scientific analysis but, I do not recall seeing the RSI app showing any buy signaled stocks that do not have any + $ gain.

orders for JOYG, TCK, RIO, DE. (all in accumulation/buy modes)

buy stop above morning high for PPC. Long at 2.55

also buy limit for GRZ at 1.02

Sandy - I'm actually buying call options on it right now. I like APWR. Downside risk to me is if their customers don't get funding to pay for their wind turbines because the priority may not be on alternative energy with the world's financial system collapsing.

I'm optimistic, though. The turbine biz is nascent and the bread and butter is power generation, which will continue to do well...

added to PPC position at 3.18

APWR - My 2 centavos - I think I'll stay away, looks like it'll either crash or do a moon shot. Too risky for anything but a small position.

From Mish's economic blog:

http://globaleconomicanalysis.blogspot.com/

-------------------

Please get this to EVERY senator before the Senate takes a vote.

Suggested Fax Text

Fax Title: Rep. Brad Sherman On Bailing Out Foreign Investors
Dear senator

Today I listened to Representative Brad Sherman on how the Paulson proposal will purposely bail out foreign investors.

Here is the shocking text as translated from CNBC in an exchange with Larry Kudlow.

(start quote)

Rep. Brad Sherman, D California:

Larry I am glad you have a few seconds to talk to someone who voted against this bill. I am not changing my mind. I want to thank my colleagues who stood up to the purveyors of panic and voted against a very bad bill and voted with 400 eminent economists including three Nobel laureates who wrote to us and said don't panic, don't act hastily, hold hearings, work carefully. The fact is Larry if you read this bill, even you would have voted against it.

It provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson's power. There is a critique board but not really a board that can step in and change what he does. It's a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries.

Larry Kudlow:

Let me just ask you one question. I think you are referring to foreign banks headquartered in the United States. I do not see how foreign investors get bailed out.

Rep. Brad Sherman:

Larry you have to read the bill. It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday.

(end quote)

Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.

Senator, please scrap the Paulson proposal in entirety and try something that might work, that is constitutional, and does not put taxpayer money at risk.

US citizens should not spending $700 Billion to bail out foreign investors. The actions of Treasury Secretary Paulson go far beyond disgusting, to outright betrayal of US citizens.

I ask that you take a clear stand against this un-American bill by not only voting against it, but to Filibuster the bill until it is given up for dead. I cannot and will not vote for any legislator who votes for this bill, or even allows it to be brought up for vote.

Senator, the United States of America is depending on you to block this bill for the good of the country.

Your Name
Your Phone Number
Your Email Addres

re:Entry with RSI system.

I use an hourly MACD chart with Bollinger Bands to determine actual entry point per Elder.

In the case of RIO, I entered a one cancels the other order. I have a trailing buy stop (1/3 of the 10 day ATR) and a buy limit of 16.40 which appears to be where the price will make a lower low, compared to Monday but the MACD will diverge.

chickenpookie - that's the beauty of speculation. put a little money on a stock that looks fundamentally sound and extremely oversold and see how it pans out.

Hey 2nd,

If I were dictator, I'd be busy chopping the heads off these subprimers. Fuld. Cayne. The packagers of the debt. The ratings agencies. Kudlow just for being a jerk. Off with their heads. Off with their heads I says.

the one bright spot at this point re gold:

last time the $USD was approaching 80 the gold price was much much lower than it is currently.

im curious to see if gold will continue to base around w/ ongoing dollar strength, and if it will rise strong w/ any sign of USD weakness.

if the bailout plan is passed, i am wondering if it may in fact boost the dollar greatly because everything is bizzaro world these days and cause a dump in gold, especially the shares,

or if the plan will be met w/ mass disapporval and a jump in gold w/ a run up in the miners as people flee most other equities.

Chicken and teamonfuego , thanks for your views and different views.

I have taken a small position in APWR will see how it pans out.

re:$INDU

Looking at $INDU, it made a low on Sept 17, then a lower low on Monday, yet the MACD diverged. Looks like the hourly is setting up for a retest of the 10,400 area. My guess is it would launch a strong counterrally to 11,100-11,200.

Bill:

It appears that TOG (Trade of Generation - Long gold and short Treasuries) is taking hold and appears to be ready to pop sometime this fall. With everything happening the last couple weeks do you still see the TOG as being viable and should occur this fall?

Thanks.. Enjoy reading the discourse.

Amazing to me how Congress can take a holiday in the face of a real financial crisis...

wavesmash - You asked earlier about options strategies whereby one might attempt to salvage an underwater long. One approach (not advice) would be to buy one ATM call and write [sell] two OTM calls for each 100 shares of long stock held. The premium from the sale of the OTM calls sold should ideally offset most, if not all, of the cost of the purchased ATM calls. This method will, of course, cap your gain on any major up-move in the underlying, but will multiply by two the effect of a modest upward bounce. It will not, of course, protect you in any way from a continued decline in the value of the underlying should that occur.

Actually, it makes sense foreigners would want to dump back on us what Wall Street sold them as safe investments.

bsi87,

Your post is an example of why I enjoy this community. I'll have to look into the entry method you describe--it certainly sounds more scientific than my approach.

I reserached Elder and which book describes this entry method--Trading for a Living? Step Into My Trading Room? Thanks in advance.

The dollar is very strong today and gold is actually up. I think this is tentative signs of Bill's theory that both can go up together as all paper currencies are degraded.

I feel for Bill, my tin can and string internet link makes life more difficult too...

GE jawboning causing drop in price?

"We believe action on a financial stabilization package must be taken -- and urgently," said Peter O'Toole, a GE spokesman, in an e-mail message.

http://tinyurl.com/3emjr4

Can't find the email message.

Not looking to add at these levels.

wavesmash - Expiry date of calls bought and sold should, of course, be the same; otherwise you run the potentially unlimited risk of being naked short calls in an up-move.

long BHI at 56.16

BP, I think it's Come into My Trading Room. Not sure.

AIG is looking strong. With the XLF break even and some of its components up big (BAC, JPM, C) and some down big, isn't it strange that AIG is up big? Is the market saying that this is one of the survivors that will thrive (albeit thrive is all relative when you're down 95%)?

teamonfuego - Why not take a small position? Those who don't have a ticket will not be leaving the station... no telling if it's the express.

Sounds like best way to mitigate my risk in GE safely... sell the stock.

It is a fairly large holding in my portfolio so I will probably parcel it off in a few transactions, once I get it out of RSP account.

NCC long bias

shark- then you'd make a pretty reasonable dictator...most of them would be too busy amassing wealth/commissioning senseless projects/sending their kids to US colleges/seething with paranoia to worry about doing the right thing...

Blowout - beware of making trading decisions using technical indicators. The market is news-driven right now and chart patterns, oscillators, etc., are pretty much meaningless for anything longer than daytrades. However, Bollinger Bands, Acceleration Bands, %R, and MACDs, have been highly predictive on hourly charts for at least several weeks.

grrr. Was in the process of placing an order for JOSB at $33 and the darn thing popped up to 34 and ran away on me. This market is irritating.

FWIW

RTN

Recall some postings on a defense stock considerations. RTN in accum zone (daily, weekly RSI7 <30, monthly close) Like it and have traded in the recent past. Nibbled, have 1/2 position in the Massachussetts defense contractor, may add on dips.

NRT---For widows and orphans. Royalty. Fixed Income play. European (Germany) gas and oil paying @ 11.6% royalty.
No personal position, but entered today for managed account.

A thought - If you think the market looks pessimistic today, just wait until tomorrow.

NRT addendum: In accumulation zone, D-W-M all below 30 RSI7.

added to PPC at 3.49

long DE 46.86. RSI accumulation zone.

Re: Bond Yields

Bond Yields have stabilized a bit today:

http://finance.yahoo.com/bonds

Euro zone sees some steepening of the short end of the yield curve:

http://www.ecb.int/stats/money/yc/html/index.en.html

http://www.ft.com/cms/s/0/bf8246aa-8f13-11dd-946c-0000779fd18c.html

Financial Times

WEDNESDAY, OCTOBER 1, 2008
Wealthy Investors Hoarding Bullion

Demand for gold continues to increase as the rich start to accumulate the metal itself.

Nevertheless, the problem with gold as a store of value is twofold. First, for Americans, the US required citizens to turn in gold (presumably coins and bars) in 1933, and they were given paper money at a not-great exchange rate. And after the ban on shorting of financial stocks, don't underestimate the willingness of the powers that be to make derivatives based on gold unattractive.

And in a real meltdown, stores of value are limited. If society is reduced to barter, food, medicine, ammo, and cigarettes get a lot more in exchange than gold.

From the Financial Times:
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.

“There is an enormous pick-up in investment demand. I have never seen a market like this in my 33-year career,” said Jeremy Charles, chairman of the LBMA. “The gold refineries cannot produce enough bars.”

The move comes as fears grow among investors over the losses at investment vehicles previously considered almost risk-free, such as money funds.

Philip Clewes-Garner, associate director of precious metals at HSBC, added that investors were not flying into gold simply because they saw it as a haven amid Wall Street’s woes. “It is a flight into gold because it is a physical asset,” he said.

“Vault staff are also doing overtime,” another banker at the LBMA meeting said, adding that investors in some countries were paying premiums of up to $25 an ounce above the London spot price to secure scarce gold bars.

Spot gold prices in London on Tuesday traded at about $900 an ounce, more than 25 per cent above the level before Lehman Brothers’ collapse. Although some traders said the rush into physical gold could boost prices, others cautioned that prices were depressing jewellery demand, capping any price gain. Industry executives said gold refineries and government mints were working at full throttle to keep up with investor demand, but acknowledged they were suffering from shortages, particularly on coins.

Johan Botha, a spokesman for the Rand Refinery in South Africa, which manufactures the Krugerrand, the world’s most popular gold coin, said the plant was now running at full capacity seven days a week. “Even so, now and then we have shortages,” he said.

The Austrian mint, which manufactures the Vienna Philharmonic, a popular gold coin in Europe, said it had extended work to the weekends to accommodate soaring demand.

Last week, the US mint suspended the sale of its American Buffalo coin after it ran out of stocks.

--------------------

"We believe action on a financial stabilization package must be taken -- and urgently," said Peter O'Toole, a GE spokesman, in an e-mail message.

This might be a hold or buy indicator as opposed to a sell indicator. He wants everyone to sell so insiders can buy.

http://tinyurl.com/3m34j6

WEDNESDAY, OCTOBER 1, 2008
Marc Faber Disses the Bailout Plan, Likes the Dollar

We have a certain fondness for Marc Faber: he knows financial history, he is refreshingly direct, not attached to conventional thinking, and has a record of generally good investment calls (and admits to his mistakes).

Reader Dean provided us his latest newsletter, plus a story covering recent interviews (no, Dean is not his PR agent, just a disciple). Some excerpts, first from the BusinessIntelligence article:
Any proposal to rescue the US financial system will fail to avert a recession said Marc Faber, the Swiss fund manager and Gloom Boom & Doom editor and publisher, now based in Thailand.

A stock rally in the event that a package is approved will be temporary and should be used as 'an opportunity' to sell, said Faber.

"The rejection of the package is good because it shows that some people in the US are still sane," Faber said... "A bailout will not buy the US a way out. The government is less powerful than markets in fixing this mess."

"Most of the investment community are focusing on the financial crisis," Faber told TV newswire last night.

"But what they should be focusing on is that earnings will continue to disappoint for a long time, and that global growth is going to go down substantially. Most economies already today are in recession."

Noting that the US Dollar should continue to find support as investors rush to try and re-pay their debts "I think gold will be a relatively good investment under any kind of scenario until the US government bans the ownership of Gold in the United States.

"They are very good at changing the rules of the game – now banning short sales [of financial and other US equities].

"So yes – physical gold, you should own. Not derivatives with Citigroup, J.P.Morgan, UBS and investment banks, but physical and outside the US,

long BUCY 42.20

Fransix:

I appreciated and agree with your excellent post from 8:09 AM this morning, in which you concluded, as follows:

So what companies will be looking for is high grade near surface deposits which go to depth and can produce gold for at least the next 10 years.

Posted by: FranSix at October 1, 2008 8:09 AM [link]

I believe that Eastmain Resources (ER.TO - I am long; and follow it closely) has this kind of deposit at Eau Claire...which they are upgrading with drilling at 10m intervals and 100m depth(only); and I believe they will conservatively double if not triple their ounces at this deposit.

Extracts from Q2FY08 MD&A reporting on recent work: “The objectives of the program were to convert indicated and inferred resources to measured resources, expand near surface open pit gold resources and determine mineable gold grade. Results to date indicate that the close-spaced drilling at Eau Claire has accomplished our objectives. Enough gold-bearing vein material was collected for metallurgical testing and to sufficiently increase the geological confidence of the deposit to allow us to upgrade the resource category, number of contained ounces and mineable grade. Definition drilling and detailed surface channel sampling have demonstrated a positive correlation between gold grade, sample size and drill spacing. At Eau Claire, the average composite channel sample grade of 23.5 g/t gold collected at surface is much higher than the currently published drill-derived indicated resource grade of 9.46 g/t gold… initial results from recent closely-spaced drilling suggest that the Eau Claire deposit average resource grade may actually be closer to that of the average surface composite grade.”

My conclusion …if avg grade is 2 ½ times higher, the oz are 2 ½ times greater – ie. 2.5 mill oz.+ Au m&i.

Regardless of the bailout decision, it is quite likely that volatility will decline. This will be especially true if it passes which I believe is the general expectation and at least partially priced in already. So...

VIX - buy at-the-money straddle very near the end of day today to close tomorrow ideally at or near the open

XLF, SPY, QQQQQ, DIA - After the market reveals its hand tomorrow, I will be looking to sell naked options (puts or calls, just depends on market direction)in order to take advantage of a drop in implied volatility. This drop will take place quickly if Congress does the expected thing and there are no surprises attached to the bill so there may not be an entry

shark,

Heads or tails — these guys should be dealt with.

Until then, don't give us any stuff more about restoring trust and confidence.

Nancy, Listen up!
Blaming the "other political party" is insulting to any intelligent listener.

A grade of around 10g/t should be good to go for an underground mine. Consistency of the deposit and good recovery rates are very important as well.

The bulk sample is the one to go by, not the channel samples at surface.

I think Goldcorp already owns a parcel of Eastmain?

CP,
IMO, The best thing for us is if they would take a 1 year sabbatical without another vote.

slight correction to 11:25am post - first few paragraphs (prior to: "Investors in gold are demanding “unprecedented...” ") come from blogger at http://www.nakedcapitalism.com/2008/10/wealthy-investors-hoarding-bullion.html and it is the rest of the post that comes from Finanical Times itself. Apologies - no misattribution desired.

"don't underestimate the willingness of the powers that be to make derivatives based on gold unattractive."

They've been doing a great job so far, gold should be on Jupiter by now.

Here is Roosevelt's executive order banning the ownership of gold in 1933: http://www.the-privateer.com/1933-gold-confiscation.html

I strongly suspect that the bill will get passed tomorrow no matter what.
What with the avalance of end of the world predictions.

With the elections looming large, no political party can afford to maintain status quo. If they are not in favor of the bailout, they better have another plan. Else, that party might be in big trouble if the economy goes into a unending tailspin.

I am not even sure what can be done. I do know that bailout is not good.

How about creating a separate financial arm which bails out the distressed home owners by giving them loans to pay off the overdue mortgage payments. And the assets continue to remain in the books of the current lenders.

I know this reeks of nationalization. What other option one can think of. Let everyone( most of them being recless borrowers ) crash and burn. That will be difficult to watch.

Any ideas , alternatives you can think of? For an economy with a very dismal savings rate and a very high borrowing level, it does appear we are in pretty dire straits.And so will th world economy that is highly dependent on the US economy.

hey Chickenpookie. What do you think of TJX. Think it might pop-up here?

Re. VIX.currently 41.40"

40 Calls bid 1.00 ask 1.10.
30 calls: bid 3.90, ask 4.10

I have been burned by exactly what you see above. Stay away!!!! You cannot sell them when you think you have a big profit.

A one year sabbatical would save a ton of money, they could deposit their paychecks into bailout target bank accounts while they're at it.

So how do you go about owning physical gold outside the U.S.?

agreed, the latest gold move has been a safe-haven move. if the bill gets passed, i expect gold to come down. i don't see a way to safely play this, though.

Mackinaw - TJX - I'm not so sure about consumer discretionary, the public are likely to be cutting back to basics IMO. I'm told apparel recycling has been on a binge...

NCC long bias

Posted by: shark_attack at October 1, 2008 11:14 AM

up 15% since then

VIX - si02 makes a good point - it sometimes can be hard to get an optimal fill. However, as long as I choose strikes that have very nearly equal implied volatility my risk of taking more than a very small loss is quite low. If I cannot get strikes of equal implied volatility I will pass on the trade

re 10:40am:

some thoughts off the top of my head (any others welcome):

- CEF fund in Canada (this is not custodianship, but it is easier to arrange for most)
- on your next trip leave it in a foreign safety deposit box, or someone you trust
- buy/keep cheap jewelry and stash for trade; I think people did not have to give up jewelry in the great gold melt of the 30s; also pre-1964 silver coins are good.
- large fund holders have access to other methods (foreign accounts etc)

sorry, my last post was referencing 11:40am by Schleppy. Typing too fast today...

chicken - i actually did buy up some AIG...got lucky and got in at $3.63.

re: tomorrow being pessimistic - why do you think this? do you think the market will tank even with the passage of the bill?

...TJX. Think it might pop-up here?

Posted by: Mackinaw at October 1, 2008 11:37 AM

up 0.06% since then

We travel in different lanes, shark

My concern is that the passage of the bailout bill (workout bill, whatever you wish to call it) is baked into the market. If the bill passes, the market may continue to fall. Of course, if it doesn't pass, it falls further and faster...

I don't think the flight to gold is a flight to safety, even though the article alludes to that. But it doesn't draw a direct inference; it is trying to find causality when no one is telling the author. The wealthy investors mentioned in the FT article have the best advisors in the world and don't ever panic. These are not retail investors - these are insiders. IMO This is a flight from paper currency as they see the devaluation of all currencies and associated currency controls that is coming. As Kaimu says, gold is no ones liability.

Famous Chinese philosopher once said, "He who picks bottoms gets sh*t on fingers".

wow. Look at JOSB, Chickenpookie

haha. that's funny RDR

long ambak 286

Consumer non-cyclicals are the only sector on my screen holding water today.

long HSC 36.18 JOYG 42.3 Triple RSI buy alerts

Fransix:

re Eastmain & Goldcorp.

yes, G owns 9.9% of the shares of ER

also, ER and G have a joint venture with Azimut, on a deposit, known as Roberto South (adjacent to the 3.5+mill oz. Roberto deposit which G is developing), of which ER is operator and on which G is paying all costs to bankable feasibility study).

again, long ER.TO

Into DZZ @ 28.37

Most entertaining to see the DOW rise shortly after FORD released their horrid 35% decline in vehicle sales. Naaah, this couldn't be market intervention???

Schleppy -

goldmoney.com

bullionvault.com

fireworks

re F news --- think the market looks at F results and comments about customers unable to get loans and dealers unable to arrange loans (no credit available), as placing more pressure on Congress to pass the rescue, bailout, whatever bill.

long RIO 18.24

Ken Tower has been on target recently with his calls . . . just began new position at Qual. analysis (no access). RTT had this:

http://www.rttnews.com/ArticleView.aspx?Id=728253

"It doesn't mean the trouble is over"

Teamonfuego - I think the crowd isn't pessimistic enough, too much buying yesterday, more downside to come - Strap in. I'm fully loaded and my stuff only goes up when I'm not watching.

Straddles paid off last time the Wall st. bailout plan was being voted.

IWM, DIA, and QQQQ straddles:

http://nexalogic.com/strangles.html

IWM is great because the bid-ask spreads are 1 or 2 pennies. Move required for profit is ~7%, which seems very small given the moves what we have seen lately.

GFI - 10-day chart shows triple top @ 10.
Disc: Long GFI (stock & calls)

long ambak 286

Posted by: shark_attack at October 1, 2008 12:16 PM [link]

This puppy went up 30 percent since I posted this but of course, I sold already. I gotta itchy finger.

Shark, you on UA today?

It is always interesting to me that someone sez technical indicators don't work because the market or the stock is news driven.

When isn't the market/stock news driven?

Maybe the appropriate caution is to reduce position size since volatility has increased and have patience when it comes to entry prices.

Thanks for the info on physical gold.

"Over $1 trillion worth of market value was wiped off the books by the stock market drop,'' said Senator Robert Bennett, a Utah Republican. ``It is ordinary people looking at ordinary pensions, with their ordinary Main Street kind of 401(k) plans, who lost that $1 trillion. And they lost it in a matter of minutes.''"

Hey Mr. Bennett - Did the broker sell the investors equities at the bottom? Tell us if those losses are permanent and if so, why. HB&B wants taxpayer money or else they're going to keep selling 401k equities.... Blackmail.

The HB&B will continue to cause max pain until they get what they want - our trillion dollars. This has all been manipulation leading to the greatest transfer of wealth in mankind's history. They knew what they were doing the whole time and knew when it came to crunch time they would never be held accountable.
The outcome of this situation is inevitable and reminds me alot of the recent FISA debacle. A bad bill was defeated but they just kept plugging at it behind the scenes, counting on the media to shift the narrative and the general populace to face the reality there was no stopping Congress and turn it back to American Idol.
IMO, this situation shows very starkly for who the Congress stands up and fights - Hint: it ain't us.
Why $700 billion? Why not $150 billion with oversight and review at the end of 3 months?

Out of DZZ @ 28.682, +1.1%

added to BHI at 57.18, ave 56.71

Corner Stone,

I think it's actually "up to" $50 billion a month, so would that be ok then?

We're talking passing a budget not actual. They don't get the $700b immediately deposited in a bank account, do they?

Would love to see what the line items are for that budget.

Just politics and free markets mixing it up a bit. Nothing to see here... move along...

Reference Ken Tower link

Wait @ 1 minute to load.

BTW, at the bottom of article there is a clip and past link where you can listen to the (short) interview.

PPC RSI 7 day capitulated (traded below 10) on 29th/30th. Hourly chart showed a good entry yesterday. RSI 7 day now at 19.36. Move above 30 could be very explosive.

Long, ave cost 3.01. Do ur own homework

ARD on the move

DJIA down 100 pts in first 30 minutes. See how it closes.

Sandy -
RE: Nationalization

I'm not sure if you had a chance to read Hussman's (sp?)Weekly Comment (link posted yesterday) but his idea of a superbond has so far been the best idea I have heard of.

NO SUH!

I'm working AMBAC, NCC and maybe AIG today
No xpensive underwear for me. Don't need it anyway:)

BNN also reports that the Senate bill contains changes to FAB157 (mark-to-market). If this passes, are we back to a make-believe world? Let the banks keep hiding everything, nothing changes.

In other news, the US government has abruptly halted a program that tests the level of pesticides in fruits, and vegetables and crops, for savings of $8M/year. The dept. of Agriculture contends it is too costly.

http://www.chicagotribune.com/news/nationworld/chi-pesticidessep28,0,6191823.story

Hah!, sorry, meant uaua

Mackinaw - Take a look at VAR

Looks good all-around, CP. Nice multi-year breakout recently. Do you think it's testing that this month?

BSI87

PPC: You might want to check out BoomBustBlog.com. This guy's a serious short and financial forensic proctologist. He's distributing his research on Smithfield foods. I think he also mentions PPC in his blog as a short candidate. This could be explosive, but it could also be the DCB from what happened to the Smithfield the other day.

Doug Kass just commented that the short selling ban will be extended today but that it will exempt convertible players.

He's pretty reliable but it's just a rumor. I have no idea what the impact of convertible traders might be nor the logic behind the exemption

Si02,
That article makes me really glad to have a freezer full and the canning shelves full of pesticide-free vegetables.

What a joke too, they're ready to throw another 700 Billion after the 1.2 Trillion we've already spent down the dead bank hole but they can't afford to spend 8 million testing for pesticide levels!!

Go figure!

Rob.

[Bill Cara note:

After 5 days without any connectivity, causing me to use another system for the WIR, I am now back online, albeit with a dial-up phone modem until my hi-speed back-up is connected in about 3 or 4 days. My cable ISP crashed on Friday and after trying 3 modems, I now think the problem is in the local cable line that is connected to the modem. But on-site service will not arrive until Oct 7. I thought I had a system failure, but there is nothing wrong with my system. Asap, I will get back-up systems just in case.

The good news is that I received final approval on resiency, work permit and securities commission licensing. Only the FINRA/SEC registration remains, but that should not be a problem.

I will try to upload a new Daily Report and Community Chat later in the day, and answer too many letters and inquiries to think about. Oh, my cell phone went out last night too. I figure sometime in November I ought to be able to smile about all this.]

Good to see you back Bill :-)

CP, can you explain to me the strength in DMND this year? It's completely beyond me. Their margins look like sh*t, their revenue/profit is way down.

Teck is close to capitulation, down 11% today. Perhaps on tomorrows open.

what the hell did they say, down 20 pts DJIA, then down 100 pts?

Welcome back, Bill.

Eegards

long AA at 21.24. Triple RSI buy

market should go down from here (after lunch), volume accumulation looks to have topped out intaday on most everything. How far down is another question, we shall see I suppose . . .

whoops - looks to have started down already.
General chart pattern is very bearish to my view, but patterns don't mean all that much these days.

gold is relative - on Monday gold made a new intraday high for the year - figured in SEK.

SEK gets sold off against the EUR in crisis times, no particular reason.

SLW made a breakout from the intraday downtrend, but has to make it stick. I see it as being in consolidation mode for now.

All the neurotic hands must be shaken loose from the bandwagon before the post-bailout bounce can occur.

long TCK at 25.87

Bill:
I realize it's redunant, but you might want to have satellite and cable. Satellite is slower, but it rarely goes down.

Welcome back Bill and congrats!!!

I just put our 401K back in the market. It's in tech, industrials, and energy. I also picked up some XLI, SMH, and XLB. I want to buy SU and TCK but am not sure they've bottomed yet.

Rob.

DJIA down 25 pts now. Jeez

Are the ratio analysis provided on site like rueters adjusted for goodwill? I'd also like to know if some of the ratios are derived from a quick look at the indirect method of cash flow statement presentation rather than the (correct) direct method. Does anyone know what the case may be?

Anyone know of a good precious metals fund for my kid's education account? I don't want to risk it with individual names in his account.

Thanks,

Rob.

Bill - You might want to consider "WildBlue", a two-way satellite ISP (vs. 1-way which requires phone link for outgoing traffic). I suspect their satellites can reach the Bahamas, as they reach virtually all of the lower 48. Not super fast, but relatively cheap. Cost $49.95/month.

http://www.wildblue.com/

yikes - what kind of rogue wave just hit?

Or a precious metals ETF that holds shares of different mining companies?

Rob.

Buffett buys some GE.

Wonder what's left in the wallet.

LOL

Rob - Why not GDX then?

I just saw a post on another forum I frequent stating that if the bailout bill is passed, the Federal Reserve Banks will no longer require reserves as of today. Could someone please verify or refute this? Here is a summary of the legislation:

Emergency Economic Stabilization Act of 2008, H.R. 3997 ( http://www.govtrack.us/special/econstimbill/changes.xpd?id=3 )

Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.

-- here is the law that is being amended --
Financial Services Regulatory Relief Act of 2006
( http://www.govtrack.us/congress/billtext.xpd?bill=s109-2856 )

SEC. 202. INCREASED FLEXIBILITY FOR THE FEDERAL RESERVE BOARD TO ESTABLISH RESERVE REQUIREMENTS.

Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended--
(1) in clause (i), by striking `the ratio of 3 per centum' and inserting `a ratio of not greater than 3 percent (and which may be zero)'; and
(2) in clause (ii), by striking `and not less than 8 per centum,' and inserting `(and which may be zero),'.

SEC. 203. EFFECTIVE DATE.

The amendments made by this title shall take effect October 1, 2011.

was that due to buffet? lol

Hey gang,

Just a short story to put things into perspective.... My little elderly mother who knows very little about politics and even less about money and financial issues has never shown any interest in either topic. Until now. Lately she has begun sending me daily links to stories on how this whole debacle was caused by the democrats...

We had a single conversation about the financial situation over a week ago. No matter how basic or explicit I tried to explain the issues, she could not grasp the essentials. She'd listen while I rambled about fiat currency, gold, NAFTA, hedge funds, hidden agendas, etc. But I could tell by her follow up questions that all of this was not connecting to any neurons... akin to "So, if I keep my 401 statements in the safe deposit box, they'll be safe right?... Because the FDIC insures whatever I put in the bank...?"

I decided not even to begin an attempt at educating her and so I suffer through her emails. These problems are just too big for the vast majority of middle america to even begin to comprehend on a complex level. Instead, they will resort in mass to what they know which is terribly little. For my mother, blaming the democrats is as far as she can go. I think many of our politicians operate at about this level of complexity too.

The real leaders in Congress and on Wall Street will get what they want because their peers and their constituency will easily be misled and misguided. They wouldnt currently be in office otherwise. Promulgating terror and applying a little market extortion should do the trick nicely. They just have to wait a few more days.

As we know, in the long run it ends poorly for all but those insiders. I would place my bets for passage of the worst sort of legislation possible in this crisis, giving Paulson and crew unfettered access to an unending stream of public funds to squander as they see fit amongst their cronies. I hope I am wrong.

Sincerely

Re: Bailout

If the bailout doesn't go through we'll see another capitulation day.

Bond yields are thus far stable, albeit at much lower rates, so Bernanke was probably right not to lower right away, but there are only so many 25 - 50 basis points to cut until you get to zero. They are literally running out of bullets, so I expect the next rate cut to be in the € zone. Just the same another few days of zero bond rates until the panic is done if the bailout doesn't pass muster.

I think another round of rate cuts in the U.S. proves Bernanke wrong, so he's probably reluctant to make a move there, I'm sure its the same in the Euro zone, where central bankers don't want to be shown up.

So what kind of trade would you be looking at? Selling bond prices and going long gold, and short the €.

Or just long gold related investments and ¥/€ cross.

OldGoat,
Thanks, you think I would have known that from being part of this blog for quite a while now but sometimes I'm slow.

Rob.

now let's all watch as GE rallies on the news that they are massively diluting their equity and have obtained some cash subject to usurous terms to WB (and more dilution in the future)

Mac

LOL. Can't have too many saviors. ROFL

Guess Warren read my email. lol.

You know it's bad when Warren buys in at 27% less than you did.

I need a Materials stock and a Utility to round out stuff. Any ideas?

Market is falling even though the TICK is extremely high...strange.

Is Buffett the ultimate vulture investor or what? He certainly thinks this is the bottom or close to it.

bsi87

Ever look at the Elliot Wave Principle?

QT,

Yeah, but it's too complicated for me plus the wave count seems subjective.

Interesting. WB announced to buy $5b GS before 700B vote last week. He announced another $3B purchase in GE before the second time vote?

God I love Warren....good for about $560 clams in the ol' GE profit fund. NOW we'll wait for those who think they are following Buffett find out about dilution and why he's getting 10% on his preferreds, 10% option to call within 3 yrs. and the ability to buy @$22.50. Me? Waiting for the next pullback....

added to ABV at 55.40, ave cost 52.94.

Re. the new bailout bill: "...raising the FDIC insurance cap to $250,000 from $100,000. TheFDIC may not charge member banks more to cover the increase. Instead, the bill allows the FDIC to borrow from the Treasury to cover any losses that might occur as a result of the higher insurance limit."

"Borrow", as in it will be repaid?

The bill also adds in new key elements, including:

- "renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels."
- ' a "Mental Health Parity" provision, which would require health insurance companies to cover mental illness as it would physical illness.'

What does this have to do with the financial issues?

I have a big IWM straddle in place and will wait for this circus to end.

Looks like this bill will be like any other horse-traded amalgamation of nonsense.

How funny would it be if they got so busy adding irrelevant items they left out the 700 Billion?

Rob.

You know, that rings a bell. They put dissidents in mental institutions in the former Soviet Union.

siO2 - what straddle did you do? thx

I just picked up some MTL at 16.90 Betting Putin calms down for awhile and this reflation will need steel.

Rob.

Warren Buffett has $40 Billion on hand now after GS/GE. He wants to spend maybe another $30 billion in deals.

He got about the same deal on both stocks:

10% interest, below market price for stock, & five year options to buy the same amount of stock at the same price.

Close-price yesterday for GE: $25.50
Buffetts price for GE: $22.25
Price for a 5 year option on GE @ 22.25: $5.00

That looks like a very high cost of capital for the GE stock holders. That puts the price of GE he paid at $17.25 w/ 13% interest rate.

Joseph, 67, earlier today.

I'm thinking about dumping my SLW and reloading after the dollar settles down after the euphoria of this bill passing wears off.

Anyone else having similiar thoughts?

Or maybe the dollar will start crashing right after the bill passes and I'll be shut out or chasing it back up.

So hard to guess the outcome sometimes...right

Rob.

If Buffet had bankrolled these massive paries on GE and GS, then you can be absolutely certain if these issues decline, then the credit derivative swaps will be worth something like ten times the value of the initial investment, and GE and GS will be returning huge swaths of cash in the short term.

Finger Lakes - Prescious Metals fund - I have liked PRPFX - Permanent Portfulio Fund for several years. It can move money from bullion to "safe" currencies, and back so its chart has been fairly consistently up until now but if the Dollar starts to fall again I will put more money into that fund.

Your case might be different than mine and this investment might not be best for everyone. 8)

Autos

Besides big drop in F sales, looks like all the others encountering very poor sales. Even Honda will be down double digits, perhaps 20%.

http://tinyurl.com/4x3c6w

[Bill Cara note:

In my focus list of 36 candidates for acquisition, I omitted any from consumer discretionary. Ford revenues dropping -34% over the prior year period is just another reason why. It will take time for Mom & Pop and companies alike to recover from the shock of this Wall Street crisis before they are comfortable in returning to make discretionary purchases.]

Spot,

Thanks, I'll check it out.

Rob.

[Bill Cara note:

I posted a Daily Report as well at 2:37pm ET. Tomorrow, I will tell you I recommend a 40% commitment to equities (spread among my list); 20% in gold and silver; and 40% in short puts with deep out-of-the-money strike prices. Should you get stock put to you in these quality prices, that would mean the DJIA eg would have to dive to below 10,000. The cost basis then for 80% of your equities would be quite low, and satisfactory for the next several years. Also, as the economy starts to take on a fresh look, with new economic wealth being created in the traditional fashion, I would work down the gold position to about 10% and depending on your need for income or not, I would decide between rolling the expiring short puts or using those funds to buy more equities. I would avoid bonds and treasuries.]

Bought some PCP today.....the stock that is, @ 76.58. Triple RSI AZ.

I tried to explain credit derivative swaps to my grandmother on the weekend with a can of diet coke and some pieces of paper.

Just write $53 trillion on the paper, put the paper on top of the can and then take away the can, crumple it up, then throw it in the garbage.

I think she figured it out.

PRPFX - Looks like it just recently broke below a 5-year weekly trend line. Be careful.

spot - Looks like you've had a real nice ride for the past few years. Congratulations. Were I you, I'd want off at the next stop. There will be other trains. DYODD.

should read credit default swap.

and should have crumpled up the paper too.

http://tinyurl.com/2mwqg2

When I installed the new blogging software from MS it installed a new tool called Windows Live Call.

It thought 123.3999 (increase in stock price for BRKB at the moment) on my broker portal was Warren's phone number and highlighted it blue. :)

It's at +$130 now.

Bill, thank you for the great post on top this thread. I hope people act and the politicians listen.

Auto Sector:

I heard a large auto dealer being interviewed yesterday and he said that although he had customers, financing was almost impossible to obtain even for those who had good credit scores. He was very concerned that the continued credit freeze could imperil his company's survival. Last week, the nation's oldest Chevy dealer (since 1919) bit the dust as GMAC cut off his credit. 3500 jobs lost.

Also, GM also announced they would build a new small engine plant in Flint,MI, for $390 million plus $136 million in State of Mich tax incentives. Net new jobs- a paltry 300. The engines are for the new Volt hybrid. So that's about $1.75million per job.

Misc:

Warren Buffet seems to have found a new occupation as a loan shark for the large corporations... getting deals not available to any of us small fry.

IBM -

Stock down like a financial. But, noticed that almost the entire board of directors are selling shares!

Khan Resources--I saw that the price was dropping even more precipitously than usual, so I checked the news on Yahoo, and it turns out that the Tinpo offer for Western Prospector has been withdrawn, Tinpo alleging that the Mongolian government is planning to nationalize the uranium mines in Mongolia. So I called Khan and spoke to Jon Ruby of investor relations who said that this is just a rumor and nobody knows anything about it, especially not Khan who would naturally be somewhat interested. He told me that Khan called the interior minister of Mongolia who also claimed to know nothing of this rumor. He explained that the terms of Tinpo's offer for Khan required that there be something (bad economic conditions aside) such as a planned nationalization of mines in Mongolia for Tinpo to renege on the offer. Indeed, he says that Western Prospector is now suing Tinpo. He did seem to agree that the sudden drop in Khan's price was due to this rumor. As for the possibility of Khan making another offer for WNP, he said we would just have to wait and see. Khan's current price is about 38 cents. Like the watch salesman I heard on the street in New York one day, "Two dollar watches, check 'em out--can't lose."

http://tinyurl.com/3mez5r
More on the car crunch mentioned by astral.

"We are taking back big mines, and one of them is one of the biggest in the world. And do you know what it is? It's gold, it's gold," Chavez told supporters at a rally during a speech about the benefits of state control in an economy.

KRY holding up well all things considered.

http://tinyurl.com/3v7yon

Mackinaw - DMND has great profit, is consumer staple I don't see how it could loose... folks keep migrating towards this one but might sell off if market tension releases? Who knows for sure, not me...
Utility - I like Dominion D right now because it has exposure to nuclear and I've been expecting a rise in popularity.
Materials - How about X, RIO, or FCX? RIO is in Cara list, I'd start there. Someone else mentioned steel above....

Bill,
Good to have you back and swinging like a heavy-weight.

Everyone,
I do not reside in the US but I have many friends and colleagues there. I am sending them all directions to this blog for the purpose of reading Bill's comments today. I humbly ask that you all do the same.

Be well. Be free. Be prosperous.

Finger Lakes:
re Precious Metal Mutual Fund

I suggest that you check out one of Frank Holmes' funds, notably this one:

http://tinyurl.com/49ce3f

I do not own this or any other pm mutual fund; but if I were shopping for one in the US, I would check out Frank's.

I own Endeavour Financial -edv.TO - of which Frank is a director; and he is one smart well connected guy.

I believe Bill would endorse Frank Holmes as well, as he mentions him from time to time, as in the following reference last year.(do a search for many other references)

"Also at lunch was Michael Cappuccitti, who I’ve known for over 25 years. Mike is now VP and Toronto Manager of Jennings Capital, a Canadian broker-dealer. Mike, Angie Comi and Frank Holmes used to work together back in the 80’s before Frank departed to US Global Advisors in San Antonio. Frank today is chief investment officer at US Global, and manager of the world top-rated natural resources funds as well as frequent guest on Financial TV. "

IWM - open OCT 67 straddle

BILL,

Missed your daily reports...great educational read

Welcome back...

and much success in your endevors

thanks sv

Joey,
Thanks, I'll check it out.

Rob.

Well concerning SLW, I decided not to sell and instead bought more at 8.40

Rob.

Is there still opposition amongst the public to the bailout, or will this be rammed through?

Started positions in TCK, SU, PD-UN.TO and FM-TO (First Quantum Minerals). First Quantum is a copper/gold play, trading at about $37 CAD, off from year high of $103, is listed on the TSX-60, currently has a PE of 3.5 and pays a small dividend. Will add more if prices come down. DYOD

Posted by Finger Lakes: I'm thinking about dumping my SLW and reloading after the dollar settles down after the euphoria of this bill passing wears off. Anyone else having similiar thoughts?"

Bill listed SLW as a value stock today. Wouldn't it be more prudent to just accumulate SLW on the dips at this point? Are you trying to outsmart the market by predicting the daily moves? If you think that silver will fall as the Bailout bill is passed, then maybe others think the same? And if so, maybe it is already priced in? The only thing, IMO, that you can count on in this market is volatility. Hence, the obvious strategy is to buy the dips, place sell limit orders above your purchase price, and wait for them to be hit (or just accumulate shares long-term).

Today, for example, another one of my limit orders was hit at $1.70 for 2000 shares of WGW that I purchased at $1.48 a few weeks ago. I still have a lot WGW left, as I think it is still in the value zone. I just placed a buy limit order for the same 2000 shares at $1.50, to reload in case a sell-off happens.

Thanks CP. I'll check those out. As to DMND, I see the profit a couple of years back but recently it looks pretty thin. Maybe I'm looking at the wrong data?

Good decision regarding SLW, Finger Lakes! :)

I think the public is just as opposed as before. And I've contacted my bought and paid for NY senators.

I have friends I've been educating about the problems since they came to me all mad that the bill didn't pass and now the economy was going to crash.

They bought the story hook line and sinker without even understanding the issues.

Now that they have a better understanding they're more opposed to the bailout but fear the consequences if we don't do it.

Rob.

DJIA down 100 pts first 30 min.

Up 19 last hour.

David,
Thanks. I was thinking about trying to time the daily movements as it tracks the dollar but was too afraid if I sold I'd end up chasing it higher if it didn't fall.

So, I actually held and bought more out of fear of missing out on the upswing. How's that for bullish sentiment?

Rob.

FranSix:

Yes, now the tide of public opinion seems to be turning in favor of passing HR 3997, as reported here:

http://tinyurl.com/4m7hng and

http://tinyurl.com/483jnw

Google getting plenty of search queries for "Who is my congressman?"

Bill,

All your points are great and so well thought out. I'm sure Ron Paul would approve of your plan.

I'm assuming the Resolution Trust Corp would hold all the dead banks' assets that no one wanted and would slowly sell them off.

Would the dead banks go away as well to be replaced by the prudent banks left standing or would the dead banks be made whole and allowed to continue operating?

I'm assuming you mean the former.

Rob.

Wavesmash - forget KRY; look at RML.V

If anybody comes away with the massive las Cristinas and las Brisas deposits, it will be RML through their 49%JV with CVG, the VZ's gov't mining company. They only need to provide half the capital that the KRY babies would have needed!

Do you know that the concession for las Cristinas is NOT in KRY's hands, but in the VZ gov't's mining company. KRY was a mere contractor to CVG.

How hard is it to declare a contractor in violation of their contract?

If anybody wins the prizes in Bolivar state, it will be RML.V (37% owned by GFI, BTW). Risky, but could have a 10x upside, IMHO.

disclosure: I have a position in RML.V.

Even if I agree with Bill Cara's basic premise, we still have to do something FAST to backstop the system. Fondling your gold will not help you.

And frankly, since the PEOPLE did not march on Washington, demand that the frauds be stopped, they are at least as responsible as Wall St. The PEOPLE took out all those bogus loans on overpriced shacks. You can't deny that, The PEOPLE are an ass.

I'm a lot more interested in preventing a meltdown than worrying about any other issue. There's time for that later, right now, we have to keep the ball in the air. Kapish?

[Bill Cara note:

It would not take any longer to set up Resolution Trust Co 2 with funding of several hundred billion dollars. Then let an independent panel at RTC2 negotiate new equity in every major bank that needs it -- on the same basis that Warren Buffett invested in Goldman Sachs and now GE. Those shares would be sold later into the free market. Btw, any bank that needs that funding would have to freeze all sales of shares to any present officer or director or investor until after RTC2 got at least their original capital back. Problem solved. I'll bet you RTC2 would be able to be closed before the end of the next President's term, and the Treasury would be better off. RTC2 would decide if any financial company today was not worth saving, and then send in liquidators to sell its assets and stick the Fed with the losses. Let the bankers' banker cover those losses -- not the taxpayer. The point is there is a simple solution, and it could be put into effect immediately -- but HB&B and the Fed would do all in their power to stop it. They had the Treasury Secretary appointed to take care of this problem for them, and RTC2 would be nail in his coffin. Appropriately.]

Old Goat - PRPFX - I see what you are saying. PRPFX moves money between bullion and "safe" currencies (not ever the $USD, I think). In fact, there seems to be a pretty strong negative correlation on the charts between PRPFX and the $USD.

Perhaps the reason that PRPFX broke its trend is because both bullion AND "safe" currencies such as the Swiss Franc have been moving down at the same time?

Thus, I am waiting until, if, and when the $USD starts dropping again, but I can afford to wait a while longer 8).

Thanks for adding that comment.

The impression I get from some of the media input is that it was housing that caused the crisis, and not speculation in oil prices. As soon as oil prices started to deflate, suddenly major Wall St. firms are in trouble. Housing had been going down for at least two years, so I assume that housing was not the cause. Speculation in oil based derivative markets probably was behind it.

After I read today's Bill comment. I fully agree.
We can not give the money to the people who created the problem in the first place. We need independent oversight board.

And I know the outcome. The chance of implementing Bill suggestion is as much as Ron Paul get elected (as Bill states in his comment.)

But we have to protect our own future or next generation. Sometimes I feel I lose hope.

procol - There is no rules of logical conclusion in your statements - meaning that you are not making any sense.

Rethink your statements and basis, then come back and show us some intelligence.

Thanks. I look forward to your next post, if it is any better than the last.

Today was kind of frustrating. The large moves I caught I caught with small size, they were wild horses. Then I jerked around, taking both sides of the trade, re-buying at the wrong times and being a schmuck.

Better things tomorrow.
Welcome back online Bill.

I agree that the People have part of the blame for getting themselves in the mess they are in but I would point out a few things:

1) Most Americans, even very talented and intelligent people know nothing about money. Our improvement in financial education as a nation will go a long way in making things better. They never thought about worst case scenarios, they never thought their homes would go down in value.

2) Alot of people were also taken advantage of by brokers/lenders in a largely unregulated area of our finacial system.

You may say people "ought" to know better but many of them don't have the tools and knowledge base to have a fighting chance with those that choose to mislead them.

Re Google,

I recall that Hussman did a critique of Google not so long ago, the result being that insiders were appropriating essentially the whole growth that Google was creating, leaving zilch for shareholders.

Will see if I can find that weekly report tomorrow, it didn't show up on a direct search just now.

(no position)

The bail out bill also includes "Sec. 211. Transportation fringe benefit to bicycle commuters." Full text:

http://online.wsj.com/public/resources/documents/senatebillAYO08C32_xml.pdf

Call your congress person! WSJ site shows has 99% against the "new" bailout.

Credit default swaps enabled unseemly leverage, which is what ultimately caused the damage, not 'subprime' loans. Defaulting loans were a trigger but without the leverage I don't think the damage would have been nearly so great.

Did anyone read the article on AIG in the Times on Saturday? A 390 person unit in London caused the failure of the entire 120,000 person firm by excessively levering up on derivatives. The manager of the unit made a fortune the last few years and said only last year that due to investment selectivity, losses were almost unimaginable. These are the morons that have destroyed the most venerable firms in the world.

Schleppy - I agree with what you say about people having to take some blame for their own actions. They, and we, must learn from our mistakes if we are to be among the survival of the fittest.

The problem is that we have yet to see any connection at all between the billions already spent by the Treasury with the needs of the common People.

This bailout is for covering our big banks's losses, for "golden (platinum?) parachutes, and for paying off some of the bad financial paper sold by (Goldman?) salesmen to Foreign Governments.

The bailout should be defeated and Markets allowed to correct the real problems over time.

Mackinaw - DMND - Well' you may be right, I was referring to their latest report of 200% earnings per share increase. It sounded good to me, but it was a simple and cursory examination. I have been wrong once or maybe twice in my lifetime...

http://tinyurl.com/4mfddm

hmmm.. maybe the world is run by obsessive-complusion?

I'm not in the least bit surprised the revised version does nothing to address the real issues and everything to cloud them. This is precisely the point I've been trying to make all along, our economy is doomed if our legislators continue down this path, they have become lame duck. Hopefully they will enjoy their catered dinners and have a chance to swim in the capitol hill swimming pool, sauna and hot tub prior to having to do their dirty work on behalf of the US citizens.

Greenspan put whiskey dents all over our Cadillac, and blew a rod while racing down the esplanade of financial destruction. Now the car is sputtering and will barely run, so let's take it to the drive in movies for a sneak peak feature and a basket of popcorn. Telephone poles, cats don't fly!!!

American legislators are in a similar position to German legislators after WWI: doing the right thing means enduring hardship that will ruin their careers. The voters will pick someone else that will ignore the problem as long as they possibly can. So that is what will happen until there are no options left, nowhere to hide. High interest rates will end the spending binge.

What should be done is the Swedish plan - recapitalize the banks with equity injections that the Federal government owns and can sell back to the private sector later. It's not a giveaway and it worked in Sweden.

Repealing mark to market accounting will just ensure that the crisis comes back in the future as management doesn't have to account for their mistakes.

Interesting about RML.V Jock. Thanks, will check it out and maybe get some GFI tomorrow.

aucourant re:KRI
The Tinpo withdrawal of their takeover of WNP is a bit of a sham because the reason all of the Mongolian Jr's are at these levels (pre market collapse) is the ongoing threat to nationalize or take a majority equity stake in foreign co's. What started out as a bun fight to get Robert Friedland became much larger because many politicians in Mongolia have personal/vested interests in many of the property's. Tinpo had outbid KRI for WNP and was planning on taking WNP private. The thought is now that Tinpo may be planning on taking both KRI and WNP out as a unit because their property's overlap and they collectively have about $40 million in cash.

Out of the bailout bill:

"$800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph"

That's a good one. Motorcycles and dune buggies for everyone!

Oh wait, it has something to do with turning coal into gas for $3500/kW.

http://tinyurl.com/4wekpq

That'll get rid of the US dependency on oil alright! Even better than corn. Why not turn gas into coal into corn into gas? That should get some funding.

Or better yet, why not turn lead into gold?

That could be what the LHC is really for. :)

Could also use it to feed the world.

http://tinyurl.com/4tlwob

Apologies for the silliness. I'm just so happy that Warren bailed me out... but why is my GE stock still down -$1.88 today with GS up 5%?

I bought his new book The Snowball: Warren Buffett and the Business of Life today.

http://tinyurl.com/4556u7

Also bought a book on Shakespeare's life. Figured it would make sense to learn more about tragedies and comedies of error too.

http://tinyurl.com/47fqfm

I think Warren may have picked up a cigar butt out of the street and is currently smoking it in front of a steamroller called GE Capital. Should be interesting to see what the markets look like this time next year.

What happens if the ratings game starts getting played with them?

"Hopefully they will enjoy their catered dinners and have a chance to swim in the capitol hill swimming pool, sauna and hot tub prior to having to do their dirty work on behalf of the US citizens."

CP- most of the world's so-called luxuries are highly over-rated, IMO...(a) catered dinners are generally cold/over-cooked/rubbery imitations of real food, (b) public saunas and hot tubs are viral/bacterial soups where you can catch the latest from your buddies who may sport the latest from their late-night encounters, and (c) you can then go 'home' to your sterile condo/hotel room to drown that gaping hole in your soul with booze...

"I think Warren may have picked up a cigar butt out of the street and is currently smoking it in front of a steamroller called GE Capital. Should be interesting to see what the markets look like this time next year."

I agree it looks grim, but his entire career has been predicated on waiting for people to HAVE to sell to him, at which point he basically names his bid. I'm not inclined to bet against him.

My disclosure is that I own one share of BRK/B to keep me interested ;)

Anything aboot snowmobiles?

[Bill Cara note:

Gov. Palin told us these are to be called snow machines.

Can't wait for the debate tomorrow. Speaking of Gov. Palin, only in the history of debating will a person who comes off the stage vertical be declared the winner -- for just that reason. We've now moved into the era of Political Entertainment Television -- I never thought until now that David Letterman and Jon Stewart would be reading us the news -- seriously.]

The PM funds I follow:

FGLDX
SCGDX
FSAGX
GOLDX
TGLDX
USERX
USAGX
IIGCX
VGPMX

Selection was based on multiyear returns, risk, and low entry/exit costs per morningstar data.

wavesmash,
Do your own DD on KRY vs. RML.V. Remember that RML.V lives in the red numbers. What's so great about that, that you want to own shares? No one, not even Jock knows what will happen with LC. Right now KRY has the contract and has met all of the conditions to get the permit by the environmental minister. KRY has done business in Venezuela for over ten years, so there is no reason to think that just because RML.V has a Russian private ownership that they will get ahead of KRY. I am sure even Hugo wants to hedge his business dealings. What's in it for Hugo to screw the Canadians? None. The gold will come out of the ground at the same price for the Vens no matter who mines it. RML.V has enough on its plate right now anyway. Their Venezeulan mine purchases will keep them in the red and busy for several years into the future. KRY is fully ready and willing to devote all of their time to the LC mine.

Wow!

Barney Frank is my Congressman, and I can't even load his website right now. I wrote Kerry, but he's an heiress baby so I doubt he'll do anything, and Kennedy, God love him, as much of a bafoon I think he is, I doubt he'll be voting again-having said that, I wrote his office anyway.

Procol:

Is that Yiddish? Kapish>>>>

No baile italiano, capice???

Interesting take. Thanks stktrader. I'm sure a book could be written about KRY and its dealings. One story I heard was it was once owned by a woman in San Francisco, who inherited it from her pilot husband.

Story would probably would sound a lot like this.

http://en.wikipedia.org/wiki/Oak_Island

RE: 36 companies.

Bill. Why are there no oil and gas service companies on the list? They are the biggest percentage of my long term portfolio. Am I missing something?

Thanks

[Bill Cara note:

Bruce, you make a good point. Please give us the stocks of the two or three highest quality rated companies on your list that are traded at the biggest market losses from prior highs. I'd like people to discuss this, and then I'll add one.]

Haven't posted for at least 6 months.

1. Thank you Bill for a priceless education.
2. Since the market peak, my core account is down only 10% (which includes many trading mistakes, like holding onto losers or trying to catch falling knife). Mainly based on capital preservation--cash. Previously, was into dollar cost averager, buy and hold, asset allocation.
3. Trading account is up 50% in one year, mostly through scalping and positions held less than 1 week, taking advantage of volatility.
4. Bill deserves those days off. I was in the habit of blindly following...I was forced to independently think and analyze in the last few days.
5. Effective volume of SPY 500 now shows bullish divergence between large player money flow and SPY price. This kind of slow accumulation/distribution by "smart money" only occurs a few times a year, and tends to mark turning points during the last two years.
Supports Bill's idea to buy into weakness in the coming weeks.
(click SP500 at top left sidebar for SP500 MoneyFlow chart)
http://www.effectivevolume.eu/

At least my congressman is Darrell Issa. "No" on the current measure. Wallstreet MUST pay!

2nd_ave I agree with your words...."most of the world's so-called luxuries are highly over-rated, IMO.." and yet, not far from Vads home, the Aerie on Malahat mountain. Check it out. My my, they made a cherry tomato into an appetizer that I still talk about years later. I firmly beleive we Americans as a culture/business accept symbolic over substance. Thats why this blog is so unique. The real deal.
Shark, I was lamenting my own getting out to early and using what opportunity to basically fart around instead of choosing real earnings. So its good to hear I'm not alone in my whipsawing my own self. Thank god its a process not an event

I had an hour long phone conversation with Roger Arnold today that I'd like to share with this group. Roger as some here may recognize, had for years a weekly and sometimes daily radio program on macro-economics, he also made his "real" living as a Mortgage Broker(Wash. D.C. area) and as such had a front row seat to the Big Show. Roger has been off the air for about a year or so, finding it difficult to get sponsorship for his show as he had been calling for the exact scenario we are seeing unfolding in front of us. His last program was a simple statement that he saw a '30's style Deflationary spiral dead ahead and he was selling his house and battening down the hatches.

Well, fast forward to today..........he is now selling his house(short sale) and his inside the beltway contacts still refuse to believe that deflation has hit America. His point was/is that as much pain as the housing market has taken(it was the largest driver of the economy) you have to expect that it would spill over into the rest of the economy. He expects the Fed Funds rate to go below 1% as we already have entered the same deflationary spiral that has engulfed Japan, only ours will be much worse. His only investment advice......T-Bills. It was a pleasure to talk to Roger again and hear that he is surviving as he is still able to arrange financing for the special odd deal.

Chickenpookie -

"Greenspan put whiskey dents all over our Cadillac, and blew a rod while racing down the esplanade of financial destruction. Now the car is sputtering and will barely run, so let's take it to the drive in movies for a sneak peak feature and a basket of popcorn. Telephone poles, cats don't fly!!!"

Haha...nice analogy CP. He got us fired up and going didn't he? That immediately brought to mind some old Commander Cody and the Lost Planet Airmen lyrics from my destructive years...for levity. (slightly modified to reflect the image you put in my head)

Pulled out of DC late one night
The moon and the stars was shinin' bright
We was drivin' up that Capital Hill
Passing cars like they was standing still
All of a sudden in a wink of an eye
A Cadillac sedan passed us by
I said, "Boys, that's a mark for me"
By then the tail lights was all you could see
Now the fellas was ribbin' me for bein' behind
So I thought I'd make the Lincoln unwind
Took my foot off the gas and man alive
I shoved it on down into overdrive
Wound it up to a hundred-and-ten
My speedometer said that I hit top end
My foot was glued like lead to the floor
That's all there is and there ain't no more
Now the boys all thought I'd lost my sense
And telephone poles looked like a picket fence
They said, "Slow down! I see spots!
The lines on the road just look like dots"
Took a corner, sideswiped a truck
Crossed my fingers just for luck
My fenders was clickin' the guardrail posts
The guy beside me was white as a ghost
Smoke was comin' from out of the back
When I started to gain on that Cadillac
Knew I could catch him, I thought I could pass
Don't you know by then we'd be low on gas
We had flames comin' from out of the side
Feel the tension, man, what a ride!
I said, "Look out, boys, I've got a license to fly"
And that Caddy pulled over and let us by
Now all of a sudden she started to knockin'
And down in the dips she started to rockin'
I looked in my mirror; a red light was blinkin'
The cops was after my Hot Rod Lincoln
They arrested me and they put me in jail
And called my uncle Al to throw my bail
And he said, "Son, you're gonna' drive me to drinkin'
If you don't stop drivin' that Hot Rod Lincoln!"

if history is any guide, barring a massive price swing in gold due to votes for the bailout, we might expect to see it drift downwards towards $860 or so before going back to $865-875 over night, then having its usual dump about 3 hours prior to market open before breaking new lows towards $850.

the technicals on gold are not pretty. but, the miners do have somewhat better technicals and i am curious to see how they will perform in a lower gold/higher market scenario over the next while if gold languishes in this area.

ultimately my concern is that gold wont drift upwards above $900 and beyond but in fact explode above and beyond in due time, leaving those out of the market in a rush to jump back in, hence why im not selling into any weakness right here, unless the shares plunge alongside the market.

Section 503: "Exemption from excise tax for certain wooden arrows designed for use by children."

Good uses for the arrows anyone?

SEC extends the short selling ban through Oct. 17, 2008. There is no such thing as a FREE market just a RIGGED market. I guess that is how we have to play the game.

[Bill Cara note:

Apparently there is no such thing as democracy either. The calls to Senators today are running something like 100 to one against this $850 billion bill (now there is $150 billion of pork in it), but the Senators are going to vote for it anyway. When the roll call is made tonight, I'd like America to see the truth: the names would be called in order -- Senator Fannie... Senator Fidelity... Senator JPMorgan... and on and on. Let's call a spade a spade. America is not a government by and for the people. It's special interests calling the shot. If this vote goes as expected, I think the public will revolt. This bill will not pass the House on Friday. Straddles are in order.]

Bill,

A great commentary.

In case you didn't see my post yesterday, I owe you an apology — when you said the American people would not stand for this, I said we would have no choice.

After years of writing and phoning my representatives in Washington, I believe this is the first time I've seen so many united. (Except by the NRA on Second Amendment issues.)

This is not a great plan, or even a good one, but it is far better than Paulson's original one. Restoring trust in the system is a long leap from here for me though.

While it is encouraging, there is one major element which precludes the planned changes you outlined here. I voted against John Kerry, but got the only possible winner, George Bush. My two independent votes cast — John B. Anderson in 1980 (His $0.50 per gallon gasoline tax to be spent on alternative energy made sense to me.) and Perot in 1992, for his plea to keep manufacturing in this country. Ron Paul, as you said, has zero chance.

We need someone at the top who will follow economic advice which favors all the people, but I'm afraid I''ll never see that. I hope I'm wrong on this too.

lol - that's hilarious, SiO2. Surely you made that up...

question on 401Ks

I pulled my entire account out of a variety of mutual funds and into a "stable value fund" at the beginning of November last year (thanks to Bill and the many contributors here, it saved me a bundle) and like Finger Lakes, I'm ready to put it back to work. But honestly, my choices aren't very appealing at all. The only funds that have really performed well over the years (until this year, when they got absolutely slammed) have heavy front end loads. The index funds don't have loads but they are tied to the standard indexes and I can't really pick and chose sectors with them. I was primarily in aggressive growth funds before that and they had performed well while I held them and had a somewhat reasonable way to choose sectors, but they were also the ones that have the loads going back in.

My question to you all is, given the current volatility, should I just ease back into the index funds for now and wait until I see some confidence building back up before I re-commit to those more aggressive growth/international funds?

TIA

So what are we looking at here? Is this new Bill just the same one that was rejected but now slathered in pork so that candidates can go back out on the campaign trail and say "Gee, look what I did for you! I got the tax on wooden arrows reduced!" ?

SIO2:

Bummer, I use carbon arrows...that time of the year again...venison anyone???

gdiman- i moved half of my 403(b) (where my selections are limited to long-only funds) into equally-weighted holdings in FSPTX, FIDSX, FSAGX, FSENX, and FHKCX as of market close today (previously 100% OAKBX)...time horizon is anywhere from 24 hours to 24 months...

Bill,
I hope that you are right that the house will not approve this measure. I believe that most Americans would rather have a protracted recession than give Paulson and Bush the bailout package. Let Wallstreet and Americas bankers stand in the soup line and dig the ditch with regular Americans. Maybe then the powers that be will re-think how America does business in the future.

stktrader- i don't quite see (upper level) bankers and financial executives standing in soup lines and digging ditches...they have the means to live well either way, as well as the brains and connections needed to displace any number of people from their jobs...voting down the measure will be a victory for the American people, but will only minimally affect those responsible for the crisis (unless they belong to the minority who actually take fiduciary responsibility seriously)...

I wonder if the US Government has thought about this:

Tell the banks to stop paying dividends to their shareholders. If you look back at just 20 of the top banks, including GS, MS and MER you will find that they are paying out $40 Billion per year in dividends. The lending rule of thumb is $1 of capital can service $10 of lending. That is $400 Billion in lending capacity that can get freed up. That is more than half of the Paulson bailout plan and it costs the taxpayer ZERO.

I guess Congress isn't sharp enough to think about these little things.

Gray- thanks for the recommendation, we may check it out the next time we fly north...wife is very discriminating when it comes to cuisine (having grown up in the business and with siblings still in the business); i know chefs can be quite creative starting with very simple ingredients...

Sec. 501. $8,500 income threshold used to calculate refundable portion of child
tax credit.
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed for
use by children.
Sec. 504. Income averaging for amounts received in connection with the Exxon
Valdez litigation.
Sec. 505. Certain farming business machinery and equipment treated as 5-year
property.
Sec. 506. Modification of penalty on understatement of taxpayer’s liability by
tax return preparer.

There's a reason they put the arrow one in the middle. "quick hide this one in there... $2 million arrow exemption." lol.

Special interests someplace?

Looks like they're trying to sneek the $2M exemption for arrows in from the spring.

http://tinyurl.com/4zplf6

(a) IN GENERAL.—Paragraph (2) of section 4161(b)
is amended by redesignating subparagraph (B) as sub paragraph (C) and by inserting after subparagraph (A) the following new subparagraph:
‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.—Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly—

Long wooden arrow manufacturers. Giving America the shaft for over 100 years along with Wall St.

http://tinyurl.com/3qvrld

Bill,

In addition to oih, I like do, hal, rig and slb.
Thanks

My vote is for PCA.TO (PCZ). Shaved in half since June.

Wavesmash,
Your 6:47 post really made me laugh!!

Thanks,

Rob.

Thriftybob,
Thanks for the list of PM funds. I'll add them to my watchlist.

Rob.

2nd,
That comment on the bankers digging ditches was a loose phrase to all that were involved in the subprime mess. A "former" neighbor of mine lost his job several months ago to a mortgage company that packaged mortgage backed securities to Wallstreet. He was part of the "grease" that helped turn the wheel. Now he is paying the price. I am sure many at wallstreet firms now either gone or fired from their good jobs are paying the price for high fiving their way to greed. The big lifestye gone.

Can you IMAGINE this Senate stuffing the bailout bill with an additional 150 BILLION dollars in additional pork? At a time of a national crisis they can't even do this legislation without saddling the American taxpayer with an additional hundred and fifty-thousand-million dollars. No wonder this country's (expletive deleted)!

I really hope the house defeats this again since the spineless Senate seems likely to pass it.

And the amount of complete pork and nonsense attached to this behemoth just shows what a sold-out mockery our political system has become. I'm very ashamed.

Rob.

Well I'm reading that it passed so all flags to half-mast and let's have a moment of silence out there.

Rob.

stktrader - KRY no more ...

Chairman of KRY's VZ subsidiary was one of the main coup plotters against Chavez in 2002. Do politicians forget that sort of thing? KRY's IR VP doesn't want to talk about that.

Chavez just signed another $1B arms agreement with Russia, and will soon host joint naval maneuvers with them. Don't you think a Russian-backed Canadian company might have a better chance with Chavez than a Canadian-canadian one?
Especially after Chavez goes public announcing that Venezuela is taking back their huge gold deposit?

Read Bill's posts on KRY, or search http://incakolanews.blogspot.com/ both of which class KRY as a fraud.

After KRY fired Todd Bruce (replacing him with a CEO who put no skin in the game) it became more than somebody's trading scheme than a serious contender to develop las Cristinas, IMHO.

I've started up 2 companies in Venezuela, and was there last March. I think I have a general feel for the politics there.

The vote was 74-25 with 99-1 of us against it. Shameful indeed.

Rob.

Indeed, Rob.

I'm ashamed that both Senators from my home state of PA voted to pass the hot potato over to the taxpayers.

It may not help but I'll do everything I can to see that this is Sen. Magic Bullet's last term and Sen. Casey's first and last.

Regards

2nd, RE: 403(b)-

Thank you for that response. That gives me some clarity (actually, I'm going to call it ammunition), but unfortunately my (or my coworkers) choices aren't nearly so well targeted. I hope it's ok to say this here, but my 401K options suck compared to those options.

I think this might be part of mainstream America's working man's frustration with being locked into a plan that you didn't negotiate and have no real choice in how it's invested but because you want to save money, hopefully watch it grow tax deferred, and also get your employer's contribution too... You tow the line and believe that if you just hang in there it will be better. But obviously for the majority of the workers, at least a couple of years have been wiped out now. If not more.

I fear that when people see their statements this month though (most that I work with are just now talking about it for the first time...way too late), a groundswell is going to occur. But it might be at precisely the wrong time and they will still panic some more and get out.

I hope that scenario doesn't happen because that's our backbone. But if it does, there will be a revolt.

I'm lucky in that I can talk directly to our plan administrator and I believe we will have a bargaining chip to work with after this fiasco.

Some oil service companies I follow/own:

Precision Drilling (PDS oe PD/UN.TO)

Trust that pays almost 10%, shares had a big turnaround at beginning of year, from 15 to 29, now back down to $16-17. I believe they had some agreement forbidding them to expand internationally because of some acquisition or something, but that lifter this summer or thereabouts, opening up more growth potential. Hence the recent purchase of Houston based Grey Wolf. I think i originally bought around 20, rode it down to 15, up to 29, and stupidly held on down again :(

HERO

There was some interest in this stock on this board a while back. Offshore drilling so could benefit from any lift of ban on such drilling. Focus is on offshore, don't know if there is more growth opportunity or better margins there, something to look into. Down from $38 to $14, just picked some up near the low. Smaller cap than BHI, so more growth potential?

The mining companies in Vancouver already know who's going to win?

http://tinyurl.com/4htkor

"I don't know in exactly what capacity Gov. Palin's husband Todd was acting, but we took him along on a flight to the mine, which we do when we have empty seats on a plane," said Horswill.

Jock,
I know of your involvement with Venezuela. But that does not give you anymore credance to the current situation than any other talking head on the subject. If the Venezuela government wanted KRY gone they had ample time to do this when the environmental minister said no several months ago. But then their congress told her to go over the talking points again with CVG/KRY, and now she says "everything" is in place to approve the permit. Why would Venezuela to this when they could have just let the issue die then and there? Now they, the government, have put themselves in a position with there backs against the wall. Maybe now they have to give up the permit to KRY which might then sell the deposit off to big bidders. Either way, KRY shareholders will be OK with that. So maybe your premise is right. Rusoro/Goldfields gets the mine in the end. Either way, KRY will be taken care of. Or not!

stktrader- there are certainly a few people who greased the wheels of the mortgage business that i won't miss- the notary public who drove unannounced to my residence to deliver papers for a refinance, obtain my signature, only to close with 'that will be $40, would you like to pay by cash or check?' LOL-> i called the refi company to cancel (how hard was it to find another one), they asked to talk to her, she left without a word, and i closed the following week...what about the title agents who can't explain a total of $1500 in creatively labeled fees- i tried to get them to lighten up and just admit they needed the money for their fat paychecks, no harm done-> no way, man...they insisted it was $50 to complete a fax, $750 to process a document...whatever...how much spare change went to fund this out-of-control industry?

obviously the initial reaction to passage is thumbs down...who knows, maybe investors will be voting with their portfolios...

2nd,
You're right. The dollar touched 80 just before the vote tally and has been backing down every since and futures nose-dived right after the vote.

Wasn't this supposed to save the system and the stock market? What would Barney Frank say if they pass it and the market still tanks?

"Ah, ah, ah, it wasn't me, it was him...(pointing to Paulson)"

Rob.

[Bill Cara note:

At the end of the day, with all my connectivity issues, it turns out the culprit was probably my using the latest IE version that came out about two weeks ago. The ISP connection tests showed 3MB download and 300K upload, which is ok, but it was taking me up to a minute to open new pages. My gmail would download 98% and then hang. The software became unusable. I wanted to go back to the previous version, but apparently I can't, so I switched to Firefox. Works perfect now. I'll see tomorrow.]

Audio from Andy Gause on Money Markets

http://tinyurl.com/3uxw9f

Stktrader - Venezuelan time

I waited a year for one gov't permit in VZ. They never said no, but nothing ever happened. A different permit came through in 6 months. If you think experience in other countries doesn't aid judgment in int'l business, go vote for Sarah Palin. I don't care.

The Xmas and New Years' holidays in VZ were MUCH more important than business deadlines. And, I'm OK with that. Life is different in different countries.

Chavez does what he wants to. He won't feel any more constrained by petty regulatory history or by legalities than Putin would. Chavez'll get to the KRY issue when it suits him, and KRY (like GRZ) will be toast!

Bill has told you, and Otto has told you that KRY is never going to mine in VZ. I agree with them, but am not going to waste any more time on this.

Give my regards to Vice President Palin !

I believe Bill is wrong that it is the start of a new bull. Just ask yourselves: Have house prices in the US bottomed?

The Senate has approved a modified $700 billion financial rescue plan just two days after a vote failed in the House
Skylane

Jock,
Sorry for creating a valid argument. Just another talk'n head here like the rest of us. One thing we all know is that we don't know the future. All we can do is watch it unfold; good or bad, profit or loss.

Dollar testing 80 again.

Rob.

House Minority Leader Roy Blunt suggested the market dive has triggered a change of heart among many conservative Republicans, and their constituents.

goingup,

I agree, anyone trying to climb a wall of worry without knowing its height will surely fail. Real Estate prices have rolled back to 2004 levels but with tighter credit who's to say they couldn't keep going down to 2000 levels? And if they did, well wouldn't that mean that defaults will no longer be limited to subprime? Can the financial system handle that mess?

skylane:

Try 850 billion

Bill

Ah yes computer software problems and dealing with Mr. Softie & IE. Don't know if you are running Vista or XP, but in XP you can use the restore feature to go back to the setup you had just before installing any new software. I'm sure Vista has the same feature, just restore the system to a date before the problem program was installed, might just do the trick.

I don't use IE unless I have to, some sites won't run unless on IE, like the Microsoft update site for example (wonder why ?). My standard browser is Firefox and I've been very happy, new IE has copied a lot from Firefox but I still don't trust them. As for any updates, software or operating system, I set them for notification only and I pick the time to install them, if and when I decide. Usually let others debug them for a while, then install when I read that everything is all clear and there is some benefit. If it ain't broke, I won't try to fix it.

Sounds like you are getting things under control, computers can be a real pain sometimes and a joy at other times. Just gotta have the alternate backup systems in place so life can go on with less stress and hair loss (mines mostly gone).

It used to take me 2 days or more to get back on line after a major computer crash, happened a few times. Now I run a second hard disk with a clone copy of my operating system and another disk with an automated copy of all my data. If the main disk blows up I just switch to the other one, about 2 mins. If the computer blows up, one of the disks is still gonna work and I just drop it in the wife's computer and I'm back up in an hour at most. Risk management.

Thanks again for all you do and glad to hear your business ventures are finally coming together.

Quasi

[Bill Cara note:

After three cable modems, a DSL modem, a temp dial-up account, four hours of computer service, a check of the electrical wiring, and a week of frustration, I now believe the only problem I had was to be the unfortunate casualty of the Microsoft-Google Wars, and I resent it. For the first week after loading the latest (beta) version of IE, I was happy with the upgrade. Then I noticed I was having trouble with Google Mail, and then the loading of pages. It was only after checking the cable ISP upload/download performance late last night, where I saw the ISP was not at fault, but it still took over a minute to load new pages, I knew the problem was IE. So, I decided to put IE to bed -- permanently -- and switch to Firefox. Voila. Perfection. I ought to send Steve Ballmer the bill. If Google has an Office Suite, I'll switch to that too. Ah, one step at a time. Thank you Firefox.]

It's all about Active X. When Microsoft created that monster they should have been flogged. I use Firefox exclusively and have so for may years. There are still sites that use Active X, but they are going the way of the Dodo bird.

Total Public Debt Outstanding as of October 1, 2008

10,024,724,896,912.49

Bill...Welcome to Firefox from an old timer. No problems. My son even had his Safari crash his computer recently.

BAC dividend is huge. 8+%. I don't see how it can stand. I don't see how Gov can justify payout to share holders unless they are us (taxpayers). Even then it would be a bum deal considering bailout dollars.

I will begin my long term cara 100 equity positions in the market when /ES[Z8] goes to 1035 and not before.

I also think we put in a top @ 1168.03 in SPX on Sept 30th.

Bill, I have been using Google Chrome lately, and I like it a lot. It is better than Firefox imo. I especially like the "bookmark bar" and the clean, organized look of Chrome.

looks like goldman has gone long gold contracts for month of October...

http://www.tocom.or.jp/souba/gold/torikumi.html

http://tinyurl.com/3lomor

My take...

stktradr,

I agree with Jock. Unless they sell out to the Russians, who Hugo might not want to offend, I'd say the permit never appears. They've been saying any day now for years. The only thing that has changed is the price. Take your profits when you can, lest you find you can't, IMO.

NEW YORK (MarketWatch) -- Not often do you regard a company whose stock is about 50% off its 52-week high as a success story.
But a success is exactly what Goldman Sachs Group Inc. (GS:$134.50,00$6.50,005.08%) is shaping up to be at this stage of the credit crisis. If we were to begin the long journey back to stability today, Goldman would undoubtedly emerge even more powerful than before.
Did anyone expect another outcome?
A solo act
Commercial banks such as Citigroup Inc. (C:$23.00,00$2.49,0012.14%) , Bank of America Corp. (BAC:$38.13,00$3.13,008.94%) and J.P. Morgan Chase & Co. are obvious winners in the credit debacle. They've been able to buy battered banks at fire-sale prices. America is about to become a country with three national banks that have big broker/dealers as subsidiaries.
These new superbanks will be formidable, but there is a question of how much risk-taking they'll be willing to stomach. Logistics are an issue too. They're integrating firms that may have been priced like single-branch banks but, from an infrastructure standpoint, are giants of American finance.
Morgan Stanley (MS:$24.42,00$1.42,006.17%) , whose stock is 65% off its high, has shored itself up by selling a 20% stake to Tokyo's Mitsubishi UFJ, but will still need to add deposits, just like Goldman.
Only Goldman, by virtue of its investment from Warren Buffett and its ability to buy retail bank deposits, will be the last bulge-bracket investment bank unencumbered by commercial-bank ownership.
Origins
You don't have to be a conspiracy theorist to recognize that a series of decisions and events have transpired to put Goldman at the top of the heap. Well before the credit crisis, people worried about Goldman's influence in the markets. Several former executives of the investment bank have senior roles in government and at the New York Stock Exchange, and its analysts are among the most powerful in the space.
Let's limit the discussion to the start of the credit crisis in the summer of 2007. Just before the market turned, Goldman traders got a hunch and began shorting and hedging the mortgage securities that were eating away at rivals' revenue. Trading revenue soared 70% that quarter to $8.23 billion.
It was Goldman's last quarter in a series in which each new profit report exceeded expectations and prior results. Goldman's share price was in shouting distance of $300. It was also when grumblings about the investment bank's transparency became louder. That's important because Goldman continues to give few details about its "proprietary trading" business. What is it exactly? No one knows for sure.
Industry collapse
What followed was notable for what didn't happen: write-downs. Goldman has admitted to less than $5 billion in write-downs, including the $1.1 billion when it reported earnings Sept. 16. That's on a balance sheet of $1 trillion.
In between those earnings announcements, Goldman lost its biggest competitor in prime brokerage, Bear Stearns Cos., on March 17. In September, it also lost the biggest competitor in debt underwriting, Lehman Brothers Holdings Inc. , and a big rival in investment banking, Merrill Lynch & Co. (MER:$26.70,00$1.40,005.53%) , in an emergency sale to a commercial bank.
Judging by the government's reaction, Morgan Stanley (MS:$24.42,00$1.42,006.17%) and Goldman should have been next -- either through a crisis sale like Merrill or a liquidation like Lehman. Investors sent their stocks reeling. Morgan Stanley (MS:$24.42,00$1.42,006.17%) quickly began talks with Wachovia Corp., while Goldman kept quiet.
During all of this, Goldman Chief Executive Lloyd Blankfein was in the middle of talks about the future of another crippled company, American International Group Inc. (AIG:$3.95,00$0.62,0018.62%) , at the New York Federal Reserve. As Gretchen Morgenson reported in the New York Times last week, those talks resulted in an $85 billion bailout of AIG via a government loan, and, oh yeah, the deal may have saved Goldman $20 billion in losses due to its trading position with the insurer."
Goldman poured cold water on that claim saying in a statement it "had no material exposure to AIG.
"Our counterparty risk was offset by collateral and hedges, and that remains the case."
There have been other fortuitous decisions, too. For instance, the Securities and Exchange Commission's ban on short-selling was lifted for market-makers such as Goldman, and U.S. regulators may be willing to back Goldman's purchase of $50 billion in troubled assets from other banks, according to a Financial Times report.
Buffett investment
It was the Buffett investment that was the master stroke. Announced on the same day that President Bush, Congress and presidential candidates worked on the first draft of Treasury Secretary Henry Paulson's bailout plan, everyone hailed the deal as a huge financial gain for Buffett and an expensive vote of confidence for Goldman.
If it were only that, the price was rich. But the investment earned Goldman permanent access to the Federal Reserve discount window, lowered its leverage to just over 18 times equity, brought it closer to its new bank-holding company structure, and, according to Fox-Pitt Kelton analyst David Trone, wasn't costly for Goldman.
"Goldman's raise will simply pad its equity capital cushion to appease the market's recent concern about its model," he wrote. It put "to rest doubts that a company could raise without fundamentally needing it."
Goldman, like its rivals, is on the prowl for deposits, but unlike its competitors, it will be the acquirer. Goldman emerges from this mess essentially the same institution. It has the same lack of transparency. It still manages hedge funds and private-equity businesses. It still has a thriving prime brokerage business.
As former Drexel Burnham Lambert CEO Fred Joseph said last week, investment banking is "not disappearing at all. [Banks] will act more like advisory firms and underwriters and lenders. They'll act a little bit more like banks, and less like hedge funds."
That doesn't mean those enterprises won't disappear. And Goldman will be one of the few left open for business.

The NAVs of these senior loan funds just keep on going down - c.a. - 25% to - 30% (!) since the spring of 2007.

At the same time, the funds themselves are selling at a c.a. 20% discount to their NAV.

you can check on these things at:
http://www.morningstar.com

Lets see - that means that senior corporate debt can be bought at a 40% discount to nominal value - or better.

Does that mean that this is a buying opportunity of a lifetime - or that 40% of all corporations on the average are going to default?

Now things are not so simple, these closed end funds often also hold other forms of assets, and are usually leveraged about 30% by selling their own short term debt in various forms (auction rate securities, for example), so one would have to dig into the balance sheet of each individual fund to see what it is actually holding and what kind of debt it has outstanding.

chart of NAVs of some senior debt funds:

http://tinyurl.com/49vtwg

ALOHA !!

ON FIREFOX
Yes, BIll I have been on FIREFOX for over a year. Wise move ...

Here is the chart of the NAVs of some closed end funds that specialize in preferreds & convertibles - they are down even more - 40% since the spring of 2007.

So it is not just the senior bank loan market that has gone haywire.

http://tinyurl.com/6p4kqx

ALOHA !!

CREDIT ... CREDIT ... CREDIT !!!

Look at how absolutely ridiculous this obsession and ADDICTION to CREDIT is! Without CREDIT the World stops! Well, really if there was no CREDIT all it would mean is that we could not spend more than we earn.

What is wrong with living within our means? When did that ever become UNACCEPTABLE?

One of the reasons I moved out of California was because the taxes were too high. HAWAII has taxes but is around 50% to 90% less than California(depending on what type of tax).

So here is an article about what will happen to all of California(State, counties and cities)if CREDIT vanishes or becomes too expensive.

Let me see if I am reading this right. I moved out of California because taxes are too onerous, so that means California takes in a HUGE amount of money from various taxes like income, sales, excise and property tax. Yet according to this article more and more money must be borrowed or California shuts its doors? Is that what I am reading? California cannot survive on just tax revenues alone. With all the BILLIONS in tax money coming in California is still BROKE! YEP ... that's it! Without CREDIT the State of California would be forced to live within its means. WOW ... Now that's P-A-I-N!! More BAILOUTS please-e-e!!! So you think its only Wall Street that needs a BAILOUT? One more BIG BAILOUT and we're done ... WHEW ... man, THANK GOD! I'm glad all our CREDIT WOES are over now ... Man, US CONgress you guys are one smart and savvy bunch of dudes! No wonder you guys get elected every year! Hats off!!!

READ ON:
Officials implore federal lawmakers to compromise
By Michael Gardner and Craig Gustafson
UNION-TRIBUNE STAFF WRITERS

October 2, 2008

SACRAMENTO – The state of California has joined the ranks of retailers and new-car buyers struggling to borrow in the tight credit market.

The squeeze threatens to delay payments for essential state services and could stall plans to build new highways, schools, housing and water projects.

Advertisement
The crisis is so threatening that Gov. Arnold Schwarzenegger, state Treasurer Bill Lockyer and Controller John Chiang yesterday separately issued urgent pleas to Congress and President Bush to approve compromise legislation aimed at easing the financial crisis gripping the country.

Bush agreed that legislation is needed, saying yesterday that “it's important to get credit flowing again so that small businesses in our communities will be able to finance their operations, so that local municipalities will be able to get the money they need to take care of the needs of local citizens, so that states will be able to meet their needs.”

Cities and counties wonder whether capital will be available – and at what price.

San Diego County planned to sell about $225 million in bonds by Oct. 15 to begin construction later this month on the largest public-works project in its history – a $531 million overhaul of its operations center in Kearny Mesa.

Chief Financial Officer Don Steuer said the county might hold off if interest rates remain high. However, the county is fortunate to have $75 million in cash set aside for the project, so even if the markets don't calm down, the county could still start building, he said.

The city of San Diego, which just had its credit restored, doesn't plan to borrow money for refinancing debt until late December or early January, so there probably will be no effect on its deals, said Jay Goldstone, the city's chief operating officer.

Lockyer started the chain of dire warnings, issuing a grim outlook in his annual analysis of the state's debt affordability.

“The credit market is frozen because financial institutions are afraid to commit capital amid uncertainty,” said Lockyer, a Democrat.

He said that “for 10 days, state and local governments have been closed out of credit markets.” Unless there is a thaw, the state won't be able to sell voter-approved bonds to launch public-works projects, Lockyer added.

He said inaction would force the state to exhaust reserves by the end of October, setting the stage for a freeze on most spending.

Picking up that point, Schwarzenegger, a Republican, told Congress: “This means that California may soon be forced to delay payments for critical services, such as teachers, law enforcement and nursing homes. The same thing would happen to California's cities and counties.”

Chiang estimated that cash-strapped California will need to borrow $7 billion through this fiscal year – credit that's growing harder to find and more expensive. END

ALOHA !!

Hummmm ... how long has all this been going on?

"A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder is less to fear."

Cicero Marcus Tullius
106-43 BC

"Bailout Bill" is passed by Senate inspite of obvious dissatisfaction with the Bill by voters. Ignoring voters whom they are elected to represent is a bad habit. In a way, this is like the flagrant test of a spoiled child - get away with it once, then do it again at will.

We need to stand up now, or accept "Taxation with NO representation."

HERE ARE OUR RIGHTS FOR RECALL OF A SENATOR OR (non)Representative. Time to get busy, because the problem won't go away on its own.

http://tinyurl.com/3mjonu

Elections of Senators and of Representatives are staggered so that not all are elected at one time. Thus, while some Senator/Representatives may not be recalled if they are running in the next election, the majority CAN be.

Get busy.

Call/Fax your Representative today and tell them that if they vote to pass this monster (400 page?) Bailout Bill, you will ask family and friends to call for a Recall.

Thanks. Now I will be quiet. I am guilty of "Read Rage" this morning.

ALOHA !!

There is a Times Online article about Russia's PUTIN blaming America for the global credit problems. He says these problems started in America.

Well, he is right. But I find the COMMENTS section underneath the article very telling about AMERICANS and the nationalistic blindness that most of the comments evoked.

Makes you wonder if Americans even know who their creditors are and you don't bite the hand that feeds you! Can these Americans spell "I-R-A-Q"?

It reminds me of what John Connally(D), Treasury Secretary under Nixon in 1971 said when Nixon closed the gold window. He told the Europeans, "THE DOLLAR IS OUR CURRENCY, BUT YOUR PROBLEM ..."

The blindness and arrogance of EMPIRE still lives on!

Here is a sample of some comments ...

COMMENTS:
1-Nice of Putin to take a break from hunting wild beasts to weigh in on the american economy. Perhaps he should consider the impact of his excursion into Georgia. If somehow he could find a way to bottle his machismo, he could save the russian economy himself.
alvinels, Seattle,

2-Hmmmm, the US controls the Russian economy more than Russia does? Sweet.
Phildo, Austin, Texas

3-Hey Vlad The Wailer, pull out of Georgia, stop nationalizing companies and let your people have freedom of speech. You'll be just fine!
John C., Va Beach, VA, USA

4-I'm sitting here laughing at Putin. The former KGB boys running Russia has no ideal how interconnected the financial world is and add to their little excursion into Georgia, you can see their economy, based only on oil, in tatters.
T Murphy, Florida, USA

5-And Russia under Mr. Putin is such a paragon of economic stability? The United States will do just fine after our markets sort out the winners from the greedy and stupid losers. My advice to Russia and Mr. Putin is "Physician heal thyself".
Patrick C., Irvine, USA

6-Putin is afraid that his country's vast reserves of American dollars would break Russia's back in the case of a serious dollar crisis. Come on Putin, utilize a little Wall Street 101 and diversify that portfolio. Or is energy and vodka the only worthwhile items that your country can produce?
Curt, San Francisco, U.S.A.

7-That "system", as he refers to it ,is something called democracy, a curious notion that allows people to freely express opinions, holds leaders responsible to their constituencies, and forces big decisions to be debated and argued back and forth - an obvious inconvenience in his circles.
Cyrus Kamada, Encinitas,

8-This coming from a man who reigns over a country with some of the worlds worst coruption. Give me a break
evan, New York , USA

9-Communists shouldn't give financial advice
Travis Renfroe, USA

10-Putin lecturing anybody on economics--that is (pardon the expression) rich. Heh heh. I don't think the Russians generally even do any accounting, as we understand the term. And government appropriation of successful private enterprise seems to be the name of the game in Russia.
Terry L. Walker, Ladson, SC / USA

Oil Service Stocks - The top 6 stocks, by volume, in this group are HAL, SLB, BJS, BHI, GLBL, and HLX.

There is a very clever “Guru Analysis” offering on the NASDAQ site, and it gives the following scores on the above stocks in accord with the analysis structures (among others) of Graham (value), Lynch (PEG), and Fisher (P/S).

Here are the scores plus the link:
SYM, GRAHAM, LYNCH, FISHER
HAL, 71, 74, 60
SLB, 57, 74, 60
BJS, 86, 93, 60
BHI, 86, 74, 60
GLBL, 86, 70, 60
HLX, 71, 56, 30

http://tinyurl.com/5xjxna

I’m no good on analysis, so I’ll just look at the charts, but I do hope Bill will share his thoughts on the subject.

re:TCK

Downgraded this AM. U may get a chance to get in cheaper than I did yesterday.

I wonder...I think what they're not telling us, is foreigners are pulling the strings on this bill. Look, they've been keeping our credit card current for years.

Then, we sell them gold plated manure we called AAA rated this and that. Then, our banks told their sovereign wealth funds we just need a billion here or there to tide us over-then, their investment drops by 80%.

You wonder why we have to take care of the foreign banks and sovereign wealth funds in this bill? We can thank FNMA and FREMAC for this. All in the name of affordable housing the system raped the taxpayer.

bsi87

TCK Downgraded this AM.

Seems like everything I buy these days gets downgraded then next day. WAG now TCK. It was so much easier when I was playing the market short.

then:the

Barry Ritholtz @ The Big Picture has a great debunking of the whole "affordable housing killed the system" argument. Greed and ineptness at various levels in the system fostered by deregulation is what caused this. NOT the desire for affordable housing.

http://tinyurl.com/4w263a

• Did the 1977 [CRA: Community Reinvestment Act] legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?

• 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ?

• What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?

• Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?

• Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what?

• Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?

• How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?

• What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?

• Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)

• The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?

• Did the GSEs require banks to not check credit scores? Assets? Income?

• What was it about the CRA or GSEs that mandated fund managers load up on an investment product that was hard to value, thinly traded, and poorly understood

• What was it in the Act that forced banks to make "interest only" loans? Were "Neg Am loans" also part of the legislative requirements also?

• Consider this February 2003 speech by Countrywide CEO Angelo Mozlilo at the American Bankers National Real Estate Conference. He advocated zero down payment mortgages -- was that a CRA requirement too, or just a grab for more market share, and bad banking?

QT

I guess u gotta look at the downgrades as after the fact, work on getting a good entry so the trade doesn't go against u right away, and correct position size if it does so u're not hurt too bad.

I'm dragging the POT anchor chain this AM.

Today's commentary: Bill is right on with his assessment, "Apparently there is no such thing as democracy either."

I just received/began reading his book and am happy to see we have many common life views. Independence in thought and action, financial no debt, and imagination (the two-edged sword of seeing the possibilites ahead).

A few things which have happened (been done to us) were apparent even to a non-economist like me. I have always told my sons —
Nobody cares about your money like you do.
and...
Always question everything.

I have written for years and received the typical form response letters from congress.

A couple of those topics:

The 401(k) replacement of the company pension is a convenient corporate relief act, not a gift to the employee. • It gets the retirement investing responsibility (and the blame) off company the books.
• It creates a whole new market of "lambs for slaughter" for Wall St. firms — mutual funds especially.

The move from manufacturing economy to service economy will come back to haunt us. (Ever seen a service at a garage sale?)NAFTA=Not A Fine Thing, America!

Today: This cry of "CRISIS!" is a perfect example of Hitler's Big Lie strategy — enhanced by instant communication and 24/7 global, (mis)information capabilities.

The good news: If enough independent thinkers (like Bill) act in unison (not an oxymoronic act) we can prevent these bipartisan, anti-democratic charlatans from setting us up once again — if not today — in the next election... and the next.

Fatty:

That's what I said, if you were pointing that at me, "in the name of..." There is no such thing as affordable housing. Unless there is a transfer of wealth to subsidize it. It's either a direct transfer, or through a reduction of lending standards, which increases risk, as well as inflates prices because now both the pool of money an buyers is larger. So, not only is there more risk in the system, but the inflated prices mean people who can pay, have to pay more, which is a further distortion/transfer.

Fatty:

FNMA an FREMAC bought those loans as CDOs

wavesmash,

I never realized bow hunters/target shooters were facing the same threats as firearms guys like me. At least we have the Second Amendment as a backup.

Is the an NRA for you? If so, can we unite the two and put congress in a legislative crossfire?

Shark,

Well, at least we can be sure McCain wouldn't vote for this bill with $150B of pork in it!

Riiiggghhhttt.

Spot,

If you look at the top of the Wikipedia entry you'll see "Proposed June 29, 1992 (failed)". I take this to mean that there is NO RECALL of Senators or Representatives provided for in U. S. law, save the failure to re-elect.

FranSix,
Housing didn't cause the crisis (perhaps a last straw). It was the cooperative removal of the inconvenient restrictions stemming from the 1929 depression and other techniques passed by congress, ignored by rating agencies and sold on TV like ecoli tainted lettuce.
Oil prices, commodities speculation in general, short sellers, a whole host of scapegoats are being fed to and thru the media to obscure the biggest fraud in history.
One of my senators, Durbin, is quoted today as having met with Paulson and Bernanke and now understanding they must act to save us taxpayers. The road to hell may be paved with good intentions, but this one is being patched by those with evil intentions.
Wall Street's troubles have been highlighted for years by such notables as Warren Buffett, Jim Grant, the late Sir John Templeton and many others. I have read accounts by some critics who have refused to go back on CNBC due to their insistence not to present negative views — Jon Hussman, Bill Fleckenstein — to name a couple.
Do not believe the media.

Wow gold up 36 now