Stock Market

tw · 08-17-2007, 12:20 AM

What makes me nervous is when so many say this is only a correction. Well even a stock market crash is a correction.

For example, Citibank apparently made massive bets and is now exposed for a problem that amounts to $billions. Many hedge funds have been bailed out quietly on the order of many $billions by their holding companies that were once considered 'protected' by financial circuit breakers. Even Goldman Sachs is taking a beating.

Meanwhile, dollars are in massive amounts overseas. No one is quite sure how large those numbers really are. Those dollars are held in assets such as bonds. What is this problem mostly appearing in? Bond markets. What happened if those other nations decide to cut their losses due to a sharply failing dollar - start selling bonds which are financing the American government at about $2 or $3billion per day? Does that number open any eyes? Who has the most American bonds? China - on the order estimated in the $trillions. Remember an earlier post - the actualy amount of currency in all demoninations throughout the world is about $5.7 trillion.

Already central banks have been spending untold $billions trying to maintain liquidity. Capital assets once used as collateral for so many speculative loans is suddenly becoming worth far less than original market value estimates.

Appreciate the problem facing the Federal Reserve. Inflation is threatening. Therefore interest rates must remain same or increase. But the liquidity crunch means the Fed must lower interest rates. A nation that was using finance games to keep the housing and auto markets going (because other market sectors were not doing as well) means the Fed has lost significant manuevering room.

No, I don't believe we are in for a major crash. But when more people say this is not a problem then a worse downturn results. The problem: nobody really knows how much 'rot' is out there in the finance markets. Hedge funds and other risk diversification tools really have unknown value when things get this uncertain. Nobody is really admitting it. But the amount of bailouts appears to be much more massive than is really being reported. A problem that will not appear in corporate balance sheets typically more like for four years later.

Stock market crash was 1929. When did the resulting recession occur? More like 1933/4.

08-17-2007, 12:20 AM	#11
tw Read? I only know how to write. Join Date: Jan 2001 Posts: 11,933	What makes me nervous is when so many say this is only a correction. Well even a stock market crash is a correction. For example, Citibank apparently made massive bets and is now exposed for a problem that amounts to $billions. Many hedge funds have been bailed out quietly on the order of many $billions by their holding companies that were once considered 'protected' by financial circuit breakers. Even Goldman Sachs is taking a beating. Meanwhile, dollars are in massive amounts overseas. No one is quite sure how large those numbers really are. Those dollars are held in assets such as bonds. What is this problem mostly appearing in? Bond markets. What happened if those other nations decide to cut their losses due to a sharply failing dollar - start selling bonds which are financing the American government at about $2 or $3billion per day? Does that number open any eyes? Who has the most American bonds? China - on the order estimated in the $trillions. Remember an earlier post - the actualy amount of currency in all demoninations throughout the world is about $5.7 trillion. Already central banks have been spending untold $billions trying to maintain liquidity. Capital assets once used as collateral for so many speculative loans is suddenly becoming worth far less than original market value estimates. Appreciate the problem facing the Federal Reserve. Inflation is threatening. Therefore interest rates must remain same or increase. But the liquidity crunch means the Fed must lower interest rates. A nation that was using finance games to keep the housing and auto markets going (because other market sectors were not doing as well) means the Fed has lost significant manuevering room. No, I don't believe we are in for a major crash. But when more people say this is not a problem then a worse downturn results. The problem: nobody really knows how much 'rot' is out there in the finance markets. Hedge funds and other risk diversification tools really have unknown value when things get this uncertain. Nobody is really admitting it. But the amount of bailouts appears to be much more massive than is really being reported. A problem that will not appear in corporate balance sheets typically more like for four years later. Stock market crash was 1929. When did the resulting recession occur? More like 1933/4.

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