<p>LongPrime–thanks for the response!</p>
<p>Looks like the old gap and crap today.</p>
<p>Big-cap tech got creamed. I’m not sure where the pop was in the $compq but it wasn’t in the leaders like APPL and GOOG. Precious metals and energy are getting taken to the woodshed right now.</p>
<p>Markets look like they’re forecasting deflation. And maybe the Fed wants a little of that in commodities. It would be nice to return to the days of the PPT if you’re on the long side.</p>
<p>I went to cash last Thursday and haven’t done anything since. My new schedule of driving my daughter to community college classes will put a crimp on trading activities for this semester.</p>
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<p>I would dearly love to understand
- who authorizes billions in (next generation?) taxpayer bailout
- who gets this money, eventually
- how do fiscal conservatives justify these bailouts? Do they accept increased oversight as a consequence, or is that considered government intrusion on business?</p>
<p>I don’t get it.</p>
<p>^read Pat Buchanan’s latest book, Where the Right Went Wrong</p>
<p>Lesson? Always use stops. - the lesson is don’t fight the trend. In Nov 08, the trend was to short. 10k each into shorting Freddie Mac and Fannie Mae would be worth > 1 million today</p>
<p>that’s nov 07!</p>
<p>What a tangled web the US weaves…</p>
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<p>Did you get out?</p>
<p>Went short AIG. They lost about $15B in marketcap today. They’re either going to bounce hard for OEX or they have some deep counterparty or CDS problems in my opinion.</p>
<p>Are you worried about me? :)</p>
<p>Sold most of it a couple of days ago. I have a very tiny position left which I am willing to ride to 0.</p>
<p>Aig is one of my worst trades in the last several years. I think it’s ranked number 1 or 2 in my worst categories for the last several years.</p>
<p>But I have had far worse trades, money wise over my career.</p>
<p>Good luck.</p>
<p>Obviously AIG has problems.</p>
<p>The amount of leverage these firms routinely use has been vastly UNDERSTATED. It is time the government recognized that Wall Streets unfettered ability to “leverage” is out of control and is at the root of the current financial crisis. Prudent oversight and regulation in this area is long overdue. Private profit being derived from what is ultimately a public risk is a surefire recipe for financial disaster.</p>
<p>Well …</p>
<p>[BBC</a> NEWS | World | Americas | ‘Wall Street got drunk’ says Bush](<a href=“http://news.bbc.co.uk/1/hi/world/americas/7522335.stm]BBC”>BBC NEWS | Americas | 'Wall Street got drunk' says Bush)</p>
<p>We personally pumped some $80,000 into USA’s economy by borrowing money for kid’s college. I think the weighted average interest rate at about 3.0%. On consolidation, these loans have a weighted average of 2.75%.
On time payments incentive, these loans will have a weighted average of 2.25%. </p>
<p>What were we supposed to do? The EE bond rate that we had was 3.0-3.5%, where as the loan rate was 3%. We were paid to borrow!</p>
<p>Since these loans are probably Auction Rate, some one is “holding the bag”, and its not me. </p>
<p>Thankyou, America.</p>
<p>It’s interesting to watch the dancing around Lehman this weekend.</p>
<p>Some parties want to buy it but without the toxic waste. Others don’t want them to be able to buy it without some of the risk. Treasury says no government bailout. We have OEX coming up next week so there should be lots of fun and games next week.</p>
<p>“What were we supposed to do? The EE bond rate that we had was 3.0-3.5%, where as the loan rate was 3%. We were paid to borrow!”</p>
<p>So you’re one of those carry-trade guys.</p>
<p>Had to goog the term “carry trade”</p>
<p>I guess we were/are. And we did so without the risks. Everything had a US Government guarantee component: EE Bonds had a floor of 3.5% (could have been 3%); by law, the unsubsidized Stafford and PLUS were indexed to 90day T Bills closest to July 1st; and guaranteed against defaulted principle/interest to the lender; interest on the loans are tax deductible. </p>
<p>Hindsight says that we should have borrowed to the max allowable. Many of the oldtimers on this forum also could not believe their good fortune. </p>
<p>MicroEconomics at its finest.</p>
<p>Covered AIG. That was fun.</p>
<p>"Bluebayou, the government is bailing out commercial and investment banks too.</p>
<p>The government did not encourage investment banks to use 33 to 1 leverage. </p>
<p>Didn’t encourage FNM and FRE to use 50 to 1 leverage either.</p>
<p>Didn’t encourage commercial banks to make loans to people that can’t pay the loans back either."</p>
<p>Actually, all of the above. Bush/McCain tax cuts. Borrow up to the hilt from our owners in Saudi Arabia and China. Give the money to the rich so they would “invest” it. They take the money to the investment houses. Investment houses can’t find investments with safe, sound rates of return. Encourage riskier lending. Banks and lending institutions step up to the plate. Then when it doesn’t go well, government bail-out.</p>
<p>So now we owe the Saudis and Chinese more based on the first set of borrowing, and now for the second round.</p>
<p>Solid Republican economics. Trickle down. Works every time.</p>
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Too true. In fact, I recall Bush and his team of economic advisors attempting reign in the GSEs (ie: following standard accounting practices & SEC regulations). Charity/Business/Government institutions don’t make a whole lot of sense in any scenario. A perverse set of incentives govern their actions.</p>
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Utterly pathetic. To tie the current economic situation to the tax cuts is ridiculous. Lets assume the tax cuts stayed at the Clinton levels. How on earth does that change the fact that people want to make money and get the highest return on investments.</p>
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Irrelevant. I don’t care about the nationality of people who owe us money.</p>
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Pathetic. You still haven’t tied the tax cuts to any meaningful cause of this mortgage meltdown.</p>
<p>The effect on the financial markets of the sale of Merrill Lynch and the bankruptcy of Lehman Brothers are relatively minor compared to what’s at stake with AIG, which has global reinsurance commitments in the neighborhood of more than 400 billion dollars. Simply put, AIG cannot be allowed to fail and the federal government – and I expect a global consortium of banks and other countries – will have to step in.</p>
<p>Already did. Every analysis of the so-called mortgage crisis I have read begins with the need of investment houses to find new avenues of investment. All based upon being flush with cash. Flush with cash because…</p>
<p>Sometimes things are too obvious to see…</p>