Recession is official?

U.S. Economy: Growth Rate Falls Short of Forecasts

Packman game continue

Goldcorp to buy Gold Eagle, reports surprise loss

Goldcorp consolidates Red Lake District with $1.5 billion acquisition of Gold Eagle

Best Investments for the Next 5 Years

The Worst, Best Investments for the Next 5 Years ...
by Larry Edelson 07-31-08


Food And Energy Prices: A Prolonged Correction Underway?

Commodities and inflation
(nice charts)

The Difference Between a Panic and a Crash

Just How Accurate is the ADP Payroll Report?

Lopping off zeros in Zimbabwe
(Zimbabwe Dollar denomination)

Interesting debt data

Wednesday Commodities Round-Up; Agricultural

Curing US Inflation, Zimbabwe Style
by Adrian Ash (Bullionvault.com)


Dollar and Anti-Dollar.

EUR/USD ~ 1.55.85, Oil ~ $120, Gold ~ $915

May Case-Shiller data: 15.8% YOY drop in prices
from Interest Rate Roundup by Mike Larson

Case-Shiller: House Prices Decline in May
from Calculated Risk by CalculatedRisk

July consumer confidence inches higher
from Interest Rate Roundup by Mike Larson


Merrill Announces Sale of ABS CDOs, More Dilution, $5.7 Billion in Write-Downs
from Calculated Risk by CalculatedRisk

Merrill Lynch dials for more dollars
from Interest Rate Roundup by Mike Larson

White House: Record deficit coming
from Interest Rate Roundup by Mike Larson

IMF Sees No End to the Credit Crisis - the possibility of hyperinflation
from Jesse's Cafe Americain by Jesse

Who’s really getting bailed out here
from NakedShorts by Greg Newton

Charts and News for Monday
from Red-Hot Resources by Sean Brodrick

Natural Gas Dropping
from The Bonddad Blog by bonddad

Homeowner rescue awaits President Bush’s signature
from Lawinfo Weblog by admin


Gold and Dollar


two more US bankfailures and starbucks

Where Starbucks Went Wrong

U.S. regulators seize two more banks, engineer sale

Weekend readings

Now, Failure Friday!
from NakedShorts by Greg Newton

How Low Can Commodities Go?
from Red-Hot Resources by Sean Brodrick

Carbon emissions trade in EU...
Търговията на ЕС с въглеродни емисии – загуби и съмнителна полза за климата
(in Bulgarian)

India's Gold Demand: A Panic for Gold?
by Adrian Ash (BullionVault.com)

Gold/Silver Market Update
by Clive Maund

Honest Money Gold and Silver Report: Market Wrap
by Douglas V. Gnazzo

Wall Street in Financial Stock Fantasyland
by Mike Larson



Bear Market Phases
from Mish's Global Economic Trend Analysis by Michael Shedlock

Ten Bear Market Phases
1. A huge buy the dip mentality sets in during the initial decline. Most party goes cannot fathom that party has ended.
2. Moderate concern sets in when buy the dip stops working.
3. Initial panic.
4. Numerous bottom calls are made, all wrong.
5. Search for the guilty.
6. Punishment of the innocent.
7. More panic.
8. Lawsuits fly.
9. Regulatory power is given to those most responsible for spiking the punch bowl.
10. Congress gets in the act and makes things worse

Ridiculous Lawsuits Fly At Taxpayer Expense
from Mish's Global Economic Trend Analysis by Michael Shedlock

San Diego sues Bank of America to halt foreclosures
Los Angeles Sues MBIA, Ambac, Others Over Bond Insurance

Unsecured Creditors Pulling Funds from Washington Mutual
from Jesse's Café Américain by Jesse

Fitch Projects A Further 25% Decline in US Home Prices
from Jesse's Café Américain by Jesse
from Calculated Risk by CalculatedRisk

Freddie Mac: Mortgage Rates Rise Sharply
from Calculated Risk by CalculatedRisk

2.2 million vacant homes for sale
from Calculated Risk by CalculatedRisk

Price comparisson

Agriculture (DBA), Oil (USO), Natural gas (UNG), Gold (GLD) comparisson. Note in DBA there are something like double top. In Gold picture is "softer", more like a triangle. In Oil and Gas - the double top completly missing.


Lets the pacman game begins

Kinross to buy Aurelian Resources for $1.18B

According my calculation, if we assume Kinross share is $21, Aurelian shareholders will receive little bit more than 6 $ per Aurelian share, which is about 50% more than current price (~$4).

Kinross currently down 4-5 %, but in long term they will profit from this merge a lot.

This is informational message, and is not buy/sell recommendation.

Oil joke

Readings from yesterday and today

You Know The Banking System Is Unsound When....
(an excelent article from Mish)

Mish: "The entire US banking system is insolvent."
(Comments on previous article)

What's the Cost For Fannie and Freddie?

Marc Faber's Latest Views
(The world is in recession already, I put out a negative view for industrial commodities for the second half of 2008 and I stick to this view)

Fannie, Freddie Rise After Lawmakers Agree on Bill

Ford: $8.7 Billion Loss

China may dump its US Treasury holdings

Thursday Oil Market Round-Up

Charts on Gold, the Dollar, Oil -- and News You Can Use

UK Investors Buy Physical Gold in Record Numbers - Target Price for Next Leg Increases

Charts in the Babson Style for Midweek 23 July 2008

Updated Gold Forecast for 2008-2009
($1200+ at the year end)


Wachovia - + 6%

and Wachovia is now... +6% ?!?!? :-)

Wachovia - 10% underwater

After ralling more than 40% for the week and after "disabling" short selling, Wachovia took another hit - 8.9 billion losses. Dividend is also cut.
Looks like this was more that the street expected because pre-market WB is 10% underwater.
Once again I was prooven right not to tuch financials :)

Black Swans

Black Swans
by Randolph Buss

Oil movie

Another Oil Bubble Movie

Airline sector

The Airline Sector - Opportunity Cloaked in Crisis...
by Clive Maund



Bank Credit and Money Supply Update
from Jesse's Cafe Americain by Jesse

About Last Week's Rally ----
from The Bonddad Blog by bonddad

Who will bite this bullet?
from The Yellow Brick Road by Andy Bebut

The Most Important Chart In The World
by Captain Hook
(minners/gold ratio)

Julie Alexandria video on lenders :)

Click PLAY several times. First time you will need to watch the advertizement.

Stormy Weather Edition

Charts and News for Monday -- Stormy Weather Edition
by Sean Brodrick

Uncle Jay Explains the ... Plummet word

Uncle Jay Explains the ... Plummet word

US Stock market / Gold cycles and bank failures 1928 - 2024

New article by me:
US Stock market / Gold cycles and bank failures 1928 - 2024

Oil bubble again :-)

JPMorgan's Kelly Says Drop in Oil Price Shows `Bubble' http://www.bloomberg.com/avp/avp.htm?N=av&T=JPMorgan...

According to him - "no fundamental reason for oil raise". ;-)
However - finances are great "it's getting less bad". ;-)

I believe JPMorgan wanna load a truck with oil.

Great Depression Again :)

The Man Who Lived Through 1929 (Reprinted)
from The Great Depression of 2006 by Jim in San Marcos


Fear: IndyMac checks not accepted

Banks Reportedly Not Taking IndyMac Checks
Finally able to withdraw their money, customers can’t open new accounts.

AP updated 10:41 a.m. ET, Thurs., July. 17, 2008

LOS ANGELES - The frustration didn't end for some IndyMac customers when they finally were able to withdraw their funds from the failing Southern California bank seized last week by federal regulators.

Some people have run into more problems when they tried to deposit IndyMac cashier checks at other banks.

Sheryl MacPhee said she waited in line two hours Tuesday at an IndyMac branch in San Marino to liquidate a certificate of deposit. But when she took it to a Washington Mutual branch in South Pasadena to deposit, she said a manager told her their new policy was not to accept IndyMac checks. If the customer insisted, she said she was told, it could take eight weeks or more to access the full amount.

"Sure, IndyMac will give you a check," MacPhee told the Los Angeles Times, "but what good is it if no other institution will accept it?"

WaMu spokeswoman Olivia Riley said her bank is accepting IndyMac checks, "but depending on the specifics, funds will be subject to an extended hold period."

Officials at the Office of Thrift Supervision said that regulating agency is investigating complaints about the checks.

Wells Fargo is placing holds of up to nine business days on many IndyMac checks. That hold policy applies to checks from other banks, just not as often as those from IndyMac, Wells Fargo spokeswoman Mary Trigg said. Her company is concerned that "people could be taking advantage of this situation by creating fraudulent checks," Trigg said.

The Office of Thrift Supervision transferred control of IndyMac to the Federal Deposit Insurance Corp. on Friday because it didn't think IndyMac could meet depositor demand.

William Ruberry, a spokesman for the federal Office of Thrift Supervision, said the agency has received several reports about problems that IndyMac account holders have had transferring their money.

"Our position is that other institutions should honor IndyMac checks," he said, "and we're looking into the situation."

Over the weekend, it became IndyMac Federal Bank, FSB, and by Monday morning the scramble by bank customers to recover their money was on.



Armed and Dangerous
by Peter Schiff
(Fredy and Fanny resque with the blank cheque)

Panic on Wall Street Is Building-Gold and Silver's Role
by David Morgan
(Is not about silver, but for Fredy and Fanny resque)

Why the Mania Phase in Gold May Be Upon Us
by Jeff Clark
(Gold bull market phase 3)


Sinclair's Buy Orders on Gold

Posted On: Friday, July 18, 2008, 1:45:00 PM EST

Subject: Bids Getting Filled

Author: Jim Sinclair

Dear CIGAs,

I got hit on my $960.10 bid, yesterday.
I got hit on my $950.10 in the early AM.
I am bidding $940.10 for the largest of the buys.

Note that I never bid or offer at a round number. Somehow, I miss the price by $0.10. My habit then is to offer $0.10 above and below depending on what I am doing at the time.

On purchases my first purchase is the lowest amount. My second purchase is a tad higher volume. My last bid is to fill the basket. The odds increase as the price decreases that that price represents the bottom of a reaction.

I don't know if it will go to $940.10 so that is a risk. I know gold is going to at least $1650, however I never chase gold up. I buy weakness, not strength.

All the best,

Interesting view on oil

Friday Charts and News

Pakistani investors attack stock exchange

Pakistani investors attack bourses after share collapse

Investors ransacked stock exchanges in Karachi, Lahore and Islamabad yesterday, reacting to a share-price rout that has devastated the life savings of many Pakistanis.

This is what happens when government try to control stockexchange.

Naked Fines

JPMorgan Chase will pay ... $400K - drop in the ocean...
In July, Citigroup, Daiwa Securities, Goldman Sachs and Credit Suisse collectively paid $1.3M


click second time if it not works first time ;)


Selective Enforcement of Regulation SHO(RTS)
by Mish
(Shorting Curbs and naked short selling again)

Forex Fridays -- the Dollar
from The Bonddad Blog by bonddad

Oil markets: Bottoming out or taking a breather?

Oil and gas prices in extended fall: Traders seek clues of bottoming-out or a breather

This is informative article. They do not say top is in.

Pop Goes the Oil Bubble!

Pop Goes the Oil Bubble!
from CNBC :-)
According those heroes, oil go to $40 :)

The End of Oil's Boom :)

The End of Oil's Boom?
A 10% correction over the past week could signal the end of a long bull run for crude oil

Another overoptimist :)
However, I found the comments very interesting:


Articles from Garry

Gold stocks & Oil
from Garry

Wrap up to a very interesting day (July 16, 2008)
from Garry

The Government Changes The Rules in The Middle of The Game

(once again for financial shorts)

Gold Shines Again Amid Banks' Ruins

Loses and surges...

JPMorgan Chase Profit Falls 53 Pct on Loan Losses
Coca-Cola Co. 2Q Profit Drops 23 Percent
Nokia's 2Q profit drops 61 percent
Continental Slides to 2Q Loss on Fuel Costs

FRE - +11% premarket
FNM - +9% premarket
LEH - +7% premarket

Oil Market Round-Up


Don Harrold revealed the great conspiration :)



Tossed To The Dogs?
from Mish's Global Economic Trend Analysis by Michael Shedlock

A Bad "Short" Day
from The Great Depression of 2006 by Jim in San Marcos

The SEC has restricted naked shorts (this doesn’t affect the average trader shorting with local brokerages; they are loaning you the stock). The restrictions apply to primarily hedge funds. The 19 stocks on the list are: Fannie Mae, Freddie Mac, BNP Paribas, Bank of America, Barclays, Citigroup, Credit Suisse, Daiwa Securities, Deutsche Bank, Allianz SE, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, Royal Bank, HSBC, J P Morgan, Mizuho Financial, and UBS. Hedge funds are the target of this restriction.

Do you get the idea that a lot of people think that something is wrong with these stocks? Is it wise to own stock on this list? I guess the real question is; do you think any stock on this “Do not short list” is going to prosper in this market and make you money?????

SEC Restricts Shorting 19 Financial Stocks
from Mish's Global Economic Trend Analysis by Michael Shedlock

Today's (Yesterday's) Markets
from The Bonddad Blog by bonddad

Charts in the Babson Style for Midweek 16 July 2008
from Jesse's Cafe Americain by Jesse
(post from yesterday)

Viewings ;)

Fanny & Fredy retrospective video

Indi Mac day 2

Matt Simons: $600 oil. Simmons Sees Oil Climbing on `Unbelievably' Tight Supply


Don't Blame the Shorts

Don't Blame the Shorts! SEC 'Witch Hunt' Misses Real Cause of Market Ills
video here
My inrernet is slow so I did not watched it in full. Will do tomorrow.

Worse is behind us :-)

worse is behind us, US economy is great, stockmarket raise, oil and gold is cheap, everyone can afford it.

U.S. Policymakers Restore Confidence in Fannie and Freddie


(Can you believe it?!?! hohohoho)

Financial Stock Manipulation

SEC Kicks Over Financial Stock Manipulation Rocks and Finds... Goldman Sachs
by Jesse


As I wrote yesterday, there is a support on $ 134 oil.


Now Oil is @ 134 sharp. Price is still in the channel, but we will see what will happen later.

Wednesday Commodities Round-Up


IndyMac delisted

Looks like IndyMac (IMB) is de-listed, and now is trading on PinkSheets only under code IDMC.PK (click for Yahoo Finance link)

Bank Run

Bank Run of Indie Mac:
Some people waited on the line from 5:30pm previous day...
ATM's and Internet banking was stopped from several days.

Socialism for Freddie and Fannie

This is serious, very serious.

Today from WSJ:
SEC Curbs Shorting of GSE Stocks, Considers Limits for Wider Market
By Kara Scannell
Word Count: 348 Companies Featured in This Article: Fannie Mae, Freddie Mac, Lehman Brothers, Goldman Sachs, Merrill Lynch, Morgan Stanley
WASHINGTON--The Securities and Exchange Commission announced an emergency action aimed at reducing short-selling that targets Wall Street brokerage firms as well as Fannie Mae and Freddie Mac, and will immediately begin considering new rules to extend new requirements to the rest of the market.

SEC Chairman Christopher Cox said the SEC would institute an emergency order requiring any traders to pre-borrow stock before shorting Fannie Mae and Freddie Mac, the ...

WTF ?!?!

So you can short IBM or MFN or NVDA, but you can not short Fredie Krueger.

This really is socialism. I don't think short selling is bad. For every short there is a long, even if is naked-short.

Financials sucks. People are scared of stock exchange too. Prices will go down. They must.

Speaking of naked-shorts, I really hope somebody to naked-short those financials, so finally SEC pay attention on this problem.

Same from Mish:

WSJ Article full text:

Same from Jesse Cafe American:



Technicaly oil "plunge" stopped just at the bottom of the channel. We have also horizontal support (not shown @ 134-135 level). I am pretty sure now the direction is up. Target = $160.

Note the wedge I spoke before is still there. I do not see prices fall to $110 - 120, but this is a technical possibility, which I personally will ignore it, because of fundamentals. If it happens, I will keep and add to my possitions, but once again - I just do not see how this scenario will happen.

Fannie and Freddie - video interview

Paulson Drove Plan to Shore Up Fannie Mae, Freddie Mac

Jim Rogers video interview with Bloomberg

Rogers Calls Fannie, Freddie Rescue Plan a `Disaster'


Global Money Supply (2008 Update)

The overall weighted annual M3 money supply growth for all areas covered in this essay is 12.4%.

US = 19%
UK = 14%
EU = 10%
CH = 3% - thats why I like CHF

Congratulations!!! Now go and buy gold :-)



Silver Emergency
from Safehaven by David Morgan
(did not read it but David Morgan write well)

Fed enacts new mortgage rules
from Interest Rate Roundup by Mike Larson
(Mike explains new mortgage rules)

How Many Bullets Does The Fed Have Left?
from Mish's Global Economic Trend Analysis by Michael Shedlock
(fallin' bank shares)
Mish Bank Scorecard :-)
Washington Mutual(WM) -26% at $ 3.64
Wachovia Bank (WB) -10% at $10.36
Bank United (BKUNA) -17% at $ .64
Lehman (LEH) - 5% at $13.72
Merrill Lynch (MER) - 7% at $25.50
Fannie Mae (FNM) - 3% at $10.00
Freddie Mac (FRE) - 9% at $ 6.99
CIT Group (CIT) -11% at $ 6.30
National City (NCC) -32% at $ 3.00

Global Money Supply (2008 Update)
by Mike Hewitt
(see my next post for it)

1 million iPhone 3Gs sold over weekend

Apple has announced that it sold its one millionth iPhone 3G on Sunday, just three days after its launch on July 11.

"iPhone 3G had a stunning opening weekend, [...] It took 74 days to sell the first one million original iPhones, so the new iPhone 3G is clearly off to a great start around the world." said Steve Jobs.

Readings... from SafeHaven

Las Vegas: Gaming Revenue Down 16%
by Randy

Silver/Gold/USD Market Update
by Clive Maund

Honest Money Gold and Silver Report: Market Wrap
by Douglas V. Gnazzo


US Dollar Long Term Chart with Commitments of Traders as of July 8 Market Close
from Jesse's Cafe Americain by Jesse

Federal Regulators Take Over IndyMac After a Run on the Bank
from Jesse's Cafe Americain by Jesse

US Treasury Plan to Inject $15 Billion Into Ailing Freddie and Fannie for Special Shares Class
from Jesse's Cafe Americain by Jesse

IndyMac fails
from Interest Rate Roundup by Mike Larson

Fed, Treasury taking steps to support Fannie Mae, Freddie Mac
from Interest Rate Roundup by Mike Larson

1,600 Percent Interest on Text Message Loans
from Mish's Global Economic Trend Analysis by Michael Shedlock
(for Sweden)

U.S. Taxpayer Bailout of China Over Fannie Mae
from Mish's Global Economic Trend Analysis by Michael Shedlock


Lets bailout begin...

Paulson: Keep Fannie and Freddie in current form

Weekend song - Hotel California

Fannie and Freddie - what other say about them

SymbolLast TradeChangeVolume
FNM9:31AM ET7.28-5.92-44.85%29,279,604
FRE9:31AM ET4.33-3.67-45.87%18,884,169
LEH9:31AM ET14.07-3.23-18.67%3,307,970

The stunning collapse of Fannie Mae and Freddie Mac
from Interest Rate Roundup by Mike Larson

Let the Bailouts Begin
from The Bonddad Blog by bonddad

US Considers Nationalizing Fannie and Freddie
by Jesse

Oil prices - funny movie

Stagnation and recession - funny movie ;-)


Fanny and Freddie - down 50 % pre-open.
Lehman - down only 10 % pre-open.


The gains from last year are erased some time ago.
2006 May peak is broken too.
Now we going to 10,700 area.

We're All Homeowners Now, Nationalization of Fannie, Freddie Unavoidable

Fannie and Freddie Waterfalls Are Too Big to Bail from Mish

U.S. Oil Imports

Did not read something that interesting on oil from weeks.
A must read.
Securing the Insecure: U.S. Oil Imports
by Marin Katusa (Casey Research, LLC.)


Lasy Funds...

Minute ago, I went to my brokerage account for no particular reason. I checked fund page - there are lot of funds by different companies such Fidelity, AIG, JPMorgan etc.

I was amazed, that from the beginning of thge years ALL funds was average 10% down. Only exceptions were some bond funds - 2-3% up, and currency funds - 5-6% up.

I can not believe this - can not be true :)

Fed chief: Gov't needs more power when firms fail

When you wanna fix the economy, it works but short term. Fundamentals always prevails. Always :-) Today we saw Freddie and Fannie shares tumble with 18% + . Lehman is 10% under water too.

And what they want? - More regulations. More money printing.
I am happy I am not US taxpayer. Because is the taxpayer who will help failing banks and after that the bank will skins the taxpayer ;-)

Yesterday I meet a friend and we spoke - You can not go to a restaurant, eat, drink and finally when time come to pay to say - "have no money". Well if you have no money - go to wash some plates. - This is what happen in USA.

I say - Regulations can not help American people - they help only Bernanke fruends - big banks.

Buy gold while is still cheap. Gold going to at least $1,200 next 2-3 months.


Whats happen with PBR

Petrobras was down, now is up.
Problem is as follows:

UPDATE 2-Union threatens strike at Brazil's main oil fields

Mixed Readings - Fanny & Fredy, Mr.Consumer, Oil and more

Former Fed Governor Says "Fannie, Freddie Insolvent"
from Mish's Global Economic Trend Analysis by Michael Shedlock

Fannie and Freddie are 'Insolvent'
from Jesse's Cafe Americain by Jesse

FNM = -6.40%
FRE = -18.91%
LEH = -10.00%

The Consumer
by Don Harrold

Thursday Oil Market Round-Up
from The Bonddad Blog by bonddad

U.S. Foreclosures Rose 53% in June, Bank Seizures Almost Triple
July 10 (Bloomberg)

The Dow Transport Average Composition by Sector
from Jesse's Cafe Americain by Jesse
(visualy explains what DJTA is)

American Icon Sold

After aquiring Prime West Energy (formal stock code NYSE:PWI), same fund aquired 90% from the famous American Icon - The Chrysler Building in NYC.

This is what happens when you debase your currency. Someone who have money, often foreigners, comes and buys your quality assets. It happen in Weimar Germany, it happen in Bulgaria, USA story will not be different.

After all Abu-Dhabi currency is probably* peg to the dollar, and it is debased "automaticly" as FED debase the USD. Do you expect they are stupid and will just stay and watch?

The Americans did this to themself :-)

*) I am unsure what is Abu-Dhabi currency

Abu Dhabi Fund Acquires Most of Chrysler Building

In Bulgarian:
Арабски фонд купи небостъргача Chrysler Building за 800 млн. долара



Oil raising in a channel. What we currently see is a correction :-) . Additional support @ 135.
There is slightly possibility for a wedge (blue line is the top), but fundamentals do not support it.

UK Property: How Low Will It Go?

Recommended "listening" - housing in UK, Hong Kong, Japan, Germany...

UK Property: How Low Will It Go?
by Commodity Watch Radio:


US Stocks Rally on a Decline in OIl Prices and the Fed's Extension of Credit Facilities
from Jesse's Cafe Americain by Jesse
(unlike explanation of last 2-3 days market action)

We're All Homeowners Now, Nationalization of Fannie, Freddie Unavoidable
from Mish's Global Economic Trend Analysis by Michael Shedlock

Toxic CDOs Renamed
from Mish's Global Economic Trend Analysis by Michael Shedlock

ChartWorks: Post Bubble Highs in an Equity Secular Bear Market
by Bob Hoye
(interesting but failed to follow it)

The Credit Crisis is Nowhere Near Over
from The Bonddad Blog by bonddad

Decision Time for Gold and the Dollar
by Roy Martens

The Indian Gold Train is Leaving the Station ...
by Alex Wallenwein
(Interesting if is true. I did not think Indians sold the gold at the first place.)

EU and Biofuels (in Bulgarian)

Обръща ли ЕС гръб на биогоривата? from Spiegel Magazine


House price boom and bust : Where all those money go?

Don Harrold just produce another conspirative video here you are a embeded link :


His idea is that the money from housing crunch are in the system. That is very interesting oppinion. I thought similar think before.

However, is it possible the money NOT to be in the system - the money can be created in thin air, but they can be destroyed in thin air as well.

Peter Schiff before said that the money went to the builders and "early investors". However, most of them (especially investors) had loans. So, small calculation:

House price boom:
  1. Mr. Joe get 100K loan (no interest and no money down for simplicity). -
    1. Where money comes from? Fractional banking reserve or from FED Discount window. We assume the bank do not package the loan.
  2. Mr. Joe buys house from builder.
    1. Builder has the money, but he probably has debt, also house cost some materials. Let say after cover everything, the builder make 30K profit. Builder also use the money to build new houses (unless house value drops)
  3. Mr. Joe gets lucky. His house let say double and now costs 200K. He sells it to someone else.
    1. Mr. Joe receives 200K, cover the loan etc and he have let say 90K profit.
      1. Because the bank created or borrowed the money for Mr. Joe, they need to cover too. Bank makes just the interest, money down fees - thats not too much money, no more than 10K. In all cases money gets destroyed.
  4. New owner have loan similar to Mr. Joe and the story is repeating (unless house value drops)

In case of loan packaging situation is not much different. In such case the bank is transparent and most of profit is collected from the "SIV investors".

Once house price collapse:

  1. Mr. Joe is OK. He have no house.
  2. Builder may be:
    1. Builder may be takes loss, because he invested the money into new houses that can not be sold for full value, and can not cover the expences.
    2. Builder may take no loss, if he did not began building yet.
  3. Current house owner have 2 options -
    1. to pay his loan, which is much bigger than the house.
      1. In such case bank takes no loss.
    2. not to pay the loan. In such case owner is OK, he lived some time for small rent or for free.
      1. Bank takes loss, because the house does not cover the loan.

In case of loan packaging situation is not much different. In such case the bank is transparent and full loss is collected from the "SIV investors".

So in this example, the everyone makes not much money compared to the price of the home. May be Mr.Joe make most money compared to invested money - he invested almost 0, but let say 10-20K and gets 90K . This is because the leverage works for him.

So, the conclusion is money are in early investors. This is where all the money go.

Am I correct?

Note I also assume Mr. Joe did not bought new Lexus + Plasma TV with surround sound + Jacuzzi system for bath.

If he did that, then this mean he did not sold the house, and he used the house as ATM - this means new loan, new fractional reserve money (or Discount window money). If Mr. Joe is non-responsible, this means he exchange the real money he made (90K) for "virtual" money that soon will be destroyed (when house price collapse).

Siemens cutting 16,750 jobs worldwide to cut costs


Don Harrold video.

Here you are the latest conspiracy :) :) :) from Don Harrold. However the money he speaks of - may be there were no such money at the first place, may be it was only leverage and loans?


Some more nonsense

Bad news as good news? Inflation? Oil price regulations? C'mon...


Who Killed the Economy

You think you saw everything. Then some day you see some even more stupid. Here for example today in Yahoo finance I saw following:

Who Killed the Economy? Greenspan Leads Portfolio.com's Blame Game

Results may be seen here:

So where the blame is properly assign? To Sir Alan Greenspan - same Greenspan, who drove the rates from 6-7% down to almost zero. Same person who made money "free"

Wall Street applaud him before, they proclaim his to be the God, the Savior of US economy. Btw, same story for Greenspan successor – Dr.Bernanke.

Sure the boom phase was pleasant - everyone made money on the Street, all assets, including the small houses raised in price. People became rich. Everybody benefits. Nobody paid.

However, much like if you go to a restaurant, a moment come when the waiter comes with the bill. The bill comes as "the housing crunch".

The bill must be paid somehow. However, the people who proclaim Greenspan as god now do not want to pay.

The Main Street will pay as usual. They always do.

Credit Cards

Credit Crunch far from over.
This gonna be much much bigger than I expected.

Fed Accepting Comments On Proposed Credit Card Rules
from Mish's Global Economic Trend Analysis by Michael Shedlock

Bank of America's Parking Meter Play
from Mish's Global Economic Trend Analysis by Michael Shedlock

Your own bully pulpit
Consumers get rare chance to try to effect changes in credit-card rules

By Andrea Coombes, MarketWatch

Uncle Jay Explains... the Indipendence


Gold article from 2006

I just love to read those old articles and to see their assumptions etc :)

Reason to invest in gold and silver


Don't missunderstand. This is a banknote,
but is called cheque, to differ the banknotes before inflation era


This chary does not show the inflation in Zimbabwe. It shows the single banknotes printed.

For example in 2006, they first print $1000 note, then they made $10,000, then $100,000.

Currently they have $50,000,000,000.

I agree is not same as Yougoslavian note of 500,000,000,000 dinars, but believe me soon they must print it.

2006 1,000
2006 10,000
2006 100,000
20071 FEB 200750,000
20071 JUL 2007200,000
200720 JUL 2007500,000
200720 DEC 2007250,000
200731 DEC 2007750,000
20081 JAN 20081,000,000
20081 JAN 20085,000,000
20081 JAN 200810,000,000
20082 APR 200825,000,000
20082 APR 200850,000,000
20082 MAY 2008100,000,000
20082 MAY 2008250,000,000
20082 MAY 2008500,000,000
20082 MAY 20085,000,000,000
20082 MAY 200825,000,000,000
20082 MAY 200850,000,000,000

Happy 4th of July America

Cheap gold :)

Urgent Alert: Why Gold Will Jump $200 in One Day? By Brian Hunt
Gold / Oil relationship


Today market action

Today oil and gold stocks are down hard.

I bought some more PBR @ 66.50 and 65.50. Bought some PWE too - price for me is not important there, PWE I intend to keep long time, however if price go back to 34 I will sell some.

Dow is positive for the day, thats why I now wondering may be this is not de-leveraging, but rather marker manipulation in front of 4th July. I am probably the last who will accept manipulation theory, however I don't see anything changed from 2-3 days ago:

  1. Is gold going up? YES. up for the week.
  2. Is oil going up? YES. up for the day.
  3. Is oil likely to go up? YES.
  4. Is oil demand will go up? Probably.
  5. Is peak oil here? Probably.
  6. Is dollar go down? NO, EUR/USD is up for the day with near 100 pips, but is down for the week.
  7. This one is cliché - do they stop suddenly print money :-) :-) :-)

Read this - this is the way you need to invest. You need to forget about day to day fluctuations. Technical analysis works if we have free market. Well we don't have free market at the moment.

One more cliché - Welcome to US(SR) !

BATS Trading system

This is where Yahoo Finance gets their realtime prices, as well pre/post market prices.
We just added this box on the left menu for you, just over the oil prices.

BATS Market Viewer


We got rate hike from ECB...

By this reason, I am re-publishing a video with Alan Greenspan from the past March:

More articles

Thursday Oil Market Round-Up
from The Bonddad Blog by bonddad

Why the Gulf Is Switching to Coal
The Persian Gulf may be sitting atop massive oil reserves. But with prices for crude skyrocketing, it makes more sense to sell it than to burn it. Instead, the Gulf is turning to coal for its energy needs -- to the detriment of the climate. At the end of April, for example, the state-owned Oman Oil Company signed a memorandum of understanding with two Korean companies on the construction and operation of several coal-fired power plants. Dubai, for its part, is initially planning to build at least four large facilities with a cumulative output of 4,000 megawatts. Abu Dhabi also wants to get into the act. Even Egypt is thinking of constructing its first coal-fired plant on the shores of the Red Sea. As odd as the idea may seem, coal power in the gulf is just one more outcome of skyrocketing oil prices.

Merrill: GM bankruptcy 'possible'
General Motors will need to raise as much as $15bn in cash to shore up liquidity and bankruptcy is "not impossible" if the US auto market continues to slump, Merrill Lynch said, reports Reuters. Other analysts have suggested GM, whose shares fell to a new 54-year low on Wednesday, needs to raise funds to weather the downturn in the US auto market through 2009. But Merrill's estimate of GM's financing needs is the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest US automaker. Merrill analyst John Murphy cut GM to "underperform" from "buy" and lowered his price target to $7 from $28. Shares fell as much as 11% to $10.50 in Wednesday's trading as the cost to insure GM's debt rose.

Stockexchange transactions from yesterday

What we saw yesterday was massive de-leveraging. At least this is my oppinion.

I loaded following stocks:

MFN @ 11 - hey this was market bottom :)
PWE @ 33.70 - current price 33.06, but we will get nice dividend there.
PBR - several buys @ 69.80 - 67.80

With dollar depretiating, and oil and gold go up, I believe those were very good buys. We will see.

I will "de-leverage" some PBR if we see 71.00 next 2-3 days. MFN will lower my expectation too, because now I have bigger possition than I intended to have, but there probably will sell everything at once.

Anyway, the main problem I see is - if sold those, what shall I do with those USD i will get in return? Convert to EUR? No thanks, EUR is same story. May be I will became fan of CHF :-)


I'm taking a closer look at the Ibanks, the Golden Boys inlcuded
(Just see the leverage!!!)

Bloomberg explains why regional bank credit is drying up
from Interest Rate Roundup by Mike Larson

Charts in the Babson Style for Midweek 2 July 2008
from Jesse's Cafe Americain by Jesse
(Nice Dow chart)

AirTran Asks Employees To Take "Temporary" Pay Cut
from Mish's Global Economic Trend Analysis by Michael Shedlock

Eurozone Manufacturing Contracts
from Mish's Global Economic Trend Analysis by Michael Shedlock

The simple truth about hyper-inflation


PPT save the day again

PPT save the day!
Once again, the Dow will close on positive teritory!
Who said we have bear marker?!?!

Dow / Gold ratio

Dow / Gold ratio is still around 12.

AT&T to sell iPhone without contract for $400 more


Two new models of iPhones go on sale July 11 for $199 and $299, depending on the amount of memory, with two-year AT&T contracts. The no-contract versions will cost $599 and $699 and will be sold sometime "in the future," AT&T said.


Could it be "they" began to cover the shorts?

Sasho birthday

This time - me and Sasho are in the middle :o)

Readings + SEO :)

Deflationary Hurricanes to Hit U.S. and U.K.
by Mike Shedlock

K-wave: The seasons

Improved Adobe (Macromedia) Flash indexing
from Official Google Webmaster Central Blog