the biggest threat to our standard of living

THIS is NOT doom and gloom
okay

it is a responsible perspective that i'm sure many could agree poses a serious threat

www.marketoracle.co.uk...

touches on the high risk of deregulation in the markets and how derivitaves trading is such a illusion built on high risk loans re-packaged as assets we been set up and set ourselves up for a fall . hedge funds are a similiar story


also talks about how the PPT works to pick up stock market by manipulating the shorts and rally's seemingly come out of the blue

That buying comes out of the blue at a time when short interest is high. The unexpected rally strikes blood, and fear overcomes those who were betting the market would drop. These shorts need to cover, need to buy the very stocks they had agreed to sell (without owning them) at today's prices in anticipation they could buy them in the future at much lower prices and pocket the difference. Seeing those stocks rally above their committed selling price, the shorts are forced to buy — and buy they do.

this according to Robert McHugh, Ph.D and consitent with former Fed chairman Robert Heller

because the ppt was designed to intervene and prevent market distasters like in 1987 it's good intentions many supect have been over-ridden and replaced by greed. (which should be very surprising:@@

it seems what may have been invented based on the economies best intrests and avoiding sudden unnecessary spook caused crashed has morphed into a tool used by the elite and big cooperation to continually post-pone healthy "corrections" as well and the group has the money and power to over influence the short position and make them cover there butt's but even this group and changes in fed policy will be unable to stop the derivitaves and hedge funds from collapsing when the credit cycle goes bust very soon as the housing sector is contributing to the liquidity crisis also.

It's the corporate warlords and banking moguls who have benefited the most from dismantling the regulatory system. The PPT creates an additional “taxpayer-supported” safety net for dubious debt-instruments which are finally beginning to unravel. There's no reason why the market should be manipulated simply to protect private investment. It is a fundamental contradiction to the workings of a free market.

This may explain why the Federal Reserve mysteriously decided to stop publishing its M-3 report. Since the Fed is the “main resource” for buying averages in the futures market “the money is injected into markets via the New York Fed's Repo desk, which easily showed up in the M-3…. Without the useful resource of M-3”, Robert McHugh, Ph.D.says, “we need to find other tools to monitor when the PPT is likely to intervene, and kill shorts”.

the level of insanity

“$8.3 trillion of real money is controlling $313 trillion in derivatives!”

If there's a fire-sale in hedge funds or derivatives, there's nothing the Plunge Protection Team or the Federal Reserve will be able to do to stop a meltdown. The market will crash leaving nothing behind

now what would cause a fire sale in hedge funs or derivatives

well how about consumer spending going backwards and mortgage defaults increasing and creditors going bankrupt and this trend will only increase

"The failure of a highly leveraged fund holding large, concentrated positions could involve the forced liquidation of those positions, possibly at fire-sale prices, thereby imposing heavy losses on counterparties," Bernanke said.

In the worst scenarios, these counterparty losses could lead to further defaults or threaten systemically important institutions," he added.

lets see how the hedge funds are doing this summer, now that for the last 4 months the housing sector forecast losses have continually if not purposefully been under forecasted (can't blame them for being optomistic and trying to be self -fullfillng) . but this housing groundswell can not be brushed off though wishful thinking and perception adjustment (spin doctors)

the question is how bad the shaky motgages which continue to default this year thanks to the subprime loans and the trillion dollars in ARM ready to reset (increase) this year and there influence on the hedge funds

as well as the amount of capital inflows going elsewhere (invested overseas) instead of in the states thanks to the weakness in the dollar and slowed consumer spending on top of and directly related to the housing debacle.


the hedge funds are telling the banks look we can't allow all these poor people who can't pay there mortgages to stay in the houses. and the banks know that if they do not do something to bridge the gap then the real estate loss will be BIG TIME and many banks and HEdge funds will go kaput.
But the big banks really don't want to take the hit either. Keep an Eye on this, there greed could be there and our downfall


[edit on 7-6-2007 by cpdaman]

i think the fed is caught in a bit of a quagmire or between a rock and a hard place because

it seems that if they lower intrest rates there will be a greater fleeing of investment in the united states to foregin shores (which has already started) on top of that the weak dollar will most likely not even be able to push our GDP growth signifigantly (over 2%) which has been experienced appox 5 times since 1950. also this will raise inflation to rather high proportions and coupled with rising energy prices will continue to slow consumer spending. the countries have been reluctant to diversify out of the dollar because they don't want to begin the slide into a widespread nearly "global" recession with much suffering and a decent sized road to recovery. however there is only so much loss they are willing to take and lowering rates wiould soon push foreign inv. over the edge

it seems lower intrest rates may not even help the economy that much and will put the world in a great position of risk of recession

the fed could increase the intrest rate to help keep foreign investment and the foreigners may be happy with this idea which will prolong there own economic situation. however this is not etched in stone or even very likely. however it seems the global economies may be choosing this option of pretty bad over much worse. the draw back domestically of course would be a housing crash of epic proportions which would have such dire effect on consumer spending , hedge funds and banking institution that the economy would (which is already in recession w/0 massaging of numbers) be thrust deep into recession/depression within a year) however this may keep the dollar strong enough for other countries that depend on it

WE are between a rock and a hard place and the stock market is standing on a foundation of a house of cards blowing in the wind of an approaching category 5 storm and the PPT is occasionally putting up a wind barrier that is able to stop only the outer bands from effecting us. dont confuse this with a absent storm SOON the winds will overwhelm the PPT. and we will have recession and inflation and currency crisis (and screw the world) or depression .

and the infrastructure is in place to prepare for the aftermath

Sorry for the short post, but out of curiousity:
Are you an economist?
and
What economists do you read?

i typed out about a 30 min response and when i hit "post reply" my computer signal faded, thus my response is gone

the economists try to spin public perception to see slide's as hiccups

and because this actually has an effect on the overall market behavior

but the wave headed toward the economy can be seen by many there is just no real reason to mention in to the public who is 2 caught up in there life issues as well as 2 happy to lap up any kind of postive spin they throw out there to rationally contemplate the future. there are many individual exceptions, especially when u see the perspective of those outside the united states. i.e europe or india they can see what is headed here