Long live the United States and its Economy

OK....time to vent.

I am tired of reading all these post here concerning the downfall of the US and the write off of our currency.

Sorry to break it to you, but we are not going anywhere and our currency will be here long after I die. The recent downturn in our stock market is a simple, and healthy correction. Anyone who knows anything about economics and market history knows and fully understands that stock markets move in different directions (kind of like global weather patterns or so called "global warming, but thats for another post). If you know cycles, you can recognize them early and profit from them. Not to gloat, but since June 2007 I have had some of my best trades, yes all on the short side. NO, I WAS NOT SHORTING AMERICA, I was shorting bad stocks. If you see things happen once before, you can profit greatly the next time you see it. But enough of that.

What the FED did over the weekend and today, was nothing more than brilliant. I could care less about all the conspiracies out there that its illegal or the FED itself is illegal. Know what? The FED is here, so get used to it. Ron Paul is not going to be elected President and its not going anywhere.

What they did was lock the liquidity crisis. They have not yet addressed the credit issue and that still could create problems going forward, but the liquidity issue is so much more important. Liquidity is what Wall Street is all about. Without it, Wall Street does not work. Bear collapsed because they were illiquid. Anyone who knows market history has seen this before, with two recent examples being Long Term Capital and Enron. In both cases they became illiquid and went bankrupt. LTCM had so much money they did not know what to do, so they began investing in non-tradable assets. Easily put, when some of their liquid assets lost value they were forced to sell. They sold at discounts, but being leveraged, they needed to also meet margin calls. They could not "readily" sell these assets that did not have a market....So they they could not assign a value. They could not pledge them as collateral and were forced to sell at any price to raise funds. It spun out of control and they went bankrupt. Again....due to being highly leveraged and invested in assets that were not LIQUID.

Bear Stearns, the brilliant geniuses they are, must have missed school the day we all reviewed LTCM as a case study in our basic investment classes in our 1st year of college. They got heavily involved REPO's, Sub-prime investments, CDO's and alternative investments. For the past few years there actually was an active market in these investments and everything was fine. Then BAM...the credit crunch. All of a sudden liquidity dried up and the market place fr these assets disappeared. Thanks to the new FASB accounting rule all investment banks were forced to mark their investments to market and assign a value. What value do you assign an investment that has not market? You can't. Markets create prices, thats how capitalism works. So, these illiquid assets became the downfall of BEAR. Good riddance. All last week, there were rumors on the street and the trading pits, I was already short Bear and other investment banks so I was quite happy. People all over the market walked away from trades and broke contracts. Counter party trading disappeared. Bear could do nothing. On Thursday the CEO tried to quell the rumors and said everything was fine. Know what? He was actually telling the truth. Things were not yet that bad. On Friday when the FED announced the 28 day loan to back BEAR and use JPM as a conduit for the loan scared the $hit out of everyone. credit spreads rose to record levels and all kinds of margin calls went out to BEAR. IT was that quick....NO LIQUIDITY. They were done.

Yes JPM is stealing a 85 year old company. Fine. Its done and the FED did what they had to.

Now it is time to realize something. Up until this morning I truly thought LEH, WM, FNM and FRE were all destined to follow BEAR. The FED, despite what you all might think, has made it clear that it will not happen in the near term. When the markets opened down 200+ points Monday, I did what my years of trading told me to......I covered all my shorts. Then, knowing that history repeats itself, I followed a long saying on Wall Street...When there is blood in the streets...BUY!!!!!! People....it just doesn't get easier. Recognize patterns, watch things happen over and over again. I covered all my shorts and got long the likes of LEH, GS, AIG, BAC, MER and even JPM. I am not planning on holding these long, but I am up 40% in some of these stocks.

NOW, Stop running around like chickens with your heads cut off screaming the sky is falling....Its not. It is time to start investing in America again. Obviously I don;t make stock recommendations on here, and with the recent rally I would recommend waiting for a pull back, but it is time and things are going to be OK. Now that liquidity has been saved the next step is to open up the credit markets again. Not the individual people, we are to loaded up with debt already, but to business, and not the ones on wall street. The mom and pop shops. Have you tried to get a business loan lately? You can't. The US can not grow without the little guy getting their share.

After we do that, we need to aggressively defend the US$. Foreign investors are short the dollar to such levels that if the FED attempted to buy the $ we could actually create a short squeeze in the currency. This would do a lot to stem inflation, lower the price of oil and pop the commodity bubble. (BUT let me get out of my agriculture stocks first) Bush should simultaneously open the petroleum reserves. Not flood the market with the oil, but put a scare into the Middle Eastern oil countries.

Well, for now I have taken up enough of your time and I feel better.

You can now vent and rag all over me, by now I must have a bunch of you fuming. Just make a promise, before you start ripping into people on wall street, please understand we are not any smarter than you, we just are willing to play the game. The game is open to anyone who wants to play. It is a zero sum game. For every winner, there is a loser, but if you see patterns you stack the deck heavily in your favor. Would you rather bet with the house or against it????? I always bet with the house.

LONG LIVE THE USA.......

Good night


[edit on 18-3-2008 by traderonwallst]

One more thing. Countries around the world are suffering similar stock market gyrations recently, yet the number one move their leaders are making is to defend the home currency and protect their own economy. Please note that despite a lot of this being caused by the America markets, we have acted to prevent collapse of global markets, not just our own. When the SOCGEN trader almost blew up their bank, the power being here in USA thought global markets were in trouble and the FED cut rates. Had they been made aware of the cause they might not have acted. But, despite that, they did. Any countries out there taking such measures to prevent a collapse over here? I think not. Don;t tell me you foreigners did not see blood in the street and an opportunity to sink the Giant. Sorry to say it, but we are not sunk and we don;t easily forget.

OK, now I am done venting.

One lucky day isn't nothing compared to the beating the DOW will end up with pretty soon. I just can't see the us getting out of this ok.

Stock markets do go up and down all the time. I'm an active trader, stocks, options, forex, metals.

Sorry but we are in uncharted territory for the economy. The problem is the Dollar.

Why is the Dollar in such trouble? Here are some of the reasons.

1) Iran is now selling lots of oil, and it is mostly in Euros, Yen, and Rubles.

2)Greenspan told Saudi Arabia among others to de-peg the Dollar to curb their severe inflation problem.

3) Every time liquidity is pumped into markets by the fed, the Dollar further inflates.


4) Call me crazy if you want, but the plan is to crash the Dollar, and usher in the Amero, along with the NAU (by 2010).

5)Higher Oil, precious metal prices, and the current wheat situation is straining consumer spending.

So here is what is going to happen, short term:

1) Inflation is not going away, in fact it is going to get one heck of a lot worse.

2)Jingle mail is going to get much worse.

3) Forclosures=Bank failures.

4) Bank failures means the FDIC will have to run the printing presses round the clock.

5) This all will cause HYPERINFLATION!! In two years when you are using 100$ bills as toilet paper, you might remember I said this.

reply to post by downtown436


The fact that your a RON PAUL follower I would expect nothing less. Enjoy your trading, hope you were long this morning. It was a beautiful day, wasn't it?

I have to say that is one of the most intelligent and inspiring posts I have read in a long time. It is nice to see somebody talk about HISTORY when it comes to the stock market. I have dabbled a bit in technical analysis of the market and individual stocks and it all comes back to human nature and the insistence of people to repeat the same chaotic events over and over in time, just after we forgot we did it.

Bravo on an EPIC post.

Good luck in the Street and be prosperous

I agree, this is very different from the re-occuring 'corrections'
The US hasnt faced something like this since the depression.

Superior economists are saying as such, that this is a very serious situation with global consequences.

Your running a Trillion Dollar war..you cant do that without significant degredation.

Your cutting interest rates very rapidly now, without success.

people are burning there houses, opposed to using them, as they understadn financing the house is ridiulous, better to burn it and reap the insurance.

Oil is at an ALL TIME HIGH, and only rising

Confidence in the US is dwindling

countries are dropping the dollar

these make for more than your regular.

Had the FED not bailed out Bear, there would of been a run on the bank, and an almost immediate decline of OTHER banks.

The fed thesmevles CANNOT afford to bail out many more banks.

Give it a month, then come back telling us if you think its all rosey.

Originally posted by Agit8dChop

Give it a month, then come back telling us if you think its all rosey.

A month? 30 days? You expect an economy to turn on a dime? Sorry, if thats what you want, I can;t help you. I even said I am not sure how long I will stay long the bank / brokers. I collected hefty returns on those trades and could close them out whenever. My thesis is the US is not done and we will come fighting back. We are Americans and WE NEVER GIVE UP.

But if you want to come back in a month and start an I told you so thread....be my guest.

[edit on 18-3-2008 by traderonwallst]

Excellent post Trader - I just totally disagree. I think the PTB tossed out the rule book sometime last summer and looking for cycles just doesn't cut it anymore. The only one I see keep popping up is the Vicious Cycle of corporate greed bleeding America dry.

reply to post by kosmicjack


Hey Kosmic

Been a while for me.

Nice to hear from you, and you are entitled to your opinion, thats whats great about debate forums, although I was doing a bit of venting myself.

It late and I need to get some sleep. Should be another long da at work tomorrow.

Deal

But seriously, this problem has been generating for some time now.
The economy isnt goign to collapse in a month to a point where people burn money for heat,
but it sure as hell isnt going to solve the underlying issues.

The worlds flooded with american dollars
and the mortgage bubble

Interest rates were cut AGAIN, 3/4 a point.
what happens after another 3/4 point cut, and then another..

and it STILL declines by 100's of points daily.

where to then?

cycles can be defined by there predictability.

these banks arent faltering because they didnt predict, they faltered because there's nothing they can do.

the underlying mortgage bubble issue is going to consume america's economy. too my easily available credit wont make for happy investors.

I guess my very elementary problem is this:

In Economics 101 we learned that it is supposed to be a predictive science - studying the cycles and indicators you are referring to. Well if it is inherently predicitve then it is inherently manipulative.

As CT as it might be, I feel that there is an unseen architecture of control at work that is much more adept at reading cycles (or should I say leading cycles?) than the average citizen or trader. If they can predict it then they should have been able to prevent it - if they really wanted to.

reply to post by kosmicjack


The problem of being able to prevent it comes down to greed. They were making too much money to want to stop it. By the time they realized what they did...it was too late. For those on the outside (me, as I no longer work down there) when you see it happening all over again... Take advantage of the situation. It was a once in a life time opportunity for a trader who recognized what was happening. I guess now that I run a risk management department I can see the inherent risk before others do, but it also allows me to take my job into my life and manage my own risk. People should pay more attention to what they are doing to themselves. Do you really need that 60 inch Plasma TV?????

Originally posted by traderonwallst

Obviously I don;t make stock recommendations on here....

You don't?

Originally posted by traderonwallst

2-2-2008 @ 23:24

I am currently long only 8 stocks and 4 of them are financials. I got long the Friday before that big sell off and doubled my positions that tuesday on the morning when we gapped way down. The only stock I will give you is C - Citigroup.

Gee, thanks!

That rec came on Saturday @$29.69. When the market opened on Monday, Citi broke-down on heavy volume...a two week nose-dive closing at $18.62 on Monday...today's close $20.71.

Helluva trade!

Citi broke a 12yr trend line in October...I wouldn't be too quick to call a bottom in financials here.

Well, the roller coaster continues.

Asian Stocks Advance Most in Month on Fed Rate Cut, Earnings

I have to say Wall Street is starting to behave just like Shanghai Stock Exchange. No need for fundamental analysis, just plain gambling.

In his own inimitable style, John Stewart nails another one: Crooks & Liars

Where would the market be without historic levels of intervention? The Dollar is another issue. Referring to the 1923 Weimar model, the Mark became worthless at 4 Trillion marks per dollar...while the stock market soared to a peak of 26,890,000

Originally posted by OBE1

Originally posted by traderonwallst

Obviously I don;t make stock recommendations on here....

You don't?

Originally posted by traderonwallst

2-2-2008 @ 23:24

I am currently long only 8 stocks and 4 of them are financials. I got long the Friday before that big sell off and doubled my positions that tuesday on the morning when we gapped way down. The only stock I will give you is C - Citigroup.

Gee, thanks!

That rec came on Saturday @$29.69. When the market opened on Monday, Citi broke-down on heavy volume...a two week nose-dive closing at $18.62 on Monday...today's close $20.71.

Helluva trade!

Citi broke a 12yr trend line in October...I wouldn't be too quick to call a bottom in financials here.

Where did I tell anyone to buy that stock? That was in response to a question. I also got out of the trade rather quickly and made 12% on that trade on a rally. I got long C below $24 on a big down day. Know whats going on before you start throwing stones. So don;t think you so smart tough guy!!!!!!!!!!!! Sorry, you are are right...back in September I did recommend on heree that people short CROX when it was above $60.

www.belowtopsecret.com...

[edit on 19-3-2008 by traderonwallst]

[edit on 19-3-2008 by traderonwallst]

Originally posted by traderonwallst

Where did I tell anyone to buy that stock?

Repeat:

Originally posted by traderonwallst

I got long the Friday before that big sell off and doubled my positions that tuesday on the morning when we gapped way down. The only stock I will give you is C - Citigroup. Picking up shares under $25 is insane if you ask me.

Your post was in response to an inexperienced market hopeful, asking where to invest newly acquired money. Clearly a buy rec, but feel free to spin it if need be.

I only remembered it, because given the vulnerability of C's chart at the time, and financials in general, I thought it was a bad call at the minimum, irresponsible at the maximum.

Recommending specific stock issues on a conspiracy board is probably not very prudent in my opinion.

Good your luck with your trades

Originally posted by traderonwallst
What the FED did over the weekend and today, was nothing more than brilliant.

i understand the venting, and the rant. I also know little about economics on a global scale, however please explain how continuing to give out rate cuts is brilliant. I just don't understand. All they ever do, is cut the rate. Is this not another cause for inflation?

How is this brilliant? It seems like it's really just a quick fix as opposed to addressing any type of real-problem. Essentially, if the US is being fiscally irresponsible, then it seems an economic crisis is sort of the natural response to that.

First, I hope you are not one of those people who flip out from a little criticism.

Next, I have to violently disagree with your assessment of the situation and would like to point out that criticism and attempts at educating readers on this forum is not necessarily indicative of support for the outcome predicted.

In other words, I don't wish for an economic collapse of the US nor of the US dollar. I fully understand the precarious position of Canada's economy vis-a-vis that of the US.

I know it may seem to you that people who point out day to day developments may be "excited" and "hopeful" and even wishing for the economic peril the US (nay the world) finds itself in but for me at least that is not true. I'm just a realist and simply trying to call attention to a very serious problem and educate others to the causes as I understand them. While I do have some economics education (University level courses) I am not a "professional" or "accredited" economist which, to me at least, means I am not shackled by any indoctrination to one school of thought (be it Keynesian, Austrian, Monetarist or the Milton Freedman/Chicago School).

I'm not normally one of those people who picks apart a post line by line to dissect it (and I hate posters who do nothing but that) but in this case certain things need to be specifically addressed, so please indulge me on this occasion.

Originally posted by traderonwallst
Sorry to break it to you, but we are not going anywhere and our currency will be here long after I die.

I would hope not, but understand that despite the fact that Germany still exists today as a very strong economy they still went through the Wiemar Republic. Argentina and Brazil still have their currencies but still underwent a recent crisis with people banging pots in the streets, remember? Zimbabwe still exists as a country and still has it's currency and is "not going anywhere" as you put it. Get the picture? I don't think anybody with a brain claims the US will disappear into the night never to be heard from again.

Your time as a sole economic superpower is at an end though, and the pain of that readjustment will be severe IMO.

... Not to gloat, but since June 2007 I have had some of my best trades, yes all on the short side. ...If you see things happen once before, you can profit greatly the next time you see it.

More power to you. I have placed what little I have where I believe I can protect it's value and perhaps make a little profit. It would be stupid not to and anybody claiming moral superiority over people who do so are idiots IMO.

What the FED did over the weekend and today, was nothing more than brilliant.

I was crafty wasn't it? Some well thought out planning and nice moves on their part.

I could care less about all the conspiracies out there that its illegal or the FED itself is illegal. Know what? The FED is here, so get used to it.

Now here we have a major disagreement and this statement speaks volumes about the person who made it. Know what? Whether you realize it or not, you just advocated that every oppressed person on this planet get used to their oppressor and lay down and accept it. I can't agree. If you say the FED is not oppressing anybody I would humbly respond that you understand very little about the situation.

They have not yet addressed the credit issue ... Liquidity is what Wall Street is all about. Without it, Wall Street does not work.

LTCM had so much money they did not know what to do, so they began investing in non-tradable assets. ... It spun out of control and they went bankrupt. Again....due to being highly leveraged and invested in assets that were not LIQUID.

Really? Hmmm....

I never forget the fact that LTCM was started by some Economics Nobel Prize winners to put their pet theory to work full time. The inventors of the Black-Sholes formulae wanted to show the world how it was done. They sure had no trouble raising money and leveraging it on the upside for some spectacular returns. Trouble is, Nobel geniuses that they were, they forgot that leverage works in reverse as well. No matter how liquid your assets are if you are over leveraged you will go bankrupt when the tide turns negative. Derivatives traders are about to learn that lesson all over again.

Then BAM...the credit crunch. All of a sudden liquidity dried up and the market place fr these assets disappeared.

Just like that eh? BAM out of nowhere?
Sorry, but I have to laugh at that one. I think I'm starting to understand your rant a little better now.

Thanks to the new FASB accounting rule all investment banks were forced to mark their investments to market and assign a value.

Uh... you mean the rules that they delayed implementing until next year? They haven't even gone into full effect yet. (there's a news thread on ATS about it. [edit: actually you started this thread on the topic but it's partial delay is discussed here as well as at the Wall Street Journal ])

Markets create prices, thats how capitalism works.

Addressing this would require a PhD thesis.

Yes JPM is stealing a 85 year old company. Fine. Its done and the FED did what they had to.

Again, you seem to think it's OK for private banks to act like predatory sharks with respect to assets managed by "professionals" for the benefit of regular people.

The next step will be the FED buying up all the bad loans in order to "save" us. The end effect will be a good chunk of the nation's real estate wealth ending up in the hands of the cartel. Economic serfdom has such a nice ring to it doesn't it? I guess you are one of those people who feel that if doesn't affect them directly it's of no concern to them or that if you are poor it's somehow the entire fault of the lazy stupid pauper. I'm sorry if this is harsh but over the years I have come to expect this kind of lack of empathy from many Americans raised on a steady cultural diet of "rugged individualism". Ayn Rand would be so proud.

Now it is time to realize something.

Indeed.

NOW, Stop running around like chickens with your heads cut off screaming the sky is falling....Its not.

I'm sorry but... the sky is falling.

Not the individual people, we are to loaded up with debt already, but to business, and not the ones on wall street. The mom and pop shops. Have you tried to get a business loan lately? You can't. The US can not grow without the little guy getting their share.

Uhh... the economy is made up of the "individuals" not companies, not even "mom and pop" shops. Besides, what are you suggesting they do in the face of the wall marts of the word?

Can't get a business loan? Why do you suppose that is? Seriously. Why is that?

Hint. When the central bank cartel wants to cause (yes I said cause) a recession, they tighten credit. Refusing to lend to each other or to "mom and pop" shops has a clear consequence known to all. Whatever pathetic excuse they use to justify the contraction of lending activity, I submit "they" know full well what they are doing.

After we do that, we need to aggressively defend the US$. Foreign investors are short the dollar to such levels that if the FED attempted to buy the $ we could actually create a short squeeze in the currency. This would do a lot to stem inflation, lower the price of oil and pop the commodity bubble. (BUT let me get out of my agriculture stocks first) Bush should simultaneously open the petroleum reserves. Not flood the market with the oil, but put a scare into the Middle Eastern oil countries.

There is so much wrong in this paragraph I don't know where to start. If you still believe that the US can somehow control the price of oil I feel kinda sorry for you. Perhaps you should spend less time thinking about your stocks and try to understand the world we live in today not 35 years ago.

... we are not any smarter than you, we just are willing to play the game. The game is open to anyone who wants to play. It is a zero sum game. For every winner, there is a loser,

At least your humble about it.

Look, I hate to break it to you but the game is rigged. Whether or not you realize it you will get burned if you try and predict this thing to it's conclusion and outsmart the cartel. You can only follow.

The game is not open to every one, it's only open to those with some disposable income they are willing to gamble away, any other attitude is just so much hubris.

I also challenge your assertion that (at the moment at least) it is a zero sum game. In a fiat monetary system it is not a zero sum game when money (as much as you want/need) is created out of thin air.

In fact our entire economic paradigm is based on infinite growth potential.

Our infinite growth paradigm is running smack into the growth limits of a newly globalized world with limited energy and resources. That is what is beginning to be played out. The transition from the old paradigm to an as yet undefined new paradigm will not be pretty (to say the least).

It is also inevitable and unstoppable.

To believe otherwise is as shortsighted and naive as any brand of nationalistic patriotism you care to display.
.

[edit on 3/19/2008 by Gools]