8 days 7773/11022 = 30% down in 8 days from high to low
10-Oct-08 8,568.67 8,989.13 7,773.71 8,451.19 11,456,230,400 8,451.19
9-Oct-08 9,261.69 9,522.77 8,523.27 8,579.19 8,285,670,400 8,579.19
8-Oct-08 9,437.23 9,778.04 9,042.97 9,258.10 8,716,329,600 9,258.10
7-Oct-08 9,955.42 10,205.04 9,391.67 9,447.11 7,069,209,600 9,447.11
6-Oct-08 10,322.52 10,322.52 9,503.10 9,955.50 7,956,020,000 9,955.50
3-Oct-08 10,483.96 10,844.69 10,261.75 10,325.38 6,716,120,000 10,325.38
2-Oct-08 10,825.54 10,843.10 10,368.08 10,482.85 6,285,640,000 10,482.85
1-Oct-08 10,847.40 11,022.06 10,495.99 10,831.07 5,782,130,000 10,831.07
Monday, November 3, 2008
Oct the worst month in 21 years
Oct 1 2008 1160
Oct 15 2008 850 down 30%
So when the market falls so bad, as an investor how will someone react?
From 10/08 thru 10/15 i sold $53000 in 401k
Oct 15 2008 850 down 30%
So when the market falls so bad, as an investor how will someone react?
From 10/08 thru 10/15 i sold $53000 in 401k
Monday, September 15, 2008
DOW falls by 500 points
Sept 15 2008 DOW crashes by 500 points.
LEH down, MER bought by BAC, AIG needs capital.
LEH down, MER bought by BAC, AIG needs capital.
LEH files for Bankruptcy, BAC takesover MER, AIG raises capital
Sep 15 2008
LEH files for Bankruptcy, BAC takesover MER, AIG raises capital
S&P and Nasdaq Futures down a massive 4%.
The last post was on July 30th and that was when Meridith Witney has
stated that the credit crises will extend to 2010.
It is now more than a year since the credit crisis started.
We had seen BSC, LEH, Indymac blow up not to mention many smaller ones.
LEH files for Bankruptcy, BAC takesover MER, AIG raises capital
S&P and Nasdaq Futures down a massive 4%.
The last post was on July 30th and that was when Meridith Witney has
stated that the credit crises will extend to 2010.
It is now more than a year since the credit crisis started.
We had seen BSC, LEH, Indymac blow up not to mention many smaller ones.
Wednesday, July 30, 2008
Banking's Bear (Meredith Whitney) Roars Again
Banking's Bear Roars Again
by Megan Barnett May 20 2008
Just as Wall Street starts to have hope, Meredith Whitney strikes again.
RELATED CONTENT
From Portfolio
The Great Depression Debate
Worthless Wall Street Research
It's a Mad, Mad, Mad, Mad World
Hoping for a Fed Encore
Superfund for Banks
News
Fed takes steps to break through credit clogs AP
Government not expected to help more companies AP
Investors brace for Citigroup to post another loss AP
Closing Glance: Most media companies' shares fall AP
Closing Glance: Health Care equipment and supplies AP
See All Related Content
Topics
Meredith Whitney
Wall Street
Citigroup Inc.
See All Topics
Join the Conversation
12 Comments
Latest: Jul 18 2008 09:40am ET
Add a Comment
Read All Comments
Start the Conversation
Add a Comment
Photograph by: Daniel Acker/Bloomberg News /Landov
It's safe to say that no one has fewer friends on Wall Street than Meredith Whitney.
But the Oppenheimer analyst doesn't seem bothered by that fact, so she relentlessly continues to throw cold water in the face of her banking brethren.
Her latest report on the financial sector did just that. If you thought the worst is behind us, or that the credit crisis hit bottom in the first quarter, or that there are signs that the loan market is coming back, or that Wall Street firms are finished with their capital raising, Meredith Whitney has three words for you: You are wrong.
In fact, Whitney, who established a name for herself when she correctly predicted Citigroup's dividend cut last fall, believes the credit crisis will "extend well into 2009 and perhaps beyond." She predicts there are still more shoes to drop, that banks will need to cover another $170 billion in loan losses by the end of next year, and that the earnings expectations for Wall Street firms are currently grossly underestimated.
"We believe the real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything seen," she wrote in a report published last night.
Whitney says that the banks used "bad math" to finance mortgages, and they relied too much on the securitization market. Now consumers are left with very little liquidity, which will keep the market for new securities essentially closed for business. She says that regulators' too-little-too-late reaction to the housing bubble will lead to knee-jerk lending legislation that could end up hurting consumers instead of helping them. Whitney predicts that credit card lines will be reduced by 45 percent in 2010. And lower consumer liquidity will only lead to more losses for the banking sector.
Banking chiefs, of course, have not painted such a dire picture. In fact, many of them have suggested in recent weeks that the worst is over and that there are signs that the credit markets are being revived.
Who can you believe? Investors are hearing Whitney's voice loud and clear, much to the chagrin of Wall Street's leaders. Financial stocks are getting hammered today, with Citigroup, J.P. Morgan, Morgan Stanley, Wachovia, and Merrill Lynch all off more than 2 percent.
by Megan Barnett May 20 2008
Just as Wall Street starts to have hope, Meredith Whitney strikes again.
RELATED CONTENT
From Portfolio
The Great Depression Debate
Worthless Wall Street Research
It's a Mad, Mad, Mad, Mad World
Hoping for a Fed Encore
Superfund for Banks
News
Fed takes steps to break through credit clogs AP
Government not expected to help more companies AP
Investors brace for Citigroup to post another loss AP
Closing Glance: Most media companies' shares fall AP
Closing Glance: Health Care equipment and supplies AP
See All Related Content
Topics
Meredith Whitney
Wall Street
Citigroup Inc.
See All Topics
Join the Conversation
12 Comments
Latest: Jul 18 2008 09:40am ET
Add a Comment
Read All Comments
Start the Conversation
Add a Comment
Photograph by: Daniel Acker/Bloomberg News /Landov
It's safe to say that no one has fewer friends on Wall Street than Meredith Whitney.
But the Oppenheimer analyst doesn't seem bothered by that fact, so she relentlessly continues to throw cold water in the face of her banking brethren.
Her latest report on the financial sector did just that. If you thought the worst is behind us, or that the credit crisis hit bottom in the first quarter, or that there are signs that the loan market is coming back, or that Wall Street firms are finished with their capital raising, Meredith Whitney has three words for you: You are wrong.
In fact, Whitney, who established a name for herself when she correctly predicted Citigroup's dividend cut last fall, believes the credit crisis will "extend well into 2009 and perhaps beyond." She predicts there are still more shoes to drop, that banks will need to cover another $170 billion in loan losses by the end of next year, and that the earnings expectations for Wall Street firms are currently grossly underestimated.
"We believe the real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything seen," she wrote in a report published last night.
Whitney says that the banks used "bad math" to finance mortgages, and they relied too much on the securitization market. Now consumers are left with very little liquidity, which will keep the market for new securities essentially closed for business. She says that regulators' too-little-too-late reaction to the housing bubble will lead to knee-jerk lending legislation that could end up hurting consumers instead of helping them. Whitney predicts that credit card lines will be reduced by 45 percent in 2010. And lower consumer liquidity will only lead to more losses for the banking sector.
Banking chiefs, of course, have not painted such a dire picture. In fact, many of them have suggested in recent weeks that the worst is over and that there are signs that the credit markets are being revived.
Who can you believe? Investors are hearing Whitney's voice loud and clear, much to the chagrin of Wall Street's leaders. Financial stocks are getting hammered today, with Citigroup, J.P. Morgan, Morgan Stanley, Wachovia, and Merrill Lynch all off more than 2 percent.
Monday, July 7, 2008
How The Bubble Bursts
How The Bubble Bursts
Fed Chooses Wall Street Over Main Street
Free Market In Jeopardy
U.S. Banking System on the Fritz
The Great Dumbing Down of the Market
The Exchange
Deleveraging Continues
As leveraged assets go down in value, the leverage multiples go up. Adding to that multiple is the falling dollar and the fact that these assets are in reality debt deposits, not cash deposits, that were passed on in different forms to be leveraged over and over.
Read More
-Minyan Jim
How The Bubble Bursts
Mr Practical Jul 02, 2008 11:00 am
Understanding inflation and deflation.
8 Secrets Your Credit Card Company Won’t Tell You
Now that we’re getting a taste of what deflation is, it’s easier to talk about. Before, I tried to describe what to expect and how to deal with it, but in a way that was difficult for the average person to understand - especially when the government, the Fed, and Wall Street continue to misrepresent it.
Now that we’ve seen the beginning stages of deflation, it’s becoming clearer what’s going on and what’s important: to conserve capital. To save.
So let’s review what inflation and deflation really are.
The traditional definition of inflation (rising prices) and deflation (falling prices) don’t make sense in today’s world. That’s why people are confused. Ironically, the Fed wants you to be this confused, because it’s actually they who create inflation - which plants the seeds for eventual deflation.
Inflation’s just the expansion of the money supply, almost always through the expansion of debt. This is what the Fed does: They create debt out of thin air and pass that debt on to the banking system by extending credit; banks then extend it to consumers.
From 1993 to 2006 the Fed created massive inflation by creating massive debt, keeping real interest rates negative and supplying plenty of credit to keep them there. This was particularly true from 2001 to 2006; in 2006 alone the Fed expanded the money supply by creating $4 trillion in new debt.
Click to enlarge
People who had no business borrowing took money from people who had no business lending. This drove the prices of the cars and house they bought with that money up, while the debt drove the value of the currency down. This doubles the pressure on the prices of things we get from other countries - like oil.
So it isn’t hard to convince people that inflation means rising prices, because rising prices almost always occur when the money supply’s inflated with debt.
In 2007, we reached a point where there was just too much debt; no one could take on any more. This is where the Fed’s inflation machine breaks down: If no one can borrow or lend on the credit they offer the banking system, the money supply stops expanding. In fact, as people try to pay off all that debt (retire it) or default on it (destroy it), the money supply, bloated with debt, begins to shrink. Hence deflation.
What does the Fed do then? Why, they buy that debt themselves, to try to keep the money supply from deflating. This leads to those TAF (term auction facility) auctions you’ve heard about, where the Fed exchanges new capital (t-bills) for bad debts with banks.
Despite these efforts, the money supply has probably deflated by the amount of write-offs -- by now, approximately $400 billion -- that banks have incurred. Strict measures of money supply, like M3, haven’t fallen - but that doesn’t include the most important broad sources of new money, like derivatives and securitized loans. As the money supply deflates, people borrow less and spending goes down. The deflation thus feeds on itself, because lower spending means lower income and debt becomes even harder to support. Prices in stocks begin to fall as the money supply dwindles.
Central banks are powerless to stop the money supply from deflating unless they take on the debt themselves. If not, it will be systematically destroyed by defaulting, and the money supply will shrink even more.
As central banks fight this by taking on debt (as in TAFs and the Bear Stearns bailout), taxpayers will be called upon to make up the losses. Ironically, the Fed’s attempts to keep the money supply inflated are much worse for the average person, who suffers from a declining dollar and higher taxes in the long run.
Why doesn’t this happen all the time, you ask? It does - it just usually happens in smaller increments. What’s happening now is different only in terms of magnitude: The money supply has been so debt-inflated for so long that the reversal is very significant. Over the years, it just adds up: Few realize just how much debt’s still out there.
When a bank takes a write-off, debt gets smaller - but we still have a long way to go. How long? Well, the level of debt’s currently four to five times greater than is normal for our economy; the natural level of income and savings aren’t enough to support the debt. Debt will get destroyed -- and the money supply will deflate -- until debt and actual savings are more balanced.
If you understand inflation and deflation in this way, our current crisis makes more sense. Now we’re seeing deflation (a shrinking money supply and lost liquidity), which is causing havoc in markets.
We’re still seeing prices rise on certain scarce commodities as various competing forces work their way through the system; but that’s to be expected, because those rising prices are caused by more debt, which will eventually make the debt untenable as income goes down.
We’re seeing formerly powerful financial institutions destroyed by even these first stages of deflation. That’s because their only power came from franchise - from being able to take out high-risk spreads. So they actually had very little capital to support vast amounts of debt when things began to sour.
High risk has been rewarded in the past by government (easy monetary policy), legislation (the repeal of Glass-Steagall, now clearly a mistake), and the markets (the Wall Street marketing machine). Those rewards fall away quickly when you see that you have built your house built on sand.
For decades, but especially over the last seven years, central banks have “solved” any and all market dips, slowing economies, and financial problems by creating debt. If the stock market declines, just make it easy to borrow, so people can buy stocks. If the economy slows, just make it easy to borrow, so people can consume more. This methodology may work on occasion, but doing it systematically leads to crisis.
Central banks can’t fix this problem: They can only create more banking debt or transfer its risks onto taxpayers via TAF auctions or nationalization - which will only stabilize the banking system long enough for banks to dilute themselves massively by suckering investors into buying stock. More debt isn’t the solution.
So stay the course. Stay out of the way. Bottom feeders keep coming up empty. There will be rallies in stocks. Some will be quite vicious, but that doesn’t mean we’re in a bull market. The GDP’s going to go way down, but will eventually come back when debt is wiped out to a point where those with savings want to lend or invest again.
We have a long way to go, though - and risk is high
Fed Chooses Wall Street Over Main Street
Free Market In Jeopardy
U.S. Banking System on the Fritz
The Great Dumbing Down of the Market
The Exchange
Deleveraging Continues
As leveraged assets go down in value, the leverage multiples go up. Adding to that multiple is the falling dollar and the fact that these assets are in reality debt deposits, not cash deposits, that were passed on in different forms to be leveraged over and over.
Read More
-Minyan Jim
How The Bubble Bursts
Mr Practical Jul 02, 2008 11:00 am
Understanding inflation and deflation.
8 Secrets Your Credit Card Company Won’t Tell You
Now that we’re getting a taste of what deflation is, it’s easier to talk about. Before, I tried to describe what to expect and how to deal with it, but in a way that was difficult for the average person to understand - especially when the government, the Fed, and Wall Street continue to misrepresent it.
Now that we’ve seen the beginning stages of deflation, it’s becoming clearer what’s going on and what’s important: to conserve capital. To save.
So let’s review what inflation and deflation really are.
The traditional definition of inflation (rising prices) and deflation (falling prices) don’t make sense in today’s world. That’s why people are confused. Ironically, the Fed wants you to be this confused, because it’s actually they who create inflation - which plants the seeds for eventual deflation.
Inflation’s just the expansion of the money supply, almost always through the expansion of debt. This is what the Fed does: They create debt out of thin air and pass that debt on to the banking system by extending credit; banks then extend it to consumers.
From 1993 to 2006 the Fed created massive inflation by creating massive debt, keeping real interest rates negative and supplying plenty of credit to keep them there. This was particularly true from 2001 to 2006; in 2006 alone the Fed expanded the money supply by creating $4 trillion in new debt.
Click to enlarge
People who had no business borrowing took money from people who had no business lending. This drove the prices of the cars and house they bought with that money up, while the debt drove the value of the currency down. This doubles the pressure on the prices of things we get from other countries - like oil.
So it isn’t hard to convince people that inflation means rising prices, because rising prices almost always occur when the money supply’s inflated with debt.
In 2007, we reached a point where there was just too much debt; no one could take on any more. This is where the Fed’s inflation machine breaks down: If no one can borrow or lend on the credit they offer the banking system, the money supply stops expanding. In fact, as people try to pay off all that debt (retire it) or default on it (destroy it), the money supply, bloated with debt, begins to shrink. Hence deflation.
What does the Fed do then? Why, they buy that debt themselves, to try to keep the money supply from deflating. This leads to those TAF (term auction facility) auctions you’ve heard about, where the Fed exchanges new capital (t-bills) for bad debts with banks.
Despite these efforts, the money supply has probably deflated by the amount of write-offs -- by now, approximately $400 billion -- that banks have incurred. Strict measures of money supply, like M3, haven’t fallen - but that doesn’t include the most important broad sources of new money, like derivatives and securitized loans. As the money supply deflates, people borrow less and spending goes down. The deflation thus feeds on itself, because lower spending means lower income and debt becomes even harder to support. Prices in stocks begin to fall as the money supply dwindles.
Central banks are powerless to stop the money supply from deflating unless they take on the debt themselves. If not, it will be systematically destroyed by defaulting, and the money supply will shrink even more.
As central banks fight this by taking on debt (as in TAFs and the Bear Stearns bailout), taxpayers will be called upon to make up the losses. Ironically, the Fed’s attempts to keep the money supply inflated are much worse for the average person, who suffers from a declining dollar and higher taxes in the long run.
Why doesn’t this happen all the time, you ask? It does - it just usually happens in smaller increments. What’s happening now is different only in terms of magnitude: The money supply has been so debt-inflated for so long that the reversal is very significant. Over the years, it just adds up: Few realize just how much debt’s still out there.
When a bank takes a write-off, debt gets smaller - but we still have a long way to go. How long? Well, the level of debt’s currently four to five times greater than is normal for our economy; the natural level of income and savings aren’t enough to support the debt. Debt will get destroyed -- and the money supply will deflate -- until debt and actual savings are more balanced.
If you understand inflation and deflation in this way, our current crisis makes more sense. Now we’re seeing deflation (a shrinking money supply and lost liquidity), which is causing havoc in markets.
We’re still seeing prices rise on certain scarce commodities as various competing forces work their way through the system; but that’s to be expected, because those rising prices are caused by more debt, which will eventually make the debt untenable as income goes down.
We’re seeing formerly powerful financial institutions destroyed by even these first stages of deflation. That’s because their only power came from franchise - from being able to take out high-risk spreads. So they actually had very little capital to support vast amounts of debt when things began to sour.
High risk has been rewarded in the past by government (easy monetary policy), legislation (the repeal of Glass-Steagall, now clearly a mistake), and the markets (the Wall Street marketing machine). Those rewards fall away quickly when you see that you have built your house built on sand.
For decades, but especially over the last seven years, central banks have “solved” any and all market dips, slowing economies, and financial problems by creating debt. If the stock market declines, just make it easy to borrow, so people can buy stocks. If the economy slows, just make it easy to borrow, so people can consume more. This methodology may work on occasion, but doing it systematically leads to crisis.
Central banks can’t fix this problem: They can only create more banking debt or transfer its risks onto taxpayers via TAF auctions or nationalization - which will only stabilize the banking system long enough for banks to dilute themselves massively by suckering investors into buying stock. More debt isn’t the solution.
So stay the course. Stay out of the way. Bottom feeders keep coming up empty. There will be rallies in stocks. Some will be quite vicious, but that doesn’t mean we’re in a bull market. The GDP’s going to go way down, but will eventually come back when debt is wiped out to a point where those with savings want to lend or invest again.
We have a long way to go, though - and risk is high
Monday, June 23, 2008
June 23 2008 DOW(n) 233 pts
June 23 2008 dow closes down 233 points at 11822.
How low will it go?
How high OIL will go? Weekend there was the Jeddah talks about more oil production.
A year back OIL was at $65 and today it is at $138.
How low will it go?
How high OIL will go? Weekend there was the Jeddah talks about more oil production.
A year back OIL was at $65 and today it is at $138.
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