Take a contrarian view

On the current crisis the financial market is holding up on to, we sure have to salute the top guns for being able to us their stature and influence to put up with manipulation of funds to shore up investments and the equity market. Treasury yields are still near all time low and getting lower every minute, as i assume there would still be some problems getting people to buy those notes more over hold. If i were treasury holders i would have sold all the bills and shift to anything that is safer or holdings that will protect my assets against depreciation of the dollar.

If one steps back again, and take the birds eye view, Mr. Paulson although adamant but contradictory, has always wanted to back the dollar badly, he acclaims that his motives are to defend the dollar from a further depreciation and 25% was suffice to diminish the value of the US debt they were holding, but from his latest act to propose for the bill to finance 700billion USD in the market would certainly boost the US nation into a 6.6 % increase in national debt. It is suffice to say that the actions to have the" troubled asset relief program " would debase the currency and suppress any yields still exist in them, all from the action of both the feds and the treasury secretary. The view now is certainly paradoxical.

Now we must always access the situation from both sides, yes the debt will be increased to a level where dollar must depreciate another 1 % minimal to justify any increase in debts, but who is going to continue selling the dollar cheaper? To what level are they going to give up the entire dollar as the common denomination used, it is not impossible to have such a scenario since the Euro has a more stable outlook compared to the dollar, at least they are not giving the money out at such a rate us printing press are.

The Euro interest rates are still at least double of those in US, but ... there is always a but Henry Paulson is putting his hopes high on the appreciation in inflation to boost the CPI and the price of real estate which may have a very feeble push in certain parts of America where real estate have already down 30% average speaking, although pricing is very individualistic and objectivity bears on buyers. They are running the funds on a reverse auction for the lowest and most competitive pricing from banks. If anyone is going to take it harsh it is the further write downs after the Troubled Assets Relief Program buys a property or default or security from 60 cents to the dollar , at the price of 20 -30 cents, that halves the value of securities held by banks.

This would be taken badly by banks and in terms of liquidity they are going to be dried up even more, but i view as long as the real estate market does not bottom and rebound we are not going to be able to feel the effects of the TARP yet, they are engineering a bottom, giving hope that they will buy only at the cheapest and receive warrants for the cent they pay in, returning the gains to the US government and from the returns covering back the loans and debt from the US foreign counterparts holding bonds and buying treasuries and the dollars.

But with all the dust and mist surrounding the asset market and the diminishing valuation of dollars from the heavy selling of yields would turn the entire economy into a hyper inflationary recession cycle before going deep into a depression. The only people happy now are Americans spending habits using more credit cards to pay for goods as their repayment would be in cheaper dollars, no wonder they are happy to take up even more loans.

I believe that asset prices will stay afloat for a while since the US government is going to buy them , but afloat at what level and for how long until we need to see the people suffer another round of Bailouts as banks took too much of a writedown, and a rate cut is either imminent or targeted loans by federal reserve parties come to their doorstep.

But, if this bill passed is well accepted and manage to stimulate bankers to lend, for business to be financed and turnovers, for mortgage loans pending for the past 6 months approved, auto sectors will see some light as well, the nation will benefit from our socialist government to help us invest the money we pay in tax, and hopefully it will not go to the top guns and financial institutes who benefit from offloading mortgage holding cheap and gain off disposal. As the trend of paying high rank CEOs with fat luscious bonuses continue , I dont see the need for the Feds to intervene, moreover risk the money of the US nation.

Asia + US

Desperations in raising capital, ECB BOJ nFeds make a joint effort to save markets.

By Bloomberg,
Central Banks Offer Extra Funds to Calm Money Markets (Update2)
By John Fraher and Simon Kennedy

Sept. 18 (Bloomberg) -- The Federal Reserve, the European Central Bank and the Bank of Japan united with their counterparts around the world to offer an additional $180 billion to markets facing their worst crisis since the 1920s.

The Fed said it authorized central banks to auction the funds to ``to address the continued elevated pressures in U.S. dollar short-term funding markets.'' Policy makers ``continue to work together closely and will take appropriate steps to address the ongoing pressures,'' a joint release said. The Bank of England, the Bank of Canada and the Swiss National Bank also participated.

Finance officials have struggled to restore confidence in markets this week as concern mounted more banks will follow Lehman Brothers Holdings Inc. into bankruptcy. The cost to hedge against losses on U.S. government debt climbed to a record yesterday, the U.K. government was forced to sponsor a rescue of mortgage lender HBOS Plc and Russia poured money into its banks.

``There's a complete lack of faith in the markets,'' said Jim O'Neill, chief economist at Goldman Sachs Group Inc. in London. ``There's a lot of cash hoarding and people losing trust in banks, so the central banks are acting to relieve that. This might not be the last time they have to act.''
Limit Doubled

The Fed said the ECB has been authorized to double its existing limit to $110 billion from $55 billion and the Swiss central bank can offer an extra $15 billion. New swap facilities with the Bank of Japan, the Bank of England and the Bank of Canada amount to $60 billion, $40 billion and $10 billion, respectively.

The Bank of Japan said its dollar-swap agreement will be conducted ``appropriately in view of the prevailing market conditions.'' That statement was published after its policy board held an emergency meeting in Tokyo today.

The action is the latest attempt by central bankers to coordinate their response to the financial crisis. In December, they joined forces to boost dollar liquidity around the world after interest-rate reductions in the U.S., the U.K. and Canada failed to ease concerns about bank lending.
The announcement boosted European shares and U.S. futures, which have been pummeled this week as contagion spread through financial markets. Europe's Dow Jones Stoxx 600 Index, which has dropped 8 percent this week, gained 0.8 percent to 260.15. Futures on the Standard & Poor's 500 Index added 1.2 percent. More than $19 trillion has been wiped off the value of global stock markets since Oct. 31.

Failure to calm markets will see central banks inject even more cash, said Robert Barrie, an economist at Credit Suisse Group in London. Other options central banks could take include accepting greater collateral denominated in foreign currencies and increasing lending to banks abroad.

``The lack of dollars has been making the financial crisis worse around the world, which is why we now have this coordinated response,'' Barrie said.

The markets gonna like this move, but again for how long? It is these coordinated actions that make taxpayers suffer and deprive the public proper utilization of funds, what happened to corporate governence and the function of a government?

Malaysia reacted well with these news with the come back of CPO and the positive sentiments implanted by the foreigns but i think some short-covering had to do with all the buying or else the last minute fizzle from - 5 to -11points should not be ignored , the market will give impression that no one will be allowed to fail with the government , not knowing that it is their money used to resuscitate the dead banks! Hang Seng was bouncing from a key support level of17500-16500, with the news it closed with almost no changes from a milestone up, lets see some updates :-

• first reactionof last nites closing
• US and Europe takes the baits( i quote More than $19 trillion has been wiped off global stock- market value but the valuation of CDOs are between 50 to 80 trillion, thats still a 4:1 ratio)- bankers are still not lending they are exploiting the loans by 302 basis.
• The very optimistic trader, confident and making profits in a bear market (pro)
• we are at that time of the year near festive season, retail should be a great indicator of the economy, visa, Amex, Master should benefit, but outlook is still gloomy for me to start buying.
• The devils advocate
• China's the giant to scoop, WB waiting people to strip
• Prepare to face the Axe, develop a great skill and sell it it is going to save your life
• Now they can solve things, dont do anything, Selling will ease at a point, how about when it is zero?
• No protectionism, if AIG can pull thru the crisis, the biggest beneficiary would be the feds and the nation, but how does profits transfer to the public?
• If fear and excuberant is an indicator, it would dominate all indicators
• Will he save Americans, traditionally elections in US and rallies run concurrently
• Job market
• Short sellers, are you the culprit?
• the oracle

Read this now

With the downfall of equities, people will turn to look at different alternatives they might use to able to defend their purchasing power from being scrapped away. If you take a look on my right i am a big fan of GOLD and yesterday we have had a comeback run in this precious metal. This is one way to preserve the Purchasing power, it is not a interest return investment scheme, it is not going to give you short term gains, it is not dividend paying; let me tell you it is a shelter in a storm, a finite metal that has been conditioned by men to value against Fiat money, u can deny the fact that gold holds nothing against the dollar, but you cannot underestimate the differences in terms of valuations (inflation V.s Goldprice; Dollar today V.s Gold Price)

Stocks will continue to take more beatings, any rally is non sustainable in the bigger picture! Falling 400 points is nothing, take 20 % fall for first cover, another 20% , another 10% your 100% retracement point is being raided what are you going to do? Cry? Come on tell me how many people are trading commodities futures? How many are considering taking on GOLD? Is it as populated as the stocks? You can short it but are you the central Banker? Wouldn't you like to arbitage on the valuation differences!! Dont follow the herds or stand being slaughter!! With a debased dollar, i would throw it for GOLD, yen is making a comeback from carry-trading uncertainties , take a look!!! Would the common denomination change in the future? would you still want to hold fiats compared to actual bullion and physical currency, it is finite so bear in mind the valuations is going to rocket.

Demand for Gold did not shrink but increased over the past few months, prices are not seen as sold down but being manipulated, safehaven, take a longer term perspective. If you don't believe me, in two years compare the DOW to Gold price. More and more fiat money are being created, more and more liquidity is being pumped up, the more inflated money is going to be, the more debased a currency the more likely i would abandon it. I mean what are reserves for in the first place when u don't need to defend your currency!

I am not asking you to jump into the pool blindly, do some research and do not attempt to time markets! After all, it is not part of investing to time a market, and it is even heavier priority not to lose insight and control over self when investing. At least not like cramer, bu...Bu... bu.... BUll S***!!! This could be the start of another round of bull in commodities, people keep in mind that Oil has retraced a lot, it could not be justified in surrounding nations that produce oil to keep selling at such a low price, OPEC will cut supply to boost pricing and curb too much supply, are you still shorting it? Lean hog, Soy, CPO, Sugar, Natural Gas are still waiting to bounce, if equity is not the safehaven, Hedge funds will raid the Commodities......Defecits, Debt that are haunting them(cheaper dollar pays debts cheap), dollar pumping, shorting of gold by CB cartels.

and they say this :

-The U.S. government is now on the hook for future Fannie (FNM)/Freddie (FRE) losses. Total losses will depend on the severity of the housing/credit debacle, but it isn't a stretch to imagine losses in the $1 trillion range.

-The U.S. budget deficit in August alone was $112 billion.

-The U.S budget deficit is forecast to be $407 billion in 2008 and a record $438 billion in 2009.

-The $438 billion for 2009 does not include any funds used to "conserve" Freddie or Fannie or any new fiscal stimulus package, and it doesn't account for the full cost of the Iraq War (let alone any new incursion into Iran, the Caucasus region, or Pakistan/Afghanistan).

-About the only thing supporting GDP growth in the past two quarters has been net exports, thanks to the falling value of the dollar. The recent strength in the dollar is likely to blunt this tailwind.

-The risk of competitive currency devaluations is very real as every country battles for a piece of the shrinking pie of investment and consumption spending.

-The Fed continues to swap high-quality Treasury securities for garbage securities.

-U.S. unfunded liabilities range from $50 trillion to $95 trillion (depending on the assumptions used).

"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd."
- Benjamin Graham

" currency that has taken the test of time , none other than gold/silver"

• who Leaps ?


• A failure to keep the insurers, what more after banks


• 1999? imagine the dollar index at 76 how abt gold n oil?


• Now they start to tell you this


• Look at GATA they have the best Vids and writings


• Panic? no gold rush yet


• is it a correction or manipulation; i mean how high dollar can go?


• Beware mortgage application were high, but why are they cheap?


• deleveraging


• 1600?2200?what is the value of gold


• Hey don be so sour! mistakes are made by man! we are all men(hyperinflation?)
• Hedge funds involved big time, no wonder Bernake sat them down Sunday(HF or CB cartel?)Pls note the -ve correlations dollar to gold, and how sell downs that dont see fundamentals and pricing!Must see this

** at this time Crude oil looks like a round curve waiting to head up? only worries are slowdown in demand as people will not spend more**

The Feds need help? The worst is not over!!!

" I could clone Einstein several hundrend times, and yet still unable to work on the mortgages they covered"- WB

When I say Feds involved, the Feds are truly involved(see this)!!! Take a look at the Bottom part of post 1, I mentioned that who is next and today we see blood on the streets again, as you see I only suggest you o hold if you can take a devaluation of up to 50% in the few months till 2009 period where I foresee many uncertainty and unwinding is half way thru!! They say we are half way there but 62 trillion of CDS show that we are less than half way thru, the market acts as a sweeper, to clear the path of dust and dirt. Feds need to act super fast and clear AIG illiquid position as soon as possible, more money created in thin air they fight the gold bug no longer!!! 20 day bill, 76 day bills what will the rates look like you tell me, see this: (bloomberg)

• US Treasury rates

“No one and I emphasize no one can beat the forces of nature and the market force! WB followers of then hear that market are irrational, and now when all are still swimming with their tops off, I assume he is behind their listing out his Buys when the downturn strips all holders to their birthday suits!” Many large corporations are still holding cash and we look at Microsoft, Coke, we look at sovereign wealth funds, the new hedge funds, Funds that promote 100% capital perseverance, C.Ds! There are still companies that are worth taking a look and it is all about timing! We all know that any sane human would be stupid to try time markets; I suggest is study behavioral patterns, take the big downfalls to compare, what are the reactions when bottoms show!

You will argue that we have technical indicators, hell I love TA they study price behavior, but its those things that is futile as it will tell u the volume, distribution, the buying pattern, the selling pattern, at a certain level, a certain price, with the assumption that price have a memory! Bear in mind, Bear!! That we are now in a situation that is so new, and such a glum that no one can explain to what extent the severity of toxic loans are going to haunt us to!!!

Look at stocks that are able to produce results to downstream and upstream in the line, look into their book values, their debts, their tangible assets and assets, think of their management as a operation focused which is to boost on their productivity and efficiency! In such a situation, we need to tell ourselves there will be no more easy money, we’ve been working smart too long, so smart we buried ourselves! Analyst reports are a bunch of excrement full of foul smell and waste, would you follow the guide of analyst who keeps that Strong BUY but yet he doesn’t buy!!! Why give the call when you are not confident with your interpretation.

Buy stocks that are undervalued, I would just say that Warren bought stocks that have 2x the value of what he was paying, or what he valued them at and you should be doing what he has been doing for so long! Cut the speculation act, do not play with thin lines unless you have a closet full of cash, even full of cash are you sure all this cash won’t be deemed as FIAT when dollar loses its front line defense! The dollar lose sight of gold today, and it shows that efforts to manipulate gold prices are gone, Feds books also need tidying! What is that news going on now Wachovia is going to merge? Read post 1 bottom. I have been nothing but spot on, we have more derailing to go, either we see a strong nationalization of assets, a big wave of mergers and acquisitions, or else we see a massive devaluation of equity, real estate and debased currency!

All the options above are assumptions and it up to you to judge yourself give me some comments. AIG have a wide range of products, and cannot be allowed to fail… think yourself if government buys their dirty loans, and gives them ample cash, what does that imply? Would you buy a business that has a central weight in all aspects of life in 130 countries and basically all walks of life!! I am not stating a buy cause I am worry to what extent the dilution will affect the price but take a look at its holdings vS assets Vs debts Vs premium.

At the time writing China investment Corp has begun its actions spreading its possible wing to take in Morgan Stanley which was about to take Wachovia in a merger, i reiterate many companies are sitting on cash piles, waiting the correct moment like this to buy a US business, Chinese are real capitalist compared to Americans.(Buffett Style) Wa Mu have no other options but to Auction itself out, would anyone take a stake in that company?