Cyprus-Forum.com

[dinos]

Fascinating stuff:
http://www.bloomberg.com/apps/news?pid= ... lKAu61sYU&

Traders at Goldman had put this firm into exactly the same position as other banks - Merrill, Citi, Bear Sterns - and would have sunk the company along with the above three. However, two guys argued to the CEO and CFO that the sub-prime market looked soft and Goldman should short it. Goldman did so in such quantities as to make them billions if the market crashed.

So Goldman's traders are just as fundamentally stupid as were Citi's, Merrill's and Bear Sterns'. They had put Goldman long sub-prime mortgages. The difference though (and what makes this so fascinating) is that Goldman had a separate enterprise at the top of the company with the power to reverse the judgment of its own experts. Instead of telling their traders that they are jackasses, or that they are wrong, or that they don't know what they're doing, these people simply offset their positions.

Thing is, why do they need their traders? And what if the intelligencia at the top is ever wrong?

Going to more conventional economic stuff, it's interesting to see that Futs markets are selling off the Dow some 340 points on a day that US markets aren't even open. This indicates worse sentiment than after 9/11. And with bond insurers about to fail spectactularly, the US economy is looking much worse than anybody anticipated. People will squawk that the Fed needs to ease and all that - but they have been since summer '07 with no results. Adding more credit to the system won't fix these problems. And all these "stimulus" packages that the presidential candidates are offering don't have a chance in hell of working.

I had taken on cash positions in October / November because I saw some of this coming, but I didn't see how big the problems could get. But hey - I live for this crap...

[Kikapu]

Dinos & JJ,

You guys are giving very accurate statement of facts about the US economy and what's to come down the road. I personally lay most of today's financial problems at the feet of Alan Greenspan. That old fool went along with Bush's sick Domestic and Foreign policy down the wrong path, just to earn himself few "Brownie Points" with the President, when he should have been independent and told the truth as he saw them.

Greenspan made every excuse so that Bush can put us further into debt. We borrowed more money from other countries so that we can keep a war going as well as give tax credit to the rich, screw up the normal Mortgage lending practices as if it was with "Monopoly Money" to buy homes beyond average person reach, and all along, Greenspan was just telling us, that all this expenditure by the Americans can be sustained and it was within acceptable levels, as salaries for average Americans was stagnating and everything else was rising. In 2007 the Jumbo Mortgage loans, more than half were interest loans only, some with no money down. 12% had Negative Amortization Mortgage loans for god sake. I have a friend who bought a home in the San Francisco Bay area for $600,000 with no money down, so his annual payment in total was around $50,000, including mortgage insurance, Property taxes and Interest only loan. He use to rent 2 bedroom for $15,000 a year before. Needless to say, he was not sleeping too well at nights, and the reason why he bought, was because he did not want to miss the "Gravy Train", because Property Prices were doubling every 4-5 years, and everyone was getting "rich" with their homes. Then people took equity from their homes and bought other expensive items, and put themselves further in debt.

Greenspan did not say anything, because the economy was moving along just fine, so people thought. Well, it was an artificial economy and the long awaited housing bubble has burst, and in my estimation, the house prices needs to drop anywhere between 30%-50% to correct itself with what an average American earns in salary. The only trouble is, this kind of a drop will send most financial institutions into the toilet. As the job market gets weaker and weaker, there won't be any incentive to raise the pay for average Americans, so the downward spiral of the American Economy will take a "death dive" into the "black hole". What I do not understand is, why was it, that when house prices were going through the roof, it was never considered to be a "inflation".

I believe inflation started 4-5 years ago, but no body talked about it. If dozen eggs doubled in price, it would be considered to be because of inflation. If house prices doubled in 4-5 years, it was considered to be a "good investment". Well, I'm afraid the "gravy Train" had already left the station about 5 years ago, is just that, people did not want to hear the truth. Americans forgot something I learned while I lived in the States for a long time, and that was,
"There's no Free Lunch in America". Sooner or later, you need to pay your bills. That time has come I'm afraid, but for some, they have already spent their bill payment money on something they did not need, which was another home for investment purposes with no money down. The problem now is, this "Black Hole" is going to get bigger and bigger until your neighbourhood also gets sucked into it, so by far, this is not only a USA problem, it is a Global Problem.

There you go guys, I blame that old fool Alan Greenspan for today's ugly times and worse times that are yet to come.

Happy New Year.!!!

[dinos]

Kikapu, since you brought up Greenspan:

Five Simple Steps to Becoming a Billionaire: The Greenspan Method
1. Become Fed Chairman
2. Lower interest rates until you create an asset bubble. Hold them low until stagflation is in the air and a real estate bubble is floating
3. Stop being Fed Chairman and release a book on how you didn’t do anything wrong and have no regrets. If possible, time it perfectly with the worst real estate market in generations
4. Join the hedge fund which has profited more in % and dollar terms than anyone else has from your mess (which you didn’t create)
5. Build a platinum statue of your muse, Ayn Rand, and sleep with it every night

It also helps if you are mostly unethical.

http://longorshortcapital.com/five-simp ... method.htm

[Kikapu]

Kikapu, since you brought up Greenspan:

Five Simple Steps to Becoming a Billionaire: The Greenspan Method
1. Become Fed Chairman
2. Lower interest rates until you create an asset bubble. Hold them low until stagflation is in the air and a real estate bubble is floating
3. Stop being Fed Chairman and release a book on how you didn’t do anything wrong and have no regrets. If possible, time it perfectly with the worst real estate market in generations
4. Join the hedge fund which has profited more in % and dollar terms than anyone else has from your mess (which you didn’t create)
5. Build a platinum statue of your muse, Ayn Rand, and sleep with it every night

It also helps if you are mostly unethical.

http://longorshortcapital.com/five-simp ... method.htm

Thanks Dinos,

I hope Greenspan's Viagra Pills are ineffective and that his New Wife takes him to the "cleaners" for not being able to play the role of a "performing husband". :lol:

[Johnson&Johnson]

hey guys !

I'm rushing around texas like a maniac so not much time to post. but quickly:

Wow some excellent points and analysis.

Greenspan is possibly the worst fed reserve chairman ever. Bernanke needs to do a Volcker now but he doesn't have the balls.

But Greenspan is just a puppet; the system is rotten to the core (If i had more time i would go into my usual tirade against the debt money system, fiat currencies and debt slavery but your'e luckily gonna get spared as i don't)

dino man i have noticed the shopping malls and box stores are near empty down here. maybe its my imagination or maybe the conbsumer is really tapped out. in any case, ive never seen it so quiet out here.

kikapu, sorry we have not met. who are you and where are u from ? u live in the states?

[Kikapu]

kikapu, sorry we have not met. who are you and where are u from ? u live in the states?

JJ,

I'm originally from Cyprus, but lived in Turkey, UK and 25 years in San Francisco, California and now, I have been living in Switzerland for the past few years.

Nice to meet you JJ.

[dinos]

hey guys !

I'm rushing around texas like a maniac so not much time to post. but quickly:

Wow some excellent points and analysis.

Greenspan is possibly the worst fed reserve chairman ever. Bernanke needs to do a Volcker now but he doesn't have the balls.

But Greenspan is just a puppet; the system is rotten to the core (If i had more time i would go into my usual tirade against the debt money system, fiat currencies and debt slavery but your'e luckily gonna get spared as i don't)

dino man i have noticed the shopping malls and box stores are near empty down here. maybe its my imagination or maybe the conbsumer is really tapped out. in any case, ive never seen it so quiet out here.

kikapu, sorry we have not met. who are you and where are u from ? u live in the states?

Yeah, it's been weird - especially with the Christmas numbers. All the TV pundits were going on about how strong they were, the stores were full, people were buying like crazy, and preliminary sales numbers were going up like mad. Unfortunately, those preliminary sales numbers included food and fuel, which have seen staggering inflation. Ex- food and fuel, X-mas sales dropped 0.4%. Consumers don't have much money after basic living expenses, and retailers sold their souls to move product. It doesn't surprise me at all that stores aren't busy now.

Bigger problem, the regulatory deficiencies are still not being addressed. Case in point, Merrill Lynch warned about a $4/share write-off, then wrote off $12/share without warning, even with SOx in place. Where is the SEC? This magnitude of dishonesty should never be tolerated, but the people responsible won't be held accountable.

The way I see it, the ship is in dangerous seas and the only people steering it are running away from the waves. It's in everybody's best interest to inject a little more honesty into the system so that the economy can start from a solid base. But it's not happening. Consumers are seeing reports of low inflation, but they're struggling to feed themselves and keep themselves warm. There's a huge disconnect between reality and what the government is telling them. The upcoming presidential candidates don't get it either, so I see some problems lasting for a few years at least.

Kikapu, Greenie has one foot in his tomb. If he actually got his wedding tackle to work, the loss of blood from his brain would likely finish him off. Even for Viagra, you need to be healthy enough for sex in the first place. You just may be able to cast that play after all...

[Kikapu]

Kikapu, Greenie has one foot in his tomb. If he actually got his wedding tackle to work, the loss of blood from his brain would likely finish him off. Even for Viagra, you need to be healthy enough for sex in the first place. You just may be able to cast that play after all...

Even for Viagra, you need to be healthy enough for sex in the first place.

At the healthy age of 52, I wouldn't know about it.!!!

Ask me again in about 20 years to see if it's true..

[dinos]

Kikapu, Greenie has one foot in his tomb. If he actually got his wedding tackle to work, the loss of blood from his brain would likely finish him off. Even for Viagra, you need to be healthy enough for sex in the first place. You just may be able to cast that play after all...

Even for Viagra, you need to be healthy enough for sex in the first place.

At the healthy age of 52, I wouldn't know about it.!!!

Ask me again in about 20 years to see if it's true..

What do they make for "electile dysfunction" which will plague the US this year? Er, besides 4 to 8 more years of G&T?

[Kikapu]

Kikapu, Greenie has one foot in his tomb. If he actually got his wedding tackle to work, the loss of blood from his brain would likely finish him off. Even for Viagra, you need to be healthy enough for sex in the first place. You just may be able to cast that play after all...

Even for Viagra, you need to be healthy enough for sex in the first place.

At the healthy age of 52, I wouldn't know about it.!!!

Ask me again in about 20 years to see if it's true..

What do they make for "electile dysfunction" which will plague the US this year? Er, besides 4 to 8 more years of G&T?

Dinos,

If Hillary gets in, she does not need to worry about any "electile dysfunction". :lol:

Bill on the other hand, might.!!!

Dinos, I missed the G&T....what is it.???