Oldtent Archives 2007 - 2008

  interesting to see gold’s lease rates rising

A lot of money has been lost this year. Only yesterday, $600 billion in value was wiped off S&P 500 firms. That’s not to mention the hundreds of billions worth of writedowns and losses previously suffered by financials as a result of subprime exposure.

What does this mean for the future?

One outcome will be a rise in dividend and bond yields, says Bill Bonner in The Daily Reckoning. That’s because the optimism of recent years will switch to pessimism, and lenders will demand much higher yields for their investments.

Treasury yields are negative when calculated against inflation. This can’t last forever.

More from Bill:

The financial industry gained more than any other from the big credit expansion. It makes sense that it should be the industry that suffers most when credit goes the other way.

In that regard, history is a good indicator of what to expect. You can guess about the very broad patterns of the future, based on what you know about the past…and of your fellow man.

We know, for example, that investors tend to go from one extreme to another. At once, they are afraid of credit…and then they feel as though credit were their best friend in the world. And they go from feeling very optimistic about the future…to feeling very pessimistic.

These feelings have market consequences. When they are upbeat and sans soucis they are willing to lend at very low rates of interest, for example. Why not? They’re sure they’ll get their money back. And when they are feeling lucky, they’ll invest in wild-eyed schemes and half-baked projects too. Everything is going their way; so why not?

But then, the mood changes. The schemes fail. Money is lost. And gradually people come to believe that the future holds more bad days than good ones. Yields rise - as they ask for higher rates of interest before lending money. Not only are they afraid that they may not get their money back, they’re also afraid that the money they get back may not be worth as much as the money they lent out. At the peak of the yields cycle in ‘82, for example, investors wanted 14% interest before they’d lend money even to the U.S. government!

and some body with 50 years experience in the industry

do you think he shares your keynesian views

tinyurl.com/4×8g8l

bonds are not the tracking system that sees realty.. y\they are traded off bills of government isssue \

and believe the distorted cpi numbers

those that use this method to compute real inflation are dealing with a

blog.mises.org/archives/004737.asp

stacked deck

To understand this one needs to know that bonds typically trade much differently than stocks. Bonds tend to be held for longer periods of time and don’t necessarily trade every day. Imagine if GE stock traded only once every couple of months, and you get the picture.

The way traders trade bonds is by doing something called discounting, usually off a treasury. Treasuries tend to trade all day every day, so if you can figure out how a given bond compares to treasury you can simply watch the treasury price and interpret that price movement towards your bond. Another way to do it is to find a bond that traded recently that is similar to the bond you own. If that bond traded up, chances are your bond is worth more, too. This is why ratings are important. If your bond is rated AA, you can watch how other bonds with this rating trade and figure out what a fair price for your bond is.

One might say, for example, that AA rated bonds are trading 200 basis points off their treasury upon observing a 30 year corporate bond compared to a thirty year treasury. A basis point is simply 1/100th of one percent. So, if the thirty year treasury is paying 4.36% and a AA rated bond is paying 6.36% you know that the AA rated bond is trading 200 basis points off the treasury.

Now, if you have a AA rated bond that is a ten year bond, you can use this information to price your bond. You might see that the 10 year treasury is paying 3.74% and therefore interpolate that your bond shoud be priced to yield 5.74% Not all AA rated bonds are equal. Some have features in them, calls, sinking funds, and other things that may make them more or less valuable then other AA rated bonds. You adjust your price based on this. You make comparisons to other bonds which have traded to confirm or adjust this price. This is why ratings are important.

That’s how bonds are priced and that’s how they trade. If you have an investment portfolio that contains bonds you may see your price change month to month even though not a single bond of that issue has traded hands. There are services that due this for traders and firms and issue guesses

i dont see them giving up on it or not succeeding with it any time over the next 13 years.

the dollar is king, more than gold is king now even with the 14% inflation that shadow statistics are computing.

 the world bond market must be on reefer since they dont accept what shadow statistics is reporting and are not adjusting yields to reflect the 14% inflation. Bond yields should be at 12% now not the 4% that these dopped up world best traders are contracting too.

i am going to call them up and give them your and shadow statistics number maybe they can wake up from their somber.

those idiots(bond traders) dont know their head from their ass(excuse my french) by keeping rates this low.

anything we can do about them bond traders?

worth taking a look at

www.financialsense.com/fsn/BP/2008/charts/1004.html

Tenters living in & around Denver, some transplants and visitors will meet next Saturday at 2PM on the SE side of the city to celebrate surviving (and thriving…) whatever happens this coming week.  That is, provided we survive!  And if the gas stations are open, and if the roads are open, etc., etc.  The ‘regulars’ already know when & where.  Any lurkers interested in joining us, post of your interest.

 I reccomend reading in full,,,  at the GE board,…”…

(CKYoung) Oct 04, 18:51

.

13) THE COMMERCIAL BANKS that are authorized to issue ‘money’ to other banks are (as mentioned) required to maintain a ‘cash’ (FRN) reserve in order to lend ‘money.’ Due to bad mortgage loans (and associated derivatives) caused by the collapsing housing market, many banks are under water. As a consequence, these banks do not have an adequate reserve, cannot lend ‘money,’ and are failing.
While many banks have no ‘money’ to lend, others do not want to lend to other banks—even on a short term basis—for fear that the borrowing bank may go bankrupt, sucking the lender into a black-hole of insufficient funds and bankruptcy. As a result, banks are collapsing round the world. The bailout, (in politically correct spin, ‘rescue package’) is an attempt to pump more Federal Reserve Notes—they call it liquidity—into various FRN starved banks. This highly inflationary practice is what has lead us to financial chaos in the first place. It is akin to giving a meth addict down in energy, more meth to reinvigorate him.

Therefore, when the term ‘root cause’ is used in reference to the slumping house sales, or lack of credit, and the economic meltdown that began in 2005, it is not the root cause, but rather a symptom, a branch high up on the tree. It is a over mature tree of many branches with roots of greed, corruption, ignorance, and naive thinking rotting far below. —CK Young

typical vancouver, go to sedar look at the millions of shares one gave himself at pennies, then see how many shares were sold at $2+, some people spots never change.

Run a little faster
Jump a little higher
The boy in the red ball jets

when life was simpler

Winedoc

<<As for gold going worthless… Regardless of confiscations or a cease in ability to trade pms… there will be a market. The black market has always existed and always will.>>

Maybe, maybe not.  We are about to enter a period never before encountered in the U.S.  Far better - from my standpoint - to use some of the gold now to purchase whatever is necessary in future for survival of self and family…maybe keep some in hand and send some out of the country, as well…to cover all contingencies.

<<My family fortunately has a small amount of fertile and productive land available for use, and we are working our darndest to expand that. Eventually we hope to have a small commercial organic farming operation up and running for produce, chickens, and herbs both culinary and medicinal.>>

Most excellent on your part…and your family’s part.  I live within walking distance of a biorganic farm that has been allowed to go fallow the past three years…deliberately, so that previous city customers would seek elsewhere for their healthy produce…for when chaos arrives, it would not be in the best interests of the neighborhood to have people in panic roaming about.  The neighborhood is in the process of forming community…who has chickens, who has medicinal herbs, who has all manner of farming equipment, etc.

<<I’m working my way though one of the recent books right now. Not necessarily new material for me, but more of a continuation of exploration that I have been drawn to from time to time over the years. Hey, if you know where one can purchase one of those really cool globe things with the rings around them would love to know.>>

I’m not at all sure of what type books you speak, would you mind sharing the title?  Nor do I understand what you mean by globe things with rings around them and would appreciate more explanation…as my interests are many and varied so I would like to be sure before I stick my toe in the water.  The heirloom seeds of my choice dwell in my freezer…from various sources.  I am well pleased with the giant sweet red peppers that I grew this past summer.

My good wishes to you.

Moggy

the deflationary cycle .. best get it over with

no i do not think it will be 30 yers hence.. the winter of whipping the slate clean to rebuild is on our doorsteps. ..

best start gettin prepared .. if they keep adding fiat to the system for a killer of a long depression .. the more they fight it the longer it will be with more and more suffering ..

when you cut off the leg of a disease.. a quick removal is better than setting their sawing for a week to remove it..

we are on the cusp of one now.. destruction of capitol, distorted monetary aggreates // debt, no savings, // the government is now doing the very same thing that caused the great depression.. adding additional monetary aggregates at world setting rates… lost jobs ,

the greatest killer in the history of mankind has been the attempt to make production out of printing presses .. wars , famine are the end result of the big lie

as in the past few weeks more fiat has been added ,, then in some 70 years of federal reserve oversite

the powers that seek the power are flooding the sytem with unbelievable amounts of cash sweeping across the planet from the japan carry trade , to world wide printing ..

infinity in numbers is a black hole ..

we are looking at many factors .. bank seazures ,, short term money flows to keep the indistrial and commerical base moving from food to basic living necessaties could freeze over night ..

remember peak oil .. usage outstrips supply .. has to be thrown into the mix

back breaking unneccessary wars based on lies ..

so many look at this inflation thing on a weekly basis this week it is not next week it is yes

inflation since the 1913 where at that time a dollar was a silver dollar now that same dollar is a penny ;;

of course prologing the inflation was the steady rise in wages .. now two wages earners , so we are not keeping up

of necessity wages must come down to combate the forces of deflation.. not more morphious sludge thrown into the mix ..

inflation is now a real 14% job less ness over 10 percent .. distorted numbers , .. inflation iks every where look at the basket of food at the supermarket ,, energy cost those that say inflation is not here and in a big way are layered in a big cocoon of denial

   thanks for the laugh!

I am currently learning about P/E Ratios and must be in a BEAR MARKET! 

<<I noted that one benefit of Mimosa extract was to relax the mind.  That appeals to me under present market conditions.>>

Ah, as I have happily discovered, not only the mind but the body as well…its use has rendered a horrendous case of insomnia to depart, far surpassing the effects of my usual concoction of Valerian, Passionflower, and Skullcap.  I’ve heard a few people here and there refer to Mimosa as silk tree, it appears to be widely known by that apt name.

Attached for you due to present market conditions and trust it will afford at least rueful agreement.   Moggy

NEW STOCK MARKET TERMS

CEO –Chief Embezzlement Officer.

CFO– Corporate Fraud Officer.

BULL MARKET — A random market movement causing an investor to
mistake himself for a financial genius.

BEAR MARKET — A 6 to 18 month period when the kids get no
allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING — The art of buying low and selling lower.

P/E RATIO — The percentage of investors wetting their pants
as the market keeps crashing.

BROKER — What my broker has made me.

STANDARD & POOR — Your life in a nutshell.

STOCK ANALYST — Idiot who just downgraded your stock.

STOCK SPLIT — When your ex-wife and her lawyer split your
assets equally between themselves.

FINANCIAL PLANNER — A guy whose phone has been disconnected.

MARKET CORRECTION — The day after you buy stocks.

CASH FLOW– The movement your money makes as it disappears
down the toilet.

YAHOO — What you yell after selling it to some poor sucker
for $240 per share.

WINDOWS — What you jump out of when you’re the sucker who
bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR — Past year investor who’s now locked
up in a nuthouse.

PROFIT — An archaic word no longer in use.