God Saved Americans’ $700 Billions with Dow’s fall of 778 Points
There is a saying that there could be a delay in God’s regime, never Injustice. Wise man also said that never regret what happened, - it did only for better. My father also taught me when you need to use the common sense, never waste your intelligence. (Use it where it is required)
American citizens excelled and finally came on to their own. They said - we can afford to lose 778 points of Dow or 10% of S&P, because they will always retrace, but we can not afford to waste $700 Billions for that crazy guy Paulson, that will take generations to come back, if they would at all. The rejection of Paulson Plan was the victory of American democracy. There could not have been better evidence when the Americans saved irrecoverable $700 Billions and lost just retraceable 778 points of Dow.
Here is the brief virtual conversation between the American Citizens and Paulson, with FED Chief Bernanke and President Bush intervening at times.
| President Bush | Fellow Americans, you made terrible mistakes… |
| American Citizen | Really, who is saying that? You? You never made right decision in last 8 years of Presidency. Yes, we made terrible mistakes, but that was 8 years ago, when we sent you to the White House. What we did today was the right thing to do – to show you the door and never see your ugly face again. We would prefer to see the face of “Ugly Betty” at least she will make us laugh, but you! You always made us shed the tears of sorrow, blood and sweat. Get the hell out of here! |
| Paulson | There will be job losses, unemployment, no credit for cars, homes, banks will not offer you loans…when you asked your Representative to vote against. Look at Dow – down 778 points, S&P down 9% NASAQ down 8% - we have worst economic situation since 1930 depression era. |
| American Citizen | Really? Who will lose jobs – the people working at Wall Street? We can afford to lose jobs for a while, because it is limited to my own generation. But paying you blank checkbook of $700 billions to buy the rotten eggs will make my grand, grand grand, grand, grand grand children to pay through the noses.
And who will benefit? You and your Goldman Sach? You mentioned that the portfolio of $700 billions will be managed by your Goldman Sach employee. Your GS will charge the exchequer 1% to 2% for next 5 or 10 years or 30 years to hold these rotten assets till maturity. So your GS will make about $ 7 billions to $ 14 billions for next 30 years, and you will go on making money in the GS stocks.
And you are saying that this is the worst time since 1930 depression. Are you kidding? The Dow is down to 10,370 today whereas it was well above 3000 in 1987. It has not gone down to even 1987 level, and you are saying that this is the worst economic time since 1930? Better get your figures straight.
And dear, these derivatives were all invented in the factory of Goldman Sach and likes, so called “financial engineering”. In off shore centers, Now that they are busting, you bring them on American soil and ask us to pay for your sins? |
| Fed’s Bernanke | Brother, you do not know the real problem. All these banks are busting, there is a credit squeeze, the interbank market is dead, GDP will go down, job losses will increase, the economy will contract, there will be problems everywhere.. You should have authorized the passage of bill for $700 billions of which only $250 billions were to be disbursed now, and $100 billions before December under the supervision…You see… |
| American Citizen | Stop right there. Let me ask you one question. How much money you pumped into the United States and abroad to ease so called “Liquidity crunch”? |
| Fed’s Bernanke | Well, about $673 billions were pumped into the system today |
| American Citizen | Hey wise guy. You pumped $673 billions into the system without any form of authorization from Congress or otherwise, and you wanted my Authorization for just $ 250 billions? Are you out of your mind? How come we get “dumb persons “like you and Greenspan to head the FED empire? |
| President Bush | You see, this is fairly complicated. Even I don’t understand. These guys are professionals and experts. You got to believe them… |
| American Citizen | You were elected as President of United States and you could not understand this basic economics? Why did we give you this beautiful and most powerful nation to you for management when you did not have even common sense?
And you are telling me that these guys are professionals and experts? These are the guys who messed up the whole system, who created CDO, CDS, and CLN etc which finally busted. We are harvesting their sins now and you are saying that we should believe this bald headed Paulson and Bearded Bernanke who have no brains of even 5th class student? |
| President Bush | Well, I do not know CDO but know WTO and WOT only… |
| American Citizen | I can understand WTO, but never heard of WOT – have you mis-spelt it? |
| President Bush | No, No, No. There is no spelling error. WOT = War On Terror. You know these terrorists who scare the hell out of me… |
| American Citizen | Oh, War on Terror. What are you doing now? Are you not terrorizing me by telling me GDP will go down, jobs will be lost, no money for the cars, homes, health care, Medicare, social security, and no money at the banks too? |
| President Bush | Well, these are my final 35 days – you may better ask these complicated questions to next President who may be better placed to answer them. |
| American Citizen | Well, Mr., President, Mr. Bernanke, Mr. Paulson, I got to go…otherwise I will lose job and only you will have to pay me the Unemployment Allowance. I am a good citizen unlike all of you, and do not want to be a burden on the state. |
| President Bush | Don’t be angry. Did not I send you rebate checks worth $106 billions some time ago? |
| American Citizen | Yes, I received it, and now you want $700 billions from me. Do you think that your fellow American citizens are stupid? Are you a President or a Con Man? Get the hell out of here – all of you…Now |
Why did the Dow fall so steeply?
These Wall Street guys spread all rumors, including PIMCO chief – Bill Gross. I was watching the market and Congressional proceedings all night long. The market fell in last 5 minutes when the sellers deluge. They marked down the prices steeply when they saw no bids, It was more like a scene of Bombay Stock Exchange in January, when the brokers marked down the prices steeply for all blue chips, seeing no bids.
It should be noted that if there were sellers all around, there were buyers too for whole day except for last 5 minutes. Even on closing bell, Maria of CNBC announced the fall of about 600+ points whereas the last minute update sent the Dow reeling by another 180 points. They were not indicative of meltdown. Who did that? Goldman at the instance of Paulson, force Congress to pass the bill a day after?
What will happen on Tuesday?
People will have time to think. Wall Street has been manipulating the whole market like a bunch of thugs. They brought down Dow in last few minutes to force the Congress. They wanted $ 700 billions before September to manipulate market prices of derivatives, by buying them at very high prices. They will even now lift the short selling ban on 799 financial shares, so that the market could go down further, and these “three Musketeers” could say – We told you so…
Asian markets will fall again in the opening trades, but then, might recover. Whatever happens in Asia or Europe, there is strong possibility that Dow after sliding further by 200 points (10,170), it may rebound strongly. The rejection of Paulson Plan is now discounted in the market price. Nothing worse is going to happen. If some bank goes under, let it go. How many banks will you go on resurrecting? These CDO/CDS have spread like Aids virus.”
The sudden outbreak of bankruptcy virus is due to off shore liabilities coming on shore. They were never seen on the balance sheets of the banks in the past. When they lost money overseas, they jettisoned to on shore parents, like an ocean that always throws the trash on to the shore.
The investors have short memory. How many times the investors remembered 1930, 1987 and 2001 in last 5 years? You can count it on finger tips.
Frozen Liquidity? How to counter it?
Let the market rates rise. There are always lenders who want to lend the money if they get higher return for higher risk. Did not Warren Buffet gave $ 5 Billions to Goldman Sach by extracting 10% interest on preferred shares? With warrants attached?
It was stupid move on the part of Bernanke to pump over $673 billions in the market without any authorization when he was seeking Congress approval for just $250 billions? What the hell is he doing? He is just printing billions of dollars every day with almost no coma, semi colon and full stop? Has he gone mad? Why does not he recognize that the lenders are just on side line? They do not want to lend in high risk environment by receiving just 2%. If they want higher interest rate for short term, let them have it. Nothing stops. Everything has a price. Let the market determine the interest rates for the time being. Pumping hundreds of billions of dollars will only make the people to shun even treasury and go for Gold – which can not be printed.
God has finally saved the America. The Americans should be proud of themselves for putting their foot firmly on the gang of President Bush, Ben Bernanke and Hank Paulson.
Kalidas, Hong Kong
September 30, 2008
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| When you take speculative position especially in respect of Indices, you have to be very careful. You have to see the calendars also. In Hong Kong and US we are closed, you may not be, and consideing time zone, the US market opens only on thursday Asia time. I am presuming that you might have used Indices. the market may rise today, but again, this is personal assessment. Other market's reaction is negative, because each center has some or the other bank failure. Commerzbank of Germany is also listed as trouble spot. You have to be very fast in Index trading. I do not trade in Indian market the options or future, so unable to guide you. In leveraged stock and index trading, never allow more than 3% price diversion. you cut the losses or book the profit. further, always keep the Buy and Sell order very distant from the current prices. So that if you caught the trend correctly, the possibility is that your price may be hit during rapid correction during the day, and you will be hit. By the time you return from lunch, your position may be in money. I know more about options and futures in US market. Their rules are different than India. Kalidas, Hong Kong 30/5/2008 | ||
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Reply Post for V8R Guest (your Ref: 30 Sep 2008 14:56 ) My Ref: 08-096-IN
I replied this question number of times in this forum. Any investment product has ups and down, so you can not say even gold can not come down - it does.
In uncertain time like this, Gold is a good protective investment, provided it is bought physically. In India, one may buy ETF with Demat deposits. But in riots, even ETF is of no use. If there were riots like in Punjab at the time of independence, people fled Pakistan with all their belongings. ETF in such case is not useful - only the physical gold.'
When you buy ETF, it is fine. If you buy physical, do not buy from banks like HDFC who overcharge you by 10%. If you buy from the market, do not buy jewellery - it may cost you more and your wife/mother/sister will never let you sell, when the price go up. Invest silently in lagdi or bar form at international price - they are always saleable instantly
Kalidas, Hong Kong
Tuesday, September 30, 2008
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| Reply Post for slowhand22 (your Ref:30 Sep 2008 15:29) My Ref: 08-095-IN-R 1. The depositors have FDIC insurance of $100,000 (in India, it is Rs 100,000) for bank deposits. If one has account with brokers or investment firms, the protection is $500,000 per account with sub limit of $100,000 in cash and rest for securities. If one wants to have more insurance, one may have to approach insurance company to insure larger amount. When I was in brokerage business, and had client's portfolio up to US$ 25 Millions, we used to ask the bank or brokers to get extra insurance for $24.5 millions for which premium used to be borne by the banks/brokers. So, in case of Lehman Brothers, the protection was higher at $500,000 under SIPC (Security Investor Protection Corporation, USA). In Hong Kong, we do not have any kind of protection. In USA, each client of any foreign broker having account with single account with the US broker gets individual protection. The foreign broker is said to have 'omnibus account' and all clients' assets are individually protected up to $100,000 per sub-client. In India, it is not so. Yes, However, such large banks usually merge with other banks, so depositors do not lose. The debt holders and equity holders lose in that order. 2. Riots are possible, if the losses are of such magnitude that the bank does not have capital. In such cases, even courts let the depositors have preference over other creditors. This is provided by the concerned Banking Act. 3. When you deal with private bank, there is always a risk. In last 50 years, from the moment I began to understand, I have not seen any major bank failures, except run on the bank on Citibank and Standard Chartered Bank, in Hong Kong in 1991/2 4. No government should give 100% guarantee for any private enterprise. This is unknown and could make even government bankrupt. Such cost is ultimately borne by the citizens only 5. If government does not want panic, they should monitor the bank properly. When the cooperative banks failed in India, there was a run on ICICI Bank when the RBI extended the line of credit running into several hundreds of crores. Take the example of bankruptcy of Global Trust Bank in India, taken over by Oriental Bank of Commerce, where the depositors got the protection but the shareholders lost entire equity. 6. Current panic has forced Americans to buy only treasury. In USA anyone can buy treasury bills or notes of even smallest amount online. No one is trusting any bank, so they buy the treasury. Due to this, 2% CPN 2 years notes may be trading at $102 so that on maturity the note holder gets $100 losing 2% interest he gets. Thus, his yield is ZERO. 7. In difficult times, the people's main concern is capital preservation and not earning. Even if the earning is zero, they are happy that their capital is safe. Kalidas, Hong Kong Tuesday, September 30, 2008 | ||
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| for hembhat Rubinomics is at play. Former Treasury Secretary, Rupert Rubin, now Vice Chairman of Citigroup, was expert in manipulating the oil prices by shorting oil futures and buying $ index. It is said that Enron was used to conduct such trades in off shore centers. Near settlement day, the short sellers have to deliver the oil, so they reverse the trade, by buying back oil futures, and selling the dollar index. This is why oil rose $25 in one day on settlement day. Otherwise, which mad man will buy US$ in the middle of giant bankruptcies? Next to go will be UBS, General Electric (GE of USA, not UK) and hundreds of hedge funds. Some money market funds too will fold up. Citigroup with all clothes torn to pieces with begging bowl in hand, is moving around recruiting other beggars like Wacovia. 'khisse mein kuchh hain nahin, aur duniya kharidne chale hein' Kalidas, Hong Kong 30/5/2008 | ||
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The market behaved as stated earlier by me - will go down more in the morning and close up in the evening. The rejection of bail out plan is not fully discounted in the lower prices.
Please write your post in English unless you use some idioms to prove your point.
Bear phase will continue for long time - when the banks are failing, money is disappearing, then it is a long long bear phase.
Kalidas, Hong Kong
30/5/2008
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| Reply Post for shakti (your Ref:sp.polo) My Ref: 08-098-01-IN An excellent question. If you have followed my posts for over a year, you would have known that I have always advocated 'physical gold' than ETF. It is easy for us to buy physical gold with 9999 purity from any gold dealer, fully certified and approved, by the Government of Hong Kong. In India, the people invest mostly in jewellery, so the gold may be 22 carats (they claim) by in reality, it is 18 carats only - we have checked them in Hong Kong. This is why when you sell your jewellery, they deduct lot of 'kasar'. Further, when you buy jewellery in India, they charge you labour @ Rs 100 per gram or more. In Hong Kong, we have fixed making charge regardless of the weight. When you buy gold as an investment, it is to be treated as investment. When the prices rise, one should be prepared to sell. If you have invested in gold jewellery, the family member never allow you to sell the gold even if the price has risen. However, if you have bought bar or lagdi, you can sell. If it is ETF, you can sell just as you can buy. there is no personal loyalty attached. This kid of paper gold or derivative is good so long as you have bought from the company survives. So, you are not investing into gold first. You are investing into the selling company first, and then into gold. Whereas in physical gold, you directly own the gold, not the paper. I have always bought Gold and silver in physical form all the time for last several years. I was waiting for this kind of crisis to happen, and let the gold prices zoom beyond imagination. At that time, I will catch a plane and sell whatever jewellery I own and sell them out at the market without retaining a single gram. My wife therefore wears only yellow 24 carat gold (This is what we get in Hong Kong from Chinese shops). I bought ETF only for short term trading, and that too in India , just 50 units worth Rs 30,000 that was sold recently earning just Rs 1800 before expenses. If you carefully analyze the world situation and the investment products in troubles, they were all papers. Physical commodity never hurts - you can hold it and keep it for generation and sell them when the crisis of such proportion hits the markets everywhere. Kalidas, Hong Kong Wednesday, October 1, 2008 | ||
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Reply Post for KUD (your Ref: KUD of 01 Oct 2008 08:27) My Ref: 08-099-IN-R
I have devoted full chapter 'Where is McKenna's Gold' in my forthcoming book, so I will avoid the comments. Greenspan never mentioned that the gold has never been audited. He always remained silent on this issue. I have Audit report that says that there is so much of gold, but it smacks of manipulation by use of some creative words. When my book hits the shelf, and people know the truth, the gold may zoom to over $3000 per oz. Hell will let lose.
At that time, I will tell you what it is.
Kalidas, Hong Kong
Wednesday, October 1, 2008
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| for KUD This is why he wants to save Goldman by saving AIG which owes $20 billions to Goldman. Goldman also appear to have unaccountable liabilities many of which may be off shore. they will be brought on shore once the funds are released. Goldman will also get right to manage the $700 Billions of portfolio which will be held till maturity - 30 years. Considering usual management fees of 2% (1% Minimum), it will earn EVERY YEAR $ 7 billions to $14 billions. That will be great revenue booster. They want to write off all accumulated losses (not yet known) by am,mortizing every year against the fees accruing here. Goldman may be carrying over $100 billions of doubtful assets similar to Bear Sterns, Merrill and Lehman brothers. SAVING GOLDMAN, KILLING AMERICAN TEX PAYERS is the function of the new command - Operation Overkill, where tax payers will be massacred under the Commander In chief - Geroge W Bush - one of the most Retarded President of all time. Kalidas, Hong Kong 1-10-2008 | ||
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| I was having very small position of Quantum ETF (just 50 units). I took the view that the bill will finally go through that may cause the s3wift rally, so I employed funds in my regular stocks, and sold Gold ETF. I know that it can go lot higher, but I already have lot of physical gold and silver. So, I decided not to keep very small position. I do not know about UTI ETF. I don't like UTI due to sheer manipulation they do in their Mutual funds. I have invested large amount in their Petro fund, which hardly gives me enough return compared to its portfolio of most oil majors and refiners. The stocks like Reliance, ONGC trepled when I bought this fund. and the fund is still trading near issue price. Strictly, speaking UTI-Gold may look better IF other features are same. I do not know UTI's charter, but since I do not like this Fund Manager who is deceitful, I do not want to even look at them. If there is an agreement today in the Senate, and that causes the big rally in stocks, that may last 3 to 5 days, the ETF may come down a lot, that will be a point of buying. I normally buy when there is price fall for 3 to 5 days in a row. Gold is very strong on its own, but temporary weakness can not be ruled out.We are all living in paper castle, so the gold will have to go higherr. No country is having enough gold now that they can short it. and almost all fund managers are dead, All these factors are in favour of Gold. It could go very high - could be $2000 or even more. I therefore do not care whether I pay 635 or 585 or 530. if at all you want to buy, you may buy at about 585 (best level) or even lower, if the equity rally goes beyond 5 days in a row. Kalidas, Hong Kong 2-10-2008 | ||
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| for shia, I have written in the past that nothing would have happened to Europe had they not bought the useless CDO/CDS papers from US banks and brokers who created this parallel economy. ` Once I have mentioned that there was fundamental difference between the mortgage as practiced in Europe, Hong Kong, Asia, India AND the one practiced in USA. It was presumed by European and British banks that mortgage type of finance is always secured and with little risk, without realizing that practices were different across the continents. They thought that the mortgage in USA is similar to one in UK and Europe. they looked only at the financial part of the product, not the legal part where they made the most serious mistake. It may be noted that even in USA, the fall in property prices is still not over 15% in most of locations. The real trouble came not from primary lender side, but from derivative side which were having only second lien, that is, their debt was subordinated to Primary Lenders. So the losses in UK and Europe is not related to the weakness in mortgage in primary market but in instruments purchased by them from the flamboyant brokers and banks from USA. Further, Europe is not English speaking, so information flow from there is very slow and inaccurate. There are many languages from French, German, Italian, Spanish, Italian, Polish, and host of smaller countries, similar to India where we have more than 50 languages across 26 to 28 states. But Hindi is a common language which is not the case in Europe All of us listen and educate ourselves in USA, UK, Australia, India, Pakistan, Sri lanka, Bangladesh, Nepal etc because the English is the common link language and almost all communications from TV media to Newspapers are bilingual. We therefore know more about these countries than others. Europe made a mistake in not having common language. It is more like monetary union than political or social. this will fail in course of time. Kalidas, Hong Kong 9-10-2008 | ||
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FOR YSB
Very serious, It was stated yesterday that 60% of all hedge funds will be bankrupted this month. they have suffered the heaviest losses due to change in rule in middle of the game and otherwise.
Kalidas, Hong Kong
10-10-2008
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Qn:wht to do if the portfolio is at 60% loss.
| for raneshramesh I have very simple formula for situation like yours. 1. If the stocks you hold are likable, retain the holding 2. If the stocks you hold are not likable, and you are losing 60%, find out the stock in same industry that has also come down by 60% or more, that is liked by you. Sell unlikable stock and Buy the likable stock. 3. if you are incurring 60% (say you bought Stock A at Rs 100 that now trades at Rs 40)do the following exercise: - Please note that although you lost 60%, the stock has come to Rs 40, then, it has to go up by 150% gain to become break even, - Normally, if the stock has become 1/3rd, I buy 3 times - If it has come down to 1/4 th, I would buy 4 times the original position 4. If the stock rebounds after new purchase, do not count average price. If the second lot goes higher quickly, sell 50% of new lot at market prices. If it goes higher, sell remaining lot of 20% This way you are able to manage the existing stock without enlarging your money. Kalidas, Hong Kong 10-10-2008 | ||
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| for raneshramesh, 500k is too high amount to lose. The properties in India are not going to crash that you can afford to lose this much. I do not know the valuation of your property and whether the apartment is ready for possession or under construction. Normally, I never advise anyone in India to buy the property under construction, because in downturn, they run away. It is better to pay 10% more and buy the ready one - pay him on one side, receive on the other - like COD or Cash against delivery. Always make final payment through the financing bank or Lawyer so that all formalities are complied with. You could have token money of say Rs 1000 and seek all documents from the builder saying that they may be required by the bank for the purpose of loan. If the market situation reverses or you find that the property is not that worth, you can retrace saying the bank did not approve the loan. The most you lose is Rs 1000 Under the cirumstances, you may apply for a loan and pay the builder against delivery of the flat (if it is ready) or make him to agree to receive part payment of just 20% more and balance only against possession. Tell him these are the terms of the bank you are borrowing from. If he disagreed, ask him to return the amount (official or No.2). If the market is in rising trend, he may refund. Otherwise, proceed cautiously if the property is under construction and the builder is of high repute. Kalidas, Hong Kong 10-10-2008 | ||
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| for amarawargaonkar I already replied you on my blogsite. As i mentioned there, it is the Brokers who make the market. Investors are generally followers. This is why you always here - so and so broker gave me this tip and that. It takes courage to say what you want to say. Just see the earlier comment who pokes a fund at me for having made the prediction of 2400 rally in 7 days - he has read only headline not the contents of the message, so he will go on writing in peculiar English and hurl abuses at me. You also experienced that - so do not worry. I have selectively started buying. I am also losing very little in some of the scrips but in some i have gained like HPCL, BPCL, even Air Deccan (in two lots I made money, but in one old lot, I am losing a bit), Spicejet - twice I made good money, I also bought more recently. I have not touched blue chips but will buy cash rich companies like ITC, MTNL, Hindustan Level (where I made good money - already sold at profit). I am still losing in IFCI (cost Rs 36 - one lot I bought below 30 sold over Rs 35.85), GV Films etc. but the my invesment is very small, and what I have invested is in the same couner where I had earlier quadrupled. I have bought back Essar Oil (120/132 and 158), Essar shipping (Rs 54/66/72) and RNRL (59/68) GSPL (44/36). I will be stepping up the purchases in another meltdown. Any stock you buy today, will have downside of 20% minimum, so If you can muster this loss, then invest, otherwise make money in your hotel. Yes, I will come to Aurangabad once - and in that case - i will need a hotel to stay in. My father in law many years ago lived in that city for over 4 years. I will be coming to India in early November Kalidas, Hong Kong 12-10-2008 | ||
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for dhruv8
Your entry price is very good. No need to average down further. Search for other counters for deployment for your balance funds.
the time has come to buy now. Yes, risk is more, and there could be 20% to 30% losses on paper, but they do not count, because most of the prices today are thinly traded stocks. Once the market recovers, they bounce back beyond the purchase price today.
Take the stock of home inventory, sell all excess wares, clothes, utensils that you never use. Sell them straight and use the proceeds to buy the desired stocks of good quality. Buy mid cap stocks, not small cap.
this way your home will also be cleared up of dirt and excess inventories and proceeds thereof are employed in stocks which are available at waste paper`s prices
Arvind Mill, Dish TV, Abhishek Industries, IFCI, Hotel Leela, Taj GVk, Midday Media, are all small investors` stocks. Buy them and hold for about 6 to 12 months, and focus on your regular work.
There could not have been better days. I was the one who asked everyone to sell 70% by January 16, 2008 and sell everything by 31-march-2008. I was proved right.
I am now exhorting everyone to start buying now of those stocks that have come down by 80% from the peak. All well known stocks. The choices are so many, that you may pick and chose like in Vegetable or fruit market.
Kalidas, Hong Kong
24/10/2008
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