Cmdr Sy
Appetite 4 Destruction
The Firm.
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Posted - 2008.09.22 20:25:00 -
[91]
Things are looking as expected when you threaten to expand the US debt ceiling by several trillion dollars, print to cover a black hole and a gap in central bank cashflow and game the rules. The last is good for only one shot each time, then the rest takes over. Markets down convincingly, dollar down (three full points on the DX and through the 50 DMA since Friday, ouch), oil up (lock limit up!) and a lot of controversy brews as people stop to think.
For example, what happens to the debt holdings of foreign primary dealers, and will the RTC Mk.II be running for taxpayer profit or loss? In either case, the banks would naturally represent the opposite side of the trade and someone has to lose. It took all of one day for the BBC and others to run with that as a prominent item. Hardly surprising, considering in the extreme case the US taxpayer might end up buying European consumer debt at an instantaneous loss and hoping we get pay rises. The death of the pure investment bank is another bit of negative news; it was nice when there was a semblance of a line separating highly leveraged speculative institutions from retail depositors and payroll accounts, now any pretence is gone. The aforementioned now share the risk and the taxpayer insures it, without debate let alone vote in any legislative assembly.
I am beating a dead horse here, but now is an excellent time to move out of equities (especially British) and into cash. The FTSE 100 and 250 are both in descending channels since the middle of last year and the 200 DMAs have dipped inside as the last substantial move up failed and culminated in that lovely run of red last week. On the former, 5500 might have become overhead resistance. Quite simply, you were better off selling up earlier, last Friday's intervention was a gift and any repeat is unlikely to be as good. I am watching this wreck from the sidelines and expect to do so for years.
Oh, and from here on in, shorts will not only cease to sell financials, they will cease to bid. Why should they change their opinions on the valuation of companies they already believed to be grossly overvalued? Their money is out of play. Rallies into the close may become an endangered species, intervention or not. Enjoy. 
EVE CCG Trinity Booster |
Taedrin
Gallente
24th Imperial Crusade
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Posted - 2008.09.22 22:32:00 -
[92]
*Sigh*, when will people realize that they can not keep accumulating debt. Seriously, corporations think that funding 60% of all activities through debt is a SMART thing. GM finances about 97% of their activities through debt. If that company goes under, shareholders are SCREWED.
Hopefully there are SOME corporations in the US who are smart enough to avoid excessive debt like the plague.
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