Quote From Paul O'Neill.....Former Treasury Secretary

Q:It’s so hard to understand how the subprime mortgage crisis has triggered a financial crisis of global proportions.

A: If you have 10 bottles of water, and one bottle had poison in it, and you didn’t know which one, you probably wouldn’t drink out of any of the 10 bottles; that’s basically what we’ve got there.

Source: NYT

A good Quote..........

I came across Russ Winter blog on wallstreetexaminer. This is from BridgeWater Associates. I agree with it.

“The financial market unraveling is, as we’ve described, ‘the Big One”. What we have meant by this is that the implications of the last six months will impact how the financial system will work for years. Both directly and indirectly (through the literal profits and incomes associated with the financial sector) and indirectly (through the benefits of credit creation) the economy is more reliant upon the financial sector than ever. The virtuous circle of easy credit and rising asset prices leading to increased consumption and therefore increased incomes has been fueling the economy for so long that it has been taken for granted. The reverse of this cycle will have profound implications for the economy, and we have only just begun to see those implications upon the real economy.”

Economic Crunch Hitting home....?

I live in a nice town called Plainsboro, NJ. I have been living here for last 3 years. I am a member of Plainsboro's New York Sports Club (NYSC).

Today I was told NYSC has decided to close Plainsboro's NYSC. The reason attributed was quote
"Business Conditions".

I am not sure what to make of Business Conditions, Plainsboro is a well-to-do community, surrounded by towns like East Windsor, Princeton......

So if things are bad for business in Plainsboro, I am sure things are much more bad in other places. With Quarter End mark-up games pretty much over, it should get interesting pretty soon.

The more important question is this: Did Bear Stearns Orderly Liquidation postponed the Credit market problems or it solved Credit market problems.

Only in fullness of time we will know the answer to the question. My opinion, it just postponed it. I believe it is just a matter of time before another shoe drops.

BE HAPPY.............

What does Bernanke Knows about BSC.......

It is always sad when innocent folks lost their jobs, given that Bear Stearns is history....But the question is this:

Why is Bernanke bending over backwards to Save a midget size IB.

BSC is not a money center bank, like C, BSC or JPM.

The behaviour of Fed during the BSC crises, looks to me that Bernanke, Treasury and Fed, after looking at BSC books are extremely nervous about whats in it and trying their best to save it.........for fear the entire Credit System may collapse taking with it, the USA economy and probably entire world with it, even though it is a provacative thing to say. But I am incresingly getting convinced things are lot more precarious than people are willing to acknowledge or admit it.

The entire Bear episode will raise lot of questions, but most pertinent one going to be

Who's next?

Now everyone will be questioned and no one will trust anyone........Given that all the other Banks that is GS, C, MS, LEH, JPM, BAC are all in essentially same boat. Even though everyone keeps talking about LEH as the next likely one to go, but only time will tell....

How high unemployment rate will raise in NY tri-state area....

One more possibility going to be .........how high unemployment going to raise in NYC tri-state area, given that Financial services industry is the bread and butter of this area.

Watch for SP1270.........

Last Tuesday, Bernanke's action jave saved 1270 level, we shall see whether that can saved this time. If this one goes then selling may get fast and furious. Since 1270 is the January low....

Good luck...........Tomorrow

Quote of the Day..........

From CalculatedRisk blog:

christofay writes: What does "AAA" mean in today's world?
Almost Anything Allowed
for a select few.christofay 03.12.08 - 9:59 pm #

Global Recession Underway?

What caused commodities price increase in the last 4 years.? Is it synchronous Global Expansion or is it the Peaknics theory, that there is only limited supply of Commodities that will cause a relentless price increase for the foreseeable future?


What made me look into this question is, almost absolute confidence exhibited by Commodity Bulls, that this time it is different and the price will rise relentlessly for foreseeable future. I am especially was suprised by a guest on Kudlow show, his first name was Kevin (did not get his last name), who said with total confidence that Crude will go to 150 and Gold will go to 1500. It is very well possible that he may be right.


But this is where I am going with this. Given that USA is in a Recession (whether it is DEEP or shallow we will know only in fullness of time), Japan is in one. Europe, either it is already is on or will there soon. Given that three Biggest Blocs of Economies are/in recession, can India or China continue with relentless growth and de-couple from other big economies.


If you want to know about growth of India or China all you need to do look at their market indices. Sensex and Shanghai respectively. Sensex went from 21200 to 15,975.52. That a shave of about 5000 points. Shanghai Composite Index lately has been week. FXP which is a Untrashort on top 25 stocks in China is going up.


In other words, is it possible we will going to have a global recession with China and India considerably slowing down. To conclude whether this is how things will unfold, keep on two instruments, they are DUG and SMN ( Disclosure: have positions in both).


You can learn a lot just by observing, just keep an eye on these two:

It is my opinion, if Crude stays about 85/- by next year at this time, then it would safe to conclude it is indeed different this time. But I am betting otherwise, that is price of Commodities will come down a lot.


Thanks for reading

Bill Gross Calls for Nationalization....

Here is widely respected Bill Gross:

http://www.ft.com/cms/s/0/d0b3bc18-ea56-11dc-b3c9-0000779fd2ac.html

Quote from Jon Markman.....

I subscribe to Jon Markman's terrific service. Todays report from Jon, carried the following quote:

It’s interesting that all the bad news was concrete while the good news was pretty flimsy.

The above simple quote, effectively sums-up where we are today.

Goldman takes out Aug Lows

I know this is old news, But mighty Goldman Sachs (GS) takes out Aug lows.

Here it is.......... Are we all set for a Cliff Diving, that means taking out 1308 on SP500 ?

Quote of the Day.........

“You can almost draw it out in a diagram,” said Bernard Baumohl, managing director at the Economic Outlook Group in Princeton, N.J. “With home prices going down, consumers cut back on spending. If consumers cut back on spending, the economy weakens further. If the economy weakens further, fewer people are able to afford mortgages so home foreclosures increase.”

--- 1 March , NYT

Watch the Volume on SP500.......

You can learn a lot by seeing......as the old saying goes.

Hence take a look at the volume when the market goes down, compared to when Market goes up.....as the volume is shown by the white oval in the volume section

When the market goes down, suddenly volume jumps, its like people are coming out of nowhere to sell-stuff.

The market is still in down-trend, watch for Jan lows....and this could get scary in a hurry