Der USA Bären-Thread

Moody's Investors Service downgraded Merrill to A2 from A1 after the results.
The sale of the Bloomberg stake and plans to sell Financial Data Services will cushion the impact of Merrill's second-quarter loss on their firm's capital ratios, the ratings agency said. But it also warned that Merrill has lost some financial flexibility.

"Management's options to sell assets or raise more common equity to offset unexpected losses are now reduced given the difficult industry and capital markets environment," said Peter Nerby, a senior vice president at Moody's.

Merrill may suffer another $10 billion in pre-tax write-downs, mainly from exposure to CDOs and other mortgage-related securities, Moody's predicted. If losses exceed that, the agency said further downgrades may be needed.

Merrill reported $3.5 billion of net losses from its exposure to so-called super senior CDOs. The firm took another $2.9 billion hit from the falling value of hedges it bought from bond insurers. Merrill took another $1.7 billion in net losses from the investment portfolio of its U.S. banks and $1.3 billion in write-downs on residential mortgage exposures.....

Short Squeeze Continues

The financials continue to bleed but the short squeeze continues. Fannie Mae is up another 25% today to $13.66 in the wake of Selective Enforcement of Regulation SHO and Bernanke's statement: "It's important for Fannie Mae and Freddie Mac bonds and stocks to rise so they can keep raising capital and aid the mortgage market."

This move in financials is going to fail spectacularly once the panic buying ends, but for now the bulls are having a bit of fun.

Mike "Mish" Shedlock
globaleconomicanalysis.blogspot.com/2008/...als-continues.html

www.newsweek.com/id/140553
....... this downturn is likely to last longer than the eight-month-long recession of 2001. While the U.S. financial system processes popped stock bubbles quickly, it has always taken longer to hack through the overhang of bad debt. The head winds that drove the economy into this dead calm— a housing and credit crisis, and rising energy and food prices—have strengthened rather than let up in recent months. To aggravate matters, the twin crises that dominate the financial news—a credit crunch and the global commodity boom—are blunting the stimulus efforts. As a result, the consumer-driven economy may not bounce back as rapidly as it did in the fraught months after 9/11.

As it seeks to regain its footing in the second half, the U.S. economy faces two significant obstacles, neither of which was evident in 2001. The first is entirely homegrown: the self-inflicted wounds of the promiscuous extension and abuse of credit in the housing and financial sectors. The second is a global phenomenon that has comparatively little to do with American behavior: rampant inflation in commodities such as oil, food and steel. These trends have conspired to inflict genuine economic pain and deflate consumer confidence. The Conference Board's Consumer Confidence Index in May slumped to a 16-year low.

While the treatment of the current malaise has been essentially identical to the reaction to the 2001 slump—aggressive Federal Reserve rate cuts and tax rebates—the symptoms are quite different. In 2001, an implosion in the technology sector and a slump in business investment pushed the economy over the edge. Even though some 3 million jobs were shed between 2001 and 2003, consumers soldiered on through the downturn. "We had a massive reduction in both long- and short-term interest rates, which set off the housing and consumption boom," says Ian Morris, chief U.S. economist at HSBC. (Remember zero-percent car loans?) This time, it's the opposite. While businesses—especially those that export—are holding up, the economy is being dragged down by the cement shoes of a freaked-out consumer and a punk housing market.
The difficulties today start—as they began last year—with housing and housing-related credit. Last Thursday, the Mortgage Bankers Association quarterly report showed that the percentage of mortgage borrowers behind on their payments—6.35 percent—was the highest since the MBA began tracking the number in 1979. It's not just subprime. In the first quarter of 2008, 36 percent of all foreclosures initiated were on prime adjustable-rate mortgages in California. Mark Zandi, chief economist of Moody's Economy.com, says the decline in home prices has slashed $2.5 trillion from household wealth, or about $25,000 per homeowner. The fall has also removed an important source of support for consumer spending, as Americans who grew accustomed to borrowing against rising home equity to finance car purchases or vacations now find themselves bereft. ....

Despite repeated claims that the damage has been contained, the banks that recklessly financed the housing boom—and then traded mortgage debt even more recklessly—are still cleaning up the mess. But it turns out (surprise!) the same sort of clouded judgment led banks to excesses in commercial lending, and in loans to private-equity firms. The battered financial system, which has raised tens of billions of dollars on onerous terms from new investors to shore up balance sheets, is still likely to suffer more pain from the popped credit bubble, said Bruce Wasserstein, the CEO of the investment bank Lazard, speaking at a New York breakfast. "The harm will radiate for another year." The latest victim: Wachovia CEO G. Thompson Kennedy, cashiered after the North Carolina-based bank suffered a string of losses. Next up: write-offs for bad credit-card and commercial real-estate debt. After a serene period between 2004 and '07 in which the Federal Deposit Insurance Corp. went without a single bank failure, four have gone under so far this year. FDIC chairperson Sheila Bair warned of the "possibility that future failures could include institutions of greater size than we have seen in the recent past." In preparation, the agency has brought staffers out of retirement......

...According to mortgage-data firm HSH, rates on conforming 30-year mortgages (under $417,000) have only fallen marginally since the Fed began cutting rates, from 6.4 percent on Sept. 21 to 6.17 on May 30, while jumbo loan rates haven't budged at all. Worse, this may be as good as it gets. Last Tuesday, Federal Reserve chairman Ben Bernanke indicated that the Fed may be done cutting rates. Why? "Inflation has remained high," Bernanke said, "largely reflecting continuing sharp increases in the prices of globally traded commodities.".....

For signs that tomorrow really is a day away, look to the thing that got us into this mess: housing. "Housing doesn't have to return to the bubble era. It's just that the rate of decline has to stop," says Lakshman Achuthan, managing director at the Economic Cycle Research Institute.

www.minyanville.com/articles/index.php?a=18101
......The last time we saw moves of this magnitude was nearly a year ago, just before the Fed “surprised” the markets by cutting the Discount Rate. Goldman Sachs (GS) CEO David Viniar said jittery markets experienced staggering gyrations -- to the tune of 25 standard deviations -- just days before Bernanke sought to calm them.

Such brazen manipulation shouldn't inspire us to relax into the soothing embrace of the Plunge Protection Team. Rather, government intervention in financial markets is inherently destabilizing, as evidenced by the unprecedentedly rare events of a few days ago.

Financial market risk management is based on math, specifically on statistical models. Traders calculate the odds of an event happening, the potential loss if it does, and then invest accordingly.

Extremely rare events, sometimes called “tail events” (in reference to their position on the normal distribution), break those models and can cause huge losses. In fact, economic theorist Nassim Nicholas Taleb dedicated an entire book to Wall Street’s inability to cope with such highly improbable events, which he called "Black Swans.”

It used to be that most of these occurrences were caused by acts of nature, geopolitical shocks or long-term structural shifts in the way a certain market or group of peopled acted. Now, with alarming frequency, Washington creates these tail events under the guise of stabilization.

Nothing could be further from the truth.

As the market comes to rely on the Fed and the Treasury to heal its ills, traditional risk management is rendered useless. Investment banks are far better served by spending millions on crafty Washington lobbyists than on teams of expert statisticians and experienced traders to protect the firm’s capital.
Irrespective of one's opionion on the economy or the stock market, this isn't a welcome development.

für die Entwicklung der US-Wirtschaft ist m.E. auch folgender, der bislang vom Lieferanten leider noch nicht aktualisiert wurde. Seit dem letzten Datenstand (Q4/2007) hat sich jedoch weder der Case/Shiller Index noch das frei verfügbare Pro-Kopf-Einkommen der Amis verbessert - ganz im Gegenteil.

Der Chart reflektiert schlicht und einfach, dass das frei verfügbare Einkommen in Relation zum Case/Shiller Index bereits seit Ende 2006 deutlich stärker schrumpft. Berücksichtigt man, dass das frei verfügbare Pro-Kopf-Einkommen von 15 - 20 % der Bevölkerung, die quasi schuldenfrei sind, dominiert wird, ist diese Aussage schon sehr krass.  

July 18 (Bloomberg) -- The Federal Reserve shouldn't wait until financial and housing markets stabilize to raise interest rates, central bank policy maker Gary Stern said.

``We can't wait until we clearly observe the financial markets at normal, the economy growing robustly, and so on and so forth, before we reverse course,'' Stern, president of the Federal Reserve Bank of Minneapolis, said in an interview today. ``Our actions will affect the economy in the future, not at the moment.''

The comments by Stern, a voter on the rate-setting Federal Open Market Committee this year, reinforced traders' forecasts for a rate increase by year-end. Stern indicated that Treasury Secretary Henry Paulson's rescue plan for Fannie Mae and Freddie Mac will help prevent a deeper housing and economic slump. ....

Traders' estimates of a rate increase in October rose to 64 percent after Stern's remarks were published, from 58 percent earlier today.

Stern dissented three times in favor of raising rates in 1996. He is the only FOMC member who's served with three chairmen: Paul Volcker, Greenspan and Ben S. Bernanke. He became the Minneapolis Fed president in 1985.

His comments today underscore that ``the Fed has grown more uncomfortable with the inflation situation,'' ....``Headline inflation is clearly too high,'' Stern said. He added that he's concerned that will feed through to core prices and public expectations for inflation......

Hier muss es anstelle von "bereits seit Ende 2006" "seit Ende Q1/2007" heißen.  

online.wsj.com/article/SB121617138088456473.html
Buyout fever gripped Lehman Brothers Holdings Inc. Tuesday: The firm's battered stock jumped 6.6% partly because of talk that management could try to take the firm private.

But shareholders shouldn't pin too much hope on the possibility of such a deal. Nor should they assume that a bigger bank will rescue them.....

...Taking the New York firm private would be particularly tough. An unlisted Lehman wouldn't be able to tap equity markets for funding should the need arise. That could spook investors who buy Lehman's debt, raising the prospect that they could end up shouldering losses if write-downs eat through capital.....
..A sale to a bigger bank looks more credible, if Lehman's shares continue to reflect a massive loss of investor confidence. But big banks, with problems of their own, either haven't had the interest or the wherewithal to pursue a deal so far. Plus, a purchase at Lehman's current share price could potentially contain a big hidden cost.

There is no exact way to determine an appropriate discount. But consider, for example, the affect of applying an aggressive 5% haircut to the firm's $161 billion in difficult-to-value Level 2 assets and a 25% discount to its $41.3 billion in extremely hard-to-value Level 3 assets.That would result in a further write-down of nearly $19 billion. Such marks would bring Lehman's book value down to about $4 billion. At the current share price, a buyer would be paying a hefty multiple of more than two times book value.....Adding about $9 billion in preferred stock to the adjusted, $4 billion book value means a potential buyer would have to fill a $12 billion hole in the firm's equity.

Sehr interessant! Damit steht mehr als die Hälfte aller zwölf Fed-District-Chefs nicht mehr uneingeschränkt hinter Bernie.

At its heart Paulson's argument assumes the GSE's problems are simply a function of confidence. He believes that if the U.S. Treasury signals that it will stand behind both firms to the bitter end, then investors would have no reluctance in buying their bonds. But assuring that creditors will be repaid (albeit with cheaper dollars) does nothing to address the root cause of the problem, which is that both firms are losing money on their loan portfolios, and on the loans that they insure. Paulson's plan actually assures that Fannie and Freddie's losses will be even larger, and puts American taxpayers, or more precisely wage earners and savers, directly on the hook. The longer these two entities remain in business, the more bad loans they will buy or insure, and the more money taxpayers will lose.

In theory, Fannie and Freddie were originally created to help provide affordable housing. In reality, like all government programs, they achieved the opposite. Rather than making houses more affordable, they merely enabled buyers to overpay for them. The result is that American homeowners are now saddled with staggering amounts of debt, as easy credit made it possible for buyers to bid prices to dazzling heights. So while a record number of Americans now own homes, they have bankrupted themselves in the process.

Without the help of Fannie and Freddie, and now the full faith and credit of the United States, American home buyers would be facing much steeper mortgage interest rates. This is particularly true given that our ability to borrow is now dependent on access to the global savings pool. Without the implicit, and now explicit, government guarantee, foreigners would be much less willing to extend cheap credit to Americans. If we had to rely solely on our shallow domestic savings pool and individual credit worthiness alone, rates would be significantly higher. Since home prices are a function of the ability of buyers to pay, higher interest rates would mean lower prices, thus making houses themselves more affordable.

Even the tax deductibility of mortgage interest has achieved a similar result. By subsidizing home buying, and encouraging renters to become buyers instead, the government has artificially increased demand for houses, causing prices to rise. In the end, the benefits of the mortgage tax deductions are limited to those who benefit from inflated home prices. This includes realtors, who earn higher commissions, governments that collect higher property taxes, and those who owned their homes prior to the loophole being enacted who cashed in on the gains.

At present, the best the government can do for housing and the economy is to leave both alone, cease interference in the free market, restore sound money, and allow capitalism to work.

Unfortunately, the laws of capitalism are now demanding that home prices continue to fall precipitously. But, based on the speed in which our government, public and financial institutions are willing to abandoned free market principals at the first whiff of economic pain, the likelihood that this impulse will take hold is increasingly remote. So hunker down as the United States finds itself on the express track to state socialism with Paulson's Bazooka locked, loaded and pointed right at us. When the government pulls the trigger the blast will blow the dollar, and what's left of our capitalist economy, to smithereens (= in Stücke zerschlagen, einen Scherbenhaufen verursachen).

Und die Anderen lässt man fallen.

Alternative dazu ist der direkte weitere Durchmarsch nach unten. Ob es dazu kommt, hängt allein von der News-Lage ab, die nicht vorhersehbar ist. Außerdem gibt es mMn auch bei den News eine Art "dark pool" - ein Filter, das Einiges "im Geheimen" hält, bis der Markt für die Veröffentlichung reif und vielleicht schon private Lösungen für die Probleme gefunden worden sind (z. B. ein asiatischer Käufer für einen Geschäftszweig der Citibank, ehe die News verkündet wird, dass dieser Geschäftszweig zahlungsunfähig ist).

---

FORBES
The Croesus Chronicles
Watch Out For The Quants
Robert Lenzner, 02.07.08, 6:00 AM ET

The stock market belongs to the quants.

Some 70% of all equity volume is driven by computer models that suddenly trigger a surge in buy or sell orders that are causing the fragmentation, volatility and use of hidden trading venues. Some 30% of all trades are being done in so-called "dark pools" -- 37 alternative trading systems that operate like private markets -- or through "dark orders" -- bids or offers that are never disclosed to the public before they are transacted.

Arguably, this trading activity causes violent moves up and down in a single session that intimidates ordinary investors.

Take Tuesday, Jan. 22, when the Dow opened down 463 points, over 3%, in the wake of plummeting stock prices in Asia and Europe. What looked to be a frightening rout was transformed suddenly and without the slightest advance warning into a huge rally as hundreds upon hundreds of gigantic buy orders, all 1 million shares or more in size, poured into electronic trading systems at Credit Suisse and several other major trading firms.

Dan Mathisson, Credit Suisse managing director and head of advanced execution services, believes these massive orders were from quant hedge funds whose algorithms suddenly decided stocks were cheap and sent out huge buy orders, all over 1 million shares each. Mathisson terms this electronic surge a "stabilizing force."

[Wenn alle Quants nach ähnlichem System/Programm handeln, müsste dies auch zu einer Marktverzerrung führen. Wer garantiert denn, dass die Modelle nicht fehlerhaft sind? Bei der Bewertung des Subprime-Schrott haben ja schließlich auch die Computer-Modelle der Rating-Agenturen versagt. Langfristig werden sich ohnehin die Fundamentals durchsetzen. Das gelegentliche Hochkaufen der Quants gibt ihnen allenfalls schnelle Gewinne (wenn sie diese denn rechtzeitig realisieren), verlängert aber insgesamt nur die Pein des Bärenmarktes. - A.L.]

Mathisson's proof: By the end of the trading session, the Dow 30 had stormed back 338 points to close down only 126 points. Credit Suisse handled 700 million shares, or 7% of the day's volume, just through its electronic trading modem.

"More and more of the world's trading is done by spraying dark orders across multiple destinations using deliberately complicated patterns and algorithmic models that can't be discovered or duplicated. No one knows who's doing what to whom anymore," Mathisson explains. Nasdaq has morphed into the best market to hide information about buying and selling. It is the largest arena for anonymity, traders claim.

Still, every trade must be printed on the consolidated tape that is displayed in investment houses and on television every day. So the trades done secretly are made public immediately after execution.

Wednesday, Jan. 23, was another day of extraordinary volatility. The market made an unusually steep round trip of over 600 points, plummeting and then more than retracing the decline in all of 90 minutes.

Price discovery often happens so fast it overwhelms the amount of cash available. So the market moves to new levels, both up and down, in sharper intraday moves. These moves are executed by means of a maze of unique mathematical formulas that drive orders to fragmented market locations, from exchanges like the New York Stock Exchange and Nasdaq to electronic communication networks (ECNs) like Archipelago, or to "dark pools" like Goldman Sachs' Sigma X. All told, on Jan. 23 some 12.6 billion shares were traded.

Goldman's electronic trading outfit in Jersey City, N.J., alone did 1.2 billion shares, or 10% of the total market volume. Some 20%, or 225 million shares, were handled through through Sigma X, a dark pool closed off to anyone but Goldman customers.

As no outsider can get inside Goldman's Sigma X, it gives the firm an edge in navigating the markets. Naturally, Goldman is in the process of trying to centralize all equity orders from every part of the firm, including its block trading desk and the division that services high net wealth clients, to increase its market share of all equities traded.

Goldman, along with the Citadel hedge fund and Knight Capital Group, owns Direct Edge, a broker-dealer that provides one-stop shopping by aggregating orders and using 10 of the most active dark pools to execute orders. In some cases, these dark pools allow outsiders entry to increase their order flow. Dark pools, unfortunately a nefarious-sounding moniker, actually have exotic names like H20, Liquidity Ping, Matchpoint, PIN, MS Pool and Liquifi. All are owned and operated by major financial institutions.

Of course, there's a potentially dangerous side to dark pools, which have become controversial because there's no transparency and orders are hidden.

"Conspiracy theorists see malevolence in matching buy and sells in the dark," says Larry Tabb, founder of the TABB Group, a consulting firm that tracks the development of electronic markets.

There are other potential drawbacks to dark pools. Few things anger a trader more than seeing inaccessible market prints while actively trading in a particular security. Buy-side traders for mutual fund empires, pension funds and banks see dark pools as the most likely place for information leakage.

The Securities and Exchange Commission has officially encouraged the creation of dark pools to compete with the dominant NYSE and Nasdaq exchanges to offer the best price competition. Indeed, dark pools are the direct result of an SEC rule allowing the private National Market System to be formed.

It is a well-kept secret on Wall Street which outside firms have access to these invisible markets. They play an increasingly important role due to the decimalization of the stock market, whereby bids and offers are in minuscule 1 cent differentials. This means that competitors can game the system by bidding $50.01 for a stock to top a $50 bid.

Credit Suisse, for one, puts a huge premium on secrecy. Its "guerrilla" algorithm allows clients to trade very aggressively without the other side of the transaction ever realizing it is part of a trade. Guerrilla operates without sending any signals. It never displays a bid or offer but uses a complicated pattern that is employed in dark pools, ECNs and exchanges.

Credit Suisse is so secretive about its systems that no sales personnel, block traders or investment bankers are allowed access to the bank's electronic operations. The goal is to keep privileged and secret what it does and how it operates. PricewaterhouseCoopers periodically inspects the walls of protection Credit Suisse has created to maintain its competitive advantage.

Credit Suisse is applying for patents on several of its algorithmic models to block the competition from using them. Its algorithmic systems are trading securities in 32 nations, from Europe to South Africa and Asia, while also making huge inroads into the execution of transactions in options, currencies and futures.

Are these changes by which the quants and their algorithms are taking over the stock market beneficial for the small investor, not to speak of the mutual funds, pension funds and bank trust departments that also represent the little guy?

"These days, completing a trade is not an easy task due in part to 'fragmenting liquidity pools.' And with unequal access to these hidden and dark liquidity pools, the quest for liquidity becomes difficult, if not sometimes impossible," says the TABB Group in a recent report.

Liber Abaci also posed, and solved, a problem involving the growth of a hypothetical population of rabbits based on idealized assumptions. The solution, generation by generation, was a sequence of numbers later known as Fibonacci numbers. The number sequence was known to Indian mathematicians as early as the 6th century, but it was Fibonacci's Liber Abaci that introduced it to the West.


[edit] Fibonacci sequence

In the Fibonacci sequence of numbers, each number after the first two is the sum of the previous two numbers. Thus the sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, etc.

The higher up in the sequence, the closer two consecutive numbers of the sequence divided by each other will approach the golden ratio (approximately 1 : 1.618 or 0.618 : 1).
--------------------------------------------------

Es würde mich nicht wundern, wenn die Quant-Programme mit einem System arbeiten würden, das auf Fibonacci-Zahlen und -relationen basiert. Deren Anwender könnten sich diese "Gesetzmäßigkeiten" zunutze machen, ohne sie zu zerstören. Ich halte es für durchaus möglich, dass findige Mathematiker den "Markt-Code" geknackt haben. Elliott hat davon geträumt, doch er war kein Mathematiker.

 

Several years ago I predicted that the National Debt would reach $10 trillion by the time President Bush left office. For a short period (thanks to the housing bubble), it looked like the deficit would be less than I projected.

Now that the housing bust is hitting government revenues, it looks like the $10 trillion projection will be close.

The current National debt is $9.518 trillion (see TreasuryDirect) as of July 17, 2008.
www.treasurydirect.gov/NP/BPDLogin?application=np
That leaves the debt about $482 billion short of my projection with about 6 months to go.
Last year, from July 17, 2007 to Jan 20, 2008, the debt increased $297 billion. That is not a fast enough pace to make $10 Trillion by next January. But the debt is increasing faster this year.The increase in the debt was about 50% higher over the first half of 2008 compared to the first half of 2007. If that pace continues for the next 6 months, we can estimate the debt will increase another $297 billion * 1.5, or $446 billion, before Bush leaves office.

$10 Trillion Man? It is going to be close!
calculatedrisk.blogspot.com/2008/07/update-10-trillion-man.html

die auf Systemen beruhen, ist - zumindest an der Börse - , dass Regeln ungültig werden, sobald sich Alle daran halten. Sonst könnte ja jeder an der Börse Geld verdienen und niemand würde mehr arbeiten gehen ;-))

Bei den einfachen Charttechnik-Regeln zählt z. B. das "bewusste" Durchbrechen von Trend-Linien - das Trader zum Einstieg bewegt - mit anschließender Kehrtwende ("false break") inzwischen zum täglich Brot. Früher waren solche Trendbrüche weit verlässlichere Signale. [Malko: Ich glaub, mit Deinem Short-Verkauf wurdest Du jetzt ebenfalls auf dem falschen Fuß erwischt, ebenso wie beim frühzeitigen Verkauf Deiner Langzeit-Longs im März 2007...]

Zum Glück sind die Elliot-Regeln so kompliziert, dass sie es wohl auf Grund ihrer Komplexität niemals schaffen, ein allgemeiner Leitfaden für die "Trader-Massen" zu werden. Trader folgen nach wie vor meist der (grundfalsche) Regel: "Mein Bauch sagt mir, dass XYZ heute noch weiter steigt. Hab mir mal 300 ins Depot gelegt, mit engem SL."

(sorry for interrupting your thoughts AL,) interessanter Artikel im Wallstreet Journal,der meine volle Zustimmung findet  Why No Outrage? bezieht sich nur auf USA,könnte aber auch hier gelten
online.wsj.com/article/...5066615.html?mod=home_we_banner_left

Through history, outrageous financial behavior has been met with outrage. But today Wall Street's damaging recklessness has been met with near-silence, from a too-tolerant populace,
By JAMES GRANT July 19, 2008; Page W1
....It wasn't the nation's small savers who brought down Bear Stearns, or tried to fob off subprime mortgages as "triple-A." Yet it's the savers who took a pay cut -- and the savers who, today, in the heat of a presidential election year, are holding their tongues.

Possibly, there aren't enough thrifty voters in the 50 states to constitute a respectable quorum. But what about the rest of us, the uncounted improvident? Have we, too, not suffered at the hands of what used to be called The Interests? Have the stewards of other people's money not made a hash of high finance? Did they not enrich themselves in boom times, only to pass the cup to us, the taxpayers, in the bust? Where is the people's wrath?
The American people are famously slow to anger, but they are outdoing themselves in long suffering today. In the wake of the "greatest failure of ratings and risk management ever," to quote the considered judgment of the mortgage-research department of UBS, Wall Street wears a political bullseye. Yet the politicians take no pot shots...
.....To facilitate the rescue of that system, the Fed has sacrificed the quality of its own balance sheet. In June 2007, Treasury securities constituted 92% of the Fed's earning assets. Nowadays, they amount to just 54%. In their place are, among other things, loans to the nation's banks and brokerage firms, the very institutions whose share prices have been in a tailspin. Such lending has risen from no part of the Fed's assets on the eve of the crisis to 22% today.
Once upon a time, economists taught that a currency draws its strength from the balance sheet of the central bank that issues it. I expect that this doctrine, which went out with the gold standard, will have its day again....
..By and by, the lefties carried the day. They got their government-controlled money (the Federal Reserve opened for business in 1914), and their government-directed credit (Fannie Mae and the Federal Home Loan Banks were creatures of Great Depression No. 2; Freddie Mac came along in 1970). In 1971, they got their pure paper dollar. So today, the Fed can print all the dollars it deems expedient and the unwell federal mortgage giants, Fannie Mae and Freddie Mac, combine for $1.5 trillion in on-balance sheet mortgage assets and dominate the business of mortgage origination (in the fourth quarter of last year, private lenders garnered all of a 19% market share.

Thus, the Wall Street of the Morgans and the Astors and the bloated bondholders is today an institution of the mixed economy. It is hand-in-glove with the government, while the government is, of course -- in theory -- by and for the people. But that does not quite explain the lack of popular anger at the well-paid people who seem not to be very good at their jobs.

Since the credit crisis burst out into the open in June 2007, inflation has risen and economic growth has faltered. The dollar exchange rate has weakened, the unemployment rate has increased and commodity prices have soared. The gold price, that running straw poll of the world's confidence in paper money, has jumped. House prices have dropped, mortgage foreclosures spiked and share prices of America's biggest financial institutions tumbled.

One might infer from the lack of popular anger that the credit crisis was God's fault rather than the doing of the bankers and the rating agencies and the government's snoozing watchdogs. And though greed and error bear much of the blame, so, once more, does human progress. At the turn of the 21st century, just as at the close of the 19th, the global supply curve prosperously shifted. Hundreds of millions of new hands and minds made the world a cornucopia again. And, once again, prices tended to weaken. This time around, however, the Fed intervened to prop them up. In 2002 and 2003, Ben S. Bernanke, then a Fed governor under Chairman Alan Greenspan, led a campaign to make dollars more plentiful. The object, he said, was to forestall any tendency toward what Wal-Mart shoppers call everyday low prices. Rather, the Fed would engineer a decent minimum of inflation.

In that vein, the central bank pushed the interest rate it controls, the so-called federal funds rate, all the way down to 1% and held it there for the 12 months ended June 2004. House prices levitated as mortgage underwriting standards collapsed. The credit markets went into speculative orbit, and an idea took hold. Risk, the bankers and brokers and professional investors decided, was yesteryear's problem.

Now began one of the wildest chapters in the history of lending and borrowing. In flush times, our financiers seemingly compete to do the craziest deal. They borrow to the eyes and pay themselves lordly bonuses. Naturally -- eventually -- they drive themselves, and the economy, into a crisis. And to the scene of this inevitable accident rush the government's first responders -- the Fed, the Treasury or the government-sponsored enterprises -- bearing the people's money. One might suppose that such a recurrent chain of blunders would gall a politically potent segment of the population. That it has evidently failed to do so in 2008 may be the only important unreported fact of this otherwise compulsively documented election season.

Mary Yellin would spit blood at the catalogue of the misdeeds of 21st-century Wall Street: the willful pretended ignorance over the triple-A ratings lavished on the flimsy contraptions of structured mortgage finance; the subsequent foreclosure blight; the refusal of Wall Street to honor its implied obligations to the holders of hundreds of billions of dollars worth of auction-rate securities, the auctions of which have stopped in their tracks; the government's attempt to prohibit short sales of the guilty institutions; and -- not least -- Wall Street's reckless love affair with heavy borrowing.

For every dollar of equity capital, a well-financed regional bank holds perhaps $10 in loans or securities. Wall Street's biggest broker-dealers could hardly bear to look themselves in the mirror if they didn't extend themselves three times further... Managing balance sheets as highly leveraged as Wall Street's requires a keen eye and superb judgment. The rub is that human beings err....The more immediate risk today is that Wall Street, sweating to fill out this year's bonus pool, runs itself and the rest of the American financial system right over a cliff.

It's just happened, in fact, under the studiously averted gaze of the Street's risk managers. Today's bear market in financial assets is as nothing compared to the preceding crash in human judgment. Never was a disaster better advertised than the one now washing over us. House prices stopped going up in 2005, and cracks in mortgage credit started appearing in 2006. Yet the big, ostensibly sophisticated banks only pushed harder.
Bear Stearns is kaput and Lehman Brothers is reeling, but Morgan Stanley perhaps best illustrates the gluttonous ways of Wall Street....under Chief Executive John Mack, [it] set out to catch up to the rest of the pack. In the spring of 2006, it unveiled a trillion-dollar balance sheet, Wall Street's first. It expanded in every faddish business line, not excluding, in August 2006, subprime-mortgage origination (the transaction, intoned a Morgan Stanley press release, "provides us with new origination capabilities in the non-prime market, which we can build upon to provide access to high-quality product flows across all market cycles"). Nor did it pull in its horns as the boom wore on but rather protruded them all the more, raising its ratio of assets to equity to the aforementioned 33 times at year-end 2007 from 26.5 times at the close of 2004. Naturally, it did not forget the help. Last year, Morgan Stanley paid out 59% of its revenues in employee compensation, up from 46% in 2004.
Huey Long, who rhetorically picked up where Lease left off, once compared John D. Rockefeller to the fat guy who ruins a good barbecue by taking too much. Wall Street habitually takes too much. It would not be so bad if the inevitable bout of indigestion were its alone to bear. The trouble is that, in a world so heavily leveraged as this one, we all get a stomach ache. Not that anyone seems to be complaining this election season.

etwas für die Wochenendleser aus der New York Times:(3 Seiten lang)
www.nytimes.com/2008/07/19/business/economy/19econ.html?_r=
man muss sich nur registieren mit Emailadresse,kostet nichts und funktioniert dann immer
......how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.

Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.

“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.......

The catfish industry is in free fall, unable to cope with the rising cost of feed. "It's a dead business," John Dillard of Dillard & Company said. Last year his company raised 11 million fish. Next year it will raise none.
Photo: James Patterson for The New York Times
LELAND, Mississippi: Catfish farmers across the American South, unable to cope with the soaring cost of corn and soybean feed, are draining their ponds.
"It's a dead business," said John Dillard, who pioneered the commercial farming of catfish in the late 1960s. Last year, Dillard and his company raised 11 million fish. Next year it will raise none. People can eat imported fish, Dillard said, just as they use imported oil.As for his 55 employees? "Those jobs are gone."

Corn and soybeans have nearly tripled in price in the last two years, for many reasons: harvest shortfalls, increasing demand by the Asian middle class, government mandates for corn to produce ethanol and, most recently, the flooding in the Midwest.This is creating a bonanza for corn and soybean farmers but is wreaking havoc on consumers, who are seeing price spikes in the grocery store and in restaurants. Hog and chicken producers as well as cattle ranchers, all of whom depend on grain for feed, are being severely squeezed......www.iht.com/articles/2008/07/18/business/catfish.php

den man in USA hört, ist der "open outcry" in den Pits der Warenterminbörsen.

wäre doch
"Recession-plagued nation demands new bubble to invest in.”
doch auch nicht schlecht

navigator

wenn die Packung alle ist, gibts aber ein böses Erwachen...

Valium ohne Rezept  

85 Prozent der US-amerikanischen Medikamenten-Versandhändler verschicken verschreibungspflichtige Arzneimittel wie Valium oder Ritalin, ohne ein Rezept dafür gesehen zu haben. Zu diesem Ergebnis kommt eine Studie des National Center on Addiction and Substance Abuse (CASA) an der Columbia University.

Die Forscher hatten 365 Internet-Apotheken genauer unter die Lupe genommen. Dabei notierten sie, dass 42 Prozent der Händler, die ein Rezept für verzichtbar hielten, den Kunden dies ungefragt mitteilten, 45 Prozent eine "Online-Sprechstunde" anboten und 13 Prozent sich in Sachen Rezept komplett ausschwiegen. Außerdem monierten die Forscher, dass auch Kinder und Jugendliche übers Internet ohne Alterskontrolle Zugriff auf potentiell süchtig machende Medikamente erhielten.

www.heise.de/newsticker/...-Rezept--/meldung/113040/from/rss09

war damals vormittags am 27.2.. Ein wichtiger Unterschied bezüglich der Performance.   ;o)  Zwischenzeitlich sah der Ausstieg etwas zu früh aus. Allerdings bedingt durch den hohen Anteil an Finanzwerten nicht viel zu früh. Bei Timingspekulationen auf mehrere Jahre erwischt man selten die idealen Zeitpunkte für Ein- und Ausstieg. Hauptsache das Ergebnis stimmt.

Ich glaube momentan noch nicht an den Absturz. Das ist mir zu früh. Ich glaube eher an den weiteren Abstieg in der von mir geposteten Range. Aus dieser Sicht hätte ich den ETF schon in der früh verkaufen müssen und nicht erst in der Mittagspause. Habe mich durch die Nachbörse in den USA irritieren lassen. So liegt das Ergebnis "nur" bei über 15% in ca. 2 Monaten. Für mein erstes Spekulieren auf fallende Kurse seit Jahren in meinen Augen nicht so schlecht. Ob und wie falsch ich lag werden die nächsten Wochen Zeigen.

Jetzt kassiere ich eben wieder Zinsen am Seitenaus und warte auf den nächsten relativ sicheren Einstieg. Short ist eh nicht so mein Ding und auf meine Longmöglichkeiten werde ich wahrscheinlich noch etwas länger warten müssen.

Zu den Quants: Verfolgt man die Ergebnisse von Fonds und von Hedge Fonds, die mit derartigen Krücken arbeiten sieht man immer große Performanceeinbrüche bei Trendänderungen wie z.B. jetzt Ende 2007. In meinen Augen sind das ganz primitive Trendfolger. Charts malen diese Programme bestimmt nicht und Wellen interessieren nur die Betreiber wenn sie Urlaub an der See machen.

Range:

 

"The emergency order could further exacerbate a loss of confidence in the safety and soundness of this country's banking industry," the ABA wrote, as it called for an expansion of the order to including stocks of banks and bank holding companies.

The Financial Services Roundtable, an organization that represents 100 of the largest U.S. financial companies, also asked the SEC to extend the order. It wants to have all financial-services companies covered in the second week.

A SEC spokesman said the agency doesn't comment on letters, but said it will collect all of the comments as it moves forward with its decision-making. Mr. Cox previously said the emergency order was a preventive step aimed at restoring market confidence, and stocks were chosen based on which firms had access to the Federal Reserve's lending facilities.

The SEC order can be in effect for as long as 30 days. It's unlikely it will make any amendments to the emergency order to include stock of these other firms, a person familiar with the matter says. However, the SEC said it is considering extending the protective measure to all stocks that trade in the U.S. at a future date.

The list includes major Wall Street brokerage firms, banking titans J.P. Morgan Chase & Co. and Citigroup Inc., as well as several non-U.S. banks.

The emergency order says traders need to lock up, or pre-borrow, stock for future delivery before they execute a short sale, or bet the stock will drop. The SEC says that will "eliminate any possibility" that the markets will be disrupted by naked short selling, which occurs when the trader never borrows the stock and then "fails to deliver" it to the buyer within three trading days.

On Friday, the SEC said market makers wouldn't have to pre-borrow the stock, but they would still need to deliver it within three days.

These "fails to deliver" can occur from clerical errors, and the SEC says they are often resolved within a few business days. But they can create downward pressure on a stock price, and when not covered over extended periods, could be a sign of abusive short selling.

In 2004, the SEC created a "threshold list" for stocks that fall into this category. A stock is included if such "failures to deliver" meet three criteria: They occur over five consecutive trading days; equal 10,000 shares or more; and at least 0.5% of the company's shares outstanding.

Only one company, Deutsche Bank AG, is on both the SEC's protected list and the NYSE Euronext's threshold list. Deutsche Bank has been on the threshold list for the past six trading days; however, that may have been triggered because of low U.S. trading volume, compared with its global trading volume. A Deutsche Bank spokesman declined to comment. Because these stocks are so widely traded, it's possible they are subject to abusive trading and the firms still wouldn't make the list.

Other companies that also have been under selling pressure didn't make the cut, including Wachovia Corp. and Washington Mutual Inc. Washington Mutual also submitted a letter to the SEC asking the order to include other financial institutions, a person briefed on the matter said.

National City Corp., a regional bank that scrambled to raise capital earlier this year and isn't protected in the SEC order, has been on the threshold list nine of the first 12 trading days this month."The current universe of names is too narrow" and should include the largest U.S banks, said Kristen Baird Adams, a spokeswoman for Cleveland-based National City. She said the bank intends to contact the SEC.

Companies have long complained that nefarious traders were abusing short-selling rules to drive down their stock prices. And over the years, many of those complaints came from small, thinly traded companies. Some of those companies were vulnerable to manipulation, but some also had weak financials and were likely to attract legitimate short sellers trying to sniff out overpriced stocks or fraudulent companies.

Advisers to some of the large banks not covered by the rule say they are considering asking the SEC for relief, while others are concerned that being on the list could be akin to a scarlet letter.

Charles M. Jones, professor of finance and economics at Columbia Business School, says the SEC's move has some unhappy precedents. In 1932, the New York Stock Exchange announced that, effective April 1, brokers would need written authorization before lending an investor's shares. "This wreaked havoc on the securities lending market, but the effect was completely temporary," he said, because the move only added extra hoops, and didn't prevent people from taking bearish positions if they wanted.

Mir reicht es, wenn ich sehe, dass das Murmeltier "den Bären" spielt ;o!