Comments on: Way too much risk in the equity market http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: The recession is over but the depression has just begun « naked capitalism http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-6619 The recession is over but the depression has just begun « naked capitalism Fri, 02 Oct 2009 02:16:20 +0000 http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-6619 [...] As for the recent asset-based economic reflation, be under no illusion that these measures ‘solve’ the problem. The toxic assets are still impaired and banks are still under-capitalized. But the increased asset value and the end of huge writedowns has underpinned the banks and led to a rise in the broader market in a feedback loop that has been far greater than I could have imagined at this stage in the economic cycle. [...] [...] As for the recent asset-based economic reflation, be under no illusion that these measures ‘solve’ the problem. The toxic assets are still impaired and banks are still under-capitalized. But the increased asset value and the end of huge writedowns has underpinned the banks and led to a rise in the broader market in a feedback loop that has been far greater than I could have imagined at this stage in the economic cycle. [...]

]]> By: Bill Gross: sell risky assets and buy Treasuries « naked capitalism http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-6528 Bill Gross: sell risky assets and buy Treasuries « naked capitalism Tue, 22 Sep 2009 12:30:14 +0000 http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-6528 [...] Way too much risk in the equity market [...] [...] Way too much risk in the equity market [...]

]]> By: aitrader http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-57168 aitrader Mon, 21 Sep 2009 05:34:00 +0000 http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-57168 So the US Fed has bought 1 1/4 trillion dollars, give or take, of "toxic" mortgage securities through their various alphabet soup of bailout programs ( http://online.wsj.com/article/SB125297162259710323.html?mod=rss_Today%27s_Most_Popular ). With the nationalization of Freddie Mac and Fannie Mae they now own an additional 4-5 trillion bucks in MBS, much of it toxic and much yet to blow up (see the coming option ARM problem here - http://www.dsnews.com/articles/experts-worry-option-arm-time-bomb-is-about-to-explode-2009-09-21 ). So Edward, help my limited brain here - just how is it that this stuff on the government's books (and I include the US Federal Reserve, which is government for all intents and purposes) is safer than when it was on the banks' books? The government can print themselves out of a crisis, leading to a run on the dollar. They can raise taxes, leading to an even bigger flood of failed businesses and higher unemployment. Or they can appeal to China, et al, for an even higher level of spiraling debt, which seems at current levels to be utterly unsustainable. I made the call many moons ago that this is going to destabilize the fiat floating currency pyramid from its shaky roots and cause a global unraveling. If Lehman was an 8-9 on the financial Richter scale, this event would be a 10+. And we are going to avoid this just how...? Business as usual? I don't see it, though apparently the current market does. So the US Fed has bought 1 1/4 trillion dollars, give or take, of “toxic” mortgage securities through their various alphabet soup of bailout programs ( http://online.wsj.com/article/SB125297162259710323.html?mod=rss_Today%27s_Most_Popular ). With the nationalization of Freddie Mac and Fannie Mae they now own an additional 4-5 trillion bucks in MBS, much of it toxic and much yet to blow up (see the coming option ARM problem here – http://www.dsnews.com/articles/experts-worry-option-arm-time-bomb-is-about-to-explode-2009-09-21 ).

So Edward, help my limited brain here – just how is it that this stuff on the government’s books (and I include the US Federal Reserve, which is government for all intents and purposes) is safer than when it was on the banks’ books? The government can print themselves out of a crisis, leading to a run on the dollar. They can raise taxes, leading to an even bigger flood of failed businesses and higher unemployment. Or they can appeal to China, et al, for an even higher level of spiraling debt, which seems at current levels to be utterly unsustainable.

I made the call many moons ago that this is going to destabilize the fiat floating currency pyramid from its shaky roots and cause a global unraveling. If Lehman was an 8-9 on the financial Richter scale, this event would be a 10+.

And we are going to avoid this just how…? Business as usual? I don’t see it, though apparently the current market does.

]]> By: Stevie b. http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-57153 Stevie b. Fri, 18 Sep 2009 17:07:00 +0000 http://www.creditwritedowns.com/2009/09/way-too-much-risk-in-the-equity-market.html#comment-57153 And David Rosenberg should have added that -never before- has communication been so instantaneous! I remember starting work in the late 60's at Merrill in London. Communication was by telex and the only similarity to today was the abbreviated terminology, used then to save money. News came in via one office printer. Any on-the-ball broker who contacted his clients to take prompt action looked very smart, as the news took days to disseminate. It may -have been- normal for this, that or the other in the old days, but nowadays you have to anticipate things even further before the event than ever, because 1 millisecond after the event is too late. Welcome to the new normal. And David Rosenberg should have added that -never before- has communication been so instantaneous! I remember starting work in the late 60′s at Merrill in London. Communication was by telex and the only similarity to today was the abbreviated terminology, used then to save money. News came in via one office printer. Any on-the-ball broker who contacted his clients to take prompt action looked very smart, as the news took days to disseminate.

It may -have been- normal for this, that or the other in the old days, but nowadays you have to anticipate things even further before the event than ever, because 1 millisecond after the event is too late. Welcome to the new normal.

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