I thought Kramer was saying that the fed should "open up the discount window" meaning, get inline with 1999 law, and lend money to INVESTMENT banks like Bear, rather than just COMMERCIAL banks like JPMorgan. The fed waited until Bear was insolvent.
Kramer called it.
Also, you may have called it too Jive... I read today investors are flocking to Treasury bills so much so that the return rate is almost nothing now... maybe the fed knew it would happen?
Thank you for the financial lesson. It would be just like the fed to change the rules and make the suckers from overseas who buy the treasuries bail out our own home debt with our foreign debt...but will the dollar survive the experiment? tjm
Another update: Someone had a fine premonition about Bear Stearns. The volume on March $30 put-options spiked up some 6000% on Tuesday, only ten trading days before expiry. The bet that BSC shares would drop over 50% within ten trading days cost 30 cents a share. Today, Friday, Bear shares dropped to exactly $30.00, and those puts were selling at $6.10. Somebody or bodies made a cool $31.9 million. Think they knew something?
the people buying the puts are probably the same big players that pulled billions out of bear and made them illiquid overnight. Bear was vulnerable to this as is Lehman bros and possibly wamu.
I think we will get past this with a Chase bank takeover of Bear and possibly a similar run on Lehman or wamu. These will amount to blips. Anyway with a weak balance sheet is vulnerable. Stay away from financials, I think everything else in the market is on sale.
This is very interesting stuff. Perhaps helpful, but not likely enough?
I just ran into a rumor that more will be in trouble next week, possibly five when they release 1st quarter numbers. The three mentioned were Goldman Sachs, Morgan Stanley and Lehman Brothers.
I would like to hope Bernanke can stop this thing, yet it appears it's just to huge to stop and the dollar will still crash along with everything else. Hello inflationary depression.
There are now reports that the Fed guaranteed $30 billion of subprime debt. Bear sold for a pitiful half a billion. They must be seriously underwater with other gambles. I wonder if they are among the small handful of traders who have the massive short positions in gold and silver.
The FED is buying AAA Mortgage backed securities.. it's silly to call these "junk", I'm assuming the FED knows more than we do.
everyone is fearful to buy good paper at the moment, it's irrational fear.
This action will promote lending and put a bottom on the dollar, at least temporarily. It also causes a lot of money to flow back into the stock market and really a positive across the board.
Update: The market was down over 2% again today. Bear Stearn shares lost about 38%, as the Fed moved to bail it out with magic money from nowhere. The Fed took that fine AAA paper as collateral. Bear Stearn is trading at around 35.
It looked like we were set to breakout today on the upside. Yep, Bear this week experienced big players pulling money out bear stearns. Most likely to head to safer brokerages like Goldman and Merrill or T-bills?.
I think what we need is Warren Buffett to come in and start picking off vulnerable assets like WAMU while fear is at extreme highs and confidence..gone. Also check out comments on your gold:dow video if you get a chance.
'S true my portfolio is overweight in gold and silver. But it didn't start out that way. :-) I didn't buy until early July. Gold was $654 per troy ounce, silver $12.60. Today they are $1001 and $20.65. BTW, the dollar index hit another all time low today. So tell me again what is "safe" about T-bills.
wow, so basically you transfer the debt into something you can control and then raise the price on the control only to sell it back again to reap a profit...? I know theres some other layers to this but i think thats it loosely righ?
The money changers are at their big games again and the only people who ever lose out are the people a crash is coming it's just a matter of when with oil at $110 and gold at $1000 it's not looking good stocks go up one day then drop the next but the prices of oil and gold still rise.
The people stuck by buying Tbills at high price. What the T-Bills are at like 2% how could anyone buy them at a high price. How could anyone sell them short when there is no where to go on the down side. I think its just another way to destroy the curency make profit and change to the AMERO dollar.
Warrior, I'm not sure I understand what you're saying, but I think you've got it backwards. It's tricky to think about. Low yields equates to high prices for the bills, and vice versa.
another great video.
I thought Kramer was saying that the fed should "open up the discount window" meaning, get inline with 1999 law, and lend money to INVESTMENT banks like Bear, rather than just COMMERCIAL banks like JPMorgan. The fed waited until Bear was insolvent.
Kramer called it.
Also, you may have called it too Jive... I read today investors are flocking to Treasury bills so much so that the return rate is almost nothing now... maybe the fed knew it would happen?
aquapurity 3 years ago
You know, I think you are right.
JiveDadson 3 years ago
I remember that Kramer episode...
Interesting...thank you. I thought I was the only person in the world that had a healthy distrust of the banking system...
A19Z89 4 years ago
Thank you for the financial lesson. It would be just like the fed to change the rules and make the suckers from overseas who buy the treasuries bail out our own home debt with our foreign debt...but will the dollar survive the experiment? tjm
mcgrawtim123 4 years ago
Interesting video, thank you. Glad I subscribed.
Do you listen to the Korelin Economics report by chance?
Phrozenbot 4 years ago
Another update: Someone had a fine premonition about Bear Stearns. The volume on March $30 put-options spiked up some 6000% on Tuesday, only ten trading days before expiry. The bet that BSC shares would drop over 50% within ten trading days cost 30 cents a share. Today, Friday, Bear shares dropped to exactly $30.00, and those puts were selling at $6.10. Somebody or bodies made a cool $31.9 million. Think they knew something?
JiveDadson 4 years ago
the people buying the puts are probably the same big players that pulled billions out of bear and made them illiquid overnight. Bear was vulnerable to this as is Lehman bros and possibly wamu.
I think we will get past this with a Chase bank takeover of Bear and possibly a similar run on Lehman or wamu. These will amount to blips. Anyway with a weak balance sheet is vulnerable. Stay away from financials, I think everything else in the market is on sale.
egrab 4 years ago
Don't leave out Merrill.
I haven't stayed away from financials. I've shorted them. :-)
JiveDadson 4 years ago
picked up GS, JPM, some XLF yesterday
Goldman + 15% today. JPM got Bear for free. Merrill is fine, Bear was the sacrificial lamb, I believe we capitulated monday.
egrab 4 years ago
Hi Jive,
This is very interesting stuff. Perhaps helpful, but not likely enough?
I just ran into a rumor that more will be in trouble next week, possibly five when they release 1st quarter numbers. The three mentioned were Goldman Sachs, Morgan Stanley and Lehman Brothers.
I would like to hope Bernanke can stop this thing, yet it appears it's just to huge to stop and the dollar will still crash along with everything else. Hello inflationary depression.
Can he put a bottom on it?
InTheSticks1881 4 years ago
Bear Stearns has sold out to JPMorgan for $2 a share! Someone do the math. Did the mystery buyers of those March-$30 puts just win $154 million?
The Fed brokered the deal, and guaranteed some undisclosed amount of subprime "AAA" mortgage paper.
The Fed also announced another 25 basis point cut at the discount window, only one day before a scheduled meeting.
Chicken Little was right.
JiveDadson 4 years ago
There are now reports that the Fed guaranteed $30 billion of subprime debt. Bear sold for a pitiful half a billion. They must be seriously underwater with other gambles. I wonder if they are among the small handful of traders who have the massive short positions in gold and silver.
JiveDadson 4 years ago
Very insightful...
weird14u 4 years ago
Thanks for the interesting info, so do you have any thoughts on how long it will be until the FED will start to increase interest rates? Thanks.
oloflindh 4 years ago
It could be years or decades. Japan went through a meltdown 18 years ago, and their rates are still near zero.
JiveDadson 4 years ago
The FED is buying AAA Mortgage backed securities.. it's silly to call these "junk", I'm assuming the FED knows more than we do.
everyone is fearful to buy good paper at the moment, it's irrational fear.
This action will promote lending and put a bottom on the dollar, at least temporarily. It also causes a lot of money to flow back into the stock market and really a positive across the board.
egrab 4 years ago
lol
Bernanke sees the Euro/Dollar go from 1.55 to 1.56 and says "See--the dollar is going up!"
EchelonMonitor 4 years ago
One thing we agree on, egrab. I too think the Fed knows what it's doing. We just have different ideas of what it's doing.
JiveDadson 4 years ago
Update: The market was down over 2% again today. Bear Stearn shares lost about 38%, as the Fed moved to bail it out with magic money from nowhere. The Fed took that fine AAA paper as collateral. Bear Stearn is trading at around 35.
JiveDadson 4 years ago
It looked like we were set to breakout today on the upside. Yep, Bear this week experienced big players pulling money out bear stearns. Most likely to head to safer brokerages like Goldman and Merrill or T-bills?.
I think what we need is Warren Buffett to come in and start picking off vulnerable assets like WAMU while fear is at extreme highs and confidence..gone. Also check out comments on your gold:dow video if you get a chance.
egrab 4 years ago
'S true my portfolio is overweight in gold and silver. But it didn't start out that way. :-) I didn't buy until early July. Gold was $654 per troy ounce, silver $12.60. Today they are $1001 and $20.65. BTW, the dollar index hit another all time low today. So tell me again what is "safe" about T-bills.
JiveDadson 4 years ago
Man, this is getting complex. I'd lie if I wasn't a bit confused. More charts? they help.
PoliticalOverload 4 years ago
wow, so basically you transfer the debt into something you can control and then raise the price on the control only to sell it back again to reap a profit...? I know theres some other layers to this but i think thats it loosely righ?
Sleeeeve24 4 years ago
Wow Jive thats alot to think about.
thanks. eh?
Winst0nOBoogie 4 years ago
Wow!! That was amazing! Note to self - do not buy T-Bills.
sLeepPastNooN 4 years ago
I dont get it but I want to
rg321123 4 years ago
The money changers are at their big games again and the only people who ever lose out are the people a crash is coming it's just a matter of when with oil at $110 and gold at $1000 it's not looking good stocks go up one day then drop the next but the prices of oil and gold still rise.
ddrmegamixer 4 years ago
The people stuck by buying Tbills at high price. What the T-Bills are at like 2% how could anyone buy them at a high price. How could anyone sell them short when there is no where to go on the down side. I think its just another way to destroy the curency make profit and change to the AMERO dollar.
pure1warrior 4 years ago
Warrior, I'm not sure I understand what you're saying, but I think you've got it backwards. It's tricky to think about. Low yields equates to high prices for the bills, and vice versa.
JiveDadson 4 years ago
A very complex subject handled particularly deftly, Jive. Well done.
Glad I'm a subscriber!
lastnymleft 4 years ago
Hey Jive why are you smearing pawn shops? At least pawns shops are financially sound. lol.
airborne373 4 years ago
Thanks Jive. I added this to my T-Financial playlist.
DoggedShirts 4 years ago
They are in trouble because of subprime mortgage backed securities.
JiveDadson 4 years ago
Oh God.....Your right its a setup.
At least we know thing from this the fed is going to lower interest rates. If only you could see my sense of disgust.
Jive good work, very insightfull.
61markt 4 years ago
Please comment and rate this video.
JiveDadson 4 years ago