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  • #11,201
  • Nov 4, 2010 9:04am Nov 4, 2010 9:04am
Quoting 4xAddict
How is Barney Frank back in?
Oh come on guys -- that's easy: He represents a liberal district in a liberal state (not to mention in a liberal part of the country). Just because YOU don't agree with Barney Frank's politics doesn't mean there aren't plenty of liberals who think he's great. I don't have a problem with the guy myself and support alot of his policies. But I've sworn off politics in this thread, so i'll leave it at that...

I did want to share with you an article I found fascinating:
http://nihoncassandra.blogspot.com/2.../sinkhole.html

I think this is spot on -- $600bn?? Drop in the bucket compared to asset values and as the author says: Like throwing a pebble into a well trying to plug up a hole...
  • #11,202
  • Nov 4, 2010 9:37am Nov 4, 2010 9:37am
"I don't have a problem with the guy myself and support alot of his policies. "

You support the policies of the man most responsible for the housing crash?

Not the only man responsible, but definetly the man who is the #1 culprit.
  • #11,203
  • Nov 4, 2010 10:30am Nov 4, 2010 10:30am
It appears that we have finally made up our minds in the markets again, I really thought a pullback was going to be necessary, but I was wrong....That is why it is always important to react, not anticipate.

Almost all of my "bad" losses over the years have been found trying to anticipate what the market will do next. This last break down of the USD is a reminder of why trading like that is dangerous......
  • #11,204
  • Nov 4, 2010 10:58am Nov 4, 2010 10:58am
Quoting unlv_tj
You support the policies of the man most responsible for the housing crash?

Not the only man responsible, but definetly the man who is the #1 culprit.
I think you belie your ignorance of what actually caused the financial crisis by making the above statements. Barney Frank while certainly not blameless with respect to financial regulation did not "cause" the housing crash. If you want villains, you should look further back at the Gramm-Leach-Bliley act that effectively killed glass-stegal. You should look at republicans who blocked Brooksely Borne from regulating derivatives. Look at things like Basel capital requirements, securitization growth during the boom years, zero-regulation on non-standard mortgages, and on and on.

Are you one of those people that blames Fannie and Freddie for all the failures of our financial system? I think what alot of people fail to realize is that during the housing boom, Fan/Fred's share of mortgage finance actually dropped DRAMATICALLY because private label RMBS (which was completely unregulated by the then Republican congress) took off and underwrote some of the most egregious excesses in financial history. Indeed, Frank actually proposed legislation to add additional regulation on Fannie & Freddie back in 2005 which passed the house but never got taken up by the Senate (and surely would have been vetoed by GWB).

At the end of the day, Frank is one member in a 435-person chamber. Any legislation that comes out of that chamber has be approved by the Senate (and typically anything that hits the Senate has to get 60-senators to support it in order for it to come to a vote due to filibuster rules). So i ask you, what should Barney have done differently? Why is he responsible and not any of his 434 colleagues or any of the 100 members of the Senate?


And as for my original comment that "I support a lot of his policies" -- yes, I stand by that comment: strong support for all civil liberties, online gambling regulation, gay rights, abortion rights, cutting spending (including military spending), financial reform (even though that bill was wayyy too watered down for my liking), health care reform, etc. I'm sure there are areas where we differ -- I probably would take a hatchet to social security whereas he would probably not...but yeah, we line up pretty well philosophically speaking...

Your resident liberal,

InfinitySL
  • #11,205
  • Nov 4, 2010 12:38pm Nov 4, 2010 12:38pm
Quoting InfinitySL
I think you belie your ignorance of what actually caused the financial crisis by making the above statements. Barney Frank while certainly not blameless with respect to financial regulation did not "cause" the housing crash. ........ I probably would take a hatchet to social security whereas he would probably not...but yeah, we line up pretty well philosophically speaking...

Your resident liberal,

InfinitySL
I agree with you that BF is not all bad, I too am very liberal in my underlying beliefs. My take/quip on his re-election was not based on his being responsible for this mess but rather a disbelief that with so many existing congress members being taken to the gallows in favour of tea partiers etc, that someone of his profile who has stuck his neck out did not become a victim of the broad-brush tea party rumblings that "they all have to go".

Many things contributed to this including but not limited to:

The US Gov's willingness to let the market believe that they essentially were underwriting the loans issue by Fannie/Freddie
[How any country can expect to provide fixed term finance for housing over such long periods really surprises me. Coming from Australia where you cannot get a loan fixed for more than 7 years (an at much high fees), one can see how flat line longer term borrowing costs contributes to bubbles forming.]

The capitalist model.
It does not allow for everyone to have the big house, the picket fence etc, there's just no room up the pyramid. The average punter is unfortunately only just realizing that with the rapid desire of the US to promote globalisation and freetrade the global social dynamic has changed.

Before globalisation really taking off the 1st world countries sat at the top of the global wealth pyramid enjoying high living standards, enjoying colonial royalties and/or war time debt repayments whilst their people remained protected by tariffs and borders. With the removal of these the wealth pyramid as classified previously by nationality is now more adequately classified by personal productivity/education levels on an individual basis. Essentially the "middle class" is now categorised with the rest of the global middle class - in China this means those earning USD10k+ per year. They have joined a much larger pool and therefore had their wealth, influence and social standing diluted

Whilst middle class people have to continue to compete with the middle class educated peoples of the rest of the globe living standards are going to continue to decline in western countries.

Speed and lack of oversight in globalisation and free trade policy.
Potentially the biggest mistake congress has made is to allow large lobby groups to sell US industry out from under the people without asking greater values in return from trade partners. I have no problem with other countries emerging and developing however the US Gov has not been protecting its people and the horse has now bolted. How they can allow trade with China in the current one sided form is beyond me. How US citizens are not in the streets about this is beyond me.

The can as you pointed out has been getting kicked down the road for decades. Just when someone will finally stand up and enforce austerity measures, make the US experience the slowdown that it has to have and turn this thing around I do not know. However until this happens the Gov continues to dig the hole deeper.

Generational divide.
In past generations people/parents have made great sacrifices in order to keep their country's, their children's future bright and until someone stands up and says yes I will shoulder this burden things will continue to decay. The US is still the wealthiest, strongest and most powerful country on the planet. When will the citizens of the US take a stand and defend this rather than crying into their liter'o'colas and watching the shit sitcom rubbish that flows from the TV?

Taking responsibility is fast becoming a generational divide. There are not enough of us younger lot to support the boomers into a cushy retirement as there aren't enough of us to pay rent in their investment properties or to buy the krispy kremes or big macs from their blue chip stock holdings. They are still the largest part of the voter base but throw their hands in the air with the selfish brat attitude they have always exuded.

Keeping congress terms fixed and short will ensure that the silver tops eventually gtfo and let decisions start getting made by those who are going to have to shoulder the burden of fixing this thing. Allowing people seats in the senate for such long periods to me seems one of the primary contributors to the rot within facilitating the slow erosion of good will through lobbyist $$.

None of these are solutions but rather just a number of factors that are currently all coming home to roost at once. The road to recovery is not just about "creating jobs" like a lot of politicians would have us believe. There needs to be a wider reaching review of how we live, period.
  • #11,206
  • Nov 4, 2010 1:18pm Nov 4, 2010 1:18pm
Quoting 4xAddict
[size=1] The US Gov's willingness to let the market believe that they essentially were underwriting the loans issue by Fannie/Freddie was a major contributor.
[How any country can expect to provide fixed term finance for housing over such long periods really surprises me. Coming from Australia where you cannot get a loan fixed for more than 7 years (an at much high fees), one can see how flat line longer term borrowing costs contributes to bubbles forming.]

The capitalist model.
It does not allow for everyone to have the big house,...
Overall -- Well Said...

A few points:
1) Well, he (Barney) has been elected for like 15-terms and this election was his closest EVER (he only won 55%-45 i believe).

2) Term limits are a great idea, but it would never pass the senate

3) I don't buy the Fannie/Freddie argument - There are plenty of investors who desire/need fixed rate investments and mortgages are great investments for insurance companies, pension funds, fixed income funds, etc. Having Fannie/Freddie makes them homogeneous, liquid, and tradeable. As I said, subprime, Alt-A, Neg-AM mortgages are not what Fannie/Freddie did

4) Your free trade arguments are quite wise but try espousing them and you'll be called a protectionist! (and that just sounds bad, right?) Along those lines, I'd encourage you to read the latest missive by Paul Tudor Jones (I tried uploading it here, but it's 3.8mb and thus too big for forexfactorty -- I could email it to you if you're interested) - It's quite good and speaks to many of the issues you raise.

That's how I'll leave it for now -- I don't want to hijack the thread anymore than I already have...

Oh and PS -- Without the tea party, the Republicans would have probably won the Senate too (you can thank Christine O'Donnell, Sharon Engel, and a couple others for their help in derailing what should have been some easier seats to pick up).
  • #11,207
  • Nov 4, 2010 2:42pm Nov 4, 2010 2:42pm
Quoting InfinitySL
Overall -- Well Said...

A few points:
1)...
Lol, never pass the senate indeed! [email protected] for the PTJ article.

Don't get me started on the protectionist rant. It's all part of the manufactured "political correctness" sphere that has craftily and successfully managed to publicly shame and silence anyone who questions mainstream, pop bullshit opinion.

Cheers.
  • #11,208
  • Nov 4, 2010 3:18pm Nov 4, 2010 3:18pm
Quoting InfinitySL
Overall -- Well Said...

A few points:
1) Well, he (Barney) has been elected for like 15-terms and this election was his closest EVER (he only won 55%-45 i believe).

2) Term limits are a great idea, but it would never pass the senate

3) I don't buy the Fannie/Freddie argument - There are plenty of investors who desire/need fixed rate investments and mortgages are great investments for insurance companies, pension funds, fixed income funds, etc. Having Fannie/Freddie makes them homogeneous, liquid, and tradeable. As I said, subprime,...
Might be my last post here but since you mentioned it.....The are plenty of RINOS in the GOP imho so let the chips fall where they may. I'm looking for 2012 if the world doesn't end and if it does-good riddens. lol
  • #11,209
  • Nov 4, 2010 3:52pm Nov 4, 2010 3:52pm
Quoting clockwork71
It appears that we have finally made up our minds in the markets again, I really thought a pullback was going to be necessary, but I was wrong....That is why it is always important to react, not anticipate.

Almost all of my "bad" losses over the years have been found trying to anticipate what the market will do next. This last break down of the USD is a reminder of why trading like that is dangerous......
I had reasons to get long both EU and GU early this week, and they're both painting fairly distant targets (500 and 700 pips respectively), and I'm trying to make sense of what this means for my EG short.

One thing to consider, is that all this upside could be wiped out by tomorrow's NFP.

Overall, I'm not sold on these rallies unless the weekly closes green.
  • #11,210
  • Nov 4, 2010 7:22pm Nov 4, 2010 7:22pm


Quoting Low
I had reasons to get long both EU and GU early this week, and they're both painting fairly distant targets (500 and 700 pips respectively), and I'm trying to make sense of what this means for my EG short.

One thing to consider, is that all this upside could be wiped out by tomorrow's NFP.

Overall, I'm not sold on these rallies unless the weekly closes green.
  • #11,211
  • Nov 4, 2010 8:37pm Nov 4, 2010 8:37pm
As usual, I am issuing my warning about trading the Non-Farm Payroll tomorrow. It's normally just not worth it.

However, there is always the possibility that if there is a sudden pro-USD move, it might simply be a selling opportunity once the dust settles. However, I think so much news has been absorbed this week, nobody gives a toss about NFP.

My prediction: Tomorrow will be a wash out, more than likely.
  • #11,212
  • Nov 5, 2010 7:15am Nov 5, 2010 7:15am
Quoting Low
I had reasons to get long both EU and GU early this week, and they're both painting fairly distant targets (500 and 700 pips respectively), and I'm trying to make sense of what this means for my EG short.

One thing to consider, is that all this upside could be wiped out by tomorrow's NFP.

Overall, I'm not sold on these rallies unless the weekly closes green.
Low,

Don't worry about that short - I saw this in Moneyweek today..

Why is the eurozone suddenly less attractive?

The yields on Irish debt - and other peripheral countries - have been rising sharply over the past week or so.

The yield on Greek ten-year bonds is above 11%. Irish yields are now at a euro-era high of 7.7%, despite the tough talking at yesterday's budget statement. Portugal is sitting on 6.6%.

And just to make everyone that little more jittery, Russia's sovereign wealth funds have revealed that they are no longer allowed to invest in Ireland or Spain. Meanwhile, the Norwegian sovereign wealth fund - the world's second-largest, managing $520bn (gosh, that's almost as much as QE2) - has also said that Spanish debt is becoming less attractive.

What's the problem here? We all knew the eurozone periphery was dodgy. But things had settled after the Greek crisis broke earlier this year. Between them, the eurozone, the International Monetary Fund and the European Central Bank put in place the European Stabilisation Mechanism - a €750bn bail-out fund. So why the sudden aversion now?

In a word - Germany. Understandably, German taxpayers are a bit peeved at the idea that they might have to write a blank cheque to bail out any country that decides to spend itself into a hole in the future. As German chancellor Angela Merkel put it: "We must keep in mind the feelings of our people, who have a justified desire to see that private investors are also on the hook, and not just taxpayers".

And last week, she put her foot down. In return for agreeing to make the eurozone bail-out fund permanent from 2013, she pushed through a commitment to a "crisis resolution mechanism". What worries investors is that this will include some method by which bondholders will have to share the pain with taxpayers if European countries need to be bailed out in future.

Of course, there's nothing wrong with this in principle. It's ridiculous that Greece was ever assumed to be as creditworthy as Germany in the first place. So it's a good idea to make sure that investors realise that if they lend their money without considering who they're giving it to, they'll end up paying the consequences.

A "toxic" sign has been put on the peripheral eurozone

The problem - as Ambrose Evans Pritchard pointed out earlier this week in The Telegraph - is the timing. If they'd thought of this when they set up European Monetary Union in the first place, it might have done a lot of good.

But doing it now, just as investors are already panicky, is equivalent to putting a big "toxic" sign over the peripheral countries. As long as investors could assume that these countries would be bailed out, there was always going to be someone desperate enough to have their head turned by a tasty-looking yield.

Not now. As Nigel Rendell of RBC Capital Markets put it, "if you take the view that the peripheral economies are more likely to default or face a debt restructuring, why would you want to risk investing in their bonds?"

Ireland could be at the centre of a new eurozone crisis

The good news is that Ireland doesn't have to return to the markets to raise more money until 2011. The bad news is that this just looks like a case of delaying the pain. Stuart Thomson of Ignis Asset Management tells Bloomberg: "We have little doubt that Ireland's fiscal position is unsustainable. At some point in the next two years, you will find they will be forced to borrow from the European Financial Stability Facility (EFSF)."

The EFSF is the €440bn centrepiece of the European bail-out package. Trouble is, as FT Alphaville points out, it's not actually worth €440bn. It's a long story, but due to the way the EFSF is built, the funds it has available are closer to around €250bn. And it'll be expensive to borrow from. More to the point, it's untested. As Tracy Alloway put it on FT Alphaville recently, "the potential for an EFSF request to trigger panic and contagion is there."

What does all of this mean for investors? The potential for another Greek-style crisis - this time centred on Ireland - is very real. For now the euro is flying high, based on the strength of the German economy and the Fed's ongoing attempts to trash the dollar.

But as Ambrose Evans-Pritchard points out in The Telegraph: "Any need for an Irish bail-out would put Portugal in instant jeopardy, as is already obvious from the latest surge in Portuguese yields." And with two bail-outs on the cards, the next domino could be Spain. "The EU bail-out fund is a bluff that cannot safely be called."

The euro might survive in the long run. But it'll suffer some touch and go moments along the way. And with the Fed damaging the dollar, it's just possible that sterling will be one of the better currencies to be invested in over the coming months.
  • #11,213
  • Nov 5, 2010 9:48am Nov 5, 2010 9:48am
I placed a trade based upon the 1.40 holding after the NFP this morning. I am posting this chart, and thinking about taking the boys to see "Megamind" today, looks like a good one.

Anyway - I am long the EUR.....for a while at least.

Still short the EUR against the GBP. Perhaps this is all about the GBP, who knows?
Attached Image (click to enlarge)
Click to Enlarge Name: eur.png Size: 26 KB
  • #11,214
  • Nov 5, 2010 9:50am Nov 5, 2010 9:50am
Quoting stewrigh
Low,

Don't worry about that short - I saw this in Moneyweek today..

Why is the eurozone suddenly less attractive?

The yields on Irish debt - and other peripheral countries - have been rising sharply over the past week or so.

The yield on Greek ten-year bonds is above 11%. Irish yields are now at a euro-era high of 7.7%, despite the tough talking at yesterday's budget statement. Portugal[font=Verdana] is sitting on 6.6%.

And just to make everyone that little more jittery,...

Thanks for posting this! Great info.
  • #11,215
  • Nov 5, 2010 9:58am Nov 5, 2010 9:58am
Chris -- Saw your blog post (http://www.thetraderguy.com/the-fed-...the-us-public/).

One clarification I would add: I think Ben hasn't declared war on the US Public -- I think he has declared war on SAVERS. Those who hold cash are getting pummeled by his policies. Retirees living on fixed incomes are getting spanked. Indeed, anyone who was responsible (didn't take on more debt than they could afford, put money in the bank and didn't gamble it in the stock market, etc) is getting hurt by his policies.

Anyone with mountains of debt LOVES his policies. If he can debase the currency, people can pay off their old debts with dollars worth half as much. Your prescriptions are correct: Commodities go up, Dollar goes lower (but only against certain currencies) and risk assets in general go up (at least for a while).

Take a look at Gold, Silver, Cotton, Sugar, etc -- all hitting ALL TIME HIGHS. And those of us who are cautious (including my idiot self liking Utilities for God sakes) don't benefit from his policies.

I am liking the GBP as well (as far as I can tell they DIDN'T institute more QE, their economy grew at a 3+% annual rate and they are reducing Gov't spending). But i'm across the pond, I'm sure our UK brethren have more insight than me. As for the EUR I don't love it (fundamentally) but I prefer not to fight the trend...
  • #11,216
  • Nov 5, 2010 12:36pm Nov 5, 2010 12:36pm
Quoting InfinitySL
Chris -- Saw your blog post (http://www.thetraderguy.com/the-fed-...the-us-public/).

One clarification I would add:...
UK won't look so pretty in 4-6 month time once the impact of the wide reaching gov spending cuts hits retail consumption.

2.5M UK resis are employed by the National Health Service (NHS). They are cutting 25% of gov positions country wide. That's at least 500K jobs gone in the NHS alone. It won't be pretty here however it's a battle of the lepers at the moment and the one with the most remaining limbs wins right? If the EU goes t1ts up in a ditch then the UK may just be the one with the one leg left to stand on.

With inflation running as it is here for food though retail sales will likely bend lower earlier. Things like 2L orange juice now the same price but a 1.7L carton, coffee containers 20% smaller but 5-6% higher prices etc. It's here already people just haven't realised it.

The SAVERS mate are the only ones left with anything and are the only purse in the tax base left to raid. It's the old people my parent's age who have done the right thing and saved paid their taxes and worked 30 years to pay off a mortgage that are getting raped.

Would at least be polite if they issued financial crisis war bonds and asked them all to invest for the benefits of the country rather than flat out theft.

It's bullsh1t!!!!

Glad we share the same view on this, it confirms that I am not going insane!
  • #11,217
  • Nov 5, 2010 1:32pm Nov 5, 2010 1:32pm
A political chain email I liked, and copied into my thread in case anybody agrees with me.

I never thought I'd be one of those people.

http://www.forexfactory.com/showpost...0&postcount=30
  • #11,218
  • Nov 5, 2010 2:02pm Nov 5, 2010 2:02pm
@infifnty...


These troubles I've been having with Oanda are getting stupid, you got any suggestions?

I'll be sending them yet another email stating that I've done all the basic fixes and my platforms are still completely unreliable.

I'm at a loss. I like Oanda. But what's the point if you can't trade your account?
  • #11,219
  • Nov 5, 2010 2:08pm Nov 5, 2010 2:08pm
Quoting InfinitySL
Chris -- Saw your blog post (http://www.thetraderguy.com/the-fed-...the-us-public/).

One clarification I would add:...
I agree, but I would also add anyone who eventually wants to buy anything are in trouble as well. While the debt you already have will shrink, the costs going forward is going to be the real issue as far as I can tell. I am talking about the common day-to-day things, like gas and milk.

It will take money out of the hands of the people, but that's nothing new.
  • #11,220
  • Nov 5, 2010 2:14pm Nov 5, 2010 2:14pm
Quoting Low

Overall, I'm not sold on these rallies unless the weekly closes green.
All stops at BE. Hoping we just need to test and see if R became S... how lame.
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