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Have you all read this ?

This is now a national emergency.

Seven trillion dollars of wealth has been vaporized in US Stocks in the last seven days alone, with five of it since the passage of that ill-designed and foolhardy "bailout" bill.

The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.

Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.

It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.

Every action our government has taken thus far, including repealing mark-to-market requirements have made the situation worse by further destroying confidence.

continue and weep.......

http://market-ticker.denninger.net/archives/604-POTENTIAL-EC...

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Remember that money did not vaporize.

That money went out of "our" accounts into someone else's. In my opinion there is absolutely no excuse for lending to dry up. The banks have all the money. The CEOs have the money at home. They have syphoned it away from us and then received bailouts on top of that. It is criminal theft. The judges are allowing it to happen because part of the money is used for bribes. Every time we try to do something through the courts, it gets dismissed. Where is Obama's birth certificate? Obama and the DNC together have moved to dismiss this lawsuit. Where is Obama's accuser, Larry Sinclair (in jail on a bogus theft charge by an Obama relative who is a judge).

Does anyone remember what the DOW closed

at yesterday? I know it just opened, but what was the open?

we have the weekend to wonder about monday.

I think next week is gonna be a nightmare , I got lucky though today and got a contract to build a six unit apartment. The guy obviously didn't get the memo about the collapse of the world economy.
~Mikael / Peace, love, Light and unity ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !

meekandmild's picture

Dow

8,348.68 down -230.51 -2.69% 10/10/08
Previous Close 8,579.19 Volume 90.44 Mil 10/9/08
Open 8,568.67 52 Week High 14,280.00
Day's High 8,570.58 52 Week Low 8,579.19
Day's Low 7,882.51

I'm told the banks in Dubai are doing quite well these days !!!

Discover Costa Rica

Discover Costa Rica

I'm assuming that is sarcasm. Have you actually checked the

banks in Dubai? They are probably going to be nationalized. Dubai is a huge bubble and it is going to burst, whether it is now or six months from now is the only question.

Free and Brave
or Cradle to Grave
You can't have both

Free and Brave
or Cradle to Grave
You can't have both

That's because Cheney moved there

everywhere he goes he messes up the place.
~Mikael / Peace, love, Light and unity ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !

That wealth has NOT been "vaporized" ...some was "transferred"

...another portion has temporarily "disappeared" and a LOT of it was non-existent to begin with.

First you MUST understand that the "stock market" is a SECONDARY market... other than the rare IPO stock issue, it is the equivalent of a used car lot, a used car lot that sells cars put there "on consignment."

Let's say that someone had "stock" (or MF's etc) that a week ago were worth $100,000 (as priced according to the market's price on that given date -- or as economists call it "at the margin") -- and now it is worth $80,000.

A perceived loss of $20,000 in value. Where did that $20,000 go? Did it "vaporize" or did someone else "steal it" or ... well, did it ever exist in the first place?

The truth is that it existed ONLY in the mind and the "perceived value" of the owner (and that perceived value may have been very wrong, but regardless it was the "valid price/value" of that stock ONLY for that given day).

For the sake of simplicity, let us say that the owner of that stock actually purchased it 5 years ago for the price of $50,000. If he sells it all today and receives the $80,000 has he TRULY experienced a loss of $20,000? Or has he experienced a GAIN of $30,000 over what he paid? The $20K in this instance didn't vaporize... it never really existed.

Conversely, let us say it is a worse scenario (for our stock owner), one where he literally DID buy that stock for $100,000 just a week ago. Until he actually sells the stock, his loss is only a "perceived" loss -- in technical terms an "unrecognized loss." If he does in fact sell it for $80K, then he will have a recognized and actual loss of $20K. Where did the $20K go? Well, it went to the person he BOUGHT the stock from (and THAT person probably experienced a GAIN or LOSS from whatever HE paid for it when he bought it "used" from its prior owner, etc on back in time). So THAT money wasn't "vaporized" -- it was transferred.


To give another illustration... I bought a house 10 years ago for the price of $100,000 -- and two years ago my neighbor sold his house (nearly identical to mine) for $250,000. But yesterday, the neighbor on the other side of me sold his home (again nearly identical to mine) for only $150,000.

Tell me. Have I lost $100,000 in wealth? (That is the amount I potentially *could* have made had I sold my home approximately two years ago).

Or have I gained $50,000 in wealth? (The amount the market most recently seems to be willing to pay for houses like mine).

Or has NEITHER actually occurred (yet)?

Since I need and want a place to live -- had I sold my house two years ago for $250K... I probably would have wanted to buy another (similar) nearby house at the same time... and it very likely would have cost me $250K. Likewise if I sell my home now, I will only get $150K for it... but I can also probably buy another (similar) home for the same $150K.

If I wait and sell my home 5 years from now, who knows what the "dollar denominated" price will be? It could be as much as $500K (though I doubt it) -- or it might be as low as $50K (though I likewise doubt that). But provided I have maintained the house in good condition, AND the economy in the area is good, AND that I choose to stay living in this area, then whatever price my house fetches at that time, should be sufficient to buy me a similar house then as well (whether the price be $500K or $50K).

OTHER things -- mainly the supply and demand -- will change the nominal price that I get (if there are lots of buyers and few homes for sale, the price will be higher, if the opposite then the price will be lower) -- but as long as I don't dilly-dally around between the sale of my home and the purchase of another, I should be able to "swap" with minimal loss.



Sure, you say... but THAT is a house... "stocks" are different. Well yes, each stock is representative of the "value" that owning a portion of a given company is perceived as having. But if I own a stock that has decreased in value because of a GENERAL MARKET DECLINE -- even 50% in value -- and I decide to sell it and then buy a different stock (one that *I* think will have higher value) but which likewise may have decreased in price, then I will probably be making a fairly even swap (with the difference in the number of shares simply reflecting the different prices and perceived values that people have placed on them at the time that I make the change).

Now if someone SOLD a quantity of a stock or mutual fund back at the peak -- let's say VFINX (Vanguard's S&P 500 Index MF) when it was at $124 per share back in February... and then "sat on the cash" for the interim, only to buy it back today at $90 per share, then THAT person will have neither gained nor lost any "money" -- but rather will have increased the number of shares (from say 1000 to 1378). The owners who bought those shares at $124, and then later sold them (for simplicity let us say at the later $90 per share price) will have "lost" a significant portion of money. But the money didn't "vanish" it went to the people who SOLD at the HIGH and bought at the LOW.

The point is that when transactions are completed and actual sales of stock are made, then it is a ZERO SUM game (or very close to it, with the brokers taking a minor "cut" in the form of fees from each of those transactions); and UNTIL THE SALE actually happens, then all gains OR losses are purely "fictional" or "ephemeral" or "perceptual" or "unrecognized."

The stock market has (essentially) the same NUMBER of stocks that it had yesterday. The companies that those stocks represent a minor % of ownership in are still the same companies they were yesterday -- factories, machinery, office buildings, etc. NONE of these things "disappeared" -- only the perceived VALUE of the potential earning capacity that the company can use them to create has changed; and it could change dramatically again (up or down) tomorrow. Indeed, if the market tells us anything, it is that the perceived value WILL change tomorrow... it will change continuously; the change may be major or it may be minor, but it will change.

And even if one of those companies declares bankruptcy (cf Lehman) the actual physical "assets" that the company most likely didn't change -- they may even be sold for pennies on the dollar -- and you as a stockholder MAY then suffer almost a 100% loss; but the company that BUYS those assets for "pennies" will GAIN that value when they buy the asset. Bar a meteor strike that destroys a factory... nothing was "vaporized" except the fictional values that people put on them.


IT IS CRITICAL that people understand this. The Dow index stocks were never actually worth 14,000+ a year ago -- people just THOUGHT they were (and it was based on "inflated" expectations -- based on an "inflated" supply of fictitious easy-credit money); and the Dow may or may not actually be worth 8,500+ -- that is just what people THOUGHT (and "bet") that they were worth at the NYSE at 3PM ET on 10/9/2008 (based on lower "deflated" expectations and a much LOWER supply of easy-credit money).

The only thing that got temporarily "vaporized" was the puffball (granted a multi-year ever-growing puffball) of easy-credit money.

CASH -- if you have it handy -- is now worth a LOT MORE (in terms of stocks) than it was a year ago. RELATIVE VALUES have changed.

In short, there is NO NATIONAL EMERGENCY in the stock market decline (in and of itself). There is only an imaginary one... it is a "Phantom Menace" that doesn't really exist! (And if you lose your head and "panic" like a bunch of sheep... well, you're doing exactly what is expected of sheep! And all other panicky herd animals that are ripe for the slaughter.)

The way that this can become an "emergency" is if/when people begin to panic. Yes, life will change (did you really expect it to stay the same... it ALWAYS changes -- jobs I have held, companies I have owned or worked for have been created and disappeared: even without stock market crashes!) Yes, "Freebies" and easy credit "buy now--pay later" will disappear. People who know how to SAVE money and be frugal will PROSPER. People who do solid work and/or have skills and knowledge will still have value. And never forget that LIFE ITSELF is NOT the "used car consignment lot" that is the stock market (unless you work[ed] on Wall Street).

"if/when people begin to panic"

By controlling the media, they essentially control if and when people panic, also. People were protesting but got no coverage, then when they wanted a good panic, they sent Jim Cramer out to say 'sell everything." They air that, then use their overwhelming force in the markets to get the ball rolling...
I agree the panic is not natural, it is part of their creation. However, I would have to disagree that is it imaginary, indeed it is very real.

Truth exists, and it deserves to be cherished.

All the signs point to oh hell yeah it's real , lets see

what today brings.

~Mikael / Peace, love, Light and unity ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Stop the NWO....It's just illumi..Naughty !

oh sh*t.

www.baldwin08.com - Chuck Baldwin or New World Order!