Gumby's Account Talk

[Gumby]

I am still 100% I and riding the wave up. How much longer will it last?

I think James is right on track...
http://www.tsptalk.com/mb/showthread.php?t=5131

 

[pattidiva1]

Gumby...
I'm a silent observer and read the MB daily. I, too, am 100% I and riding it up. Yes it would be nice to know how much longer it will last. I can only IFT to G for the remainder of the month.

 

[Gumby]

Gumby...
I'm a silent observer and read the MB daily. I, too, am 100% I and riding it up. Yes it would be nice to know how much longer it will last. I can only IFT to G for the remainder of the month.

I am out of IFT's also......or I would have went into C fund a few days ago. I am at least trying to learn how to be a short term buy and holder.
I believe as long as oil price continues to decline we are in for a good upwave with a few zigs and zags in between.
Good Luck.

 

[Birchtree]

Oil closes down $3.79 to $124.64. We'll see if we can get a good last hour rally good enough to knock off some socks.

 

[Gumby]

Oil closes down $3.79 to $124.64. We'll see if we can get a good last hour rally good enough to knock off some socks.

Looks like profit taking instead....oh well...there is always another day.

 

[Gumby]

BLANK CHECK TO FANNIE AND FREDDIE
Could it be the largest government givaway in history?
Is the new government way to privatize gains and socialize losses?

http://money.cnn.com/2008/07/23/news/economy/housing_bill/index.htm?postversion=2008072321


"The bill allows Treasury over the next 18 months to offer Fannie and Freddie an unlimited line of credit and the authority to buy stock in the companies if necessary"

Unlimited line of credit? That sounds like more than 25 Billion to me.
Lets see....Fannie and Freddie guarantee the purchase and trade of mortgages and own or back $5.2 trillion in mortgages. If I do my math right....that is 5,200 Billion dollars. A 1% default rate is 52 Billion.... a 10% default rate is 520 billion.....20% default is 1.04 Trillion..BUT

"The Congressional Budget Office on Tuesday estimated the potential cost of a rescue could be $25 billion. CBO said there is probably a better than 50% chance that Treasury would not need to step in. It also said there is a 5% chance that Freddie and Fannie's losses would cost the government $100 billion."

This is making up to be the biggest givaway in history. I predict that the CBO is off by a factor of 10 and this will make the Savings and Loan scandal look like small potatoes. Just think, the government is still allowing these companies to keep the same CEO and board of directors that got themselves in the mess in the first place and retain their multi-million dollar salaries.


"Permanently increase "conforming loan" limits. The bill would permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,000 from $417,000.
The FHA maximum loan limits for high-cost areas would also increase to $625,000. Higher loan limits will make it easier for borrowers to get mortgages, because they're more likely to be traded if they are considered conforming. "

Lets see....what got us into this mess to begin with is loans for more than the value of the homes....and the goverment is now allowing a permanent increase of 50% in the loan amount. This appears to perpetuate the mess by propping up the value of homes instead of letting the home price fall back to reality. We are all going to be paying for this mess for years and years to come. I can't help but think how many millions banks and mortgage companies made by pushing 0% down loans to people who could not afford them and then the banks/mortgage companies sold the worthless paper to Fannie and Freedie and kept their premium. Looks like outright fraud to me.

 

[Steadygain]

BLANK CHECK TO FANNIE AND FREDDIE

What amazes me the most is I have been one of the most outspoken opponents of the FED's actions since 10/07 and I'm sure my previous posts would verify that.

Only now am I convinced they actually did "the right thing". Had they brought out all the facts at once and not done the bailing and rate cuts as they did - and exposed the severity of problems in gradual stages - saving Fannie and Freddie for last: THIS COUNTRY WOULD HAVE SUNK INTO THE GREATEST DEPRESSION EVER - EVEN SURPASSING "THE GREAT DEPRESSION".

So it's rare you'd ever hear talk like this - and take the stand I take - but now (more than ever) I am convinced the FED managed to avoid a far more serious set back that all the ones "really in the know" expected.

Bottom line: Our Economy will struggle a little while longer but we are in a far better position than we would have been otherwise.

 

[fedgolfer]

BLANK CHECK TO FANNIE AND FREDDIE

I guess today will tell if the markets play this as buy the rumor, sell the news. Personally, I'd rather see our gov't spend our money on stabilizing the financial and housing markets then spending it elsewhere. Everyone acts all free market capitalism until they get pressured in the panic dive and they call for gov't rescue... then, they say tisk-tisk when the bill/bailout happens. Gimmie a break... we'd be 300 points lower on the s&P since Hank/Ben's appearence on the Hill.

 

[luv2read]

I take the opposite view. Congress is having to step in with a rescue package because the FED's actions failed to stabilize the financial industry. No BSC or Freddie and Fannie bailouts and raising interest rates instead of cuts would have stabilized the dollar and forced the financials to step up to the plate, declare all their losses and capitalize themselves. The strong would have survived and bought up the weak, and it would all be behind us by September; instead we have this slow decline. But the BSC bailout assured them that the FED wasn't going to let any of them fail and allowed them to speculate in the oil market instead of cleaning up their acts. Lowering interest rates was intended to help the borrowers but it didn't, rates are as high as they were before all the cuts; so now Congress has to step in with a housing bill to "rescue" the GSE's and homeowners. And we haven't seen all the CDO unwinding yet, there's more to come. I think it will be February next year before all the writedowns are finally out there - after the inauguration.

 

[Gumby]

What amazes me the most is I have been one of the most outspoken opponents of the FED's actions since 10/07 and I'm sure my previous posts would verify that.

Only now am I convinced they actually did "the right thing". Had they brought out all the facts at once and not done the bailing and rate cuts as they did - and exposed the severity of problems in gradual stages - saving Fannie and Freddie for last: THIS COUNTRY WOULD HAVE SUNK INTO THE GREATEST DEPRESSION EVER - EVEN SURPASSING "THE GREAT DEPRESSION".

So it's rare you'd ever hear talk like this - and take the stand I take - but now (more than ever) I am convinced the FED managed to avoid a far more serious set back than all the ones "really in the know" expected.

Bottom line: Our Economy will struggle a little while longer but we are in a far better position than we would have been otherwise.

Steady,

I think all the FED has done is to prolong the pain and suffering while letting the "fat cats" reap the rewards. The only way the government should help out Fannie and Freddie is to dismantle their board of directors prior to injecting any "guarentee" money. It has been over 20 years since the Savings and Loan scandal and the government has not learned from it. The bailout of Fannie and Freddie will just help the rich just keep getting richer, especially foreign investors that have bought the worthless paper from Fannie and Freddie....and there is tons of it.

The FED action has devalued the dollar and increased the price of energy and has caused inflation to soar. Mortgage rates were acutually lower for homeowners before the FED rate cuts. What has the FED done for the average Joe except for making food and energy more expensive? Who is getting the benefit of their actions?

 

[luv2read]

Gumby you read my mind!

 

[fedgolfer]

if the FEd/gov't didn't come in on those pivot points, we would have fallen into a financial market collapse due to no market confidence. Stabilization is 99% psychological, so trying to attach tax dollar spending arguements takes the focus off the big picture. if they didn't step in there, the indices would have continued falling, housing downturn would have been more parabolic to the downside, more companies would have failed, we would be in a depression right now. They are buying time and confidence with your tax dollars and it may sound like a lot, but its chump change considering where we'd be without it.

 

[Gumby]

I take the opposite view. Congress is having to step in with a rescue package because the FED's actions failed to stabilize the financial industry. No BSC or Freddie and Fannie bailouts and raising interest rates instead of cuts would have stabilized the dollar and forced the financials to step up to the plate, declare all their losses and capitalize themselves. The strong would have survived and bought up the weak, and it would all be behind us by September; instead we have this slow decline. But the BSC bailout assured them that the FED wasn't going to let any of them fail and allowed them to speculate in the oil market instead of cleaning up their acts. Lowering interest rates was intended to help the borrowers but it didn't, rates are as high as they were before all the cuts; so now Congress has to step in with a housing bill to "rescue" the GSE's and homeowners. And we haven't seen all the CDO unwinding yet, there's more to come. I think it will be February next year before all the writedowns are finally out there - after the inauguration.

Luv,

You are 100% correct! Nothing substantial will happen until after the inauguration.

 

[luv2read]

if the FEd/gov't didn't come in on those pivot points, we would have fallen into a financial market collapse due to no market confidence. Stabilization is 99% psychological,....

I think we saw that when the market dropped drastically in one day and the Dow hit 11,000. It would have dropped further without SEC stepping in to protect financials from shorts - it's been on the upswing since then. Oil specs have retreated as well under the threat of regulation.

 

[fedgolfer]

Luv,

You are 100% correct!

I respect your opinions. but to TSP investors you're bascially saying to fight the Fed which is not wise. not one of these Fed/gov't bailouts on capitulation candlesticks was meant to be a one-and-done fix... every recession usually needs several bandaids, this one may need a few more. But to say the Fed & Hank are wrong by doing this is almost saying bet against the Fed/gov't and adds to panic. Don't drink the Don Harrold cool-aid as gospel.

 

[luv2read]

I respect your opinions. but to TSP investors you're bascially saying to fight the Fed which is not wise. not one of these Fed/gov't bailouts on capitulation candlesticks was meant to be a one-and-done fix... every recession usually several bandaids, this one may need a few more. But to say the Fed is wrong by doing this is almost saying bet against the Fed/gov't and adds to panic. Don't drink the Don Harrold cool-aid as gospel.

I respect your opinions and financial know-how as well. I'm not saying to fight the Fed, I'm just saying that I suspect their motives. They are NOT looking out for taxpayers or homeowners or anyone but their big oil and financial buddies. The Fed and the Administration are betting against all stocks except for the favored few that the SEC stepped in and put on a "protected" list, all the others are fair game for shorts. Could someone(s) with big $ behind the scenes be hoping to get the prices down as close to $0 as possible then step in and buy?

Don Harrold? Who's that?

 

[fedgolfer]

I think we saw that when the market dropped drastically in one day and the Dow hit 11,000.

No, that day was just typical capitulation. I'm talking something of greater magnitude. Why do you think we ALWAYS see Fed/gov't intervention on a capitulation candlestick, because they're preventing something that would be MUCH, MUCH, MUCH worse.

 

[luv2read]

No, that day was just typical capitulation.
Collapse/capitulation. And the next day the SEC steps in with their "endangered/protected" list and the market goes up.
I'm talking something of greater magnitude. Why do you think we ALWAYS see Fed/gov't intervention on a capitulation candlestick, because they're preventing something that would be MUCH, MUCH, MUCH worse.
That's survival of the fittest and the Fed should have let nature take its course, or else enacted a rate increase which would have stabilized the dollar and had a more desirable and long-lasting effect.

...

 

[fedgolfer]

They are NOT looking out for taxpayers or homeowners or anyone but their big oil and financial buddies.

Don Harrold? Who's that?

They are, they're first looking to stabilize the markets by not causing contagion, and financial domino effects. They know inflation will be contained to a certain degree by a world recession and the fact that comodity prices will have to come down (and they are). They're LETTING all the weak hands (in housing and the market), get flushed out for bad loans, or bad investing decisions. Then, they'll come in and throw in a pittance to the individual tax payers for some votes. It ain't perfect, but why would someone who owns a home,stock or pays into retirment accounts not want them to stabilize? I don't think you really see what domino effect would happen if they didn't do these things. I'm a moderate by nature and you know you have something that can work when the libs and conservatives are both unhappy.

 

[Birchtree]

I have to agree with fedgolfer on this particular topic.