THE DEPRESSIONIST MASTERPIECE

yo!...every picture tells a story...innit!

PALOOKAVILLE FINANCIAL
capitulation day
+139...

NB chart is uk based and funds reflect the effect of currency movements

charts from equitable life are used as an illustration of sector performance comparisons only
and not as a commentary on their investment performance. no opinion is offered here either for or against equitable life as a pension company...

...they just happen to have these charts...
...which i find very helpful...
...when comparing sector fund performance...

...THERE IS A DISCLAIMER AT THE TOP O THE PAGE...

...THIS AINT ADVICE AN WE AINT IN BUSINESS...

...WE JUS SUCKERS LAK YOU...

...PISSIN INNA WIND...

SLOW BOAT TO JAPAN

yo!..turnin japanese but wiyout a dosh...innit!

paintybollox : back from Firenze nah...an it all still crap!

lamont : ..."Before the Government adopts full-blown Keynesian policies, it should examine their effect on Japan after the bursting of its “property bubble”. Between 1991 and 1998, Japan spent 100 trillion yen on new railway lines and other public works. Little good did it do. Its economy stagnated. Since 1991, Japan’s government debt as a proportion of GDP rose from 64 per cent of GDP in 1991 to 171 per cent this year. Japan is in a debt trap it can’t escape.

Gordon Brown’s policies would take Britain down the Japanese route — with one important difference. Japan runs large trade surpluses and can fund its borrowing from domestic savers. The British Government depends on international capital markets to finance its borrowing. Deficits and excessive borrowing may not have mattered when the world was awash with money. That has changed. Confidence is all.

Today’s bust was inevitable. But recovery will follow. The economy adjusts. Prices fall, buyers come back into the market, confidence slowly returns. It is mistaken government action that turns recessions into depressions .

Adding higher government borrowing to private sector borrowing does not improve the performance of the economy. If consumption has grown too fast, increasing government spending is the equivalent of driving through a red light.

Gordon Brown is like a gambler on a losing streak, doubling up by spending. More huge tax increases lie ahead. Because he has already exhausted the scope for stealth taxes, his policies mean we could see VAT raised to 20 per cent or the basic rate of income tax heading back towards 30p. One thing we can be sure of: it will be horrible. But once the consequences of Gordon Brown’s fiscal management are plain, it will take a generation before the voters trust Labour again. Times

PUSH ME PULL YOU

yo!..all the fun of the fair...innit!

petey : ...the lever has come off the one armed bandit money machine
at the VEGUS FED an now none of the buttons are workin...

zooneh : ...f**kin candyfloss...innit!

beulah : lookyhear atta bollox...

Insight: Shattered illusions of liquidity

..."The substantial build-up of foreign reserves in central banks of emerging markets and developing countries has puzzled economists. As identified by David Roche, of research boutique Independent Strategy, and others, the large build up of central bank reserves is really a liquidity creation scheme that relies on the dollar’s favoured position in trade and as a reserve currency.

Deterioration in the US economy and the issue of more government debt to support the financial sector may increase pressure on the US sovereign rating and the dollar. US government support for financial institutions is approaching 6 per cent of GDP compared to less than 4 per cent at the time of the Savings and Loans crisis. This may set off a further phase in the global de-leveraging as large losses on dollar investments slow down the international credit creation system.

Gillian Tett of the FT coined the phrase “candy floss money”. Financial technology spun available “real” money into an exaggerated bubble that, like its fairground equivalent, collapses ultimately. The emerging market reserves system is another dimension of this candy floss money.

The perceived abundance of liquidity was, in reality, merely an illusion created by high levels of debt and leverage as well as the structure of global capital flows. As the financial system de-leverages, it is becoming clear, unsurprisingly, that available capital is more limited than previously estimated.

In recent years, money was cheap and other assets were expensive. As each of the global economy’s credit creation engines breaks down and systemic leverage reduces, money becomes scarce and expensive triggering adjustments in asset prices in a reversal of the process.

Mark Twain once advised: “Don’t part with your illusions. When they are gone you may still exist, but you have ceased to live”. In the current financial crisis, many illusions have been shattered. The quantum of available capital and the munificent resources of central banks and sovereign wealth funds may be another of the accepted ”facts” that may be revealed to be an illusion." FT

Fed offers $540bn to prop up money funds

..."The Fed move highlights the extent to which policymakers are concerned about US money markets, even as conditions have improved, with interbank rates dropping. Policymakers are also worried that moves to prop up US banks may have undermined money funds, which compete with bank savings accounts. FT


market ticker : ..."Horsecrap.

Bernanke is doing what Paulson tried and failed at in the "free" (coerced by arm-twisting by Paulson) market through executive fiat, and he is printing money to fund it. Exactly how much money he is printing (as opposed to lending) depends on the precise amount of overpayment that is being induced through these so-called "loans", but that it is happening is not open to question.

Why has this become necessary?

Ben and Hank produced a dislocation in this section of the marketplace by favoring other debt instruments with federal guarantees, thereby forcing money out of these instruments.

This in turn created major problems for money market funds who buy this paper as a routine matter of course in that when they needed to redeem deposits they suddenly found no buyers for the securities, as those people had fled to other instruments that Ben had guaranteed payment on!

As each new facility is rolled out by Ben and Hank a new area of debt becomes backstopped by the government in some fashion, thereby forcing money out of other instruments and causing those instruments to become distressed!

We are rapidly reaching the point where only The Fed and Treasury are providing any lending at all!...read the whole article

petey : Beware below, Bedlam above,
Halls of mirrors and tunnels of love.

Sensory shrapnel, bullets of bliss,
Hands that hold, lips that kiss.
Generate spells, create confusion,
Expectation, cruel illusion.

Money in slot, hand on lever,
Chills the soul, causes fever!

THE DAY AFTER TOMORROW

Y0! f*ckin freezin...innit!

PALOOKAVILLE FINANCIAL stardate capitulation day+31

...Admiral Brown has won the battle of the media...

...he has arranged for our money to be given to the BANKERS so that they can sit on it and feel warmer...

...evvabody happy innit!..bollox!

...itz bankers 10 - taxpayers 0... inna contest ta see who guz BONUS or BUST...

...they think itz all ovva...

........MASSIVE TEMPERATURE DROP..!...

FINANCIAL WINTER : ECONOMIES FREEZE OVER

mish : ..."

• US leading indicators have biggest weekly plunge in 37 years.
• US leading indicators are at 33-year low.
• US Consumer sentiment drops most on record to 57.5 from 70.3, the biggest decline since monthly records began in 1978.
• US big-ticket purchase sentiment slumped to 58.9, the lowest level ever, from 75.
• Canada Consumer Confidence Drops to 26-Year Low.
• German investor expectations slumped to minus 63 from minus 41.1 in September.
• French manufacturing confidence slumped in September to the lowest in 15 years.

edmond : " Britain faces deflation for first time since 1960

Britain will slump into deflation next year for the first time in half a century, experts have warned.

For the first time since 1960, the cost of living will start to shrink next year, in a worrying parallel of the Japanese "disease" of the 1990s, according to new research.

The news comes amid growing speculation that the Bank of England will soon be forced to cut borrowing costs to 2pc or below, taking them to their lowest level since it was founded in 1694.
Telegraph

700 BILLION BONUS BAILOUT

guardian : Wall Street banks in $70bn staff payout

"Pay and bonus deals equivalent to 10% of US government bail-out package"

FANTASY ISLAND

simon : ..."As we reported on Friday, Mr Brown has promised to maintain his spending pledges on capital projects and public services. This is despite the fact that the economic prospects predicted at the time these pledges were made are now fantasy. Growth is non-existent, tax revenues are tumbling, borrowing is ballooning, yet Mr Brown thinks it is business as usual.

I have quoted Jim Callaghan before and, for Mr Brown's edification if no one else's, I do so again: you can't spend your way out of a recession.

Mr Brown thinks he knows better. Having also borrowed money to bail out the banks - and who is to say that will work, or that more banks might not need assistance? - the total borrowing this year is predicted to be £90 billion- £100 billion.

Given how wildly inaccurate most earlier predictions have been, we can assume that is a conservative estimate. Mr Brown has learned nothing. The debt will take generations to pay off. I hope our grandchildren will be grateful for this unwarranted imposition on them...."Telegraph

IT IS NOW..!

...bond market fat lady still waitin ta sing

petey : winter draws on!..

THE BEAR OF THE BASKERVILLES

yo!...some days...the bear will eat you...some days you'll eat the bear...

PALOOKAVILLE FINANCIAL stardate capitulation day+28

...a most awful thing has happened!..it would appear that after a lovely bull market
from 1982 -2000...

...a nasty, capital destroying, bear market... has crept up on us...

...while we were watching some of the worst tv ever...

petey : spider been onna web lookin at some very gloomy stuff...

spider : yo! boss...cop fo dis...

thomas : "My most optimistic forecast is it will last another 4-5 years from now, or about 12 years if we count year 2000 as the starting point. If we use the commodity super-cycle by Jim Rogers, which usually runs opposite to the general equity market and lasts until 2020 as Jim predicts, it will be also a 2 decade bear market for equities, consistent with both the 1970s and the 1930s. When will the S&P 500 be back to last October's peak? At least 24 years from 2000, or 2024. A few chart technicians today think the Dow can drop all the way to 1,000, back to the 1982 level. Even that is possible, but I think it might bottom at one of the lower Fibonacci levels between 14,000 and 1,000. Which one of them is yet to be seen in future years but my guess is around 4-5,000. seeking alpha

michael panzner :..."Not to beat a dead horse, but on Tuesday, (in "Give 'Em Enough Hope...") and last week (in "Bear Market Rallies"), I noted that it is not uncommon to see eye-popping rallies in bear markets.

Even so, I do think there is something very interesting about the dates of most of the entries in a chart accompanying an article in today's Wall Street Journal about yesterday's big rally, entitled "Dow Takes Giant Leap as Bailouts Snap Gloom."

market ticker : ..."Do not believe for a second that a single thing done by these folks is going to help Main Street - or you. It will not, just as it has not. Oil and food price ramps, mortgage spreads, the stock market and the economy after jawboning repeatedly with "the economy is fundamentally strong" (instead of warning people that we were headed into a recession and might want to prepare for that!) and more.

"Main Street" will continue to get the most unpleasant of surprises if the course of action in Washington, most particularly the actions undertaken by The Fed and Treasury, is not reversed now.

How bad can it get? Read this article from Bloomberg:

"Oct. 14 (Bloomberg) -- Iceland's benchmark stock index plunged 77 percent, the biggest decline on record, as trading resumed after a three-day suspension and the nationalization of the country's largest banks."

Think it can't happen here? The price of every imported good tripling overnight as the currency crashes by 2/3rds instantly?

That is what happened to Iceland - literally overnight.

If we don't force transparency of all financial institution balance sheet and capital positions, this may be coming to a stock market - and grocery market - near you.

Hope and pray it does not, and vote all politicians who voted for this crazy bailout bill out of office come November 4th.

I love this nation Ben and Hank - are you willing to kill it so your banker buddies don't have to confess?"

watson : i say holmes old chap...bit over the top don't you think??

holmes : my dear watson...I recommend you read the complete articles...

...over a cup of Earl Grey anna slice o lemming!

WIRE RALLY

yo!...night atta opera...innit..!

PALOOKAVILLE FINANCIAL stardate capitulation day+26

...alla kings orses an alla kings men have joined forces ta put
humpty dumpty back together wi vinega an brahn paper...

...shocks an scares is rocketin on relief that itz all ovva...

newsnight : it all gon be cool nah man...fat lady sung innit!...
...lez kick ass on who dunnit...

watson : i say holmes old boy...time fo a spot a bubbly wot?

holmes : everything may not be as it seems...

watson : wot fo yo such a sad sakka sh*t shamus?

holmes : elementary! watson old boy...elementary...

watson : an?

holmes : house prices still fallin dude!...stiffs still skint, in debt an scared...
...truth still not out there...trust still gon walkabout...

tim knight : "...As for equities in general - - I said very plainly I was looking for a rise "between 1050 and 1100" on the S&P. At this rate, we'll be there tomorrow! (Although I really doubt "this rate" will continue; today was, after all, a relief rally with huge, pent-up demand). In any event, the opportunity to get really bearish again won't require a lot of patience.

market ticker : "...The resistance to forced truth-telling is maddening folks. It has been going on now for over a year, and until it stops, I just don't see the market normalizing. I know the counter-argument - "everyone is broke" - but if that's the truth, then let's get on with it, because we're only delaying the inevitable. You can't make the broke un-broke, you see. If we need to set up some state-sponsored banks (to do it FAST) and then spin them off in IPOs, letting the existing system die, then so be it.

Perhaps such a time would be a good opportunity to include The Fed in this sort of forced replacement, since they are and were complicit in the original destruction and have been part of the liars charade! After all, what Congress giveth via legislation, it can taketh away, no?

In any event don't get complacent; I see nothing here right now that suggests the "crisis is over", but the mouth-breathers in the media are of course cheering the market's rally.

Good for them.

We'll see how long it lasts.

Check Libor, the TED spread and the IRX tomorrow when our bond market is open for trading. You should get a decent idea of what's what at that point."

from financial armageddon ...

grantham : ..."The terrible thing -- after all this pain -- is that the U.S. equity market is not even cheap. You would imagine that, given the amount of panic, that it would be. But it started from such a high level in 2000 that it still has not yet worked its way down to trend, although it is getting close. But the really bad news is that great bubbles in history always overcorrected. So although the fair value of the S&P today may be about 1025, typically bubbles overcorrect by quite a bit, possibly by 20%. That is very discouraging.

barrons : What about equities outside the U.S.?

grantham : Things are getting cheaper. We score the EAFE [the Europe, Australasia and Far East Index] as absolutely cheap, and it's offering a 7% real annual return over seven years. Emerging-market equities are a bit cheaper, and we see a 9.5% annual real return over the same period.

The problem, though, is that we have so much downside momentum, so many financial problems and so many interlocking relationships, that it is hard to imagine this crisis subsiding because stock prices are digging in their heels and approaching fair value. financial armageddon

fortune : "...Investors have been reluctant to admit that this cycle, unlike 1998's credit crisis, is imbedded in the real economy," Merrill Lynch investment strategist Rich Bernstein wrote last week. "The government can come up with any number of refinancing and liquidity plans, but households are likely to increasingly default on mortgages and other debts if cash flow is not stabilized via employment."

The employment picture is deteriorating rapidly. The United States has lost 760,000 jobs in the past nine months, according to the Bureau of Labor Statistics, while weekly initial jobless claims have hit a recent 478,000 from the low 300,000 range in early 2007.

Those are numbers that go hand-in-hand with recessions, noted Northern Trust economist Asha Bangalore. "Projections of weak economic growth," she added, "suggest that a higher level of jobless claims in the months ahead is nearly certain..."

...."But outside the booming financial sector, job growth was soft and wages were stagnant. The median U.S. family's income was actually a shade lower in 2007 than it was at the end of the high-tech boom of the 1990s, according to census bureau data.

"Since 2000, a lot of economic growth has been illusory," said Len Blum, a managing director at investment bank Westwood Capital. "Now that the asset bubbles have been popped, you start to realize we really didn't make that much progress in our economy."

Indeed, consumer outlays are now falling, as households try to work off their debts. Along with the surge in mortgage delinquencies that precipitated the financial crisis, the spending slowdown is also taking a toll on employment..."cnn

fat lady : i've never been so insulted in all my life...

groucho : ...the night is young yet!

beulah : what abaht a sanity clause?

petey : evva boddy know...they aint no sanity clause..!

CARRY ON CRUISING

adubbly dub, dubbly dub, dobbly dubbly..dubbly dub..

yo! cappin pugwash innit!..

stardate capitulation day+4

we ere onna HMS PALOOKAVILLE..steamin outta sea to rescue survivors fromma SHIPWRECK.

the United Flakes Ship TITANIC out of Wall St. has hit a iceberg an come to a shudderin stop!

the TITANIC is holed below the water line and toxic sewage has polluted the atlantic.

Admiral PAULSON has vowed to save the vessel at ALL COSTS and sez that the TITANIC is unsinkable and therefore will never go down!

Catain wobbleya BRUSH was onna bridge atta time o da CRASH declarin VICTORY after the shock an awe.

wobbleya : it wan me wot dunniy! it were a shot sellers innit!

paulie : i gotta 7000,000,000 dolla vacuum gun annit gon suck...

bluepetey : willya lookit at? a great AMERICAN ECONOMY dead inna water...

the toxic sh*t fromma SEWAGE BANK inside a ship don become illiquid an the suckers canna git outa it!..

the brave little HMS PALOOKAVILLE has stood off at anchor because o da toxic pong! cappin pugwash has bailed out THE ROCK an is waving not drownin..he sez...

pugwash : don't panic...don't panic...

bbc :US banks make shock status switch

"The changes should enable Goldman Sachs and Morgan Stanley to raise more funds by opening commercial banks.

The move - part of a huge restructuring effort on Wall Street - will also give them access to Federal Reserve support..

THE MOTHER OF ALL BAILOUTS - 2

tthe TITANIC has sent outa S.U.S....save our suckers!....they daren't jump ship cos o the HARD LANDIN ...inna sh*t.. and are demanding a BAILOUT...

the PIRATES wot was runnin a sewage business have got away wi a BONUS in gold and are laughing alla way from a bank!

wobbleya : do summat paulie fo da sh*t set solida an crushes a conomy ta death...

paulie : we gonna OUT SUCK the suckers!...they ainta brick gon be standin onna brick...the sh*thouse gon be supported wi po workin stiffs doh!

wobbly : yo gottit paulie save our suckers man!..do it fo yo country...do it fo the election! but above all...do it fo me!

pugwash : pirates...junk...junks fulla pirates...yo ho ho anna bottle o rum...

IT ENDED ON WALL ST.... ?

bloomberg :

``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''

Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.

By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.

`Blood in Water'

``There's blood in the water in the industry and the sharks are circling,'' Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''

ft : Goldman, Morgan Stanley to become regulated banks

Goldman Sachs and Morgan Stanley, the last surviving big investment banks on Wall Street, have become regulated banks....

ft : Emerging markets face $111bn maturing debt

A $111bn backlog of bonds that need to be refinanced over the next year has built up in the emerging market economies and raised the threat of defaults and company closures.

With the ability to raise money in the debt markets severely restricted because of the credit crisis, emerging market banks and companies could struggle to roll over the maturing debt, according to ING Wholesale Banking.

nourial : The shadow banking system is unravelling

"Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self ­fulfilling and destructive run on its ­liquid liabilities.

But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that ­prevent runs.... " FT

ambrose : Financial Crisis: America rises to the occasion as storm heads towards brittle Europe

An almighty crash has been averted, very narrowly. There is no guarantee that the revolutionary actions of the US government will prevent a full-fledged global slump, but at least we now have a fighting chance.

By taking the colossal wreckage of the credit bubble onto its own books in a $700bn (£382bn) taxpayer sink, Washington has forestalled a run on the world banking system, and may hopefully have saved the viable core of modern capitalism.

Hank Paulson's "Super Sink" is the "game changer" we have all been waiting for in this interminable crisis. It puts a floor under the toxic debt that is bleeding the banking system to death, and ends the downward spiral of CDOs, CLOs, HELOCs, and such instruments of leveraged excess that lie at root of the credit terror. No doubt the Fed, the Treasury, and Congress have made a string of mistakes but they are now rising to the occasion - the reflexes of a wounded but still formidable superpower. The US has shown time and again that it has the institutions and flair to pull itself out of disaster....." Telegraph

liam : Financial crisis: Default by the US government is no longer unthinkable

...."But, in the run-up to the US election in November, Democrats in Congress - and even some Republicans - may decide they're simply not having it. How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?" Telegraph

more telegraph :Japanese megabank to buy up to 20pc of Morgan Stanley

Japanese megabank Mitsubishi UFJ Financial Group is to buy up to 20pc of Morgan Stanley, which along with Goldman Sachs has given up its status as an investment bank.

"We have decided on investment in Morgan Stanley," a MUFG spokesman told AFP. Although he declined to give any further details.

The deal was annouced as Morgan Stanley and Goldman brought the era of the Wall Street investment bank to an end by choosing to give up their independent investment banking status to gain easier access to funds to survive the financial turmoil....

...Giving up investment bank status gives Morgan Stanley and Goldman greater access to Federal Reserve funds and makes it easier for them to buy retail banks, but it will also subject the two to much tighter regulation....." telegraph

bluepetey : well me hearties...ahah!...innit? the plot anna sh*t thickens...the politix gon fix the boom wotz bust...gon fix a markets so they caint go down...gon fix the 'lection? fix a dolla?

dolla gon fall...commodities gon rise?

...when a wind blows...a cradle will rock...when a bough break..cradle will fall...

an dahn will come cradle...baby an all!

halfcat : ah swear, painty dude, yo one sad sackka sh*t man...yo paintin a saddo picture here!

bluepetey : aint painted it dude...it aint art..i jus photograph it!..it already there man!
yo caint make this stuff up!