[mmasters]

So where's this thing going?

Right now the fed is doing their best to mask the problems and make everything look ok. But the problems haven't gone away, could they be buying time?

I'm starting to believe in the speculation of a large crash coming in the September-October time frame and not only because of the funny business going on with the SPY options. The fundimentals are quite bad: commodity prices are moving to all time highs (wheat being the leading example), the housing market is falling off a cliff, the subprime junk bonds have surely left large losses and possible insolvencies along with tainting many other investment bonds. The whole trickle down effect of this bond crisis is a generalized financial firm crisis along with credit availibility drying up and rates moving up fast. Surely 3rd quarter earnings will be terrible. Add to that Bill Poole had mentioned the fed would only lower the prime rate in a crisis. Many of us know as soon as they lower the prime rate the USD will lose ground against other currencies causing a whole another crisis. Surely the fed can only focus on one crisis at a time but now they've revealed that in a crisis they will move to instigate another possible crisis?

[Bas]

looks like the first signs of a stagflation situation which we have been expecting for so long.

[dukey]

i dunno whats going on
but mmasters
maybe u can make some sense of this

$this->bbcode_second_pass_quote('', 'R')eport Of Strange Options Trading (8/22/07), someone put $2 billion bet on crash

[Plantagenet]

An October stock market collapse is a strong possibility.

We've gone 6 years without a recession in the U.S.----a recession is coming eventually.

[mmasters]

Love the mixed messages in this article:

$this->bbcode_second_pass_quote('', 'T')he chief executive of Countrywide Financial, the mortgage lender handed a $2bn (£1bn) lifeline by Bank of America, said the housing market showed no signs of improvement and would push the US into a recession.
<snip>
Calling the credit crunch "one of the greatest panics I've ever seen in 55 years of financial services", Angelo Mozilo added that, although world stock markets appear to have stabilised, the commercial paper market was still depressed.
<snip>
Mr Fukui said the market instability was largely a healthy purge of excesses. "Basically we see recent volatile market moves as a process of risk repricing but we need to continue to monitor market movements and underlying moves in the world's economy," he said.
<snip>
Analysts said sentiment was slowly improving. "The market is getting more comfortable," said Tony Russell at ABN Amro, "but confidence can certainly be shattered by any more revelations.

http://www.telegraph.co.uk/money/main.j ... con124.xml

[Plantagenet]

Its the worst of times.

It always is.

[seahorse2]

I need someone to explain what "spy options" are.

[seldom_seen]

right, put and call options based on the SPY ETF.

There is a certain level of abstractiion here.

You have the stocks traded on the S&P, which are kind of the root assets. Then you have the SPY ETF (exchange traded fund), which is derived from the underlying S&P 500.

On top of that, you then have the put and call options, derivatives traded on the underlying SPY ETF.