[roccman]

Again no link, but I have cut some pieces below:

$this->bbcode_second_pass_quote('', '[')b]They haven't been this weak since the "Great Depression." FAS157 defines fair value as an exit price - the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Due date is 11/15/07. Wait until you see the revelations. Be out of the general stock market. This is going to be as nasty as it gets.

[Jack]

Interesting information.

I have a suspicion that the economy, in real terms after inflation, is shrinking - thus exacerbating the trouble in maintaining the economy, and especially the derivatives.

Peak oil theory suggests that as oil availability declines, the economy must shrink. We see a reduction in oil availability, but the numbers tell us of a growing U.S. (and perhaps global) economy. I think the economy is shrinking, and has been shrinking, for some time.

I started a thread on the subject. LINK

Have you any thoughts on the matter? Might this be the underlying problem that triggers all the others?

[evilgenius]

I think Citi is riding the bubble, but maybe, like Northern Rock, there will be tremendous double digit bounces after it goes down to say $12.50. I might be willing to buy Citi at $12.50 and hold it for about four days. Is that a good point to buy or is the best price lower? What do you guys think?

[Jack]

$this->bbcode_second_pass_quote('evilgenius', 'I') think Citi is riding the bubble, but maybe, like Northern Rock, there will be tremendous double digit bounces after it goes down to say $12.50. I might be willing to buy Citi at $12.50 and hold it for about four days. Is that a good point to buy or is the best price lower? What do you guys think?

[evilgenius]

You might get burned, but if Citi goes to $12.50 and the Fed doesn't step in then nobody's money is going to be worth anything anyway. I just wonder if $12.50 is the stopping point (25% of $50.00) or if I shouldn't expect overshoot to $8.00 or so. At a certain point, when the price gets low, little moves makes a big gain. Just to make it clear, I ain't thinking about jumping in above that price level and I don't want to play options.

[threadbear]

I just recieved the book, "A demon of our own design" in the mail yesterday. It is about this unfolding nightmare. Here's some reviews.

Editorial Reviews
Review
"A risk-management maven who's been on Wall Street for decades…Bookstaber's book shows us some complex strategies that very smart people followed to seemingly reduce risk—but that led to huge losses." (Newsweek)
"Mr. Bookstaber is one of Wall Street's 'rocket scientists'--mathematicians lured from academia to help create both complex financial instruments and new computer models for making investing decisions. In the book, he makes a simple point: The turmoil in the financial markets today comes less from changes in the economy--economic growth, for example, is half as volatile as it was 50 years ago--and more from some of the financial instruments (derivatives) that were designed to control risk." (The New York Times)

"Bright sparks like Mr Bookstaber ushered in a revolution that fuelled the boom in financial derivatives and Byzantine 'structured products.' The problem, he argues, is that this wizardry has made markets more crisis-prone, not less so. It has done this in two ways: by increasing complexity, and by forging tighter links between various markets and securities, making them dangerously interdependent." (The Economist)

"He understands the inner workings of financial markets...A liberal sparkling of juicy stories from the trading floor..." (The Economist)

"…smart book…Part memoir, part market forensics, the book gives an insider's view…" (Bloomberg News)

"Like many pessimistic observers, Richard Bookstaber thinks financial derivatives, Wall Street innovation and hedge funds will lead to a financial meltdown. What sets Mr. Bookstaber apart is that he has spent his career designing derivatives, working on Wall Street and running a hedge fund." (The Wall Street Journal)

"Every so often [a book] pops out of the pile with something original to say, or an original way of saying it. Richard Bookstaber, in A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation, accomplishes both of these rare feats." (Fortune)

"a must-read amidst the current market chaos" (BusinessWeek.com)

"Bookstaber is a former academic who went on to head risk management for Morgan Stanley and now runs a large hedge fund. He knows the subject and has written a lucid and readable book. To his aid he calls mathematics (from Bertrand Russell to Godel's theorem); physics (particularly Heisenberg's uncertainty principle); and even -- meteorology." (Financial Times)

http://www.amazon.com/Demon-Our-Own-Des ... 0471227277

[culicomorpha]

Does the FAS157 thing mean they will have to report the real value of their assets? This Thursday?

[roccman]

$this->bbcode_second_pass_quote('culicomorpha', 'D')oes the FAS157 thing mean they will have to report the real value of their assets? This Thursday?

[kadoomsoon]

You guys have just seen the tip of the iceburg lettuce.

[peaker_2005]

$this->bbcode_second_pass_quote('kadoomsoon', 'Y')ou guys have just seen the tip of the iceburg lettuce.

[Jack]

$this->bbcode_second_pass_quote('peaker_2005', '
')Jack: interesting theory. In the case of the US there may well be some truth to that. I think locally Australia's economy's still growing but only because of how significant a resource base we have.

[peaker_2005]

$this->bbcode_second_pass_quote('Jack', '')$this->bbcode_second_pass_quote('peaker_2005', '
')Jack: interesting theory. In the case of the US there may well be some truth to that. I think locally Australia's economy's still growing but only because of how significant a resource base we have.