My understanding, though admittedly limited, is that in he late 80s around the same time Greenspan, a former JP Morgan exec, was appointed to the FED these 1930s firewalls between commercial and investment lenders began to be loopholed vigorously and ultimately disassembled, succumbing to decades of pressures from the banking industry lobbies. Sure the regs were relics in the face of modern electronic commerce, but their intent was aimed at guiding herd behavior which is a timeless thing. Remember that while imperfect, the barriers between entities were erected because most believed (and still do) that market speculation played a major role in the crash of 1929. Particularly institutional level speculation using the uninsured resources of small investors accumulated throughout the go-go 20s. The similarity in behavioral pattern to what we see now is remarkable.

The panic of 1907 gave us the Fed, 1929 crash gave the FDIC, I wonder what systemic improvements 2008 will bring?

Time is not now to look for opportunities. Anyone putting money in the stock market now will end up losing money. The fourth quarter is going to be brutal for most companies.

Regarding stocks, it’s time to look for opportunities.

Hope you made some good money on that bet. Right now it looks like the close was 9,955.50. Nice guess.

:
I think we’re closing down 1K today.

We may see sub 9000 before the day is out.

I’m betting on the bounce.

I bet my buddy it would close at 9,950 today at about 10AM when it was sitting at 9,800

Now down only 360. Looking good right now.

With record traffic to seattlebubble, how’s its income stream? I haven’t seen you updated “revenue checkup” on thatchmound for a while. Wrt to the Dow, what was your prediction?

Warren got himself a sweetheart deal. The CEO of GE came out a few days before that announcement and affirmed prior earnings guidance. A few days later earning expectations were lowered and GE also announced that they were selling more common stock to raise capital. The lowered earnings expectations were attributed to trouble in GE’s finance arm.

Warren Buffett was sold preffered shares with a yeild of 10% per year so that GE could tell the markets, “Look we’re fine, Warren Buffet thinks we’re solid”.

Goldman Sachs did essentially the same thing a short time ago.

It pays to be Warren.

“The Principal Financial Group® is a company focused on helping customers achieve long-term financial security. We closely monitor and actively manage holdings in our investment options available to retirement plan participants.

Because of the current state of the real estate market, The Principal® has taken action to protect participants’ interests in the Principal U.S. Property Separate Account (“Separate Account”). We are implementing a pre-existing contractual limitation in your group annuity contract which will allow us to manage the Separate Account and satisfy withdrawal requests over time and fairly among all those who request a withdrawal.

Effective Friday, September 26, 2008 at 12:01 a.m. Central Time, we are applying a built-in contractual limitation which will delay the payment of most withdrawal requests. Those requests will be honored proportionately as sufficient cash becomes available for distribution, in accordance with the terms of your group annuity contract. This limitation applies only to this Separate Account and does not apply to other retirement plan separate accounts or Principal Mutual Funds.

Background

The Separate Account, managed by Principal Real Estate Investors, LLC, is unlike most other retirement plan investment options because it invests primarily in owned real estate rather than securities. These holdings include developed, commercial properties such as warehouses, office buildings and retail properties. Unlike public securities sold on an exchange, real estate assets are sold in private transactions that take a period of time.

The recent turmoil in the credit markets has compounded already challenging conditions in the real estate market, resulting in a sharp slowdown in the sale of commercial real estate assets. In addition, cash flows out of the Separate Account have outpaced new contributions as investors have decided to engage in rebalancing transactions or otherwise move assets from real estate to other investment strategies.

While the Separate Account has historically maintained sufficient cash to satisfy withdrawal requests, the combination and duration of these market factors has prompted the decision by The Principal to implement a withdrawal limitation for the first time in the 26-year history of the Separate Account.

The pre-existing contractual limitation allows Principal Real Estate Investors to manage the Separate Account consistent with its investment strategy and objectives. It also provides for payment of withdrawal requests over time proportionately among all customers. While available cash from future sales of real estate assets will be used in part to satisfy withdrawal requests, Principal Real Estate Investors will continue to manage the Separate Account, including use of available cash, in the best interests of plan participants. Sales will not be made under unfavorable circumstances in order to have cash available for withdrawals or any other purpose.

Outstanding withdrawal requests will be paid proportionately with other pending requests as sufficient cash becomes distributable, as determined by Principal Life Insurance Company. Payments will be based upon the unit value as of the date of the distribution.

Death and disability benefits are not affected by this limitation and will be processed as usual. In addition, transfers and contributions into this Separate Account are being accepted as usual.

Gains, losses, and cash flows related to this Separate Account do not affect the general account of Principal Life Insurance Company or any other separate account.”

Greenspan is on the record saying that they were extremely worried about deflation in 2002 and that had a huge influence on the policies that brought us the artificially low interest rates.
http://www.federalreserve.gov/FOMC/minutes/20021106.htm

It’s likely that we will get to the low point they were afraid of then, but the debt burden on every constituent will be higher than it ever has, including during the catastrophic first half of the last century.

It’s really weird that the gutting of Glass-Steagall by banking lobbyists through Sen. Gramm ( R) and Rep. Leach ( R) in 1999 is getting zero attention. Is it really just too arcane to explain in 90 seconds on the tv? The whole thing is eerily similar to “Lord of the Flies,” with D.C. being the island.

Down 625 with a little less than 2 hours left.

Nobody’s ever called Sniglet “overly optimistic”.

…But I sure hope he’s wrong, even though he’s looking smarter and smarter as the days progress, dammit.

Wow! It’s incredible that the Seattle Times would print such negative common sense advice.

The Seattle Times had an article this weekend on deciding when to buy. They actually had such crazy concepts as

“You need to consider the state of your finances”

“If your job isn’t settled, please don’t buy,”

“draw up an estimate of what their budget will be after they buy”

“People have to be serious enough about it to collect a down payment first,”

“Anybody who is midcareer, we’ve got too much house if we can’t put a lot of money in a 401(k) plan,”

“A buyer considering an alternative loan, such as one with an interest-only payment or an adjustable rate, should “try out the worst-case scenario” and see if the budget can handle it”

I never thought I’d see the day when they allowed such negativity in the Times. I certainly haven’t read anything like it in the last 8 years.

http://seattletimes.nwsource.com/html/realestate/2008226349_firsthome05.html

I want to make the bold prediction that while greed got us in to this situation, greed, oddly enough, will get us out of this situation. Banks and investors can’t sit on their money forever. They have to invest it somewhere. Those that are motivated, greedy, and smart will find arbitrage opportunities to position themselves. Some will try to be market makers. People won’t sit on their money and the credit markets won’t freeze, because someone somewhere wants to make more that a couple of percentage points on their money. And of course, there are people that want to make a quick buck, but you can’t make money without spending a little.

Prediction: Market and Economy will recover quicker than most people think. 12,000 by end of 2009.

when you agree with the MSM about investments, it is time to rethink your positions.

GE is basically free today, but i can’t bring myself to buy in b/c i have no idea what their accounting department is trying to hide. How do you evaluate P/Es when all of the pertinent facts are hidden?

Back in the 11,000 days, you didn’t read people posting targets of 5000, and now you do.

Well, I for one was predicting Dow 5000 back in June of 2007 (see link below). In fact, I called for Dow 2500.

http://seattlebubble.com/forum/viewtopic.php?f=2&t=412&st=0&sk=t&sd=a

Back in the 11,000 days, you didn’t read people posting targets of 5000, and now you do.

Well, maybe you didn’t read it, but people were certainly posting such predictions:

Eleua // Jun 9, 2008 at 9:40 pm

I don’t see why a historically overpriced stock market would hold above the 10K level. I think Japan’s market, as well as our own in the 30s might be a guide.

My target is the 6000s with sub-5K being possible.

I think a relevant question is whether the aggregate wisdom of this site will be able to call the bottom. It seems like the formula for this site is that no matter how bad things are, the users predict that it will get worse. Back in the 11,000 days, you didn’t read people posting targets of 5000, and now you do.

I just can’t imagine the users here turning positive or bullish on the DOW or housing markets. That will be the true test of whether this site is of enduring value or not.

I expect there to be some rip-roaring multi-month rallies that recover 15% or 20% of the index along the way to 5000, but I think we will get there.

It is going to be quite simply, the worst economic disaster the world has ever faced.

Agreed, but I also believe that when it’s all said and done, there will be a LOT of money to be made. The problem is knowing when that time is.

I’m staying in the safe investments for now….

I would agree, but some small banks, while not lending in the sense that you mention, are heavily levered in land and lent mightily to local builders who are having a tough time (understatement).