You probably don’t want to count on a government program for other people’s retirement either.

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971

Bernanke says we have to give the bailout “time to work”…you know…just like the stimulus checks!

For the S&P 500, the 92% of Monday’s 104-point spike has been given back.

But hey, it was up 9 hun on Monday, and everyone said last week was the bottom.

Good Market Day
SEE!!!! SEE!!!!! I TOLD YOU SO!!!!! SEE!!!

Bad Market Day
crickets chirping…….

Sorry about my lack of availability. I have family in town and tons of work to do. I will try to be more available for you.

Like most investing you can’t freak out about one day, one week, one quarter, or a year. Invest for the long term and you will be fine. Now might be a great time to invest for the long-term. The problem is everyone wants to make money now and very few see long-term investing as being of any value.

To be honest, the Bubble is definitely losing its appeal. The graphs and work the Tim does over all is great. However the spin machine is out of control. It is way too biased, definitely pro-anarchist, censors opposing opinions, and now venturing into political punditry.

David I will try to come back tomorrow, but it will likely be Thursday. You can beat up on me then!

As always, looking forward to it!

Absolutely. Usually it is followed by “Yeah but”. It is just one more example of the long list of bias here at the Bubble.

I was surprised by the political punditry in the Gregoire post. Unfortunately I do not have the frame of reference to opine about the Seattle politics so I will stay out of that fight.

We are one step closer to balanced coverage!

I haven’t said that 60 trillion in defaults has occured, I said that the CDS market is estimated to be 60 trillion.

-Sellers of credit-default protection on bankrupt Lehman Brothers Holdings Inc. would be forced to pay holders 90.25 cents on the dollar under initial results of an auction today, setting up the biggest-ever payout in the $55 trillion market.

Preliminary results of the auction to determine the size of the settlement on Lehman credit-default swaps set an initial value of 9.75 cents on the dollar for the debt, according to Creditfixings.com, a Web site run by auction administrators Creditex Group Inc. and Markit Group Ltd. A final price is scheduled to be announced at 2 p.m. New York time.

The payment would be higher than indicated by trading in Lehman’s $128 billion of bonds yesterday. The debt was trading at an average of 13 cents on the dollar, indicating credit swap sellers would have to pay 87 cents.

More than 350 banks and investors signed up to settle credit-default swaps tied to Lehman. No one knows exactly how much is at stake because there’s no central exchange or system for reporting trades. It’s that lack of transparency that has increased the reluctance of financial institutions to do business with each other, exacerbating the global credit crisis and prompting calls for regulation of the market.

The list of participants includes Newport Beach, California-based Pacific Investment Management Co., manager of the world’s largest bond fund, Chicago-based hedge fund manager Citadel Investment Group LLC, and American International Group Inc., the New York-based insurer taken over by the government, according to the International Swaps and Derivatives Association in New York…..

BNP Paribas SA strategist Andrea Cicione in London estimated earlier today that a 20 cent recovery rate would lead to sellers paying out as much as $220 billion.

“Banks can go to the Federal Reserve, or use the commercial paper market where it is still functioning” to meet protection payments, said Cicione. “But fund managers or hedge funds, once they’ve used their cash, have only one option, to sell assets.”

Defenders of CDS had long argued that the guarantees were hedged with offsetting swaps. We are about to find out whether that true.
Topics: Banking industry, Credit markets, Derivatives

Posted by Yves Smith at 11:56 AM

That’s the most positive angle a person could take on the fact that 60-70 trillion in outstanding CDS is now going to be worth less than 5 trillion.

“An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth only 8.625 cents on the dollar. The valuation leaves the insurers of the debt a bill of about $365 billion. It is not clear whether the insurers, which are required to settle the bill in the next two weeks, will be able to pay – a development that could further undermine increasingly stressed capital markets.”

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4922981.ece

There are 60-70 trillion in credit default swaps (CDS) and they are worth about 8.6 cents on the dollar and somehow this is somehow a good thing because it “frees up some money”???? Pass the crack pipe please. The 700 billion dollar bailout is like a band aid on a bazooka hole.

http://calculatedrisk.blogspot.com/2008/10/credit-spreads-still-getting-worse.html

These is still no relief in the credit markets.

http://money.cnn.com/2008/10/08/real_estate/financial_crisis_pulling_out_of_home_sales/index.htm?postversion=2008101014

“”You have to have a lot of confidence to make this kind of big-ticket purchase in the current environment,” said NAR spokesman Walter Molony. ”

Hmmm… Molony…rimes with “Baloney”. Anyway the article mentions a Seattle couple who backed out from a contract because in light of the economic developments they think there will be better deals coming up, Ya think?

http://www.nakedcapitalism.com/2008/10/are-hedge-fund-margin-calls-leading-to.html

“It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well — have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers… There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.”

Still, an enormous amount of uncertainty was resolved today with Lehman, so a lot of money has been unlocked.

I probably saved 110K+ from losses by selling 1st qtr. last year, still left 25% in the fund. I didn’t want freak the wife out to much at the time.

I held QID for better part of a year, but got freaked out every time the Gov. intervened when I was about to make a kllling. I also held DUG. Sold both over 50 percent lower than what they are at now. OUCH!!!! I never hit the homeruns.

In reading the comments, I’ve seen several posters ask the question “Are you guys happy about this crash?” It seems like you need some disclaimer that explains the majority opinion on this topic, or at least your own opinion just to clear things up for these people.

To anyone curious, here’s my explanation. No, I am not happy about the crash, in fact I am nervous about it. I don’t really have much money in stocks either way, though I do have a long-term retirement account which has been marginally punished.

Rather, I would compare my view of this crash to the scientist who predicts a earth shattering catastrophy in blockbuster end-of-the-world movies. The scientist tells everyone that a giant earthquake could sink Manhattan, everyone laughs at him. He goes back and checks his numbers, and they look more likely than they did the day before. Then the earthquake hits killing thousands. The scientist can’t do anything to help at this point, and he feels bad for all those who died – wishing they had listened to him sooner. But, now that it has happened, he’s got a ton of new data to look at and explain. His job is, after all, explaining the data. So, rather than be devastated, he is fascinated.

“Information is Power.”

Reason # 82 about why WM went out of business. WOO HOOOOOO!

The listing talked about the short sale…

http://money.cnn.com/data/markets/dow/

I am surprised that Iraq is already not contributing heavily to alleviate the crisis. We could send them some consultants on democracy and they could give oil for very little money.

I am sure there is a way out of this.

People need to focus on some different threat like terrorists and 3rd world countries should give all their resources for peanuts.