The futures sure love it

[solarbird]

Briefly: a "bad debt rescue plan" is pitched as something that "may" cost "up to" half a trillion-with-a-T dollars. It'll be more than that. There is also now a ban, albeit temporary, on shorting financials stocks. Marketwatch has an early AM bulletin: "FED TAKING NEW LIQUIDITY MEASURES, INCLUDING BUYING FANNIE AND FREDDIE DEBT" but no story; there is a short story on loans to prop up the money-market sector. Whup, a new one: oh look, they're guaranteeing them now - so much for all those little disclaimers on commercials about risk. The TED spread has dropped to 229 after spiking to a record 314, a massive drop; Dow futures are up 370 points. And the dollar is rallying.

But the Fed is still having severe trouble trying to reach its target rate, and had to float some 0% overnight loans to come close.

Also, it's kind of too damn hot in this room to sleep well. Foo.

Comments

[silussa.livejournal.com]

If I were involved in the commercial financial markets for a living (as opposed to JUST my retirement money and the like), I'd probably not be sleeping at all.

So, we're applying the FDIC model to money market funds, in an attempt to get cash flow back IN instead of flooding OUT. Can't say I like that, but if I'm not mistaken, the alternative is that short term financing dries up completely...and I'm not sure I want to think what that does to the economy.

[angharads-house.livejournal.com]

well, for one, it kills all industrial projects not funded by operating cash flow. Scared? hell yes, scared!

[technoshaman.livejournal.com]

Too warm in there? Weird for a hospital...

[angharads-house.livejournal.com]

Not having hot flash, are you? ^_^

Story on CBC this morning, 0600 radio news, saying that Bank of Canada threw 10 gigabucks at "an international pool of banking support" whatever that means.

And absolutely nothing concerning possible Canada/EU deep integration. Would consider this as pre-election hot air, mostly. Conservatives, by the bye, really ARE floundering in the polls. NDP is climbing.

[technoshaman.livejournal.com]

Don't know anything about the pros or cons of Canada/EU integration other than I like EU privacy laws, among other things...

And go NDP! That would be two prayers answered if it holds...

[angharads-house.livejournal.com]

yes, it would actually be good, but (particularly in E's case) we think it's really only a hot-air bubble at this point. I have a hard time imagining Harper willingly decoupling from NAFTA.

[technoshaman.livejournal.com]

*nods* no, you're right, I don't think he would want to de-NAFTA...

Some opinions on personal finance requested

[silussa.livejournal.com]

Realizing that nobody on this list is a financial advisor, nor plays one on TV...I'm looking for opinions.

I've been working on paying down accumulated credit card bills from my younger, dumber days. On the current track, I figure on being totally paid off on them in three years.

However, if we're looking at recession or depression (ignoring for the moment the two are essentially the same)...should I be holding onto the cash instead of paying the bills down and off?

I can see arguments both ways, so I'm looking for outside input.

Re: Some opinions on personal finance requested

[angharads-house.livejournal.com]

really depends on where you think the retail interest rates are headed. in general, killing debt has one of the better pay-backs, as measured against other possible investments. however, the caveat here is that keeping some accessible cash does provide you with the ability to react to unscheduled crises.

only reason to slow debt repayment would be if you were certain that your loan interest rates were not going to ramp upward. since credit cards usually float their rates, this is an unsafe assumption in most cases.

Re: Some opinions on personal finance requested

[wrog]

paying down credit card debt or subsituting lower interest debt for it (e.g., refinancing your house at a lower fixed rate) wherever you can is almost never a mistake.

Or to put it another way, if we're now in the kind of economy where it actually makes sense to keep open an outstanding loan at 18% interest because you're expecting inflation to overwhelm that and take care of the problem, that basically means we're in a whole new world now. And you had better be really sure of your current employer/employability.

[silussa.livejournal.com]

I have the really brief summary of where things are going, and why we're seeing such strong reactions.

If I'm not mistaken, the last time that liquidity dried up and confidence in the markets collapsed was....1929.

The problem for the governments is that the liquidity dried up BECAUSE confidence collapsed. Trying to restore confidence by pumping in liquidity doesn't seem to be working so well...but I haven't a clue as to the alternative approach.

[firni.livejournal.com]

"They want to make their own, original mistakes."

http://blogs.wsj.com/economics/2008/09/18/wall-street-crisis-not-quite-1929/

[elfs.livejournal.com]

Brad DeLong this morning: "Given the TED spread, I say it's time to invest in risky bonds. Either things recover. Or the fact that your bond portfolio has gone bust is the least of your worries."

[angharads-house.livejournal.com]

Hee, really glad we are on the cash side right now. Just blind dumb luck, that.

[firni.livejournal.com]

My goodness, however shall we fund that little "war" or two we have going on overseas?

[wrog]

There is also now a ban, albeit temporary, on shorting financials stocks.

The ban goes into effect today, never mind that the monthly options expiration is tomorrow. And if you happened to have an open long-put or short-call position and wanted to close it out today, TFB for you. Don't mind us if we gratuitously blow up a whole bunch of market makers; it's not like we actually need a working options market or anything.

There are basically two possibilities here:

1. Chris Cox, the head of the SEC, does not understand how markets work.
2. he does, but optics/politics/looking-like-you're-doing-something trumps rational regulation and he otherwise doesn't give a shit

I really don't know which is worse.

And here I was originally feeling stupid for having closed out my option and short positions on Tuesday only to see things slide further on Wednesday. I guess I had a sense that They were going to do something stupid, but ... Jesus Fuck.