Is the market THAT dumb???? (obviously, yes)

[redgtxdi]

DJIA up over 300pts as I type this and I'm just laughing outloud to myself.

WTF do people think?? Maybe I need to go back & take econ classes again (wherever Bernanke took 'em) 'cuz everything I see happening in this market is just so WRONG!!!!!!

EDIT (must've hit 'enter' on accident).......

Over in P & N there's a thread that says BMW is killing jobs in Germany 'cuz the US dollar is so low the labor in the US is actually *cheaper*.

(And, no, I don't necessarily think it's good, I'm just saying it to be fair.......'cuz manufacturing in America is not a bad thing, we're just not winning it back the right way, imho).

 

[PokerGuy]

Yes, the market is composed of millions of idiots, and you are the only brilliant one

Actually, what Bernanke talked about was not simply printing more $$ etc, which would simply devalue the dollar further and increase inflationary pressure. In fact, what he talked about was a plan to help investment banks by loaning them money backed by debt, including the mortage backed securities. The hope is that by doing that, they can take some of the volatility and uncertainty associated with the mortgage backed securities out of the market, and help relieve the credit crunch that is strangling the economy.

Lowering interest rates is but one tool in the arsenal, and the fed is afraid that slashing interest rates again will not help the situation much, and will boost inflation even more while lowering the value of the dollar. The stock market today is saying "hey, this plan is much better than just reducing the fed reserve rate".

 

[Jschmuck2]

Originally posted by: redgtxdi
DJIA up over 300pts as I type this and I'm just laughing outloud to myself.

WTF do people think?? Maybe I need to go back & take econ classes again (wherever Bernanke took 'em) 'cuz everything I see happening in this market is just so WRONG!!!!!!

EDIT (must've hit 'enter' on accident).......

Over in P & N there's a thread that says BMW is killing jobs in Germany 'cuz the US dollar is so low the labor in the US is actually *cheaper*.

(And, no, I don't necessarily think it's good, I'm just saying it to be fair.......'cuz manufacturing in America is not a bad thing, we're just not winning it back the right way, imho).

Anyone who uses "'cuz" is immediately discredited when talking about non *LOL related subjects.

Fail.

 

[Capt Caveman]

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots, and you are the only brilliant one

Actually, what Bernanke talked about was not simply printing more $$ etc, which would simply devalue the dollar further and increase inflationary pressure. In fact, what he talked about was a plan to help investment banks by loaning them money backed by debt, including the mortage backed securities. The hope is that by doing that, they can take some of the volatility and uncertainty associated with the mortgage backed securities out of the market, and help relieve the credit crunch that is strangling the economy.

Lowering interest rates is but one tool in the arsenal, and the fed is afraid that slashing interest rates again will not help the situation much, and will boost inflation even more while lowering the value of the dollar. The stock market today is saying "hey, this plan is much better than just reducing the fed reserve rate".

Correct.

 

[Epic Fail]

If the market is so dumb, you should keep hush hush and milk it all you can. It's dumb to tell us your money making secret.

 

[FoBoT]

Originally posted by: redgtxdi

Over in P & N there's a thread that says BMW is killing jobs in Germany 'cuz the US dollar is so low the labor in the US is actually *cheaper*.

(And, no, I don't necessarily think it's good, I'm just saying it to be fair.......'cuz manufacturing in America is not a bad thing, we're just not winning it back the right way, imho).

i seriously think this is why they are killing the dollar
seems like the wrong way to me, but i don't know crap about economics

 

[Jhill]

The first and foremost job of Chairman of the Federal Reserve is too avoid a major recession at all costs. And that's what he is trying to do.

 

[redgtxdi]

Kinda' like the way the mortgage company's job was to get anybody into a house w/ whatever loan/any way possible, no matter what?

 

[Chryso]

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots

This is true.

IMO the biggest problem with the market is it is working backwards. Instead of a company stock giving an indication of how well a company is doing people are making business decisions to try to manipulate the stock.

 

[techs]

Actually since Bush seems committed to doing anything to prevent the crash until he leaves office, Bernankes signal just tells the market the Fed will go along.
So, sort of like the groundhog signalling six more weeks of winter, Bush is pushing off the crash until after he leaves office.

 

[CPA]

Originally posted by: Chryso

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots

This is true.

IMO the biggest problem with the market is it is working backwards. Instead of a company stock giving an indication of how well a company is doing people are making business decisions to try to manipulate the stock.

company stock has never given an indication of how well a company is doing, it gives an indication on how well (or not) the company is going to do in the future.

 

[pstylesss]

Originally posted by: techs
Actually since Bush seems committed to doing anything to prevent the crash until he leaves office, Bernankes signal just tells the market the Fed will go along.
So, sort of like the groundhog signalling six more weeks of winter, Bush is pushing off the crash until after he leaves office.

My god you make everything about Bush.

Bush does not have complete control over the Fed. Pull your head out of your ass.

 

[miketheidiot]

Originally posted by: Jhill
The first and foremost job of Chairman of the Federal Reserve is too avoid a major recession at all costs. And that's what he is trying to do.

actually he has two equal roles, to manage inflation and keep the economy stable. Right now economics strability is viewed as the greater threat and that is the current focus

 

[gsellis]

Originally posted by: ZeroIQ

Originally posted by: techs
Actually since Bush seems committed to doing anything to prevent the crash until he leaves office, Bernankes signal just tells the market the Fed will go along.
So, sort of like the groundhog signalling six more weeks of winter, Bush is pushing off the crash until after he leaves office.

My god you make everything about Bush.

Bush does not have complete control over the Fed. Pull your head out of your ass.

OK, I am not the only one. I started to type this (follows), but remembered the poor Special Olympics boy with the comment about arguing on the internet. What the heck, fire in the hole.

Originally posted by: techs
I really don't understand monetary policy, but I hate George Bush

Fixed that for you.

 

[alkemyst]

I see us having another great depression. The money is so freaking worthless right now and becoming less and less so to the rest of the world.

 

[Rebasxer]

There won't be another great depression, just a low to moderate recession. It'll suck but won't be that awful.

 

[poncherelli2]

Originally posted by: redgtxdi

WTF do people think?? Maybe I need to go back & take econ classes again (wherever Bernanke took 'em) 'cuz everything I see happening in this market is just so WRONG!!!!!!

He took them at Harvard, and then MIT.

 

[alkemyst]

Originally posted by: Rebasxer
There won't be another great depression, just a low to moderate recession. It'll suck but won't be that awful.

How can you be sure? I guarantee they didn't see the last one coming either...although it was orchestrated and not a random event.

 

[jai6638]

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots, and you are the only brilliant one

Actually, what Bernanke talked about was not simply printing more $$ etc, which would simply devalue the dollar further and increase inflationary pressure. In fact, what he talked about was a plan to help investment banks by loaning them money backed by debt, including the mortage backed securities. The hope is that by doing that, they can take some of the volatility and uncertainty associated with the mortgage backed securities out of the market, and help relieve the credit crunch that is strangling the economy.

Lowering interest rates is but one tool in the arsenal, and the fed is afraid that slashing interest rates again will not help the situation much, and will boost inflation even more while lowering the value of the dollar. The stock market today is saying "hey, this plan is much better than just reducing the fed reserve rate".

In all seriousness, to understand what you wrote in the first paragraph ( what are mortgage backed securities ), what steps do I need take? Are there any books I could read? My inability to understand this financial jargon is irritating. lol

thanks

 

[alkemyst]

Originally posted by: jai6638

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots, and you are the only brilliant one

Actually, what Bernanke talked about was not simply printing more $$ etc, which would simply devalue the dollar further and increase inflationary pressure. In fact, what he talked about was a plan to help investment banks by loaning them money backed by debt, including the mortage backed securities. The hope is that by doing that, they can take some of the volatility and uncertainty associated with the mortgage backed securities out of the market, and help relieve the credit crunch that is strangling the economy.

Lowering interest rates is but one tool in the arsenal, and the fed is afraid that slashing interest rates again will not help the situation much, and will boost inflation even more while lowering the value of the dollar. The stock market today is saying "hey, this plan is much better than just reducing the fed reserve rate".

In all seriousness, to understand what you wrote in the first paragraph ( what are mortgage backed securities ), what steps do I need take? Are there any books I could read? My inability to understand this financial jargon is irritating. lol

thanks

Mortgage backed securities are groups of mortgages selected for rate/risk in a portfolio. The interest paid into them is what drives the values of the securities.

For a long time the subprime market was a great buy...now they are being avoided and often unsellable.

All in all the mortgage model for a banker if payments are made is a sure win, even if the people never go full term the typical 7 years is a nice return on investment.

 

[Special K]

Originally posted by: alkemyst



For a long time the subprime market was a great buy...now they are being avoided and often unsellable.

Was this because these securities were being falsely rated as much higher quality than they actually were?

 

[Pliablemoose]

Helicopter Ben not making you happy?

And there won't be a depression, we're too smart for that, inflation & recession will be bad enough.

And yep, the market is that stupid, just remember it can & will go back down in a heartbeat.

We have another year plus of pure shit to make it through...

 

[Jassi]

Originally posted by: Pliablemoose
Helicopter Ben not making you happy?

And there won't be a depression, we're too smart for that, inflation & recession will be bad enough.

And yep, the market is that stupid, just remember it can & will go back down in a heartbeat.

We have another year plus of pure shit to make it through...

I've got money in my Roth IRA set to invest but I wish I could time it with the bottom of the curve I hope I didn't miss it. I was waiting for middle of summer....

 

[zerocool1]

Originally posted by: CPA

Originally posted by: Chryso

Originally posted by: PokerGuy
Yes, the market is composed of millions of idiots

This is true.

IMO the biggest problem with the market is it is working backwards. Instead of a company stock giving an indication of how well a company is doing people are making business decisions to try to manipulate the stock.

company stock has never given an indication of how well a company is doing, it gives an indication on how well (or not) the company is going to do in the future.

i thought it was more of an indication of how much investors feel a company is doing/worth.

 

[LegendKiller]

Originally posted by: Special K

Originally posted by: alkemyst



For a long time the subprime market was a great buy...now they are being avoided and often unsellable.

Was this because these securities were being falsely rated as much higher quality than they actually were?

There are only certain sections where this has happened. To categorize the entire subprime market as this is ridiculous. If you consider that less than 10% of the subprime mortgage will default, that means that it is most likely that all AAA bonds will return every penny of principal to it's investors. Only the First Loss or lower tranches, which were rated relatively appropriately will take principal losses.

That means that less than 2% of the entire mortgage market has problems with ratings. That means that the rating agencies screwed up on a small piece and were 98% accurate. Then that means that over 30 years they have been pretty accurate and only incurred this 2% loss in the last 5 years.

So yeah, putting it in perspective means that their margin of error is strikingly small. NExt time you are 100% perfect, let me know, because I expect you to be in the race against God for being the ultimate being.

Here's an idea, instead of believing hype and hyperbole, go actually read about securitization structuring, that way I don't have to follow you around and correct your FUDD.

People like you are tornadoes.

As far as what happened today, it was pretty good news.

Above everything, liquidity is needed in the market, a 28 day Repo isn't a huge deal and helps calm things down.