Posts Tagged ‘Dubai’

The Great Afghanistan Bank Run

The Great Afghanistan Bank Run

Courtesy of Jr. Deputy Accountant 

Did we mention we bombed the sh*t out of the bank?!

Here’s the quick sitch: Kabul Bank – Afghanistan’s largest – is under attack by depositors who have removed some $155 million in deposits in the last two days after news that the bank had been running a questionable operation and loaning money to insiders like Mahmood Karzai, brother of Afghan president Hamid Karzai. Karzai is a Kabul Bank shareholder, naturally. The bank’s chairman Sherkhan Farnood decided an island shaped like a palm tree in Dubai would be a great investment so he took it upon himself to invest $160 billion of the bank’s assets in said palm tree islands and, for convenience’s sake, put the properties in his name. Who wouldn’t?

The U.S. government didn’t find these activities to be entertainment and swooped in to stop the nonsense. Unfortunately now they may be required to prop up Afghanistan’s already precarious financial system. Oh well, they’re experts in doing that at this point, if they could save Bank of America I’m sure they can save some corrupt Afghan bank.

MSNBC:

A senior U.S. official in Kabul told NBC that in recent weeks, Gen. David Petraeus, commander of international forces in the country, and other U.S. officials had “forcefully” urged President Karzai to crack down on the bank.

After reviewing the bank’s activities, “we didn’t like what we saw,” said the official. In particular, the official said, U.S. officials — “and many Afghans” — were upset that the country’s assets, much of which has been derived from billions of dollars in western aid, were being taken out of the country and invested elsewhere.

The U.S. prodding apparently prompted President Karzai to direct Afghanistan’s Central Bank to move in and oust Farnood, the bank’s chairman, and Khalilullah Frozi, the bank’s chief executive officer, from their positions. The reports of the move, first reported by the Washington Post, triggered the run on deposits that has now threatened the bank.

U.S. officials, under the direction of David Cohen, assistant secretary of the treasury for counterterrorism, are closely monitoring the situation and have dispatched a team to assist officials of the Afghan Finance Ministry as they grapple with how to deal with fallout from the bank withdrawals, a Treasury Department official said Thursday.

"U.S. officials in


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EXCESS GLOBAL DEBT IS STILL THE PROBLEM

EXCESS GLOBAL DEBT IS STILL THE PROBLEM

Courtesy of The Pragmatic Capitalist 

By Comstock Partners:

Berlin Laboratory Test For Swine Flu

The impact of the Greek debt crisis on the stock market does not come as a surprise to us.  It is one part of the chain of reaction from the excess global debt problem and the related “cycle of deflation” that we have been warning about since the late 1990s.   At that time we wrote about the large amount of debt being used to finance the dot-com boom that collapsed in the early 2000s.  From 2003 to 2007 we continually pointed out that the housing boom and related debt buildup sparked by the Fed’s extended low-interest rate policy would inevitably have a bad ending.

Since that time we have been insistent that without the reduction of both global and domestic debt any economic recovery would not be sustainable. However, rather than reducing overall debt, most nations, including the U.S., have shifted debt from private to sovereign hands.  These actions were virtually certain to result in sovereign debt problems, and these have now begun to show up in spades.  As usual the weaker entities have been hit first (Dubai and Greece) and the debts are now in the process of being transferred to the stronger nations.  The key problem is that the stronger nations have only limited capacity, at best, to take on a significant amount of additional debt, and they run the danger of being dragged down as well in a continuation of the chain reaction.  Without a major deleveraging of debt the economy cannot return to its historical long-term growth rate.  But the process of deleveraging will result in below-average growth with recurring recessions until the process of reducing debt to manageable levels is completed.  The process of deleveraging almost always results in deflation, and a series of “beggar thy neighbor” policies, although inflation can eventually follow as nations attempt to print money in an effort to avert defaulting on their debt. (Please see Comstock’s cycle of deflation chart below)

Dubai, United Arab Emirates, Hydraulic excavator with skyscrapers in background

The Greek debt problem, therefore, is not an isolated event, but part of a chain reaction in response to decades of debt expansion that must now be unwound.  As soon as the Dubai crisis emerged late last year we have seen it as just the first in a series of sovereign debt crises that would emerge over time.  Even if the EU and IMF…
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Wednesday’s Worry – World Wide Cash Crunch

Hugo Chavez is running low on cash

Should you care that he just had to withdraw $5Bn from reserves, sending them to a 10-month low and down 19% to $28.35Bn?  Well it’s not just Venezuela but they are a good example of what’s happening around the World as even oil-rich nations can no longer prop up their economies and will have to begin competing with the US, Europe and Japan to borrow money on the international markets.  Venezuela may have external debt financing needs this year of as much as $19 billion and as much as $22 billion in 2011 should authorities choose not to use non-reserve savings estimated at $41.1 billion, according to Morgan Stanley.  “Short of some break in Venezuela’s current dynamic, the economy may be faced with a severe dollar crunch as early as this year,” Pardelli and Volberg said. “The dollar crunch may prompt the authorities to attempt to buy time by drawing down their hard currency savings, issuing debt or significantly ratcheting up policy heterodoxy.”  

Greece needs $15.6Bn by the end of May and that much again in August and November.  Seven-year notes sold by the government this week fell even after the European Union and the International Monetary Fund crafted an aid package that would be triggered should the nation be unable to raise sufficient cash from capital markets to cover its financing needs. Greece may pay about 13 billion Euros more in interest on the debt it sells this year than it would have to had yields stayed at their pre-crisis levels relative to Germany’s.

The UK will be spending 10% of their tax revenues just to pay the interest on their debt as debt itself soars to 90% of GDP with debt now costing the UK more than their Defence and Transportation budgets combined.  Neighboring Ireland is looking at a $110Bn bill over the next 12 months to stabilize it’s bad banks – and that’s AFTER giving the banks a 47% haircut on the value of the assets the government will be picking up.  This will not be counted as an addition to Ireland’s already $95Bn in debt for 2010 because, technically, they are buying an asset - even if the asset is toxic.  It’s the same trick our Fed uses every month to pretend things are fine…

Fed President Richard Fisher says the U.S. can’t ignore the effect of the
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New Baghdad and the Collapse of Capitalism

New Baghdad and the Collapse of Capitalism

Courtesy of Doug Hornig, Casey Research

 

Forty years ago, it was a small town on the Persian Gulf, merely one of seven sheikdoms joined in federation in 1971 to create the United Arab Emirates. Basically, there was nothing there but sand. Yes, oil had been discovered under that sand, and the city/state was enjoying its first economic boomlet. From about 60,000 in 1968, population tripled by 1975, doubled in the next ten years, and nearly doubled again by 1995.

'Burj Khalifa', The World's Tallest Building - Dubai

 

Problem is, especially compared with many of its Gulf neighbors, it didn’t have all that much oil to begin with, and its reserves were falling fast. What it did have was Sheikh Mohammed bin Rashid Al Maktoum, the most influential member of the family that had ruled for more than a century and a half. And the sheikh had a vision.

 

Sheikh Mohammed believed that the Muslim world needed a New Baghdad, a center of commerce and learning and culture that would shine like the hub of the old caliphate, which had dominated the civilized world a thousand years earlier. He was determined to erect a dazzling, ultra-modern new metropolis, starting from scratch.

 

On the sands of Dubai.

 

The rest of the story is pretty well known. The crown prince, and later ruler, of Dubai had his way. His emirate became one of the richest and gaudiest places on the planet. Population shot to almost 1½ million, about 90% of them immigrants – from unskilled Bangladeshi laborers to software engineers from the U.S. – all lured by the promise of better-paying jobs than they could find at home.

 

Even…
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Sovereign Debt Defaults

Here’s two posts (article plus update) by The Shocked Investor on Sovereign Debt Defaults.

Concerns Escalate On Sovereign Debt Defaults: Who Is Next?

A week ago we posted the list of countries [below] at risk of default or with very poor credit ratings. It turns out that concerns are seriously growing worldwide about sovereign debt.

The Financial Times reports today that following the disasters in Greece and Dubai indeed sovereign debt risk is emerging as a serious concern for senior bankers, risk consultants and auditors: "Bankers at some large institutions are discussing whether they need to make provisions for sovereign risks in the same way they now set aside reserves to cover losses from corporate or emerging market risks".

This all has to do not only with the seemingly isolated financial disasters (Greece, Dubai, although one can add Hungary, Ireland, Iceland, Japan, the U.K, and even the U.S, and several others – are these really isolated?), but with the loose monetary policy employed by some countries. Moody’s has warned that debt could be sold off in 2010 if central banks do not implement successful exit strategies from these loose monetary policies.

"Control Risks, a risk consultancy, has seen a big increase in mandates from insurance companies and other financial institutions seeking to understand the part politics plays in sovereign default risk".

A survey showed lower risks for eurozone countries given the likelihood of support by other member states, however, countries such as Kazakhstan, Ukraine, the Seychelles and Eritrea – are vulnerable to downgrades and default.

So we have money printing pushing markets up, and debts and disasters in the making. This is why I like straddes so much. Anything can happen.

Sovereign Debt Update: Europe At Great Risk

Here is a great follow-up on our article on sovereign debt risk. The Wall Street Journal has a map of the risks in Europe:

[Chart: Euro Zone Grapples With Debt Crisis, WSJ]

Says the WSJ article: "After two years of crashing banking systems and economic recession, the euro zone enters 2010 with a full-blown debt crisis. The European Commission warns that public finances in half of the 16 euro-zone nations are at high risk of becoming unsustainable".

"Half of the 16 euro-zone countries are deemed to be at


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Merry Monday Morning

Mondays never let us down, do they?

Thank goodness too or we would have regretted flipping more bullish on Friday but the combination of thin trading and a short week with no data on Monday was just too much for the pump-monkeys to resist and they are out in force this morning, sending the Dow futures 40 points higher, over 100 points above Friday's low, where our lower levels held and we made some upside bets (see Weekend Wrap-Up for details).  We are mainly in cash for the duration of the year but we'll be keeping our eyes open for some nice opportunities, like shorting oil again as they cross below $75 (now $75.08 at 7:30) on the last day of January contract trading, using $75 as the stop line to the upside – that play should be an easy way to scalp a few quarters

Gold popped back to $1,118 overnight but not too impressive as silver is laying around at $17.35 while copper was rejected at $3.16 and couldn't hold $3.15 either so we're probably heading back to test $3.10 this week once the dollar reasserts itself after losing ground to the Euro ($1.435) and the Yen (90.50) in overnight trading (after the Nikkei closed up, of course).  None of that matters, of course, in the final 8 trading days of the first decade of the 21st century as it's VERY unlikely the Dow will match it's Dec 27th, 1999 finish of 11,497 or the S&P 1,469 or especially the Nasdaq, which is not even at 1/2 it's 1999 finish of 4,069.

The NYSE, oddly enough, has been a small winner over the past decade, having finished 1999 at just 6,876 and the Russell has been the best performing index, now at 610 and up over 20% from the decade's start at 504.  This is GOOD – this makes me feel good about America and about our prospects for the future.  Of course our big industrials had a rough decade – we shipped our manufacturing overseas and there's little left there.  Of course tech can't compete with the idiotic bubble of 1999 and the S&P also fell victim to globalization and performed poorly against increasing foreign competition.

 

But at home, our broader and generally smaller companies – the ones that employ 70% of all American workers, have found a
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Hmmm…. Dubai (Again) – More?

Hmmm…. Dubai (Again) – More?

Courtesy of Karl Denninger at The Market Ticker


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Testy Tuesday – Things Start To Go Wrong

Over 100 people were killed by car bombs in Baghdad at about 3:30 this morning.

That got Europe off in a foul mood this morning and poor earnings guidance from MMM didn't help, nor did poor Industrial Production numbers out of Germany or new fears that Dubai World will cause massive losses (Nakheel lost $3.65Bn in it's first half report).  Then Moody’s Investors Service said today deteriorating public finances in the U.S. and U.K. may “test the Aaa boundaries” while Fitch Ratings downgraded Greece’s credit grade to BBB+.  Ben Bernanke told the Washington Economic Club yesterday that the U.S. economy faces “formidable headwinds” but, on the bright side Japan’s government backed a stimulus package worth 7.2 trillion yen ($81 billion).   

Before we know it, futures are off 100 points at 7:30.  Hopefully we don't break below 10,320 at the open as we covered our long DIA puts to that spot, more worried about a bounce up than a market move in our generally bearish direction.  We had a very nice day yesterday with our $100K Virtual Portfolio already making it's target $1,000 for the week so locking in the gains seemed prudent but maybe we could have been greedier…

Central banks and governments around the world are totally right in saying that the recovery is still very weak,” Philippe Gijsels, a senior structured product strategist at Fortis Global Markets in Brussels, said in an interview with Bloomberg Television. “Going into 2010 I would be extremely surprised if we do not see a serious hiccup somewhere.”  German industrial output unexpectedly fell for the first time in three months in October, led by a drop in production of energy and investment goods such as machinery. Output decreased 1.8 percent from September, when it advanced 3.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 1 percent gain,  off by 280%, according to the median of 38 estimates by "expert" economists in a Bloomberg survey.  

Moody's fingers the U.S. and U.K. among top-rated sovereign borrowers, saying they must prove they can reduce their bulging deficits or risk a downgrade to their AAA credit ratings. Under its most pessimistic scenario, the U.S. could lose its rating in 2013 if economic growth lags, interest rates rise and the government fails to shrink the deficit or recover its loans to the financial sector.


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When You See The Flash……

When You See The Flash……

Courtesy of Karl Denninger of The Market Ticker

Operations Allied Force

This is rather humorous, really….

Bankers are furious that two defaulting Saudi conglomerates that owe $20 billion (£12.2 billion) appear to be favouring local banks over foreign creditors. State-owned Royal Bank of Scotland, HSBC and Standard Chartered are all understood to have exposure to Saad Group and Ahmad Hamad Algosaibi & Bros (Ahab). Dozens of other Western banks are also owed money, including Citigroup and BHP Paribas.

So what?

You banksters were perfectly happy when you got preference you weren’t entitled to last year!

Remember that?  You got paid at par on things that were worth much less and in many cases zero.  AIG Credit Default Swaps anyone?  GM bonds?  Chrysler bonds?  Various bank deals that "protected" bondholders that should have taken losses, while screwing non-bank debtholders and others?

I have raised hell about the refusal to honor the sanctity of the capital structure in these pages since, well, The Market Ticker began publication.

But I haven’t seen any of you banksters complain when the favoritism and violation of the capital structure favored you!

Now, suddenly, Saudi Arabia is joining the ranks of defaulting Arab nation-state-projects, and they’re doing the same sort of thing to foreign holders that those very same banks did to other people last year, in many cases bankrupting them outright.

Angela Knight, head of the British Bankers’ Association, said yesterday: “This is an important issue for our members and one we would like to see resolved as calmly and quietly as possible.”

Funny how secrecy always is a primary concern when you’re the one looking for something different…. and especially when you just got done screwing everyone else in the world a short time ago.

I hope The House of Saud tells you where to stick your mendacity.

You saw the flash over Thanksgiving with Dubai.  You’re welcome to believe that the 1500 degree wall of air and overpressure won’t arrive if you’d like, or that the plume of fallout won’t blow your way, even though the wind was in your face while you were facing that flash.

believeGo ahead folks. 

Believe.

Believe that all the bailouts and handouts that favored people…
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Wickedness Abides

James Kunstler on Dubai…"the monstrosity they built in their waterless convection-oven of a city-state makes Las Vegas look like a mere strip mall in comparison." – Ilene

Wickedness Abides

"While Dubai is not big enough to set off financial repercussions outside the Middle East, the main fear is that investors could flee risky markets all at once in search of safer havens for their money."  -- The NYT, Vikas Bajaj and Graham Bowley, reporting.

     Apart from the stark self-contradiction in this quote from The New York Times, you have to love the fatuous ‘it’s all good’ self-assurance where global banking is concerned. No problemo y’all!  A mere overdraft incident, a cash-flow hiccup… and yet "the main fear" [among whom?] is that investors [where and in what? Like, everywhere?]  could flee risky markets all at once in search of safer havens for their money [WTF?].  Gosh, well, as long as they don’t flee the New York Stock Exchange, the Hang Seng, the FTSE…. And, hey, do you suppose anybody bought any credit default swap "insurance" on the deals that financed scores and scores of super-giant condominium skyscrapers and hotels amounting to the greatest spec construction folly in the history of the world?

     Snapshots of the stupid fucking work-in-progress have been circulating around the Internet for five years, the disbelief was so monumental.  I confess, when I first saw the Palm Island I was impressed at what a superb air-strike target it presented.  And then, when the real estate assemblage of artificial islands arranged like a map-of-the-world came along, I could only imagine the megalomanical glee rising in the throat of a jet bomber pilot (nationality unspecified) as he closed in on it.

     Whom the gods would punish, they first make completely crazy. That includes us, here in the USA, by the way, but pound-for-pound Dubai is the current champeen.  The monstrosity they built in their waterless convection-oven of a city-state makes Las Vegas look like a mere strip mall in comparison. Throw in a few other affronts to nature, such as an indoor ski "mountain," a beach cooled by an under-the-sand refrigerated pipe network, golf courses that have to be hosed down with acre-feet of desalinated sea-water, and forget about "the gods" — one begins to see the


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Phil's Favorites

Disney teams up with Secret Cinema - watching movies will never be the same again

 

Disney teams up with Secret Cinema – watching movies will never be the same again

Secret Cinema’s production of Moulin Rouge. Secret Cinema

Courtesy of Sarah Atkinson, King's College London and Helen W. Kennedy, University of Nottingham

Disney’s recent deal with the immersive experience company Secret Cinema signals a new era for the cinema industry. New film titles from the Disne...



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Zero Hedge

"The Markets Are Really Panicking": VIX Explodes, Markets Crash In Worst Week Since Lehman

Courtesy of ZeroHedge View original post here.

Friday's market performance has traditionally been the weakest, even during the meltup phase ahead of the recent coronacrash, and as such it will probably not come as a surprise that today's overnight rout which followed the biggest 6-day correction from a peak for the S&P on record...

... has accelerated only this time without even a casual attempt to buy the dip, with the S&P plunge accelerating, and briefly dipping below...



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Kimble Charting Solutions

Financial Crisis Deja Vu: Home Construction Index Double Top?

Courtesy of Chris Kimble

Most of us remember the 2007-2009 financial crisis because of the collapse in home prices and its effect on the economy.

One key sector that tipped off that crisis was the home builders.

The home builders are an integral piece to our economy and often signal “all clears” or “short-term warnings” to investors based on their economic health and how the index trades.

In today’s chart, we highlight the Dow Jones Home Construction Index. It has climbed all the way back to its pre-crisis highs… BUT it immediately reversed lower from there.

This raises concerns about a double top.

This pr...



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Insider Scoop

A Peek Into The Markets: US Stock Futures Plunge Amid Coronavirus Fears

Courtesy of Benzinga

Pre-open movers

U.S. stock futures traded lower in early pre-market trade. South Korea confirmed 256 new coronavirus cases on Thursday, while China reported an additional 327 new cases. Data on U.S. international trade in goods for January, wholesale inventories for January and consumer spending for January will be released at 8:30 a.m. ET. The Chicago PMI for February is scheduled for release at 9:45 a.m. ET, while the University of Michigan's consumer sentime...



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Biotech & Health

Could coronavirus really trigger a recession?

 

Could coronavirus really trigger a recession?

Coronavirus seems to be on a collision course with the US economy and its 12-year bull market. AP Photo/Ng Han Guan

Courtesy of Michael Walden, North Carolina State University

Fears are growing that the new coronavirus will infect the U.S. economy.

A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; ...



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The Technical Traders

SPY Breaks Below Fibonacci Bearish Trigger Level

Courtesy of Technical Traders

Our research team wanted to share this chart with our friends and followers.  This dramatic breakdown in price over the past 4+ days has resulted in a very clear bearish trigger which was confirmed by our Adaptive Fibonacci Price Modeling system.  We believe this downside move will target the $251 level on the SPY over the next few weeks and months.

Some recent headline articles worth reading:

On January 23, 2020, we ...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Chart School

Oil cycle leads the stock cycle

Courtesy of Read the Ticker

Sure correlation is not causation, but this chart should be known by you.

We all know the world economy was waiting for a pin to prick the 'everything bubble', but no one had any idea of what the pin would look like.

Hence this is why the story of the black swan is so relevant.






There is massive debt behind the record high stock markets, there so much debt the political will required to allow central banks to print trillions to cover losses will likely effect elections. The point is printing money to cover billions is unlikely to upset anyone, however printing trillions will. In 2007 it was billions, in 202X it ...

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Members' Corner

Threats to democracy: oligarchy, feudalism, dictatorship

 

Threats to democracy: oligarchy, feudalism, dictatorship

Courtesy of David Brin, Contrary Brin Blog 

Fascinating and important to consider, since it is probably one of the reasons why the world aristocracy is pulling its all-out putsch right now… “Trillions will be inherited over the coming decades, further widening the wealth gap,” reports the Los Angeles Times. The beneficiaries aren’t all that young themselves. From 1989 to 2016, U.S. households inherited more than $8.5 trillion. Over that time, the average age of recipients rose by a decade to 51. More ...



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Digital Currencies

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

 

Altcoin season 2.0: why bitcoin has been outgunned by crypto rivals since new year

‘We have you surrounded!’ Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

When bitcoin was trading at the dizzying heights of almost US$2...



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ValueWalk

What US companies are saying about coronavirus impact

By Aman Jain. Originally published at ValueWalk.

With the coronavirus outbreak coinciding with the U.S. earnings seasons, it is only normal to expect companies to talk about this deadly virus in their earnings conference calls. In fact, many major U.S. companies not only talked about coronavirus, but also warned about its potential impact on their financial numbers.

Q4 2019 hedge fund letters, conferences and more

Coronavirus impact: many US companies unclear

According to ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.