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Posted by on Nov 13, 2010 in Markets, TG Roundup

Category 6 Financial Storm Coming Our Way?

In this post, I want to write as little as possible. Hope the seriousness is conveyed.

Pay no attention to stock market. Debt markets are smarter than equity markets. Right now, the municipal bond market is taking a “shellacking.”

Imagine a large California defaulting on its debt obligations. That is where this is headed.

I don’t know how soon. But this is not good.

9 Comments

  1. Namasthe

    FWIW

    Funny but this is what I think is the the reality.

    • What do you call this? Getting caught with your pants down? These people have such impunity!!

  2. Mohan garu, do you ever have any positive stories on financial markets on your website ?

    It is easy to scan through internet and pick the stories that fit your theory and constantly bombard teluglobe users…but do you think it is fair ? I hear the same drum beats on your Friday talk show also – and stopped listening to the same rhetoric, although I had to forgo lovely telugu songs to which I ( and I believe, most listeners) used to tune in.

    I don’t feel that you are a very sophisticated man having your own agenda shoving through the throats of folks who innocently come to this site or your talk show but if you want to do some good journalism and do not want to be another Telugu Glenn Beck, constantly scaring people, please bring in experts from both sides of the issue, have a healthy debate from which we all can learn and let people form their own opinion.

    I understand that this web site is to discuss ‘anything’ that anyone would like to talk/share and you may be right too, but your constant negative financial topics are defintely not in tune with the general theme of this website and are more like far right wing, one sided, conspiracy theories.

    • Good criticism andi – especially about the show. You have a good point about MMGL. But may be not about TG.

      As I always say – I would like to hear and pay attention to dissent, any dissent. For, most dissenting voices don’t speak – they rather walk away. I am glad you spoke candidly about it and I am almost sure that you are not alone.

      Finding the right balance on the show is always a challenge. I can rise or lower the temperature on the issues I cover. However, comparing me to schizophrenic Glenn Beck is bit below the belt. 🙂 Based on what you said, I will certainly make adjustments on my show.

      As with ‘balanced’ writing on this board, I don’t believe in balance for balance sake. I will continue to call the way I see it rather than what some people want to hear. If you want to provide alternative point of view, I am inviting you to post on this board. You can post anything you want, that you see as a ‘balance’ to what you see as my ‘doom-and-gloom.’ [BTW, you have been given author privileges on TG].

      I am no ‘right-winger’, nor am I a ‘lefty’. In fact, a majority of the people cannot be boxed like that. Also, If it sounds to you like I am a proponent of conspiracy theories or I have an agenda – you got it wrong. I subscribe to no conspiracy theories. Conspiracy theories are often just that – theories. However, the corruption is real.

      Here is an example of the difference between corruption and conspiracy theory. On the Third Thursday of Oct 1998, Greenspan announced a rate cut at 3:03 PM, which led the markets to catapult 300 points in almost no time. Consider this:
      – if you knew OEX contracts close at 3 PM and settle at the 4 PM closing prices for that day,
      – if you also knew later that most people who were rightly short the market got shafted in that one last hour of trading, and
      – if you also knew that some of the counter parties to those shorts – banks (Bank of America was one of them) – not only got off without the damage, but ended up loading on the OEX calls that morning,

      what conclusions will you draw from that data? [Those three bullet points were news – not conspiracy theories].

      I can cite you numerous examples of corruption like this, including another blatant manipulation and extension of OEX settlements to 10 AM to Third Friday in Sept 2008 – which was in the wake of Lehman bankruptcy. The extension allowed some banks to get out of the hole they were in as of the previous day’s close.

      I don’t know about you, but my conclusion from this data is this: the Fed and the banks are part of a cartel.

      If you want positive spin on economic stories or banks or businesses that are on one hand stealing from the citizens and on the other hand crying foul about government involvement, you can watch CNBC instead. They are there to push the agenda of Wall Street interests. Fox is there to push the right-wing and nut-case agenda. I, on the other hand, do not have any agenda. Just as I mentioned with an example, I see corruption, extreme corruption – in the political scene and business scene.

      Finally – I am not an eternal pessimist. I see very little positives in the current economy. The cleansing has to be done. Confidence in the system has to be restored. Bad businesses, and policies should go out of business before the actual recovery starts – which should take time.

      Again, thanks for the feedback. I really appreciate it.

      • Mohan garu,

        Encouraged with your positive acceptance of my observations, I want to discuss few more points.

        The example you have given in your reply is classic example of simplistic conclusion on corruption. While there will always be people who try to look for loop holes and are ahead of the curve in deceiving the system, assumptions of large scale deception with some very simple and sometimes even very convincing examples doesn’t go too far.

        The market mechanisms involved are too complicated and would need careful analysis rather than painting everyone including people with proven track record with such a broad brush.

        Anyway, coming back to presentation of your articles, which are almost always negative, I should first confess that I am not knowledgeable
        enough to bring up a convincing contradictory argument for each and every example of yours. But I am sure there are people who have a different viewpoints and my point is that they should be heard too.

        Hearing a different viewpoint actually puts your theory/prediction to test and we all can learn a thing or two.

        Providing one side of the story actual erodes the credibility of any argument. Your point, however valid, is already over shadowed because I know what to expect. I know what conclusion you would draw.
        I already know the people (ofcourse, your favorite buddy, GreenSpan) or entities(read : wall street, banks) who are almost always the bad guys.

        As the saying goes : The greatness of a democracy is not the rule by the majority but capacity to listen to the minority (something to that effect, don’t remember the exact quote).

        Similarly, your arguments can be further strengthened and can be more convincing if they are challenged. It is your choice to either rant on these people (which almost never get challenged in this forum) or
        set a good journalistic platform by inviting people with opposite views and stimulate your audience with more thought proviking articles that help understand the working of these complex financial systems.

        Thanks again for providing this open forum and appreciate all your good work. Good luck.

  3. I have cash parked in my money market for almost a year. I want to jump in the market if the armageddon does come. I am growing a little impatient at this point. I hope you are right about that category-6.

    • Chakravarthy,

      I am also in full cash for a while. But I will be careful in jumping into market this time. I believe a fundamental restructuring of the banking and monetary system, which includes a radically different Feds is needed to restore confidence in the system. And, it could happen in the next fie years.

      Until then – one has to be very careful in ‘investing’ in this crazy market.