This'll go over like a turd in the punch bowl with some...

Globe and Mail

NORVAL SCOTT

October 9, 2008

CALGARY -- Jeffery Tonken has lost a fortune over the past six weeks.

"It's Armageddon out there," Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said yesterday.

"I've lost millions. Everyone has."

The value of Canada's energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show.

Despite being one of the success stories of 2008 - Birchcliff has capitalized on the B.C. gas rush - the company's shares have plunged from almost $16 in July to just over $6 today.

more at the link

I did inhale.

was not destined to last this time around. Energy is definitely the future, but the mad rush to sell anything hydrocarbon at any price was not.

Ian and I had some great laughs over what would happen when the oil bust came.

you don't expect future nationalization?

until we know the final discoveries and disposals of the banks.

Given that the vast majority of banks that will fail have yet to fail, and that there will be chain reactions that result when they do, I have no confidence in any predictions I can make. Nor should anyone else.

That's the rub of the "There's no creditworthy investment in the world?"

Playing games now is truly what one would call gambling, with the most likely probability being that you catch falling knives.

we are facing a new economic era

I have heard a couple of times the recycled slogan: New Economy.

Now when at least the USA and Iceland have The New Economy (*), nobody uses the slogan.

(*) As usual, the USA vigorously attempts to export its economic system to all other parts of the world. I think we who live outside the USA should request advice from Cuba how to preserve our old system.

To let fear subside, people to take stock and lay plans?

"All things are always on the move simultaneously" So said the great Churchill. I admire your prescience. There are brilliant technologies and ideas that will be brought to bear in the coming months and years. But I'm worried that in all this hysteria about "subprime" and CDS and "Bubbles", that people are ignoring the root causes of our present difficulties. America has systematically ripped the guts (another Churchill expression) out of our poor, working and lower middle classes. Everything from phony inflation stats, usurious credit cards, underfunded public schools, a dysfunctional medical care system, disgraceful exploitation of "undocumented" immigrants. For a while, these people had access to credit, but this is ending. Over the last dozen years, we have had two bubbles, one more monsterous than the other. We all can't be prision guards or army rifleman; even goverment spending has to take a hit. What will be the powerful & healthy drivers of a sustainable economic recovery??

Risk is about acting even when there is worry, when all the facts are out, it will be priced in. Lehman has told the powers that be that another major bank cannot be allowed to fail in that way.

We need to let some more beating go on, it is not the screaming buy signal, but the yield curve is steeper, interest rates are lower and accommodative, fiscal policy will be there.

For right now, tax loss selling is the important task. Take the cripples out of your portfolio and shoot them, because many will not participate well in the coming rallies.

What is happening is that reality is obtruding on flawed ideology. Market forces are the forces of reality operating in economics, which is a mixture of the normative (values/preferences and norms/rules) and the rational (evidence-based reasoning). Neoliberalism is a flawed largely normative ideology masquerading as a purely rational theory with a scientific basis, which falsely represents itself as being based solely or chiefly on market forces and accepts the free market as the ultimate criterion. We are seeing a behavioral demonstration that this is not the case.

That ideology is now self-destructing from internal contradictions, as Marxians would say. Out of its ashes a fresh ideology will arise that attempts to capture the exigencies of the time in terms of the "spirit" of the coming age.

What does "spirit" mean here. It is approximated by the Chinese terms xin (seat of consciousness) and shen (comprehensive manifestation of awareness, cognition and affect), i.e., blend of "head and heart." In Western psychology the closest approximation is called "mindset" in contrast to environmental setting. When setting shifts, so does the prevailing mindset, and the prevailing mindset shapes the approach to setting. But the Chinese concepts are poetic and symbolic as well as rational and definite. Both rational and non-rational forces (both "higher" and "lower") are involved in the mix, and they are often somewhat at odds, often beneath the surface of consciousness. Postmodernism is a Western attempt to grasp this and express it as a counterpoint to the traditional strucuralism and essentialism of Western thinking.

In short, Thatcherian TINA and Reaganomics were responses to the changing context that was shifting away from New Dealism as the prevailing set and setting changed post-WWII. So too, present times are marking the end of this trend as this ideology is no longer suitable for the current context.

What will emerge to replace the present order is yet to be seen, since the major players are still operating in terms of the waning universe of discourse, and a new vision has not yet emerged and been articulated clearly, although it is likely (or hopefully) foreshadowed in progressive thinking.

At epochal turning points like this, retreat to maximum safety and high liquidity will likely prove most comfortable for all but those who both extremely prescient and experienced enough to assess risk/reward ratios impartially and those strong of stomach who can take the volatility without being buffeted by the gale winds of fear and greed. Yes, there will be ups and downs, but in this kind of psychological environment it is difficult for most people not to get whipsawed.

UPDATE:

The Dow Jones Industrial Average plunged 678.91 points (7.33 percent) to end at 8,579.19, the seventh straight loss for the Wall Street index and the first close below 9,000 since 2003.

[snip]

Analysts said the market was being driven by fear and panic amid a global banking crisis that showed little signs of easing.

"The stock market has now moved into very deeply oversold territory. Virtually every technical indicator we follow is strongly signaling an oversold market ripe for a rebound," said Fred Dickson at DA Davidson & Co.

"That said, we need to see something positive happen in the credit markets for buyers to step in and sellers to stand aside. At some point, we expect the tidal wave of hedge fund-related selling to subside, although theoretically it could continue for several more weeks."

Yahoo Business

when the deep money says it is.

However, now is the time to be picking targets for buying.

Because at some point the TARP is going to just be put directly into the stock market. That point is soon, as the pressure to save the retirements of millions of registered voters will become unbearable.

I'm starting to think the scam is up.

We got Enroned.

Your retirement is gone.

Where exactly does the government plan to get all this money they're going to save us with?

I did inhale.

when being poor has its advantages.

As Mike Ruppert once asked:

Do you prefer to fall from the penthouse to the sidewalk, or the sidewalk to the curb?

I did inhale.

What is happening is massive unwinding of leverage coupled with fear and panic. The global economy was awash in leveraged bets resulting in a huge credit bubble, and this has to be unwound in order to go forward again on a solid basis.

There is too much debt to be supported any longer, let alone repaid. As a result there is a huge run for cash to pay down debts, and what cannot be repaid or serviced will be defaulted on. This won't be over until that cycle runs its course, although there will be rallies due to short covering and some long short-term bets.

But this bear won't rest until the credit bubble has deflated. We will all be fortunate if the powers-that-be don't blow up the monetary system trying to cushion the fall and save their butts.

is governments printing money, buying shares, and then using shares in a Bretton woods style fixed exchange rate system. Run too high a deficit... ship shares out.

We are witnessing not only the failure of the flawed political ideology based on socio-economic neoliberalism but also of central banking under that regime. While there are a number of factors they played a role in the downfall of the regime of neoliberalism, none was more fundamental that the role of the Fed and other central banks, but especially the Fed under Greenspan and Bernanke.

For two major reasons: First, the Fed underwrote the credit bubble by keeping interest rates at historical lows while those bubbles were building. Secondly, the Fed used none of its considerable arsenal of tools and regulatory power to keep the field level and prevent the excesses that were developing, which were obvious to many quite early in the game.

In spite of this, the Fed is still at the center of the solution, along with Treasury, which stepped in when the Fed couldn't handle the matter. Now we have the two principle players who fueled the fire involved in crafting the solution. Even members of the elite like Lehman's Fuld are crying foul as the CEO of Goldman, now wearing the hat of Treasury, chooses unilaterally who lives and who dies.

Moreover, we also have Congress involved, which has very little economic sophistication and stood by while all this was happening, happy to repeal regulation already in place, ignore oversight, and approve disastrous fiscal policy. And we have a lame duck administration trying its best to avoid responsibility and a president conspicuous by his absence. This does not bode well.

The icons of neoliberalism are now rushing forward to condemn solutions that involve socialization of losses, earning their sponsors opprobrium from the right as socialists nationalizing private property. This criticism is turning ugly.

There is also a populist outcry as asset values plummet and retirements disappear. This is turning ugly, too.

There were already many voices, led by Ron Paul's primarily, now calling for the end of the Fed and fractional reserve lending, as well as a return to the gold standard. While that may not happen, and I think it unlikely, there is considerable push to overhaul the system, and it will be interesting to see how this develops.

we were told that represented a $1.2 tillion loss. So today's 680 point drop ought to come in at about another $1 trillion.

The total amount of cash in existence is only some $850 billion.

Dudes better have a hell of a printing press...

I did inhale.

He said it was surreal, like going back in time. The people who went were saying awful things all around him, jeering.

He's the one who said it was like going to some kind of KKK meeting, to which I responded a McKKK meeting.

Look up the videos of these things. Bizarre.

""One thing that Americans do at this time, also, though, is let's commit ourselves just every day, American people, Joe Sixpack, hockey moms across the nation, I think we need to band together and say never again. Never will we be exploited and taken advantage of again by those who are managing our money and loaning us these dollars,"

(Arrrrgh)

The market did indeed bounce off of 8000.

Now how far it bounces up, I don't know. You can go whole years and not do better than just selling at the crest of this bounce. But with this much borrowing coming in, it seems likely that we have farther up to go before we see the retest. The results of that retest will determine whether or not it is time to buy with both hands