Lower highs and lower lows = down trend , no ifs or buts. It'll cycle but at the moment it's going down .
Prepare for the "The Kick The Can Down The Road Crash of 2011"
- Thread starter Cdntrader
- Start date
here ya go another argument for down:
http://www1.chinadaily.com.cn/world/2011-08/28/content_13204455.htm
http://www1.chinadaily.com.cn/world/2011-08/28/content_13204455.htm
Stress Tests
Europe is struggling to contain a sovereign debt crisis that is nearing its third year and has left many banks from Spain to Greece in or close to insolvency. Stress tests on 90 European banks published on July 15 showed eight lenders had a combined 2.5 billion-euro ($3.6 billion) capital shortfall, failing to ease concern that many of them remain vulnerable to a potential sovereign default.
Without an âurgentâ recapitalization, âwe could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis,â Lagarde said. Bolstering banksâ balance sheets âis key to cutting the chains of contagion.â
The former French finance minister, who took the helm at the Washington-based IMF in July, said recapitalization should be âsubstantialâ and called a mandatory move âthe most efficient solution.â Banks should seek funds in financial markets first and later public money if necessary, including from the 440-billion euro European bailout fund, she said.
Europe is struggling to contain a sovereign debt crisis that is nearing its third year and has left many banks from Spain to Greece in or close to insolvency. Stress tests on 90 European banks published on July 15 showed eight lenders had a combined 2.5 billion-euro ($3.6 billion) capital shortfall, failing to ease concern that many of them remain vulnerable to a potential sovereign default.
Without an âurgentâ recapitalization, âwe could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis,â Lagarde said. Bolstering banksâ balance sheets âis key to cutting the chains of contagion.â
The former French finance minister, who took the helm at the Washington-based IMF in July, said recapitalization should be âsubstantialâ and called a mandatory move âthe most efficient solution.â Banks should seek funds in financial markets first and later public money if necessary, including from the 440-billion euro European bailout fund, she said.
True. The question is whether or not this has been priced into equities. Some (US Domestics with big casjh balances, share buybacks, and dividends have already been bought). Riskier assets have gone sideways or down. Do we go lower? Sure could. But price action lately has been bullish. Frequently a new quarter means a new turn in the market. We'll see. Thanks for the news.
Remember that the TARP vote approval announcement actually sent the markets lower in 2008.
this is shaping up the same way imo.
There are also rumors of certain bank debt guarrantees by the ECB today.
http://www.businessinsider.com/the-eu-is-working-on-a-radical-plan-for-banks-2011-8
First off. there haven't been that many crashes.
Secondly, Secretary of State James Baker's useless speech about currency was the day before the Crash of 1987.
I'd still argue that the whole obsession with one day "crashes" is overblown. If the market drops 20-30% in a few weeks or a month, it still serves the same purpose in many regards. In fact, I'd argue it probably does a fair bit more harm as it encourages many of the "dip buyers" to keep re-loading long since they always think a rebound is right around the corner.
Nevermind the fact that they can lose more in a period of several days than they can make in months during those low volatility churn higher bull legs.
I don't know about a crash, but CdnTrader's cite of Lagarde's speech is the correct cite to make if you're looking at what's going on out there.
The markets figured out that Europe's private banks are hugely exposed to the sovereign debt market, not surprisingly since this was considered reasonably risk-free until Greece hit the skids. They have withdrawn from funding banks longer term, and as a result the banks are now finding they have to resort to short-term funding, which exposes them to a huge rollover risk.
Lagarde is saying that behind this liquidity crisis is lack of faith in European banks' reserves being enough to get them through the sovereign debt crisis. She is right.
As of tonight, she is being asked to "clarify" her statement, so that she backtracks to simply saying it's only liquidity, not capitalization, that is at issue.
This is nonsensical. I don't know how the markets are going to react to all this, but the idea that a liquidity crisis brought on by a lack of faith in the banks' sovereign debt holdings isn't at base about capitalization is just nuts.
In 2007 I was given a huge chance to make money on the coming crisis, which I ignored, for reasons I still can't figure out. A very high-ranking official in a big bank said in a speech about his bank's balance sheet, that it was suddenly showing very large amounts of short-term funding. This was after the first noises about the Bear Stearns hedge funds that went belly up early on in the crisis. I remember thinking, hmm, this means that incident wasn't just a hiccup. Why? Because when suddenly people aren't willing to invest in you for a term longer than a month or two, it means they are getting a lot more concerned with the return of their capital rather than the return on their capital, and that means they're concerned about your solvency. Which is what Lagarde was pointing out.
The markets figured out that Europe's private banks are hugely exposed to the sovereign debt market, not surprisingly since this was considered reasonably risk-free until Greece hit the skids. They have withdrawn from funding banks longer term, and as a result the banks are now finding they have to resort to short-term funding, which exposes them to a huge rollover risk.
Lagarde is saying that behind this liquidity crisis is lack of faith in European banks' reserves being enough to get them through the sovereign debt crisis. She is right.
As of tonight, she is being asked to "clarify" her statement, so that she backtracks to simply saying it's only liquidity, not capitalization, that is at issue.
This is nonsensical. I don't know how the markets are going to react to all this, but the idea that a liquidity crisis brought on by a lack of faith in the banks' sovereign debt holdings isn't at base about capitalization is just nuts.
In 2007 I was given a huge chance to make money on the coming crisis, which I ignored, for reasons I still can't figure out. A very high-ranking official in a big bank said in a speech about his bank's balance sheet, that it was suddenly showing very large amounts of short-term funding. This was after the first noises about the Bear Stearns hedge funds that went belly up early on in the crisis. I remember thinking, hmm, this means that incident wasn't just a hiccup. Why? Because when suddenly people aren't willing to invest in you for a term longer than a month or two, it means they are getting a lot more concerned with the return of their capital rather than the return on their capital, and that means they're concerned about your solvency. Which is what Lagarde was pointing out.