The following message was brought to you by Dealbreaker commenter SEG:
Fear, a true 4 letter word, is raging out of control inside of the New World Economic Order. The myth of decoupling has been destroyed, and the world is gripped in mass hysteria. The TED rate appears to have helped the VIX(en) to experience a spike in LIBOR.
Something more terrible then a cartoon character is attacking the world as we know it. It appears that we have unadulterated fear of CDS exposure loose inside of the economic world. While I will normally try to divert any conversation away from politics, I think the following quote is worth reading. It touches on the exact topics we face today.
"... This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself--nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days..."--FDR 1933 inaugural address
The fear that is rocking the financial markets has finally shifted from Wall Street to Main Street. In this case, the first eye witness reports of it, comes from the CEO of a public company who shared the following story with me. Before I share the story, the following is my definition of his friends......a professional hard working investor who is used to having a fine splash of the best scotch and who enjoys a quality Cuban cigar smuggled into the states and placed in his private box, is feeling the panic for the first time...
"...I have heard of an investor who withdrew $3 million dollars from his account at the bank, had them count it out and then had them place it into his safety deposit box at the same bank, in order to be free of FDIC issues. This action was to give him peace of mind so he could sleep at night. He didn't need the money, but fear of losing it drove him to this solution..."
The fear of money, or said better the fear of losing one's money, is driving the collapse of the basic structures that underpin our financial world. Money market funds generate the liquidity grease that our modern economic system operates on. We have Fear depriving the money market system from access to capital to provide the liquidity necessary to keep day to day operations in motion.
The US Treasury needs to address the CP market ASAP, before the gears of world finance lock up due to a lack of any liquidity.
We need a solution to the CP market Right Now, more then we need Congress to pass the "50 Pork Projects in a Bill Basket."
Posted by guest , Oct 03, 2008 9:29AM
So, SEG is the suprise guest writer?
Posted by guest , Oct 03, 2008 9:44AM
Who GAF
Posted by guest , Oct 03, 2008 9:45AM
Yeah I read this last night in the comments. Now it's repeated as a headline story. Not sure this is helpful... an unknown source citing an unnamed one. I think I'd rather know who SEG and this CEO is, or have them shut the fuck up.
Posted by guest , Oct 03, 2008 9:45AM
@SEG, I know what CDS's are, but what is the CP market?
A Stupid Equity Investor
Posted by guest , Oct 03, 2008 9:48AM
SEI- Commercial Paper
Posted by guest , Oct 03, 2008 9:49AM
Commercial paper, for fuck's sake.
Posted by MarshallStack , Oct 03, 2008 9:49AM
It is surprising he did not convert it to Euro or gold or something other that greenbacks.
Any idea what kind of % this is of his overall? Pocket change?
Posted by guest , Oct 03, 2008 9:51AM
I ALWAYS PULL OUT BEFORE I CUM.
Posted by Henry Ryecroft , Oct 03, 2008 9:53AM
Somebody call a doctor. Roubini is bleeding from his nipples:
http://www.rgemonitor.com/blog/roubini/
Posted by guest , Oct 03, 2008 9:56AM
@DealBreaker...
Thanks for putting StupidEquityGuy's material on DB in a feature article. SEG writes well and coherently, and if TGFD can almost understand what he is saying, then he is surely getting his message out.
@#3...
I too saw SEG's post last nite, but I don't agree with you.
The Guy from Delaware
Posted by guest , Oct 03, 2008 9:57AM
So, if this is true, if even this guy is afraid then maybe Bess or EP ought to pen an article about patriotism and faith in the economic system and why it is so important not to do something that dumb.
If everyone does this, takes their money out and holds it all around the world then isn't this like fighting a losing battle?
Posted by guest , Oct 03, 2008 9:59AM
I'm sure this is a naive question, but does anyone think that there is an opportunity for the remaining big banks to monopolize the credit market now by opening up and starting to lend? I envision a "Trading Places" moment, as institutions desperate for credit lines practically ambush the banks who hang the "open for business" sign for lending.
The banks could charge whatever they want, under onerous terms, and possibly lock in these customers for the long haul.
It just seems like a great time to leverage (pun intended) their position and dominate market share.
Of course, you need more than one to jump in to at least create the appearance of counterparties...
Posted by guest , Oct 03, 2008 10:09AM
I'm going to reach back to my first adult job, which was in internal audit at Chase. $3 million in cash? Not likely the bank has that on hand entirely in $50's or $100s. In 20s that would mean 3,000 bundles of bills. Lets assume maybe $1 million could be in bigger bills. So maybe 2,000 bundles of 20's plus 200 bundles of 100s? Its also not likely that the bank has a safe deposit box big enough to hold that. Much as I like SEG's style, I call BS on this story.
Posted by guest , Oct 03, 2008 10:16AM
@5/6, I should have known that CP = Commercial Paper, but I wasn't thinking right. Thank you.
A Stupid Equity Investor
Posted by beentheredonethat , Oct 03, 2008 10:16AM
You cannot solve the commercial paper market problem by targeting the commercial paper market. It is the ultimate in short-term financing, and although the paper can be dated as much as 270 days out to maturity, a huge portion matures anywhere from overnight to a week. The fundamental aspects of the squeeze have to solved at a higher level before the CP market will function properly. In other words, attack the root of the problem, and the CP market will automatically be fixed. Trying to fix the CP market in a vaccuum is tugging on Superman's cape and pissing in the wind.
Posted by guest , Oct 03, 2008 10:19AM
As I've commmented before -- the Democrats and the MSM (in the service of promoting Democrats politically) have been "short selling" the economy for years. Well before this shit starting hitting the fan, a significant number of people thought we were in a recession and an amazing number thought we were in a depression. Tellingly, when asked if they, personally, were hurting financially, most said no, but "other people" were.
Well, now we *are* in the land of recession with possibly worse things on the horizon, but the urge to run down the economy in pursuit of political gain is ingrained in Dem and media behavior. Witness Chuckles Schumer creating a run on a bank with his reckless statements. Harry Reid coming out of a meeting with Paulson, et al and announcing that "no one knows what to do" and his latest about the failing insurance company.
Even if these things are true, in a situation like this, responsible leaders think of the country first, before political expediency. Same with the media. I don't mean lie, but don't deliberately spook the herd. That's what's happening here.
Interestingly, when this whole mess with the need for a bailout first happened, one person did say that the fundamentals of the economy were ok, and then went on to explain that what he meant by that was the work ethic of the American worker, entrepreneurship, and innovation were still intact, etc (I don't have the exact quote). That person was John McCain.
His quote was immediately truncated in press reports as only saying the fundamentals of the economy are sound, and he has been ridiculed as being a delusional, senile old man.
Obama and his alcolytes in the press have used this partial quote extensively to portray Rupublicans in general, and McCain in particular as out of touch. I've seen McCain ridiculed here on the basis of that truncated quote.
But do note that McCain's initial reaction was to calm the herd while trying to work on a solution, while Obama, the Democrat's leadership, and the MSM's initial reaction was to try to gain politically by placing blame, avoiding responsibility and and to agitate the herd with "sky is falling" rhetoric.
BTW, the sky may actually be falling, I'm not trying to deny that, but the instinct of an awful lot of people in our polical and media leadership is to hype the bad news for political gain.
Now the Main St. herd is even more restless, and Barack Obama, Harry Reid, and their friends are walking amongst them slapping one or two on the rear end and shouting suddenly. The herd is starting to panic --
Posted by guest , Oct 03, 2008 10:22AM
@ 12 nope.
Banks are also hording cash because of expected payouts on CDS triggered by the failures of freddie, fannie, leh and WM.
Auction for these bonds are on the following dates: Fannie Mae and Freddie Mac auctions on October 6. Then, Lehman is settled on October 10, and Washington Mutual is scheduled for October 23.
Because of the opacity of the CDS market, it is still not clear how many contracts have to be settled and whether payouts on the defaulted contracts, which could reach billions of dollars, are concentrated with any particular institutions.
As far as it being patriotic to support our econmic system, not really. The economic system has done some really stupid things to get us into this situation. And up until 3 weeks ago this adminstration continued to flat out lie and say this system was strong.
My duty is first to make sure my family is solvent. I don't trust any system to do that for me. I never have.
Posted by diablo , Oct 03, 2008 10:23AM
@15
What if this is an emergency? Shouldn't the Fed intervene and become the emergency bank for the corporate sector? Otherwise, how long would it take to attack the root of the problem, as you say, and get the fix?
Posted by beentheredonethat , Oct 03, 2008 10:33AM
@18
I believe we are rapidly approaching an emergency, this bailout not withstanding. If confidence in counterparties to repay even their most un-esoteric instruments (commercial paper) does not return soon, that 700 billion is going right down a rat hole. This is a confidence problem at least as much as a credit problem, and the confidence part is alot harder to solve. As far as Fed intervention, that seems to be what Schwarzenegger is requesting to the tune of $7 billion to meet his payroll in October. A couple of hundred billion to FNM & FRE, 85 billion to AIG, 29 billion to BSC, 25 billion to F & GM, 700 billion to the banks, and on and on........don't you think the Fed is pretty much fucked already? Who is going to float the necessary paper? Fed needs funds too....
Posted by guest , Oct 03, 2008 10:35AM
@17
Well said. Bravo. Let us await the collapse of the system. Bail while you can. Hoorah!
Posted by beentheredonethat , Oct 03, 2008 10:39AM
@17 & 20
Precisely wrong, and a major part of the problem. Prior to this generation, the men on the street always looked out for the well-being of the country, even in the wake of some serious fuck-ups. This generation buys into a whole different set of values, and there is nothing cool about it. We will all eventually pay for that, sooner rather than later.
Posted by guest , Oct 03, 2008 10:42AM
@8
Too bad your dad didn't pull out before he came. Now the world has to bear with assholes like you.
Posted by beentheredonethat , Oct 03, 2008 10:50AM
@17
Also, not possible for your family to be solvent if the system locks up......
Posted by guest , Oct 03, 2008 10:52AM
Long: Nonperishable food, gold, guns, ammo.
Short: Companies with a CEO who fears a banking system collapse, withdraws a very improbable amount of cash, and PUTS IT IN A BANK. Also, people who believe such stories.
Posted by guest , Oct 03, 2008 10:53AM
@21
Self First. Britney Second. Country Third.
Posted by guest , Oct 03, 2008 10:54AM
21 Prior to this generation "the Street" was a bunch of partnerships, which is maybe why the "men of the street" looked out for the well being of the country. They also may have felt that obligation out of guilt for having made their money largely by manipualting stock, but thats another story.
Posted by guest , Oct 03, 2008 10:56AM
13: I'll go you one better. Absent preparation, I'd bet there aren't any bank branches in the US where a person could go in and say, "I want $3M in cash, right now," and get it. They just don't keep that much currency in the vault. Something could happen to it. Somebody could rob the place. Somebody could slip it into a duffel bag and walk out the door with it while Olivia Newton-John and George Clooney are having sex in the lobby. Anything.
There might be a FEW branches that have that much cash on hand, but they wouldn't take it out of inventory for one depositor at a go. It'd wipe them out and they'd be unable to handle large cash transactions until they could resupply. Movies aside, it ain't that easy to get your hands on that kind of dough.
My first jobs (well, the first one that didn't involve delivering newspapers or cleaning barns) were bank teller jobs - even the largest bank in a medium-sized city doesn't have that much cash around to give out at one go, I can tell you that.
Posted by guest , Oct 03, 2008 10:57AM
this does kinda feel like 'pisssin in the wind', i.e., Polish shgower)
do people still use 'reverse-Polish' calculators?
Posted by guest , Oct 03, 2008 10:58AM
@ 21
I think it is noble to ask "not what your country can do for you but what you can do for your country".
Unfortunatley the country is being run by idiots. I think confidence in governement should have reached its apex just after the Cuban Missle Crisis.
Since then the trend has been down.
The last 8 years have been horrid. The only direction i have got from my government on how to exercise my patriotic duty, is to tell me to shop.
Perhaps in the past people looked out for the well being of the country because they had faith that the country was doing the same for them. That faith is gone and for very good reason.
And from what i can see of the possible future leaders it is not likely to emerge again anytime soon.
I agree with you perhaps it is time to start sacrificing again. I was hoping that after 9/11 we would be asked to scarifice. Certainly the country and the world was ready, able and willing. But instead we were asked to shop.....
I never thought it was the governemnts to look after me, i do think it is their job to look out for me and that has not happened .
Posted by guest , Oct 03, 2008 11:03AM
23: Sure it is. It's called cash, gold and silver.
Now, if things really go to Hell, it may not MATTER that you're solvent, I'll give you that. But the way things are now is not the only way things can work.
Or you could always go with the theory of my buddy the 'Nam vet, who says that since he has more guns and ammo than anybody he doesn't need to stockpile anything else.
Posted by guest , Oct 03, 2008 11:03AM
28 Its known as reverse Polish notation and is the standard format on an HP 12C. You should also note that the 12C is one of the few calculators allowed when taking the CFA exam. Signed, Non-Polish CFA
Posted by guest , Oct 03, 2008 11:06AM
"Interestingly, when this whole mess with the need for a bailout first happened, one person did say that the fundamentals of the economy were ok, and then went on to explain that what he meant by that was the work ethic of the American worker, entrepreneurship, and innovation were still intact, etc (I don't have the exact quote). That person was John McCain.
His quote was immediately truncated in press reports as only saying the fundamentals of the economy are sound, and he has been ridiculed as being a delusional, senile old man."
There's a reason for that.
The entirety of your post is bullshit. Go back to living in whatever cave you have been for the past 8 years. You know, the timespan in which everything that used to be great about this country fell apart.
You toxic Republicans with your 'family values' and so-called 'fiscal conservatism' have fucked this country up but good.
Posted by beentheredonethat , Oct 03, 2008 11:07AM
It is our job to look after the government, not vice-versa. Even if you don't like the guys currently in charge, the country transcends that. I promise you this world is a MUCH darker place without that US Passport in your back pocket. Ever spent more than a month straight in Europe? Anyone who has knows what I'm talking about. And to those who may be under the misimpression that a beach house in Costa Rica is actually an alternative, then by all means, you know where the door is.
Posted by guest , Oct 03, 2008 11:10AM
@27
Maybe he called the bank earlier and say "Hey, I'm coming at the end of this week for my 3M in cash. Prepare it NOW!"
Ok. Done deal. Bank had time to find the cash.
Posted by beentheredonethat , Oct 03, 2008 11:11AM
@32
You may want to trace the evolution of "affordable housing" being introduced into the banking system before you start screaming at the Republicans. they have this funny way of expecting to be paid back prior to approving a loan.
Posted by guest , Oct 03, 2008 11:13AM
@#17/SEG/DB/Others...
Since @17 said, "Banks are also hording cash because of expected payouts on CDS triggered by the failures of freddie, fannie, leh and WM", could this then be a possible fix for the CDS problem?...
Uncle Sam should just shut down the CDS market. Close it completely until further notice. Since CDS buyers paid only small premiums for their bets, and since buyers now expect huge paydays from troubled banks, and since payouts could conceivably put banks and us over a cliff, why payoff the bets? Just give the holders of CDS's a 'return of premium', and be done with it. Fuck the big 'get-well' payday. We'll get over it.
Does my suggestion have any merit? Does it make any sense? Or does it just betray my utter lack of understanding of the situation?
We don't need the world financial system to completely ShutTF down and drive us into a barter-system, stone-age existence all for the sake of preserving somebody's big payday.
@#21 is right...
"Prior to this generation, the men on the street always looked out for the well-being of the country, even in the wake of some serious fuck-ups. This generation buys into a whole different set of values, and there is nothing cool about it."
The Guy from Delaware
Posted by guest , Oct 03, 2008 11:14AM
@35, you may want to read a little more on that supposed canard before trotting it out as the reason for this mess we're in.
Posted by guest , Oct 03, 2008 11:16AM
33 What's wrong with a month in Europe? Its good food, good public transit, excellent culture, good retirement benefits and healthcare. I know, whats bothering you is that its a bit too egalitarian, not enough survival of the fittest. I sometimes think however that that's not an entirely bad thing. At least there are no fat people in polyester. Let me ask you: have you ever spent a month at Disney World or in Las Vegas? America is not NY or chicago.
Posted by beentheredonethat , Oct 03, 2008 11:25AM
@38
The answer obviously is no. The fat/polyester comment is 20 years dated. Obesity is a scourge across Europe, same as here, and continues to spread to all societies that finally have two nickels to rub together. The problem is they rub them together at KFC. Highest per capita consumption of McDonalds? Wait for it..............FRANCE!! Both fat and polyester are in abundance on the continent. You think we're the only one's buying Chinese made clothes? You think their Walmarts aren't packed?
I base my commentson the totality of the US, not a particular place. Would you dare be treated at the NHS in UK? NO YOU WOULD NOT!!!
Posted by guest , Oct 03, 2008 11:35AM
39 I was just in Europe and believe me, obesity is no scourge. I repeat: to see the real America, which can be a disgusting sight, take a trip to Disney or Vegas. Why do you think an empty headed specimen of trailer trash like Palin is so popular?
Re the NHS: true, but I would do quite well thanks at the NHS counterparts in France, Italy or Germany. And in fact if I wasn't lucky enough to be one of the minority of Americans blessed with a high quality employer-provided plan, I probably would be better off with NHS.
Posted by beentheredonethat , Oct 03, 2008 11:38AM
@40
By all means, go. What's here for you?
Posted by guest , Oct 03, 2008 11:50AM
@41 - I'm not 40, but one thing stopping him/her might be the inability to work (legally), and maybe the language barrier in even illegal work.
It's pretty much the only thing stopping me.
Posted by guest , Oct 03, 2008 11:55AM
40 here. I'm an American, why would I leave? But clearly not one like you ("any sailors here, you know what a turtle is") that's blindly satisfied with things as they are except for all the meddling by those nasty commie D's who don't realize the world would be a better place if it was ruled by Bush forever.
Posted by beentheredonethat , Oct 03, 2008 11:55AM
@42
Don't hedge it. There's a couple of million expats over there and lots of English spoken. Take downtown 4 or 5 to Bowling Green, come up to street level, walk two blocks south, strip, dive in, and swim east once you transit lower harbor. 2800 miles later, hang a left for Dover, or go right to Calais. Best of luck.
Posted by guest , Oct 03, 2008 12:01PM
36: Leetle problem caused by pair of troublemakers known as Contracts Clause and Fifth Amendment.
Besides, "fat payoff for small premium" is in the eye of the beholder. I pay about 0.1% of value of my house every year to insurance company: in exchange they represent me if I get sued, replace my house AND all the stuff in it if it burns down, etc. I wouldn't consider that "fat payoff." A deal is a deal.
Posted by guest , Oct 03, 2008 12:06PM
@44
Humans have inertia. We'll never move until we're forced to. But that doesn't mean we don't want to.
Posted by beentheredonethat , Oct 03, 2008 12:09PM
@43
Turtle. when you capsize a boat, the keel rotates 90 degrees and the sail lays on top of the water. Not a great situation, but with the correct leverage, the boat can be righted. A turtle begins as a capsizing but continues rotating another 90 degrees so the boat is completely upside down and the mast is pointing straight to the bottom. Sometimes the mast comes loose from its lines and goes to the bottom, taking the sail with it. Other times, when trying to right the boat from 180 degrees, the weight of the water trapped by the sail is enough to snap the mast and it takes the sail to the bottom. Every once in a while, if everything is executed perfectly, you can right the boat from a turtle without killing any crew. Questions?
Posted by guest , Oct 03, 2008 12:13PM
This is all Bill Clinton's fault.
And, those liberals, and those people. None of this would a happened if it wasn't for those people...
Posted by guest , Oct 03, 2008 12:49PM
Leetle@#45...
Thank you for your reply to my #36 entry.
I think your homeowners insurance and "getting sued" analogies to the CDS problem are incorrect.
If your house burns down or if you are sued, you suffer real damages. Where is the actual damage to the CDS holder if his premium is returned? All I see is a lost opportunity to make a really-big score. No actual out-of-pocket harm done.
As I said on another DB thread, these are exceptional times, and this country/world is in a survival-of-the-system mode, not in the sanctity-of-predatory-contracts mode. The system cannot be shut down because someone feels entitled to a big payday.
May I ask you again? Would shutting down the CDS market work? Thank you again.
The Guy from Delaware
Posted by StupidEquityGuy , Oct 03, 2008 1:01PM
@47, You sound like someone who might have sailed some blue waters before... in a different place, in in life...
Have you had to do the turtle? if so, did you snap the mast?
I remember one summer sailing around the lake in the family sunfish. I turtled it more times in one afternoon by myself, then probably any one else on the planet has...
I called my self an Ace for shooting myself down 5 times...
~SEG
I gave the boat to a kid who wanted to join the merchant marines school. I figured it was his turn to learn how to not sail correctly...
Posted by guest , Oct 03, 2008 1:46PM
TGFD - the only real problem with your suggestion is that pesky little "government shouldn't modify private contracts" thing. Sophisticated investors are allowed to be stupid.
Now if the TARP were to buy the other side of those contracts and accept a DPO or waive the payoff, then . . .
Just frightening. I mean, it actually could do just that. Or anything else it wants.
Posted by beentheredonethat , Oct 03, 2008 1:48PM
@50
That would be the whole purpose of sailing a sunfish. Capsize and turtle, get the chicks wet. Only problem was if you failed to secure aforementioned mast and had to return to shore sans mast and sail. Can't snap a sunfish mast, too short relative to weight of boat. That's when you hope its not that big a lake and Dad is not around. Make it past nightfall, wake up in morning and claim someone made off with the rigging. Did it happen? Maybe. Graduated to Lasers after that, and continued up from there. Awesome sport in any size boat.
Posted by StupidEquityGuy , Oct 03, 2008 2:09PM
@52, Dad had already lost part of the tiller when he lost his glasses and turtled in a real way, so a neighbor rebuilt all of the working parts with his version of custom stained wood.
It all worked on shore, it was pretty as could be for the boat, but it was definitely not stock config. The Keel was not long enough so it could not balance worth a damn. In hindsight, I don't think anyone could have sailed it, but for shear fun of getting wet and away from shore, it was perfect.
I need to get something like that for my girls to grow up in...
Best Regards,
~SEG
Posted by beentheredonethat , Oct 03, 2008 2:18PM
@53
Most definitely. That is why the sunfish is so alluring......perfect for the kids, can't really hurt it, when the rudder, tiller, centerboard,etc, get all fucked up from the horseplay, time to improvise and see if you can make it back to shore without having to resort to the mortifying tow back to the dock. Sometimes we wouldn't even rig the boat. Load the cockpit with ice and beer, double wrap the joints in plastic, cigarettes, remember to bring matches and use them before going swimming....Floated around for hours on a hot day......AWESOME
Posted by guest , Oct 03, 2008 2:45PM
49: You are entitled to your incorrect opinion. CDS are a form of insurance. If Allstate underestimates the risk my house will burn down, that's their problem, not mine. If they underestimate the risk that my whole neighborhood will burn down, again, that makes my collecting problematic, but it doesn't mean the government should let them off the hook. Ditto a CDS Allstate sells to somebody ELSE on the risk that I won't pay my mortgage. If they underestimate the risk on my mortgage, or all the mortgages in my neighborhood, tough toenails. That's what all those brainy actuaries went to school and learned all that cipherin' for.
And to answer your question, no, it wouldn't work anyway. It would just shift the losses back to the holders. And it would remove one of the few possible incentives anybody has to engage in the credit markets. Admittedly, CDS are probably uneconomically expensive now anyway, but if they are, the problem's solved going forward, and if they're not, it means holders still want them and guarantors think they've priced in the proper risk levels. Either way there's no reason to break lawful contracts.
Posted by guest , Oct 03, 2008 2:48PM
SEG@#50...
A sunfish with a very small, lightweight mainmast/mainsail rig is a far cry from a 40 footer with a rig that weighs several thousand pounds and that is either deck-stepped or keel-stepped. The stepping flanges/bolts and the shrouds/stays may not be able to withstand the load especially in a wind-driven sea state that presumably caused the capsizing event in the first place. Catastrophic loss of the keel bulb on a modern racing hull will produce a turtling event in an instant.
Once, several years ago, my wife, 2 friends, & I were bringing our boat down from Southwest Harbor, ME. It was mid-May, and it was damn cold. In retrospect, I probably should have waited till mid-June to make the trip.
We were about 25 nautical miles north of P-Town off the tip of Cape Cod, at a spot on the chart called "Wildcat Ledge"; I'll never forget it. Wind meter was oscillating between 40 & 50 kts with 13' seas. We were exhaused and decided to heave-to for a rest. We carried a reefed main and partly-furled #2 genoa (don't have a #3) and were fairly close-hauled at the time. The small mizzen (yawl rig) was empty. As we put the wheel hard over and were backing the jib, and before we could even ease the main sheet, she went over, damn near on her side, 60-70 degree angle. Happened in an instant. Cockpit winches were submerged, and I looked at an open companionway and at that cold seawater so damn close that I feared flooding of the cabin and a loss of vessel and possibly loss of lives. Luckily, the near knockdown lasted only a few moments because as soon as we eased the mainseet, she immediately came back up and everything calmed right down. But for those few moments, I felt great fear. As the captain, I was responsible for everyone's safety. We were all tethered to the boat, so no one was injured or thrown overboard. We stayed hove-to for an hour or so to relax and to unwind before we proceed on towards the CC canal.
That was some scary shit.
The Guy from Delaware
Posted by StupidEquityGuy , Oct 03, 2008 2:55PM
TGFD, TY for sharing the sailing story... that was real...
I only have sunfish and trimaran time around buck island in the US VI's...
~SEG
Posted by guest , Oct 03, 2008 3:29PM
@#51 & @#55...
Thank you both for your thoughtful answers to my question.
I do believe, however, that just as a drowning man will grasp at straws, and just as a desparate and threatened man will do anything to protect himself and his family, so too will Uncle Sam do anything to protect the nation when it is in extremis. No matter whose contract he shreds, no matter whose rights he steps on, no matter who he offends, no matter what laws he ignores, he will do it to save the nation and the system.
After all, it's only money. He'll do it to save the nation and let things get sorted out later.
That is exactly what could happen. He'd close every bank and close every market until the crisis abated. Getting somebody's CDS's paid would not even be a consideration.
Let's hope it doesn't come to that.
The Guy from Delaware
Posted by StupidEquityGuy , Oct 03, 2008 5:58PM
In the WTF category... I went to the local Wells Fucked C bank and tried to cash a check for some weekend liquidity... they had zero repeat zero $50's and $100's at the branch. They gave me $5,000 dollars in $20's...
I asked how long its been this way, and the teller said they have had people yanking cash out in size for two straight weeks.
Things are starting to get a little weird out there...
~SEG
Posted by guest , Oct 03, 2008 8:04PM
SEG...
I have a question for you. I'm afraid of the "wierdness out there", and my equities (mutual funds) are falling in value. I'm thinking about bailing out and going to all cash. I'm down 25% or so YTD, but I'm afraid to move now for fear of missing a possible? rebound.
Any suggestions?
The Guy from Delaware
Posted by StupidEquityGuy , Oct 03, 2008 8:54PM
@ Myself first, A partner of mine went back to the same branch, where he has an account and they gave him bills larger then 20's.
So they were just inflicting annoyance pain on me for wanting to cash the check instead of opening an account with them. Flockers... they just lost any chance of replacing my Bank of Steers accounts...
@TGFD, I honestly don't have a suggestion for you. The bounce is coming, but does it come once we are a 1,000 lower or not, that is the question.
I do not use MF, as I started out on that side of the street back in the 90's with a firm I will call Bonds & Asia... It was because them that I ended up founding Stupid Equity LLC and going Maverick.
I would suggest you consider ETFs in placement of MFs... you have intra day liquidity, better transparency of holdings and lower management fee's.
Why pay serious money for management like myself, and still get long only MF exposure?
Best,
~SEG
Posted by StupidEquityGuy , Oct 03, 2008 10:25PM
Also, I am not the guest writer they talk about. I am just an idiot who sent Bess a write up while drunk and she wrote back this morning and said... I am posting this now...
and well, she did... she also ignored my next three ideas... so we are semi safe from me being anything more then an annoying guest host of "Today's Stupid Equity Moment..."
Which is a column I wouldn't mind writing... FWIW...
Best,
SEG
Posted by guest , Oct 04, 2008 12:57AM
SEG...
Thanks for the ETF suggestion; I'll have to check into them.
Looking forward to another "Today's Stupid Equity Moment."
Regards,
The Guy from Delaware
Posted by guest , Oct 04, 2008 1:41AM
@SEG
I was the one hauling the 100-dollar bills out of the banking system. No shit.
@TGFD
First of all, let me assure you there's be a clusterfuck coming soon in spite of the bailout. So your MF will be toast very soon.
That means it's a sure short right? Not exactly. If recent actions are of any indication, there may be more annoying interferences from the Fed to prevent the clusterfuck required to cleanse this shit system. If that happens, expect a pop to the sky in the short term.
So long or short? It's hard to say. If someone can kill off the Fed, then it's a reassuring short. But you can never say never to those pesky SEC/Fed irritants.
Long SPY Short QQQQ. Hoorah!