this is a real mess this time(by mannfm11)

I don't think we are going to make it. This isn't a wake up and smellthe roses credit scare. It is a sudden realization that the entiresystem is corrupt to the point that no one knows what out there hasworth and what doesn't. What we are looking at is a bunch of brokebillionaires and the problem is we don't know which ones are the brokeones. How much crap is GS stuck with? This is a lot deeper thanmortgages. This world now runs on excessive credit created out of theUS and supported by recycled paper. We are looking at high gasoline andfuel to boot and a society that is going to suddenly find they cannotget another credit card, tap their home for another loan or buy a caron easy terms. Thus the credit isn't going to be dumped on the next bigscreen TV or video game, but saved for the next meal or tank ofgasoline.

I am going to theorize this is going to look likemost crashes, a sharp decline, a rally and a plunge. I don't think weare done going down on this stretch yet either. The rally was lastweek. The low of the month came on Friday, 600 points below Thursdaysopen. The bulls will all say down to about 12000 that we are merelyconsolidating new territory and will wait with what they have left toplay the next big rally.

The Fed put out $38 billion on ashort term repurchase agreement. Who is the insolvent party out there?Who is going to buy this crap off this insolvent party so they can paythe Fed back? What is the insolvent party going to have to sell to getthe money to buy back this crap from the Fed? Being it is a hugeenterprise, how much credit is going to be denied the system?

TheFed is there to manage liquidity between banks and to createcirculating medium. IT cannot fix bankruptcy. The 1929 to 1933adventure proved this, though idiots will claim we have learnedsomething since then. Well, you can patch a tire that is losing air andrun it awhile. But, those you see spread all over the highway arebeyond aid. We are in the dark now and the Fed hasn't figured out whichone they are fixing or maybe they know and are trying to keep theexploded tires out of the other inventory.

There are a lot ofmisconceptions about Japan. Japan tried to fix a problem like this withdeficit spending and central bank management. The culprit was said tobe real estate, but the real culprit was the guys that orchestrated thedeals went broke. The banks, the brokerages, insurance companies andthe investment bankers. There is a misnomer that the central banks andgovernments control the economies. The creators of credit, the borrowerand lender do so instead. These guys have to be willing and able. Howmany willing and able borrowers and lenders are left in the USA? If abank has no net worth to put up as surety, they are in effect violatingall laws, quite possibly to the effect that the borrower might claimfraud. I saw a chain of court cases to that effect, that a bank cannotlend its liabilities.

Borrowed money pushed this market to itspeak, its earnings to their peak and everything else to its peak. Tobelieve we are going back to the peak any time soon implies the lendingsituation is going to be rapidly fixed. I think the little guy gotcooked in the tech bubble and isn't coming back. The rich guys areeither not rich or they know to wait on a bargain. The hedge funds aregoing to be liquidating stock because they can't sell what they arestuck in and afford to mark to market. A chart of Japan might be worthlooking at here, especially when it comes to the Nasdaq, which is atthe 50% mark, not the all time high. The Nikkei went back to the 50%mark after hitting the 1/3 mark. The bottom was more severe in theNasdaq. I think the big bear is ahead and this is a real mess this time.