The Economic Crisis

[bah]

Citigroup stock is now in the 3 dollar range, down 20% from yesterday. It is treacherously low right now. I don't have much faith that Citigroup might make it out of this on its own. The government would not let it fail, so it might do a Fannie Mae on it. The government would buy up the company by diluting the stock, thereby collapsing the stock price, and the shareholders would be left with virtually nothing.

The other thing that could happen is Citigroup's fire sale of its assets might keep it afloat.... or it could just merge with another company. We'll see what happens.

The rally before the closing today was said to be caused by Obama's pick for Treasury Secretary. Obama chose Timothy Geithner, current president of the Federal Reserve Bank of New York.

Gold is also up 57 dollars, now trading above the 800 dollar mark at 801.60 dollars.

The current prospect is that in the near future, the federal government will need to finance its massive spending programs by issuing more Treasury securities.
The hope is that the global market would be receptive to the massive influx of new Treasury securities. If the world doesn't seem to want to lend the US anymore money, interest rates will spiral upward and the US dollar will collapse.

Let's hope that doesn't happen. It would be highly disastrous if it did.

[binary010101]

Treasury bond yield rates (as of 11/21)..........

1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr

0.03 0.02 0.45 0.83 1.09 1.35 2.02 2.53 3.20 3.93 3.70

are down to almost zero for 1 and 3 months. Seems that people are so desperate for a safe place for their money that they'll loan money to the government for almost zero.

(Sorry about bad formatting, copied directly off Treasury website)

[bah]

I am willing to make a bold speculative prediction that the current high demand for Treasuries will be unsustainable in the future.

[binary010101]

That's probably true. The only reason the Fed's slashing rates so low is to promote lending (since bonds aren't an option any longer).

On to another topic: What do we do with the credit card debt?

[bah]

Well, until problems get exposed in the credit card debt... nothing much would be done. They'll just hope people will still make their payments on time or something. I'll guess when some big problem arises... they'll start talking about how to fix it and such...

The US government just rescued Citigroup. I suppose the problems became to big to ignore last week, so they came up with a big plan during the weekend to rescue it.

[binary010101]

Hooray... We'll get a tax hike!

[robotman]

yahoo more taxes

[bah]

I present the Kondratieff Winter Inverse Pyramid:



I'd say we are in the Treasury Bills region now.

When we are in a credit expansion phase, we climb up in the pyramid. When we are in a credit contraction phase, which is happening now, we move down in the pyramid. Shall we plunge down to the bottom of the pyramid, GOLD?

[robotman]

nice but that makes very little sence exept htat we sould try to stay away from gold right?

[SiegeLord]

No, robotman09. I have made a poem to explain why you shouldn't stay away from gold.

Gold-gold, by SiegeLord

Gold gold, gold gold gold, gold gold!
Gold gold gold, golden gold,
Gold gold; gold-gold gold gold?
Gold gold gold gold gold, gold!

Golden gold, gold gold, gold-gold,
Gold gold gold, gold gold.
Gold? Gold gold? Gold-gold?
Gold gold! Gold gold! Gold gold!

Chorus, repeat 5x

Gooold, goooold, gooold!
Gold-gold!

End Chorus

Gold gold, gold gold gold, gold gold!
Gold gold; gold-gold gold gold?
Gold gold gold, golden gold,
Gold gold gold gold gold, gold!

Gold gold gold gold, gold gold.
Gold; gold and gold gold gold.
Gold gold gold, gold gold? Gold.
Golden gold-gold. Golden gold-gold!

Chorus, again