Notes for Crashof2008 #1 to #7

January/February tends to bad for stock market because companies will be audited and have to be honest about their earnings/balance sheet.

Read London financial times

We always privatize the gains, while we always socialized the losses.

Dec 2008, Goldman Sacks betting major banks will lose more than half its value.

Foreclosure usually happens 18 months after first miss of payments.

People estimate that Adjustable Mortgage (resets) will peak at mid of 2008.

March 17, 2008 Greenspan: unexpected, sharp, discontinuous response.

Fed reserve: market maker in treasury. 800 billion dollars in their kitty. but 450 trillion dollars derivatives. China 1 trillion reserve, Japan 700 billion. Fed has insider information: labor dept statistics, inflation data, etc. Fed get these information 1 or 2 days before public. They trade based on these insider information.

Look up Black Wednesday.

End Game: Treasury start to go down by inflation expectation. Everyone sell treasury, buy hard assets. Fed's value decline. Fed does not care dollar fell as long as treasury is in bull market. Treasury holders demand higher interest rate. Everyone's interest rate go up. Fed will raise its interest rate to protect dollar, thus its portfolio