No credit crunch here, just going back to normal guidelines- Move along folks nothing to see here.
"Wells Fargo, Wachovia Reduce Home-Mortgage Lending Amid `Credit Crunch' U.S. mortgage lenders such as Wells Fargo & Co. and Wachovia Corp. are raising rates and imposing stricter standards on some of their most creditworthy borrowers as slumping demand in the mortgage bond market chokes off funding."
Do you people understand what's going on??? this is not just "screw the IB"S"- duh (and I'm not an investment banker).
Cramer's video is panic material... watch it spread over the weekend.
I think the drop will be overdone in the short-term (at least 10%, more likely 20%), and the Fed will be forced to cut rates. When that happens it will be just like Cramer said... Armageddon.
This is the problem with having put Martha in the slammer for such a minor offense: you run out of headroom for handling the real crooks.
In some countries they chop off hands for petty theft. We don't do that here, but it is not too late to start.
Anyone in their right mind would have done the same thing...that is get out while it is still worth a buck. Do you really think he was the only person to sell? Remember the stock hit 4 bucks plus on Thursday. There was plenty of time to sell.
Read the fine print. Supposedely, the CEO's sale was a margin call. How conveninient! Also, the Chief investment officer quit on July 27, 2007 without any notice and the company forgot to mention that in its previous filings!
There are already numerous class actions pending.
Latenight | 08.03.07 - 11:20 pm | #
Vote yes. Be prepared to endure the I told you so pain from the inflationists as oil breaches $100 a barrel. Comfort yourself that although people still have jobs and places to live, they can no longer afford to eat food.
Vote no. Be prepared to endure the I told you so pain from the deflationists as the credit crisis continues. Comfort yourself that although people can afford to eat food, they no longer have jobs nor places to live.
For the record, I voted no. Maybe I'm just hungry though.
Is there any way you could add "Yes and No" as a choice? It would make it SO much easier.
This isn't just a US thing. Many European countries and Australia are worse off than the US in terms of consumer debt and real estate bubbles.
There is no housing bubble in Germany. If there was still Deutsche Mark, it would be a safe bet but with euro who knows if it can survive another few years due to tensions inside the euro area.
Switzerland is also non-bubbly but they have low interest rates and Swiss franc was one of the favorite carry traders short position. Maybe it'll reverse? But currently, Switzerland is very deeply interconnected with the EU so any problems within EU would spread to Switzerland, too.
What about the crisis of feeding your family, having shelter, and putting gas into your car on your way to Walmart for work?
Dustdevil | 08.03.07 - 11:27 pm | #
I second that. It's too late to do anything at all about it. The best thing to do now is take your medicine and not do anything stupid to create a loss of confidence that anyone in the US has a clue how to manage the economy. Bernanke didn't create this mess, and honestly, I feel a little sorry for him, but not much. He was stupid to take the job.
Greenspan is the idiotically dangerous free market anti-regulation libertarian politico suckup that got us into this mess, and if I were Bernanke, I'd lay this crown of thorns on his head as his finally coronation for the economic charlatan that he is.
Cutting rate when Bernanke came to town would have prolonged the binge a bit, and worsened the inevitable. Raising rates might have been a good idea, but then he'd be blamed for everything and Greenspan would be off the hook. Bernanke thus lost either way. So he sat on his hands, go figure. It wont help him in the end but at least he stuck to the inflation line while he thought it mattered, all the while crossing his fingers and hoping that we'd ride through this mess without too much damage.
$3.5 million is nothing compared to what the Orange Man has sold off, though he was wise enough to do it over a period of time well before his company goes BK.
This is about survival of the fittest. AHM is JUST a conduit - NOT a direct lender. A good friend of mine at Wells Fargo, a major buyer of AHM paper told me that this is NOT a spill over into the conventional market, but it is about mitigating risk and reward.
AHM underwrites the loans and sells them to 1 of 4 major buyers, At that point, they initially make the VAST majority of the revenue and then pass on the loan.
That is what they are a pass thru, just look at the dividends they paid out. Everyone saw how much they made and now its tightening AND now the big 4 better control their risks without sharing in the rewards.
The Money Honey was on PBS tonight and she talked about the credit crunch, B.S., CDOs, foreclosures, real estate and containment. Maria stated that she thought the economy would grow at 3.75% in 2007, and that there would be no recession in 2007-8. The one thing Maria would concede was that today there was fear on the street.
I am sick to death of Bubble Vision and convention wisdom. Is it any wonder that I hang out here with the rest of you. In the words of John Lennon "just give me some truth, all I want is the truth"
Anybody want to take a crack at the last balance sheet of AHM? AHM was mostly an ARM, Prime, and Alt-A lender.
Yeah, they were levered about 14/1, but almost 87% of their holdings on the 10K were rated AAA. Even sub-prime/CDO type "AAA" is trading for 95 cents on the dollar.
They'd need to sell their assets for less than 92 cents on the dollar to wipe out equity holders. I can't figure where the bomb in the balance sheet is.
"Maria stated that she thought the economy would grow at 3.75% in 2007, and that there would be no recession in 2007-8. The one thing Maria would concede was that today there was fear on the street."
Did she happen to mention the huge gap in the GS chart @ 150?
Cutting rates even by a half point is not going to make the mortgage holders pay their bills. The bonds are still probably junk either way.
Cutting rates isn't gonna cut it. Its gonna take an RTC Phase II to clean up that mess... And the folks with the exploding mortgages will find themselves in bankruptcy court for their rehabilitation.
I second your sentiment on Glass-Steagell (I wonder what CR thinks about bringing that back). I wonder what our erudite readers think about bringing that back.
But that reminds me that they have no more limitations to remove to bail them out this time. Another reason this time is different.
Glass-Steagall was steadily weakened by regulatory exceptions under three administrations going back to George Bush Senior. The premise was that tearing down the regulatory walls would promote competition. But the effect was to create greater concentration and renewed opportunities for insider enrichment.
Financier Sanford Weill gradually assembled the empire of insurance, commercial-banking, and investment-banking pieces that ultimately became Citigroup, helped by indulgent regulatory policies promoted by Federal Reserve Chairman Alan Greenspan and Rubin. When Congress formally repealed Glass-Steagall, in November 1999, the act was termed in some circles the "Citigroup Authorization Act." Rubin had stepped down as treasury secretary that July. His new job, announced in late October, was chairman of Citi's executive committee. Rubin's initial annual compensation was around $40 million.
Also if we do fall into a global depression, what will the New Deal II look like with King George in power?
Ministry of Truth | 08.04.07 - 12:57 am | #
Hoover the second will do nothing. Ask the Democratic contenders, that task will probably suck up more of their time than extricating us from the Iraqi finger trap. Until recently I thought that W would manage to sneak out of town before the bill came due. Now I think that the general populace will have figured out that "something" just isn't right by September and that we'll be in a recession by fall. By next summer things are likely to be quite interesting.
Health care will help tradeables, as our businesses now have to pay health insurance for employees, putting us at a substantial competitive disadvantage given the exorbitant cost of health care in the U.S...
Glass-Steagall was Archaic,with tdays sophisticated modeling of risks high returns can be virtually guaranteed.We no more need a return of Glass-Steagall than we need Habeas Corpus or the bill of rights,our leaders are INFALLIBLE and guided by God in all their decisions!It is time for George to declare himself president for life to ensure a steady hand at the helm in this time of crisis!!
Health care will help tradeables, as our businesses now have to pay health insurance for employees, putting us at a substantial competitive disadvantage given the exorbitant cost of health care in the U.S...
That's not what I meant - the New Deal II will likely be more money into more-of-same system but with gov't subsidy helping... sort of like the solution to the ag crisis in the 80s was more subsidies for 'small farmers' that in the end ensured ADM, ConAgra & Cargill, John Deere and the financial institutions lending to farmers were able to efficiently convert those subsidies into their own corporate profits.
Meanwhile small farmers continued to leave farming.
Any 'reform' of health care might reduce the costs GM & Ford pay but is certain to make sure Humana and Medtronic & J&J do great as well. They have just as much clout, no?
So as msny or more resources get committed to health care as before and not necessarily more efficiency or better outcome.
So I don't see how, in the end, this improves our 'tradeables' position much in aggregate, just a rerouting of the 'who pays'... but maybe I missed something.
Don't know where they'll come up for the money for it, since they don't have the money for what they're already doing and revenues are set to plummet.
They print it of course... and in a deflation prices would be falling anyway so you'd hardly notice the 're-inflation'... that is unless the presses stay on too long like under Greenspan...
That's always been the flaw in this logic but also why I don't believe deflation has a chance over the long haul - it can't stand up to the power of the press.
Slowoooomotion said: "This is exactly why it needs to be done."
Dustdevil says: "Huh"
With due respects to Dustdevil, and i don't mean anythiny personal.
This is what i think Slowoooomotion meant. He meant to say: Business cycles needs CLEANSING when it has gotten to such extreme exuberant points, that cleansing is the only option to clean the excess. If you're the garbage in the house, it has to go outside. Stinky garbage can't stay inside the house to stink the house. He also meant: I'm sorry if you the stinky garbage, but its house cleaning time. Again i beleive slowoooomotion meant no offense. Nothing personal. This has happened in the last depression. Too much excess, too much garbage. Hopefully, everyone reading this site will make right decisions properly navigate themselves into NOT becoming a stinky garbage, while those who work an 8 to 5 jobs, comes home for dinner, watch the soap operas, go sleep, go to work next day, end of week goes shopping-mall, without knowing the turmoil that may impact their financial well-beings. How do i know? Because in 1987, i had a 8-5 job and didn't know how serious the situation was. It was just another day to go to work.
This is about survival of the fittest. AHM is JUST a conduit - NOT a direct lender. A good friend of mine at Wells Fargo, a major buyer of AHM paper told me that this is NOT a spill over into the conventional market, but it is about mitigating risk and reward.
AHM underwrites the loans and sells them to 1 of 4 major buyers, At that point, they initially make the VAST majority of the revenue and then pass on the loan.
That is what they are a pass thru, just look at the dividends they paid out. Everyone saw how much they made and now its tightening AND now the big 4 better control their risks without sharing in the rewards.
is that legal?? it sounds like he's opening himself to huge (more than $3mm worth) lawsuits.
Everythings fine really no rate cuts needed,
Everything is fine,
ABX-HE-A 06-2
2 words -- Joe Nacchio
No credit crunch here, just going back to normal guidelines- Move along folks nothing to see here.
"Wells Fargo, Wachovia Reduce Home-Mortgage Lending Amid `Credit Crunch' U.S. mortgage lenders such as Wells Fargo & Co. and Wachovia Corp. are raising rates and imposing stricter standards on some of their most creditworthy borrowers as slumping demand in the mortgage bond market chokes off funding."
Do you people understand what's going on??? this is not just "screw the IB"S"- duh (and I'm not an investment banker).
No rate cut needed -move along folks nothing to see here,
"ItÂ’s the worst credit crisis since S&Ls collapsed, says industry watcher"
CEO liquidates his position before the firing of most staff and (possible) BK filing. I smell an investigation in the wings...is this "equally fair"?
I would have dumped those shares, too. Then, I would have called my broker and spent the entire slug on principal-only strips.
I'm surprised he didn't sell at the top. Not the brightest bulb.
Cramer's video is panic material... watch it spread over the weekend.
I think the drop will be overdone in the short-term (at least 10%, more likely 20%), and the Fed will be forced to cut rates. When that happens it will be just like Cramer said... Armageddon.
At that point, I'm getting out of the dollar.
This is the problem with having put Martha in the slammer for such a minor offense: you run out of headroom for handling the real crooks.
In some countries they chop off hands for petty theft. We don't do that here, but it is not too late to start.
Anyone in their right mind would have done the same thing...that is get out while it is still worth a buck. Do you really think he was the only person to sell? Remember the stock hit 4 bucks plus on Thursday. There was plenty of time to sell.
Finally... we're taking out some of the trash.
Things stink a little bit less in the US economy today.
At that point, I'm getting out of the dollar.
This isn't just a US thing. Many European countries and Australia are worse off than the US in terms of consumer debt and real estate bubbles.
It's just that the US real estate bubble was the first to go bust because we have so much empty land to develop excess housing on.
Maybe that will actually turn out to be an advantage.
Plus what happens to all the emerging markets that have developed huge capacity to service the US consumer?
Gross excesses of capacity can devastate economies.
My strategy for wealth preservation is to go to national tournaments and purchase champion pedigree animals.
Also, FWIW, I'm in talks with a prominent venture capital firm to start a domestic pedigree ETF.
Stay tuned for more updates...
I think we can deliver a 40% YoY return in an economy that's growing at 2% YoY.
And that's a conservative estimate.
Read the fine print. Supposedely, the CEO's sale was a margin call. How conveninient! Also, the Chief investment officer quit on July 27, 2007 without any notice and the company forgot to mention that in its previous filings!
There are already numerous class actions pending.
Latenight | 08.03.07 - 11:20 pm | #
Hey slow -
What about the crisis of feeding your family, having shelter, and putting gas into your car on your way to Walmart for work?
Indymac production report for July:
http://theimbreport.com/wp-content/uploads/2007/08/month-end-format_report_073107.pdf
Very small reit in CA, interesting to see how much of their portfolio is non-performing:
News
Vote yes. Be prepared to endure the I told you so pain from the inflationists as oil breaches $100 a barrel. Comfort yourself that although people still have jobs and places to live, they can no longer afford to eat food.
Vote no. Be prepared to endure the I told you so pain from the deflationists as the credit crisis continues. Comfort yourself that although people can afford to eat food, they no longer have jobs nor places to live.
For the record, I voted no. Maybe I'm just hungry though.
Is there any way you could add "Yes and No" as a choice? It would make it SO much easier.
This isn't just a US thing. Many European countries and Australia are worse off than the US in terms of consumer debt and real estate bubbles.
There is no housing bubble in Germany. If there was still Deutsche Mark, it would be a safe bet but with euro who knows if it can survive another few years due to tensions inside the euro area.
Switzerland is also non-bubbly but they have low interest rates and Swiss franc was one of the favorite carry traders short position. Maybe it'll reverse? But currently, Switzerland is very deeply interconnected with the EU so any problems within EU would spread to Switzerland, too.
Hey slow -
What about the crisis of feeding your family, having shelter, and putting gas into your car on your way to Walmart for work?
Dustdevil | 08.03.07 - 11:27 pm | #
This is exactly WHY it needs to be done.
This is exactly WHY it needs to be done.
sloooowwwwwmotion | 08.03.07 - 11:58 pm |
Huh?
I second that. It's too late to do anything at all about it. The best thing to do now is take your medicine and not do anything stupid to create a loss of confidence that anyone in the US has a clue how to manage the economy. Bernanke didn't create this mess, and honestly, I feel a little sorry for him, but not much. He was stupid to take the job.
Greenspan is the idiotically dangerous free market anti-regulation libertarian politico suckup that got us into this mess, and if I were Bernanke, I'd lay this crown of thorns on his head as his finally coronation for the economic charlatan that he is.
Cutting rate when Bernanke came to town would have prolonged the binge a bit, and worsened the inevitable. Raising rates might have been a good idea, but then he'd be blamed for everything and Greenspan would be off the hook. Bernanke thus lost either way. So he sat on his hands, go figure. It wont help him in the end but at least he stuck to the inflation line while he thought it mattered, all the while crossing his fingers and hoping that we'd ride through this mess without too much damage.
Well, looks like he guessed wrong.
$3.5 million is nothing compared to what the Orange Man has sold off, though he was wise enough to do it over a period of time well before his company goes BK.
This is about survival of the fittest. AHM is JUST a conduit - NOT a direct lender. A good friend of mine at Wells Fargo, a major buyer of AHM paper told me that this is NOT a spill over into the conventional market, but it is about mitigating risk and reward.
AHM underwrites the loans and sells them to 1 of 4 major buyers, At that point, they initially make the VAST majority of the revenue and then pass on the loan.
That is what they are a pass thru, just look at the dividends they paid out. Everyone saw how much they made and now its tightening AND now the big 4 better control their risks without sharing in the rewards.
The Money Honey was on PBS tonight and she talked about the credit crunch, B.S., CDOs, foreclosures, real estate and containment. Maria stated that she thought the economy would grow at 3.75% in 2007, and that there would be no recession in 2007-8. The one thing Maria would concede was that today there was fear on the street.
I am sick to death of Bubble Vision and convention wisdom. Is it any wonder that I hang out here with the rest of you. In the words of John Lennon "just give me some truth, all I want is the truth"
sloooowwwwwmotion - why should we care if some BBB bond is down to 38 from 95? AAA was holding up well.
Cutting rates even by a half point is not going to make the mortgage holders pay their bills. The bonds are still probably junk either way.
Anybody want to take a crack at the last balance sheet of AHM? AHM was mostly an ARM, Prime, and Alt-A lender.
Yeah, they were levered about 14/1, but almost 87% of their holdings on the 10K were rated AAA. Even sub-prime/CDO type "AAA" is trading for 95 cents on the dollar.
They'd need to sell their assets for less than 92 cents on the dollar to wipe out equity holders. I can't figure where the bomb in the balance sheet is.
"Maria stated that she thought the economy would grow at 3.75% in 2007, and that there would be no recession in 2007-8. The one thing Maria would concede was that today there was fear on the street."
Did she happen to mention the huge gap in the GS chart @ 150?
To Maria: May I see your credentials?
Kicker,
Forced loan buybacks & severed warehouse lines are probably not sufficiently illustrated in that balance sheet.
I guess we finally found out what the result would be from repealing the Glass-Steagall Act.
Geoff, whats Libertarian about central planning (i.e. central banking)? Goverment Sponsored Entities? Defacto bail-out garuantee to the markets?
Do you think Libertarians stand for this?
Cutting rates even by a half point is not going to make the mortgage holders pay their bills. The bonds are still probably junk either way.
Cutting rates isn't gonna cut it. Its gonna take an RTC Phase II to clean up that mess... And the folks with the exploding mortgages will find themselves in bankruptcy court for their rehabilitation.
This will drag out for years.
Sorry Rumsfeld, I only meant libertarian in an antiregulation sense.
Here is a question to everyone. Why would a depression expert be put at the helm if a depression was not expected?
That what we focus on tends to happe
Also if we do fall into a global depression, what will the New Deal II look like with King George in power?
Chuck,
I second your sentiment on Glass-Steagell (I wonder what CR thinks about bringing that back). I wonder what our erudite readers think about bringing that back.
GO DIRECTLY TO JAIL
DO NOT PASS GO
DO NOT COLLECT 3.5 MILLION DOLLARS
How stupid is Strauss???
Why would a depression expert be put at the helm if a depression was not expected?
Maybe Big Ben is like the fire fighter that is an arsonist, maybe he longs for a chance to prove his hypothesis.
"And the folks with the exploding mortgages will find themselves in bankruptcy court for their rehabilitation."
Where are all the BK judges going to come from? Maybe we can offshore them or make BK like a quickie marriage in Vagas
Ah, Glass-Steagall, finally fully repealed to aid the bailout of LTCM. What a farce.
Citigroup Authorization Act
But that reminds me that they have no more limitations to remove to bail them out this time. Another reason this time is different.
Glass-Steagall was steadily weakened by regulatory exceptions under three administrations going back to George Bush Senior. The premise was that tearing down the regulatory walls would promote competition. But the effect was to create greater concentration and renewed opportunities for insider enrichment.
Financier Sanford Weill gradually assembled the empire of insurance, commercial-banking, and investment-banking pieces that ultimately became Citigroup, helped by indulgent regulatory policies promoted by Federal Reserve Chairman Alan Greenspan and Rubin. When Congress formally repealed Glass-Steagall, in November 1999, the act was termed in some circles the "Citigroup Authorization Act." Rubin had stepped down as treasury secretary that July. His new job, announced in late October, was chairman of Citi's executive committee. Rubin's initial annual compensation was around $40 million.
I see Geoff, I missed the big L
Do you mean big L for LOSER? Yes, he is a loser too.
But you do know that he is closer to a libertarian than a republican, right? I mean, shate, he was a frickin' Ayn Rand disciple.
Also if we do fall into a global depression, what will the New Deal II look like with King George in power?
Ministry of Truth | 08.04.07 - 12:57 am | #
Hoover the second will do nothing. Ask the Democratic contenders, that task will probably suck up more of their time than extricating us from the Iraqi finger trap. Until recently I thought that W would manage to sneak out of town before the bill came due. Now I think that the general populace will have figured out that "something" just isn't right by September and that we'll be in a recession by fall. By next summer things are likely to be quite interesting.
I second EE - nothing on this shift.
New Deal II AFTER Jan 2009 - if necessary - will likely be 'infrastructure' and 'health care'.
That won't help out tradeables much though.
Health care will help tradeables, as our businesses now have to pay health insurance for employees, putting us at a substantial competitive disadvantage given the exorbitant cost of health care in the U.S...
"To Maria: May I see your credentials?"
Credentials don't mean anything at this point.
Glass-Steagall was Archaic,with tdays sophisticated modeling of risks high returns can be virtually guaranteed.We no more need a return of Glass-Steagall than we need Habeas Corpus or the bill of rights,our leaders are INFALLIBLE and guided by God in all their decisions!It is time for George to declare himself president for life to ensure a steady hand at the helm in this time of crisis!!
Health care will help tradeables, as our businesses now have to pay health insurance for employees, putting us at a substantial competitive disadvantage given the exorbitant cost of health care in the U.S...
That's not what I meant - the New Deal II will likely be more money into more-of-same system but with gov't subsidy helping... sort of like the solution to the ag crisis in the 80s was more subsidies for 'small farmers' that in the end ensured ADM, ConAgra & Cargill, John Deere and the financial institutions lending to farmers were able to efficiently convert those subsidies into their own corporate profits.
Meanwhile small farmers continued to leave farming.
Any 'reform' of health care might reduce the costs GM & Ford pay but is certain to make sure Humana and Medtronic & J&J do great as well. They have just as much clout, no?
So as msny or more resources get committed to health care as before and not necessarily more efficiency or better outcome.
So I don't see how, in the end, this improves our 'tradeables' position much in aggregate, just a rerouting of the 'who pays'... but maybe I missed something.
We no more need a return of Glass-Steagall than we need Habeas Corpus or the bill of rights...
LOL.
Regulators, regulators? We don' need no stinkin' regulators!!!
Strauss probably had a automated sell program registered with the SEC unloadng all the way down.
New Deal II AFTER Jan 2009 - if necessary - will likely be 'infrastructure' and 'health care'.
Don't know where they'll come up for the money for it, since they don't have the money for what they're already doing and revenues are set to plummet.
Don't know where they'll come up for the money for it, since they don't have the money for what they're already doing and revenues are set to plummet.
They print it of course... and in a deflation prices would be falling anyway so you'd hardly notice the 're-inflation'... that is unless the presses stay on too long like under Greenspan...
That's always been the flaw in this logic but also why I don't believe deflation has a chance over the long haul - it can't stand up to the power of the press.
Slowoooomotion said: "This is exactly why it needs to be done."
Dustdevil says: "Huh"
With due respects to Dustdevil, and i don't mean anythiny personal.
This is what i think Slowoooomotion meant. He meant to say: Business cycles needs CLEANSING when it has gotten to such extreme exuberant points, that cleansing is the only option to clean the excess. If you're the garbage in the house, it has to go outside. Stinky garbage can't stay inside the house to stink the house. He also meant: I'm sorry if you the stinky garbage, but its house cleaning time. Again i beleive slowoooomotion meant no offense. Nothing personal. This has happened in the last depression. Too much excess, too much garbage. Hopefully, everyone reading this site will make right decisions properly navigate themselves into NOT becoming a stinky garbage, while those who work an 8 to 5 jobs, comes home for dinner, watch the soap operas, go sleep, go to work next day, end of week goes shopping-mall, without knowing the turmoil that may impact their financial well-beings. How do i know? Because in 1987, i had a 8-5 job and didn't know how serious the situation was. It was just another day to go to work.
This is about survival of the fittest. AHM is JUST a conduit - NOT a direct lender. A good friend of mine at Wells Fargo, a major buyer of AHM paper told me that this is NOT a spill over into the conventional market, but it is about mitigating risk and reward.
AHM underwrites the loans and sells them to 1 of 4 major buyers, At that point, they initially make the VAST majority of the revenue and then pass on the loan.
That is what they are a pass thru, just look at the dividends they paid out. Everyone saw how much they made and now its tightening AND now the big 4 better control their risks without sharing in the rewards.
For those of you on cnbc.com challenged browsers and operating systems (I'm a mac guy myself) here is the youtube of Cramer's meltdown:
YouTube - Cramer: Bernanke, Wake Up
Pretty. Freaking. Hilarious.
Cheers,
prat