so agreed ... they can't blame the subprime buyers of overprice homes this time either as the pain -- alt-a, siv, auction rates securities, cdos, monolines, etc -- is sooooooooo much more widely spread
So we have all these crisis going on at the same time. Credit markets becoming unhinged, Oil going nuts, a completely out of control federal budget and last but not least the stock market appears to be rigged. Hum, so where does one turn for financial safety:
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
I think people were looking over MBIA and Ambac and thinking "How could we be so foolish to think such bond insurers on risky debt could be a viable business strategy".
Then they moved down 2 inches on their holdings spreadsheet and saw Fannie Mae and Freddie Mac and a lightbulb went off.
Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing.
Didn't they increase their stake in AAA mortgages a couple months back too? Oh, isn't that what Peleton did too? Maybe a lot of Calpers workers won't be able to retire for a while...
Do mortgage rates tend to follow the 10-year t-note more closely than the 30-year t-bond?
For some reason mortgage rates have been tied to the 10 year t-note. Is this because of the prevalence of ARMs in recent years? If most loans being done now are 30 year fixed loans will they become tied to the 30-year t-bond?
Maybe time to buy a rototiller, a bunch of seeds, some fertilizer and turn your yard into a garden...
bofiz | 03.06.08 - 5:52 pm
Seriously, a friend and I are clearing some trees next week to create more playarea for the kids. The fence is also being moved back.
The playset is about to be put on the back burner and we're going to do a vegetable garden instead.
A friend also has some acreage of pasture a few miles away and I'm going to suggest to him that he do some gardening too.
First the Victory Garden. Now the Depression garden.
ac and bofiz: my understanding is that the mortgage rates for 30 year fixed rate loans generally follow the 10 year treasury because that time frame is a better reflection of how long those loans are held (i.e., prepaid due to selling, refi, etc. before reaching maturity). The ARMs are tied to LIBOR (generally, but they can be tied to other indices, too). Again, my understanding regarding the rates on 30 year fixed is that the relationship is more of a coincidence than an actual correlation. I could be wrong, but that is my understanding.
Given the level of refis and weird products in the last number of years, I seriously doubt that anyone can get a legitimate reading of what follows.
I believe that that model is shot.
"Utterly unhinged"...come on now, this is not the economic end of the world. A severe recession is survivable. This is not a nuclear war. What is wrong with these folks?
homedad: I agree that the model is shot. I was just giving my thoughts on what the model had been since they were asking. Looking at the rates shooting up while the treasury rates are declining shows that the two are not tied together, just that in the past these two generally moved together. As you said, the toxic crap loans and total absence of underwriting standards has now caused the investors to rethink (or, maybe more correctly, to start to think) about the appropriate risk premium.
John Authers shortview today has some interesting charts on housing valuation in ounces of gold and S&P financials. Sounds very scared towards the end about the prospect that that "the US is headed towards absolute desaster"
"determining fair value requires training, and many auditors may not have extensive training in valuation techniques."
Some critics believe that the massive writedowns the banks have been taking of late can be blamed in part on fair value accounting. The Financial Accounting Standards Board is planning to weigh in on the subject pretty soon. FASB Chairman Robert Herz recently told The Wall Street Journal that the board intends to look into the rules for how banks value off-balance-sheet vehicles, which have contributed to some of those huge writedowns.
Citigroup had $1.1 trillion sitting in off-balance-sheet vehicles last year. It's almost as if they wanted to go into competition with the federal government over deficit amounts if those assets go south.
Seriously, what if banks just said screw it and let the property go to tax sale- is the lien buyer than the owner of the prop? does the lien buyer than own the prop and have to pay prop taxes?
30 year mortgages are compared to 10 year notes as they have a similar duration (price volatilty). Despite the commentary by all the FNMA / FHLMC bears out there, its not just FNMA / FHLMC. GNMA's, which are full faith and credit are widening as well. If it was just a credit issue, they would be tighening like treasuries. Its just too many sellers, banks, margin calls, etc and there is no way that the street is going to put capital up (if they had it) to step in front of the train.
Carlyle Fund Gets Default Notice After Margin Calls (Update9)
By Edward Evans
March 6 (Bloomberg) -- Carlyle Group's publicly traded mortgage bond fund failed to pay margin calls, prompting creditors to seek immediate repayment, as the burning subprime mortgage market scorches investors in even the highest-rated debt. The stock fell 58 percent.
Carlyle Capital Corp. missed four of seven margin calls yesterday totaling more than $37 million, the Amsterdam-listed fund said today in a statement. The company expects to get at least one more notice of default related to the margin calls...
"This is not a nuclear war. What is wrong with these folks?
Boat52"
You're right, the large poor classes will likely not all die out like in a nuke, but the rich will. They are only looking out for themselves. buyer beware.
Standard operating poop containment procedure calls for a rate cut tomorrow...and then again after the meeting but before options expiration...told you not to lower rates last year Ben...wait till I tell my wife about the Depression gardens...
I think CR needs to provide us with a new graph - namely the number of stories of financial meltdown chronicled by this blog over the last few months. Is it just me, or is it getting harder to keep up...
There is nothing unhinged in the markets. They just aren't reacting the way they want them to react.
This panic talk is just to try and whip up support for further rates cuts and taxpayer bailouts. Notice the mention of the fre/fnm support guarantees in the same article. They are just trying to panic the politicians into bailing them all out.
Mr Beckmann added that most of the reduction would come from repayments of existing loans but said that Citigroup would also explore the sale of some loans.
He said that, by the third quarter of this year, 90 per cent of new mortgages originated by Citigroup would either be securitised or sold to Fannie and Freddie - a move that was expected to reduce the companys capital and credit exposure.
Commodity prices are not going up so much as the value of the dollar against them vs the euro is depreciating. Its not an inflation problem, its a currency exchange problem, with people seeking gold and oil as a hedge. Unfortunately, we can't fix the currency problem without raising rates, which makes the housing problem worse. Or increasing savings, which will make the recession worse.
\t"what is asserted without reason may be denied without reason"
\tIf no grounds have been given for an assertion, there is no need to provide grounds for contradicting it.
The entire financial world is in denial, until they fail; we are doomed! Every Fed memeber, every CEO, every one in The Senate and Congress act as if they are realtors pulling for NAR and that this is a buying opportunity. God save us all! SOS!!
Congress is going to have to swallow the implicit guarantee on agency paper. It will be a big gulp and should impact interest rates considerably when that is added to the national debt.
Nova,if you put the excess or spoiled produce outside the fence where there is a good backstop,you can harvest the deer.pick up a smoker cheap on CL and make your own jerky.
You know why this is happening - the upped the Fannie and Freddie limits today so they can now purchase crap.
High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000
Nemo said: "(By the way, if we get an emergency rate cut tomorrow, I am so claiming that I called it.)"
Myself, I wouldn't presume to time such a move like that, but I can see from the spread between the ^IRX and the Fed target that there's about 160 bp of (additional) potential easing.
My loan guy is telling me that it will be another 60-90 days before they are actually ready to handle these new conforming-jumbos. I suspect the fed would prefer them to move quicker...
High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000
NICE! My area goes to $729K (Whitelandia NJ)
Can I get 125% Cashout Refi with that? Oh, and no doc- I've been unemployed for 6 months- I promise to spend the extra 25% on completely worthless shit and NOT short the market or buy anymore GLD or DBE or USO. Cross my heart....
I learned something today: that GNMA MBSs have explicit government backing, unlike FNMA's MBSs.
I read that GNMA's MBS premium to the 10 year Treasury bond was not that different from FNMA's, 1.9% vs. 2.4%. I was confused. Governement guarantee; why is there ANY premium to the 10 year bond?
So, I looked at GNMA's financial statements: $500B in MBS guarantees against $13B in equity.
So, I think I understand why GNMA has a premium to the 10 year bond; the market must have doubts about the government's ability to backstop those GNMA MBSs.
All I am saying is the markets are not "unhinged" or "financial system broken" as they claim when the VIX is below 30.
They know they won't get bailed out unless they can convince everyone it is a "systemic crisis". So they will run around acting as people can't conduct transactions. Just because I can't see at the price I want doesn't mean the system is broken.
They are just trying to scare the politicians into intervention.
Now in another few weeks we may see unhinged but you will know it when you see it.
"High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000"
They can -- but how much will they really take? They're not obligated to take garbage, I assume. I assume that not a lot of jumbo deals will pass their smell test.
Bob Dobbs writes:
"High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000"
Yeah, but the lenders haven't raised the caps yet....
Well: max 60 percent LTV for second homes and investor properties. But a max LTV of 90 percent on fixed loans? Ten percent is not going to protect them.
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Nervous | 03.06.08 - 5:44 pm | #
Gold ~ yes
Commodities, ~nope
Foreign markets ~ Yes = Yen
Cash ~ Yes
So here I sit on a bucket of money, and where do I turn?
I dont know about you. But Ill be in my beautiful leased Condo in Florida for the spring/summer. Not paying much attention to this any longer. I had a Doctors appointment today and he told me I had high blood pressure. I said no shit. He wanted to give me medicine. I said my medicine is all paid for in Florida. Ill take 80mg baby aspirin a day and see you next year!
Not short/long any more. I have some very low GTC buy orders on a couple of things. All total 20% of my cash if they all get filled.
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Nervous | 03.06.08 - 5:44 pm | #
gardens are good. with my weeding skills, I am better off stocking up in the canned goods section of the supermarket. already have the wooodpile. a few cans of gas stored in a safe location away from the house are also a good idea.
Re: "Alabama County Won't Pledge $184 Million for Swaps"
Was somebody here asking about the difference between swaps and insurance a while back?
Insurance policies rarely have a "we can cancel if we don't feel like paying" clause, although if you are poor and don't have a lawyer the insurance company might try to tell you otherwise.
if you're stocking up on an asset allocation of canned goods, a home garden and gold coins in case of complete societal collapse, don't forget the automatic weapons to protect what's yours.
"So we have all these crisis going on at the same time. Credit markets becoming unhinged, Oil going nuts, a completely out of control federal budget and last but not least the stock market appears to be rigged....
So here I sit on a bucket of money, and where do I turn."
Nervous | 03.06.08 - 5:44 pm | #
i just moved 5 yards of manure and mushroom compost for the depression garden..8 dollars per yard (brown gold)
this just sent to me by my mortgage broker friend:
It is becoming a little more evident that there may be some serious issues going forward with Thornburg, as we hope it all works out for them, going forward, locking or quoting their products is not something we want to do right now!!! This is just to be careful!!!We will keep you posted!!!
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets (as reported by Bloomberg and others). It seems like a reverse repo is an investment and use of funds not a source of funds.
To Rob Dawg - In response to a comment last night (maybe 1000 messages ago - how do you people keep up with all of this - I think I've skipped over 700 comments tonight - I can't keep up and still live a normal life). I don't have time to do a blog. I barely have time to blow my nose most of the time. I do a little reading and writing here while I'm watching market and other news at the end of the day - right now I'm watching tomorrow's weather report - we have a storm front coming in.
I do not know everything about everything. But I do know a whole lot about a very limited number of subjects. E.g., with regard to fixed income markets - I know a lot about munis - not a lot about mortgage backed securities. Not that I didn't try. I read through several editions of Fabozzi when mortgage backed securities were the newest - latest - and greatest - quite a few years ago. And simply gave up. I never wanted to buy any fixed income product where I had to be a computer programmer to try to understand it.
I do know a lot about other small market areas - and nothing about others. Regarding the markets I'm interested in - I run about 30 charts a day - many with multiple pages - and have been doing that for over 15 years. They are my "market newspaper". I also know a lot about gardening in NE Florida - golf - dining - and cooking certain kinds of cuisines. Don't ask me who the favorites are for the Final Four .
Like Dirty Harry said - a man's got to know his limitations. I'd rather know a lot about a small number of things than almost nothing about everything.
Still - I keep my ear to the ground when it comes to things that might affect me. And this mortgage backed and other asset backed crisis will affect all of us in one way or the other. IMO - it is a combination of irresponsible lending to people without pockets (much less deep pockets) - a lot of speculation on the part of real estate buyers - or people buying things they simply couldn't afford to buy - combined with too much leverage on the part of the people who traded in the asset backed securities. I don't know when or how the current crisis will end. I'm just glad I am not yet knee deep in piles of manure. And - I plan to stay in touch with what's going on - and - fingers crossed - wind up in the same position when this is all over.
BTW - people have implied that you have a blog. If so - could you post the name and URL? Roby
(you remember the guy who gave the great interview on cnn several months ago about how many business models wont survive the coming financial crisis) (bold to say so me thinks)
well, the news just got worse as he gave a presentation to students in Utah
"Byrne said when someone purchases a stock, there is a three-day stock settlement period during which a broker or a trader must provide a purchaser with that stock. However, through loopholes in the system, brokers and traders can legally not provide you with that stock almost indefinitely, giving the purchaser an IOU instead, Byrne said.
"It's my thesis that certain people have figured out how they can abuse that loophole, and flood the market...often in connivance with a broker dealer," he said.
Through this "flooding," the brokers can essentially issue the same stock to hundreds of people at no penalty. By increasing the supply of stocks, these dealers can dramatically drop the price according to the laws of supply and demand.
Byrne showed how the "cheating parties" make money off of a stock price dropping through a process called "naked short selling."
"I've been in this market for 30 years, I'm one of the senior citizens of the bond market, and I have never, ever seen such a confluence of negative events,'' said Marilyn Cohen, who manages $215 million in fixed income investments as president of Envision Capital Management in Los Angeles.Clearly the Fed has been rendered impotent on doing anything to end this credit crisis.''
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets ...
Answer: In a "reverse repo" the party "sells" securities that he promises to "buy back" on a certain at "par" plus interest. (I.E. a collateralized loan.) The buyer is investing/lending to the "seller" for the period of the agreement. If the borrower is unable to buy back the securities the "lender" owns them.
"The dangers of recession and inflation are both very real," said William Poole, president of the Federal Reserve Bank of St. Louis, who voted against the Fed's last interest-rate cut on Jan. 30.
"If inflation develops while the Fed is concentrating on avoiding recession, the consequence will be to delay recession but not to avoid it," Poole said.
Poole told the U.S. Monetary Policy Forum in New York that a delayed reaction would be "worse than a mild recession" right now, in remarks that directly contradicted testimony by Fed Chairman Ben S. Bernanke this week and added to the turmoil in financial markets.
That 90% LTV requires an FRM, a FICO of 700+, full documentation, and a new appraisal!
Also looked like the "Declining Markets Policy" adds another 5 percent to the Max LTV...thats most of the key markets in CA,FL and AZ...Not sure how many people in CA have 100k lying around for a down pmt.
March 6 (Reuters) - Lawmakers must not be too heavy handed as they react to the collapse of the U.S. subprime mortgage market and end up closing this source of credit forever, a senior Federal Reserve policy-maker said on Thursday.
St. Louis Federal Reserve President William Poole said the subprime market was now basically shut and might never reopen if the regulatory backlash was too onerous.
"The public policy problem is the danger that, with the sad record of so many mistakes and abuses in recent years, regulatory burdens to end the abuses will do so, but only at the cost of making subprime lending so costly and risky to lenders that they will have no interest in restoring this market," Poole said in prepared remarks.
A text of his speech at the University of Illinois-Springfield was released to the media in advance of delivery.
Poole, who retires from the Fed at the end of this month, did not directly address the economic outlook, but stressed the housing market's problems have been costly.
"The lessons have been expensive and painful and the pain is not yet over," he said. (Reporting by Alister Bull; editing by Gary Crosse)
"Other than overleverage, bad debts, sinking home prices, no jobs, shrinking wages, cash strapped US consumers, rising oil prices, a sinking US dollar, $500 trillion in derivatives not marked to market, rampant overcapacity, underfunded pension plans, looming boomer retirements, no funding for Medicaid, no funding for Medicare, and no Social Security trust fund, everything is just fine."
OT - Topher - I'd rather screw around with the asset backed securities markets than high blood pressure. Take care of it - yesterday! If by any chance you will be in NE Florida - I'd be glad to give you the names of some good cardiologists.
To Rob Dawg - I know about some medical stuff too. My husband has MS and high blood pressure - and I know a lot about making sure he outlives me.
On topic - there was a statistic on CNBC today. Almost 50% of all mortgage problems are in California and Florida. I suspect of those in Florida - 75+% are in spec condos and similar in south Florida. There are more spec condos being finished now in south Florida (last number I heard was something like 25000+) - than all the single family houses on the drawing board where I live for the next 30 years What's the story in California?
I have absolutely no desire to bail out spec buyers in Florida. Perhaps I might be a bit more sympathetic to people in California if I knew more about them. I have a lot of sympathy for people in the midwest - but - since most don't have the jobs they used to have (and those jobs won't be coming back anytime soon) - I doubt the answer to their problems involves bailing out their houses.
In the 1970's or so - maybe earlier - a lot of people in the north of the UK lost their industrial jobs. But they wouldn't move to places in the UK - primarily in the south - where there were new jobs. Created a permanent/semi-permanent underclass - the slackers.
I don't think that's a great solution for the problems we're seeing in the midwest US these days. I know my SIL's parents - over 80 - in Cleveland - can't move and start a new life. But their grandchldren can.
I'd like to hear your opinions - particularly those of you in the midwest - about how to deal with the people in the midwest who are in trouble because their jobs have disappeared. Roby
What regulatory concerns is he talking about? The Fed has bent over backwards pumping liquidity into these crooked operations and The SEC has looked the other way, no audits, no investigations, what is he talking about?
Federal Reserve Bank of St. Louis President William Poole said today that the US government should avoid over-regulating the subprime lending market and the mortgage securitization industry, since both are important financial innovations that should be allowed to survive once the current financial turmoil is tamed.
Mortgage originators that sell their loans with little or no recourse have less incentive to maintain prudent underwriting standards than do originators that put their own capital at stake,' he said.
Another lesson learned: 'rating agencies don't always get it right.'
'After recent experiences, the reputation of a first-class mortgage broker should matter more than the rating assigned by a rating company,' he said.
He is right there, the rating agencies need to be shut down for being conduits for fraud!
Blowncue - I am not only old enough to remember Kidder Peabody - I had an account there. Then Kidder was bought out by Paine Webber - which in turn was bought out by UBS. I have dealt with the same broker there for over 20 years. He is sitting at the same desk he sat at 20 years ago. But the name on the front door has changed a few times.
BTW - My broker is in Minneapolis. I have never lived in Minneapolis - but he was recommended to me by a friend 20 years ago - and we have a good relationship. Have only met the guy once - a couple of months ago - when he was in a golf tournament here where I live (TPC at Sawgrass in Ponte Vedra Beach FL). Roby
Mortgage originators that sell their loans with little or no recourse have less incentive to maintain prudent underwriting standards than do originators that put their own capital at stake,' he said.
Fibonacci Retracement | 03.06.08 - 7:55 pm
Dude, as a broker that is a non starter. The reps from Chase for example would come by and check out my apps and tell me to "bump up" there income and assets on the stated/stated deals. We did as told and closed loans.
However, all my clients had scores over 700 and not one has defaulted on a loan.
Regs are in place and unenforced. Lending requirements are being ramped up fast by the banks to save their hides. Perhaps Poole fears that regs lock in the fear overshoot by the market participants. Wouldn't be the first time.
Im picturing wetlands and lots of wildflowers, in regard to cascading liquidity (I should be thinking in terms of
While not exceptionally high, the Niagara Falls are very wide. More than six million cubic feet (168,000 m³) of water fall over the crest line every minute in high flow,[1] and almost 4 million cubic feet (110,000 m³) on average. It is the most powerful waterfall in North America.[2]
The Niagara Falls are renowned both for their beauty and as a valuable source of hydroelectric power (Sir Adam Beck Generating Station)EST 1917. Managing the balance between recreational, commercial, and industrial uses has been a challenge for the stewards of the falls since the 1800s.
The Grand Coulee Dam is almost a mile long at 5223 feet (1586 m). This is almost as long as six Titanics laid end-to-end.[4] At 550 feet (168 m), it is taller than the Great Pyramid of Giza[5]; all the pyramids at Giza could fit within its base. Its hydraulic height, 380 feet (115 m), is more than twice that of Niagara Falls. The spillway is as long as 5.5 football fields. There is enough concrete to build a four-foot wide, four-inch deep sidewalk twice around the equator.[6]
The credit-default swap market is completely distorting reality,'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker.Given what these spreads imply about defaults, we should be in a deep depression, and we are not.''
Robyn. I had a reading of 152 over 95 Ill be fine. Nothing a baby aspirin and a 10mg Valium cant handle. I need to loose 20lbs also. No problem. Im like Bear in the winter I put on a little extra. Im only 46. He just wants more money out of me. I last saw him in 2003 I still have the BP prescription in my drawer.
bofiz writes:
Do mortgage rates tend to follow the 10-year t-note more closely than the 30-year t-bond?
For some reason mortgage rates have been tied to the 10 year t-note. Is this because of the prevalence of ARMs in recent years? If most loans being done now are 30 year fixed loans will they become tied to the 30-year t-bond?
bofiz | 03.06.08 - 5:55 pm | #
30 yr Mtg's tend to follow the 10 year because the effective durration is closer to the 10 yr. Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
The banks that have been using correlation to calculate their risk will have to go back to scratch,'' said Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance.By using correlation models as the main means of risk management, the engineers threw out sound banking practices.''
Tavakoli is very smart, very hot on finance, listen to her!!!
Hmm, did Poole's Alzheimer's kick in before he got to retire?
Is he saying, if the government stops lenders from throwing money at people who can't repay it to buy overvalued houses, we better be careful, because then people will stop throwing money at people who can't repay it to buy overvalued houses?
I'm not as smart as these Fed guys, so help me out here.
Cascading cross defaults are becoming far more likely.
Cheers,
Misean | 03.06.08 - 7:56 pm | #
I think I have heard this mentioned somewhere before...
FYI,The REO backup may be starting to break for one company. Coldwell Banker just handed 73 REO's to a friends wife. No minimum price,she has full pricing authority. A flat 25% !!!! fee to do with as she pleases. Her only directive...Make em gone. I guess pricing the 2 previous she had correctly and selling them quickly was good for business(3days/2.5 weeks).
The entire derivative pyramid is all about building synthetic bridges which are theoretical games that connect casino bets. This game is designed to jump one bet to another bet, one pile of money to the next, but the game is now inverted and they are jumping from debt to debt, from burning casino to burning casino, and this game is unregulated, uncontrolled and will result in financial collapse if this fire is not contained ASAP. The obvious problem is in the relationships between hedge funds and casinos and banks and government agencies that have built bridges that connect them all to a collusionary network of fraud which thrives on obstruction of justice and fraud.
As my best friend Einstein told me, "you can't solve a problem on the same level from which it was created".
He said that many times and yet, retards dont get it, they fail to see that a system run by crooks can not be changed into an honest game. The best we can hope for is the next Martha Stewart or a dead Ken Lay. Go figure!
Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
Dirk | Homepage | 03.06.08 - 8:04 pm | #
Considering the jingle mail, they may now be pricing to the 6 mos Tbill
Commodities as a portion of overall assets serve to lower overall portfolio risk due to their negative correlations with the other major asset classes. While CalPERS may be buying at the local top, it could be said that they are buying insurance when it's high priced. Of course, the actual plan is to add to an existing exspoure over the next 2 to 3 years, not what has been interpreted by the press to be $7B this year (which, BTW, only represents 3% of the plan.) The benchmark index for the CalPERS allocation is up over 30% since the initial allocation to commodities was put it place last year.
The link below is to the MOSERS website, and if you read the article on commodities, you'll understand the reason plans invest in commodities and why the current price levels are more or less irrelevant. This article is almost ten years old, and is just as relevant now as it was when it was written.
It looks critical indeed. Bears could press hard today into the market. Tomorrow and Monday are decisive as to where we're headed. The Jan 22 lows are in grave danger (DJ above, Nas + S&P below).
Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing.
Or maybe this is the signal of the top in commodities. I have read many reports indicating that some of the panicked money going out of mbs and so forth is going into commodities. So the rise in commodities is based at least partly on speculators' demand, not on economic fundamentals--just like the rise in housing prices that got us to this point.
A bad recession really will cut demand for lots of commodities, even oil. So if you think commodities are a can't miss investment--well, I'm not sure there is any such thing.
4822 writes:
"That's the part I don't get, the genesis (if not the whole) problem was that there was no smell test." Because the stinkers would be giving the test?
4822 | 03.06.08 - 7:38 pm | #
Meaning low interest rates and/or conforming loan limits were not the real source of the problem, so why were they the "go-to" variables for the solution.
People don't fret about a devalued asset provided that they can both enjoy it and afford the payment (think new car buyers). If the PTB fixed the exploding ARM payments* and suspended the smell test for these buyers they might find these people could G-A-SH whether their homes are worth 2/3's of the purchase price.
*Please don't flame me about contract law, I'm not that nuanced.
Once this Bubble deflates, people may start asking HOW this mess was allowed to happen. We are getting the solid play-by-play analysis. Not so much the HOW or specific WHY on the finance and economic blogs.
One answer to the Super Bubble collapse is recent banking deregulation...not a really popular topic on the blogs or MSM.
But IMO once banks were allowed to package and gamble in mortgage derivatives, the Bubble grew far greater and faster than the underlying risky mortgages.
The Fed(Greenspan) was advocating banking deregulation. Bill Clinton responding to this advocacy, signed the repeal(deregulation) of the 1934 Glass Steagall Banking Reform Act as I understand it.
So again IMo, we are primarily in this Crash because of specific banking deregulation and also the non-regulation and supervision of the mortgage lending practices by the Fed.
At a recent Senate Banking Committee hearing, it came out that the Fed was asleep at the wheel as this Bubble/Crunch/Crash unfolded. Why was the Fed sleeping? C'mon they really just went to sleep??
All this may make sense when America and its assets are bought at fire sales for ten to maybe 25 cents on the deflated dollar.
That 90% LTV requires an FRM, a FICO of 700+, full documentation, and a new appraisal!
Here's the thing:
This is the new era of "Yes, Virginia, you can refinance your principal and cram down that interest rate, too!" That, in conjunction with massively hiked GSE caps, means it should be no problem for any FB getting an option-ARM refi'd into a FRM.
Getting that 700 FICO should also be no obstacle for your motivated fraudster, thanks to consequence-free identity theft and sundy FICO manipulation schemes out there.
Full documentation an obstacle? Just like it was befiore the new regs? Please... Anyone out there got Photoshop or a copy machine?
New appraisal? I'm sure fraudsters will find the best Hit-The-Number appraiser money can buy.
Probable end-game: socialization of Wall Street losses via GSEs, followed by monetization of resulting government bad debt via inflation.
Optimistic Joe writes:
It looks critical indeed. Bears could press hard today into the market. Tomorrow and Monday are decisive as to where we're headed. The Jan 22 lows are in grave danger (DJ above, Nas + S&P below).
No rush O-joe, next interesting level is 10,500 on the dumpster.
Think about it. If CalPERS did invest 3% in commodities, and they fell by 50%, what would be the implication for the other markets? Inflation would be lower, bonds would be up. The economy would benefit, and stocks would be up. I'd be willing to bet that the benefit to the 60% or so to equities would more than offset the loss of value of commodities. It would just take 2.5% of the 60% to offset the loss of the commodities allocation.
Now what would happen if commodities go up another 50% or so under the same scenario. . . .
Poole in Q&A bragging how "health care is 15% of GDP not counting medicare/medicade" and HB's "only 5% GDP"...like our upside-down health care system will save our upside-down housing mortgage mess. These FED people are MORONS....we are deep shite.
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets ...
Answer: In a "reverse repo" the party "sells" securities that he promises to "buy back" on a certain at "par" plus interest. (I.E. a collateralized loan.) The buyer is investing/lending to the "seller" for the period of the agreement. If the borrower is unable to buy back the securities the "lender" owns them.
I was wondering if you were snarking after I posted. Hold off on PM for at least a few days. They're kinda whipsawing now...get a line on the short term trend. Looks like silver is testing new resistance levels. Wait till next week to see if they hold.
What happens if there's a bank failure and customers have automatic electronic payments set up. Business as usual as long as the direct deposits are still coming in?
I hope the Orange one reminds our "esteemed" rulers about all the money they took to look the other way every time a pointed question is asked. Glod that would be just GREAT!
One of my colleagues sent me this hysterical depo transcript from a litigation between GMAC and HTFC, a soon-to-be-famous example of everything wrong with the world of mortgages.
From p. 9 (and how do I send this pdf to Tanta or CR?):
a. Hostile, uncivil, and vulgar conduct
Throughout his deposition, Wider sought to intimidate
opposing counsel by maintaining a persistently hostile demeanor,
employing uncivil insults, and using profuse vulgarity.
Q. [T]his is your loan file, what do Mr. and Mrs.
Fitzgerald do for a living?
A. I dont know. Open it up and find it.
Q. Look at your loan file and tell me.
A. Open it up and find it. Im not your fucking
bitch.
Q. Take a look at your loan application.
A. Do it yourself. Do it yourself. You want to do
this in front of a judge. Would you prefer to
[do] this in front of a judge? Then, shut the
fuck up.
Q. Sir, take a look--
A. Im taking a break. Fuck him. You open up the
document. You want me to look at something, you
get the document out. Earn your fucking money
asshole. Isnt the law wonderful. Better get
used to it. Youll retire when Im done.
Wider Dep., Nov. 8, 2007, at 418:25-419:17.
I lost my post, I am having a semi-junior senior moment. I am a russet potato when it comes to investing (e.g. small) I lose my password and have to "talk to Chuck" every month.
I was an educated yield-hound and then I got too busy and it got too hard.
I once came across a former bond trader who described the difficulties of trading...Treasuries...I think...in 1994 at Kidder, Peabody...today's action reminded me of 1994.
I was looking for your castle in the trees at the 17th hole but your landscaper has done a fine job. I hope you get a good deal on windows. Watch out for U-boats!
Q. And you have a hard time comprehending. Were
going to adjourn this deposition if this happens
again because you are offending every single
person.
A. Dont speak for anybody in here except yourself
fuck face.
Q. Im speaking for myself and Im speaking for the
Court Reporter.
A. If she had a problem with me she would say
something. She knows its [not] directed toward
her. Its directed to you because youre a piece
of shit and a piece of garbage and Im the only
person in your life that is fucking up your world
and I enjoy it. I enjoy it and when you sit there
and say Im perpetrating a fraud Im just better
at the law than you are and you cant get in the
fucking door and its pissing you off. Keep
trying.
Id. at 433:19-434:11.
Q. Have you spoken to Mr. Petinton about the subpoena
he received for documents?
A. He mentioned [it] to me. He laughed at you.
Q. What did he say?
A. He thought you were a joke.
Q. What else did he say?
A. That youre a joke.
Q. Did he say he had documents responsive to the
subpoena?
A. He had no documents. He doesnt discuss things
with me. He just said youre a joke.
Q. Thats what he said?
A. Yes.
Q. So he shares your opinion on these things as well?
A. Yes, youre a joke.
Id. at 437:24-438:15.
If your florida + relaxing treatment doesn't work SOON (i.e. in a week or two max), then I'd recommend taking your BP meds or at least speaking with your doctor.
152/95 is very very very high, not just a little high. I'm doubtful that rest/relaxation will be enough. Starting exercise is good, but be careful and screen it with your MD first, as your heart and/or kidneys may not be able to handle it (depending on WHY you have elevated BP as example)
in my practice, we admit all people with BPs over 160. you are at risk for a stroke or other serious BP related illness (like heart attack, blindnes, kidney damage, etc)
Hypertension is a silent killer. one often feels fine until it's too late.
it's a testament to how glorious and awesome our bodies really are. even under extreme stress and pressure (pun) it performs so well that we can ignore it.
I say these things as a doctor (although not an internist) and also as a person who has watched a loved one have massive acute cardiac event with secondary brain injury, becoming a "vegetable" at age 51.
His typical BP prior to the massive event: 148/98. one day he passed out.
although it is true that some of the medications are not proven to help heart patients (*like some of the cholesterol drugs, where we can lower cholesterol but can't prove it's adding life expectancy), the BP meds are quite a different matter.
consistently elevated BP results in higher and higher BP through it's interaction with the blood vessel wall, the kidneys, and the heart/heart vessels itself.
Q. Do you know--
A. No, I dont know. Be specific.
MR. ZICCARDI: Let him finish the question.
Q. Sir, if you cant be a little more civil--
A. I am very civil.
Q. --in how you respond to my questions--
A. I am very civil.
Q. What we can do is we can have this deposition in
front of a judge.
A. We can do that.
Q. And the judge can--
A. Lets do that.
Q. No, no. Were not going to--
A. Lets do that; this way he can rip your ass out.
Q. Were not going to do that, sir, okay.
A. Then dont fuckin threaten me, asshole.
Q. Well, sir, I would appreciate it if you would
control your language in light of the people that
are present in the room and I would appreciate it
if you would be a little more courteous, okay.
A. Im very courteous.
Q. Okay. Now--
A. Lets go in front of a judge and shut up.
Q. Sir--
A. Shut your mouth.
Wider Dep., Sept. 26, 2007, 28:7-29:15.
"Full documentation an obstacle? Just like it was befiore the new regs? Please... Anyone out there got Photoshop or a copy machine?
New appraisal? I'm sure fraudsters will find the best Hit-The-Number appraiser money can buy."
whoever said such...
Yeah full doc was an obstacle. Banks were pushing the deals on us. Also, you don't need a copy machine. With stated/stated...they just turned their head and "believed."
Appraisal? Different story. Didn't use or run in to corrupt appraisers.
Glad you had a good experience with a broker, my sole experience sucked. FIL donated $ for first kid's college with stip that use his broker.
Jeez. Stuck me in a dog fund and I had to move after several years and lost profit.
Second kid's fund did much better when I told the broker that I'd be placing in other than what he recommended. Finally fired the guy.
Some years ago, FIL did too.
So...now what to do with the 529s?
All three are in conservative - mostly bond funds - but don't like the options. Most conservative is the MM option (fortunately through Vanguard) but it's still Commercial grade MM...
Explained some of all this to eldest child several weeks ago w/her account and will shift to 20/80 stock bond mix.
Fortunately, she's a rocket scientist...she's going to need it. BTW, whatever happened to Robert Cote?
Noted that one of the regulars sold out of gold at 300% the other day and clicked with recent conversation with the wife re gold and inflation/deflation.
I concur that gold and commodities are not ironclad. But how do you know when the top is hit?
nobody knows how high/low anything could potentially move in this environment.
The assumption that calpers and many others are making is that certain allocations are non-correlated and thus present diversification benefits.
In my opinion, when high degrees of leverage are involved, that argument is complete and utter bullshit.
In such an environment, assets that are normally non-correlated become correlated, if one has to sell due to margin calls, they are selling what they can until they can't, then they sell everything.
I think that is what the shadow bank run is doing to commodities right now. Can't confirm it, but the hedgie problems of the last few days provide strong anecdotal evidence.
From my long past fixed income days, I recall that a repo is the same as a reverse repo. The only difference is the direction. The nomeclature is from the broker/dealers perspective. If the dealer is financing his inventory, it's repo. If the dealer is providing financing to the customer, it's a reverse repo.
reports like this have surfaced for awhile, we know the IB's balance sheets are getting smaller, we have read reports of highr cost margin, decreasing lines/elimination of smaller players all together, if it has not hit the space yet, just a matter of time-
until then, party on darth, most seem to believe they are better than the rest and will be the first to exit-
I keep saying when it happens and it will, it will be a real show (where's neil? got popcorn).
Suppose the citizens of the country threw in their Social Security to bail out the financial system, in return for a promise of basic health, lodging, and services in our old age.
Would that be starting to look attractive?
Or would it be simpler to get the money from a few oil zillionaires and have a theocratic monarchy instead of a social democracy?
I find myself in a conundrum. A deep recession will crush a lot of decent folk (my God mother's rental car business in NYC, for example, which never quite recovered from 9/11). However, I feel it is necessary to reverse some of the massive mis-allocation of resources that has built up in credit bubble industries: housing is the most obvious, but how about casinos (every state has em now) or even higher education (paying 80,000 to get a degree that will net you 34,000 a year job).
What will be interesting is that there is an entire generation of people that have never experienced a deep recession (unless you were in IT, 2001 was very mild). Many of the survival skills needed (ie savings, basic DIY repairs) have been lost. Many of my friends don't know how to survive without running up CC balances. The shakeout will be interesting to watch.
OT:The Italian treasury has taken the highly unusual step of intervening in the debt markets to prevent a further surge in government bond yields as hedge funds with heavy exposure to the region scramble to raise liquidity.
A flight to safety has pushed the yield spread between 10-year Italian bonds and equivalent German Bunds to 55 basis points, the highest since the launch of the euro. A similar pattern has emerged across the southern belt of the eurozone, with spreads hitting post-EMU highs of 53 versus Greece, 44 for Portugal, 38 for Belgium and 36 for Spain.
I guess the bond market has woken up to the fact that the EU member countries credit stands on it's own. There isn't any ECB backstop for reckless spending.
JoeMortgage writes:
Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
Dirk | Homepage | 03.06.08 - 8:04 pm | #
Considering the jingle mail, they may now be pricing to the 6 mos Tbill
JoeMortgage | 03.06.08 - 8:16 pm | #
Very true Joe, and what does that make the spread given a 6 month bill rate of 1.52%? Heck even if it should be pricing to the 3 year, thats at 1.46%!!! Of course jingle mail is not just a durration event.
"Suppose the citizens of the country threw in their Social Security to bail out the financial system, in return for a promise of basic health, lodging, and services in our old age."
That's exactly what is going to happen, except we won't get the basic health, lodging or services.
Yah, very pretty picture, one will need lots of film, or how you say, storage capacity and batteries!
In that environment, it was the FRBNY's judgment that it was to the advantage of all parties--including the creditors and other market participants--to engender if at all possible an orderly resolution rather than let the firm go into disorderly fire-sale liquidation following a set of cascading cross defaults.
On June 4, Warren Pollock published a disturbing report in his Macroeconomic Newsletter. He reported on a statistic that I had been completely unaware of: "settlement fails." I was well aware of what it deals with: bank settlements. Banks must settle accounts with each other daily. Bank A owes Bank B, which owes Bank C, which owes Bank D, which owes Bank A. The system is enormously complex. It is interconnected.
If the settlement system ever fails, we will get what Greenspan has called "cascading cross-defaults." In defending the New York FEDs decision to call together a 1998 meeting of commercial banks to encourage them to bail out Long Term Capital Management, Greenspan told the House Banking Committee in October, 1998,
While the principle that fire sales undermine the effective functioning of markets may be clear, deciding when a potential market disruption rises to a level of seriousness warranting central bank involvement is among the most difficult judgments that ever confronts a central banker. In situations like this, there is no reason for central bank involvement unless there is a substantial probability that a fire sale would result in severe, widespread, and prolonged disruptions to financial market activity.
It was the judgment of officials at the Federal Reserve Bank of New York, who were monitoring the situation on an ongoing basis, that the act of unwinding LTCMs portfolio in a forced liquidation would not only have a significant distorting impact on market prices but also in the process could produce large losses, or worse, for a number of creditors and counterparties, and for other market participants who were not directly involved with LTCM. In that environment, it was the FRBNYs judgment that it was to the advantage of all parties including the creditors and other market participants to engender if at all possible an orderly resolution rather than let the firm go into disorderly fire-sale liquidation following a set of cascading cross defaults.
Cascading cross defaults are the greatest single threat to the world economy. They could push the worlds banking system into gridlock. Then our plastic, credit-based money would no longer buy things. This would create a monumental crisis.
Think of your situation at a distant gas station: a nearly empty gas tank, far from home, little or no cash, and the message box on the gasoline pump says "card rejected." All of your cards are rejected. All cards everywhere are rejected. Then what?
There are more spec condos being finished now in south Florida (last number I heard was something like 25000+) - than all the single family houses on the drawing board where I live for the next 30 years What's the story in California?
McMansion farms. Almost unimaginable. Entire cities with almost nothing but thousands of new 2,500 sq. ft.+ houses. Just one in South Orange County, Ladera Ranch, has 8,000 homes. It's now entering freefall. Oh, did I mention the city of Mission Viejo just approved another development of 14,000 just next to it?
More recent developments or more remote ones are often eerily empty. It was seeing some of these vast wastelands that converted Cramer into a housing bear. The ones he saw, out near Indio, are probably worse than anything I've seen, since I'm near the coast.
We have excess condos, but they are decidedly secondary.
JoeMortgage:
You are probably correct. I was in the US last week, for the first time in 2 yrs. I stayed with my father, who is an academic researcher. At this point in his career, he has saved enough he can retire whenever he wants. Anyways, he told me that he senses a growing panic greater than what he felt in the late 70's. His conclusion was that leverage was the difference. When he was in his 30's, he put away about 7% of his paycheck every month; he could survive a period of unemployment (of which he had several in his life). Many of the younger people he works with will lose their homes if they miss a paycheck. The report we are getting of people paying their CC's while giving up their homes bares this out.
Serious note. The monoline legal fiction of AAA is what's holding this together now. The strength of their length in the chain is that of a pair of paper clips hanging on to 1/2 inch hardened steel.
I will fill my prescription. Its for Zestril 10mg.#30. I think it is wise to not be so hard headed. I read up on it since my earlier post. I sure dont want to have a heart attack trying to relax. Thank You All
Surveying the blogosphere I am getting the following:
This is pure delevering, the sources on Bloomberg sounded panicked. Marilyn Cohen's comment really struck me in particular, as 1994 had big margin calls hitting Steinhardt and Cooperman, iirc.
There are rumors swirling. One I am not comfortable spreading. The other is of an emergency Fed meeting and TAF facility expansion with reduced haircut for collateral.
I do not have a ringside seat.
For nerds, tell Tanta to look at the Redwood Review from Redwood Trust because there are marks for 4q07 she might find interesting.
For those unfamiliar, they are not holding their positions on margin. Do not confuse their own exposure with underlying collateral performance. They said '06 and '07 vintages (jumbo prime, Alt-A) are performing worse than they expected--and their loss estimates were three times Street estimates, iirc. At one point they bought an ABS issue (AAA I think) at 40c on the dollar in q4. Later in q, illiquid trades at 33c on dollar! They picked up ('04-'05 Acacia) paper they helped originate at 52c on dollar.
Don't own RWT. I remember talking to George Bull, later Wally Weitz by phone in 1998 iirc. Little guy like me, that was really something.
"Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing."
Being public, Calpers isn't required by Pension Protection Act to bring their funding ratio up to 100% over time like private DB plans are.
But imagine if you are a private DB plan sitting there today with 60% of your assets in stocks and 20-30% in non-Treasury paper. You are getting creamed. If this continues much longer, we could be looking at a 65% funded ratio in private DB plans, which equals about a $1 trillion shortfall. Amortize that over 8-10 years and you're still looking at more than a $100 billion annual hit to corporate earnings over the next decade. Most of it is concentrated in 3-4 industries and 15-20 companies.
The U.S. auto industry is going to fail and then PBGC, and then the private DB plan gig will be up. A lot of public DB plans probably will give up, too. But Calpers won't be among the first of them.
If you're a California public employee, your retirement benefit is in the top 10% in terms of security, compared to PBGC-backed plans and smaller public plans.
Yes, Live free; I used to live in NH and enjoyed the history there. I never cared much about The Revolutionary War, but as I have become an older, wiser person, that period is ahhh, a very great metaphor useful in seeing where we came from and what we as a nation have morphed into. I enjoyed the parks, and graveyards; swordfish and crab too>
Stark gained historical notoriety due to her husband's battle call of "There are your enemies, the Red Coats and the Tories. They are ours, or this night Molly Stark sleeps a widow!" before engaging with the British and Hessian armies. Stark is also known for her success as a nurse to her husband's troops during a smallpox epidemic and for opening their home as a hospital during the war.
Re: There are rumors swirling. One I am not comfortable spreading. The other is of an emergency Fed meeting and TAF facility expansion with reduced haircut for collateral.
Here, I'll spread this, I think Warsh should resign in the morning along with Paulson, Cheney and Bush, and then we should begin a moratorium on building homes across America, end the war in Iraq Friday at Midnight, cut taxes and then start a bounty hunter organization to audit every corporation in America and place every executive that falsified SEC docs into prison. I would place the fear of God into every crooked banking asshole on the planet and pay bounties to anyone that could verify fraud or tax evasion...and then...I gotta get another beer....
Here, I'll spread this, I think Warsh should resign in the morning along with Paulson, Cheney and Bush, and then we should begin a moratorium on building homes across America, end the war in Iraq Friday at Midnight, cut taxes and then start a bounty hunter organization to audit every corporation in America and place every executive that falsified SEC docs into prison. I would place the fear of God into every crooked banking asshole on the planet and pay bounties to anyone that could verify fraud or tax evasion...and then...I gotta get another beer....
Fibonacci Retracement | 03.06.08 - 10:12 pm |
Think of your situation at a distant gas station: a nearly empty gas tank, far from home, little or no cash, and the message box on the gasoline pump says "card rejected." All of your cards are rejected. All cards everywhere are rejected. Then what?
Fibonacci Retracement | 03.06.08 - 9:49 pm
Fibonacci:
Thank you for the elegant little example of what could be occurring if things aren't under control. Was trying to explain/exemplify to someone and had a horrible time doing so. I was totally dyslexic.
r_c:
Thanks for the clarification. In other words, when looting the store before the police arrive, don't stop to make comparison on the model of TV.
Im all in favor of Ganja Bonds and CDOs which would help support the war on subprime fraud! I think if I ran the press, I'd offer a TAF in a slightly new way!
Hell legalize it all and the US sponsored debacle between Columbia, Venezuela and Ecuador disapears. Yeah that's gonna happen. Our masters' care so much about us that they just can't get rid of prohibition.
Besides they like killing innocent southeners. New weapon systems give them too much bribe...campaign contributions.
Watching some of these crashes I'm concerned about incentives for destructive behavior. Creditors of entities like Carlyle can manipulate bond prices to force defaults and pick up valuable collateral well below book. CDS provide a mechanism for manipulation as well as an additional methods to profit.
one of the reasons I like blogs, aside from my increased net worth, is that you see things like a doctor giving out advice to a fellow blogger about his health. I would not have bet that someone who spent 7 years in higher education would sign on with a handle of "yearning to learn". Kudos to the good doctor for his advice.
It will always be easy to find poor performing assets in a large, globally diversified portfolio. Returns are not made by avoiding all risk, and not all risky assets will be good performers, by definition. For every dollar CalPERS pays out, 75 cents of it has come from investment returns. That's a tad better than "pay as you go".
Pick your asset class, you can always find an example of a member of the class which did not perform well.
I've read your comments for quite some time, you typically do much better than that.
JoeMortgage writes: "Millionaires in the making" (a couple trying for $1M by 50 years old*: among other things, article talks about them buying a 1-year old Ford Mustang for $19K)...
Heck, my first car was a Chevy Nova. He's 25, and already in $4K CC debt. Bad start.
That said, given his job as a used car salesman, his odds just went WAY up in the US: if he had had a productive job like an engineer, I'd have said no chance.
*(inflation not noted... BB may give them a great head start)
"I've read your comments for quite some time, you typically do much better than that."
I'll do some digging then. I've never found Calpers to be smart...lacksadaisical would be a better description. Too late tonight for anything good, but I'll try to puruse things tomorrow.
Just remember that Calpers essentially offs it's fiduciary responsibilities to 3rd parties. I'll try to get back...Calpers is not my main focus though.
I'm not saying you're entirely wrong, just that what I have doesn't jive with your position.
No more sweet talk from-a culprit,
no more sweet talk from the hypocrites (oh, no hypocrites!),
no more sweet talk from-a culprit (wo-ah yeah),
no more sweet talk (no-no-no-no sweet talk) from the hypocrites (hey!),
no more sweet talk from-a culprit,
no more sweet talk (no-no-no-no sweet talk) from the hypocrites (no-no-no-no hey!).
Has anyone looked at gold charts over the past couple of days? Big time sell-offs followed by immediate buying - bringing the price right back up to or near new highs. Sometimes the buying is rapid, sometimes gradual, but the demand is there (must be lost of mom and pop buying). It's like a damn cork.
Anyway, the sell-offs make me thing someone big (or several someones) need(s) liquidity. I have a feeling mom and pop don't feel so good about cash right now.
Glad you mentioned beer. Just opened a Golden Monkey by Victory Brewery...was going to drink tea but read the post and, hey.
Post several days ago mentioned that we should contact our representatives and demand action. While the sentiment is noble, I don't see what short-term action that they can take. If the problem is that some are not coming forward with what they know, then determine if it warrants a warrant and move forward accordingly. On what grounds? There are so many laws on the books anymore that they ought to be able to find something. If the long-term health of the financial system is an issue, then just move, dagnabit.
I agree that there should be severe and meaningful consequences. I'm leaning towards stocks in the midst of the NY Financial District, but there doesn't seem to be any sense of shame. I guess that I would like to see a fair number of trial and high - confiscatory? - fines.
This whole mess has gotten too far out of hand to leave to the political and financial classes anymore.
It is ironic that the USA wages a "war on drugs" and a "war on terrorism" but yet we have a war on the middle class and we have banks acting like terrorists and a government that seems to be at odds with its citrizens. We have people from The Fed either out of touch or blinded by greed, we have a President in denial, lost in the feeble belief that his Ownership Society is going to be his lasting positive contribution to this era, and that The War in Iraq has saved us from an enemy worse than than the embedded parasites and corporations who contrived in collusion to destroy America in search of greater profit, greater glory, greater greed, and now what have we left to look forward to? We have a society in chaotic decline which is failing, while these Patriots raise the flags of denial and walk arm-in-arm as an army of terrorists looking for the next way to take advantage of weakness!
I just convinced myself after typing the last comment. I'm in.
Was asked last fall to consider running for school board. My response - seriously - was "Huh? Me?"
Too much else happening, move and three kids, no time.
Person asking me asked me to keep my options open re this topic and I'll contact her manana with a positive for next election in 2009. Got to start somewhere and do something...
Stocks outside the Stock Market? No one would look twice unless they could leverage it for lunch money.
We need to go after the money. Then they'll pay some goddamned attention. Top tier citizens (including politicians) need to see examples of the end results of malfeasance. Nixon should have done jail time. Michael Milkin should still be in jail. You think these asshats would have tried pulling this crap if they knew for certain they'd lose everything?
Think the Chinese will be having any trouble with their version of the FDA for, lets say, the next 50 years?
No doubt about CalPERS hiring some outside managers for a portion of the assets. It's a function of the state not wanting to pay market rates for investment professionals, so they end up paying more in management fees to third parties. Most of the equities are indexed in-house, and most of the fixed income is managed in-house. Most of the fancier stuff is outsourced.
Don't forget the perpetrators of Iran-Contra, who were not only pardoned, but in some cases, (Eliot Abrams, John Poindexter) returned to heights of power under GWB!
A quick google search reminds me that yes, Golden Monkey is 9.5% alc . . . and that a long forgotten TV show once entertained me as a child.
If you get on your diet/exercise plan, there's a chance you can come OFF the meds in the near future!
But never take med advice from a blog... CALL your doctor and talk about this with him/her on the phone (or at least his/her nurse)... they may help you with some of your questions!
and there may be a cheaper alternative ACE inhibitor to zestril as well... (like vasotec) but it depends on your personaly history, sid effects etc
lastly:
a relatively good site for med info in plain english is
mayoclinic.com
you can search in the search bar on that site for lots of med topics, like "ace inhibitor" or "high blood pressure" to learn more for yourself!
There's one in every car writes:
Wider depo in detail:
http://www.abovethelaw.com/2008/03/lawyer_of_the_day_7.php
Wow..unbelievable. Not knowing the context of the situation I can't begin to guess what Aaron Wider's hoped to prove/gain by this deposition (assuming he was of sane mind). Mostly aragont and offensive BS but I 'bout choked on this gem...
Q. My question is where are you currently employed?
A. Im not. I just told [you] I work for free.
Q. Okay. Youre not employed by HTFC Corporation?
A. No, I own HTFC Corporation. Be specific.
Q. Okay. And what do the initials HTFC mean?
A. Hit That Fuckin Clown. Thats what it means. Its an acronym.
Andy in NZ - Don't worry. I have a SIL - Ruth - who is a broker at ML. She is retiring in a few months and I hope she cashed in a lot of stock a while ago.
Topher - 150+ and 90+ = time for meds - especially if you're under 50. I am about 115 over 75 at age 60. When markets go crazy - my stomach falls apart - not my blood pressure. Different disaster strokes for different folks (sigh).
Fair Economist- Thanks for the California info. Very different situation than Florida - although the same disastrous results.
homedad43 - After a few missteps in the 70's - I have never used a broker as anything except a sales person who gets me the best stuff I'm looking for at the best possible price. I think most people are better off learning about the markets - figuring out what is in their best interests to buy (considering their time frames and how they relate to risk) - and then exploring the best place to buy the stuff. Can't say it is something one learns overnight. I've been at it for over 30 years - and am still learning.
FWIW - my goal these days is to earn 5% or so after tax - which is why good munis at 5% are attractive - as are callable CDs at 6% in retirement accounts. I am sure that no one likes these numbers - but they are realistic in terms of longer term planning IMO.
BTW - I do own other things - like physical gold. Which I bought on the way down in the early 80's. YOY return over the last 20 years is less than 1%. I look at it as a disaster hedge for a small portion of my portfolio. Roby
Emergency Cut at 8:30am
50 bps as a tourniquet
If the equities can make it to the hospital by
mid March
50 bps at the Fed meeting
Might be to late though, she could be D.O.A
Thanks for the info. Spouse is an internist and can't tell you how many times I've turned the phone over to her when an acquaintance/church member/neighbor calls.
She doesn't really get why I spend more time doing this, blogging with this site and following the financials, but she's seen significant changes in our financials in the past two years. Time online has ramped up significantly in the past several months; always been a history buff and while history doesn't always repeat itself, there are too many flags to past situations.
Thanks for the info. Spouse is an internist and can't tell you how many times I've turned the phone over to her when an acquaintance/church member/neighbor calls.
She doesn't really get why I spend more time doing this, blogging with this site and following the financials, but she's seen significant changes in our financials in the past two years. Time online has ramped up significantly in the past several months; always been a history buff and while history doesn't always repeat itself, there are too many flags to past situations.
Question for you. Didn't have time to call them in daytime and didn't see answer on site, but in what dollar increments are these sold? $10K? More/less?
Looked at PA munis and reviewed what they had available. Think that healthcare related (think hospital) (dad-burned Golden Monkey!) would be better able to survive and not blow up a la other munis.
Oh come on, get in the spirit of this, this how they felt in Boston, not too long agao:
Their first manifestations were ridicule and derision, which the riflemen bore with more patience than their wont, but resort being made to snow, which then covered the ground, these soft missives were interchanged but a few minutes before both parties closed, and a fierce struggle commenced with biting and gouging on the one part, and knockdown on the other part with as much apparent fury as the most deadly enmity could create. Reinforced by their friends, in less than five minutes more than a thousand combatants were on the field, struggling for the mastery.
At this juncture General Washington made his appearance, whether by accident or design I never knew. I only saw him and his colored servant [possibly Will Lee], both mounted. With the spring of a deer, he leaped from his saddle, threw the reins of his bridle into the hands of his servant, and rushed into the thickest of the melee, with an iron grip seized two tall, brawny, athletic, savage-looking riflemen by the throat, keeping them at arms length, alternately shaking and talking to them.
In this position the eye of the belligerents caught sight of the general. Its effect on them was instantaneous flight at the top of their speed in all directions from the scene of the conflict. Less than fifteen minutes time had elapsed from the commencement of the row before the general and his two criminals were the only occupants of the field of action.
By the grace of God, I am blessed withDeschutes Brewery Inversion IPA, but sad to say, it is not an Imperial IPA, nonetheless, I remain well and ready to search for Fed corruption and collusion.
Amen
I guess I really should go throw some snowball at Goldman, for the subprime auto loans they trade in, as Im wondering deep within, if these are no-doc loans???
Conjure Bag says, "Redskins, find a thick rug, get down on your knees, and pray."
``Given what these spreads imply about defaults, we should be in a deep depression, and we are not.'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker.
Nude | 03.06.08 - 8:02 pm
Conjure Bag says, "Herr Boettcher, the year is young."
Know the incident to which you are referring, but can't place. Kucinich would do it, as would Paul. See, I'm ecumenical and both sides are represented.
Just have to be sure that the person has the character of Washington and not Mussolini.
sorry for you, KISIS. I'll relate a scaled down tale of woe. Several years ago I had my favorite beer of all time. It was delicious, it was sublime, the world was my oyster in my newfound glory. It was Stone Seventh Anniversary Ale . . . a limited edition, served at the Blind Tiger in the West Village. Then one day it was gone. And it dawned on me that I would never have it again.
From various blogs and stories, I get a very strong NAR-like denial set, which remains pervasive on one hand, but yet suggestive that denial is a matter of self-censorship, which can re-enforce and distort reality, like a drugged haze that a zombie is induced by.
I think this type of dis-connect will impact the election, as it did so, with the re-election of The Bush Coup. There is perhaps a large majority of under-educated, un-educated, un-aware, un-caring and dysfunctional element that may tip the balance in the fall. Be that as it may be, perhaps I am amongst them?
Thus, these pockets of polarity may not come to grips with the connection between the price of a burger, or the increase in oil, or the increase in wheat, or the matters related to a full scale systemic financial meltdown, which may at some point awaken them to the reality that the riddles going over their heads are not marshmallows or just pretty and puffy clouds.
These pockets of insanity will no doubt be a factor in sustaining the Ownership Society and remain as a highly flammable fuel which will help to enable the dream of not re-paying debt or to be accountable for the cost of that dream.
Friday
3:00 US Fed's Fisher speaks at Banque de France Conference
5:00 US Fed's Yellen speaks at Banque de France Conference
7:00 CA Unemployment Rate FEB Exp: 5.9% Prior: 5.8%
7:00 CA Net Change in Employment FEB Exp: +3.0K Prior: +46.4K
8:30 US Fed's Mishkin speaks on Exchange Rates and Monetary Policy
8:30 US Change in Nonfarm Payrolls FEB Exp: +23k Prior: -17k
8:30 US Unemployment Rate FEB Exp: 5.0% Prior: 4.9%
8:30 US Change in Manufacturing Payrolls FEB Exp: -25K Prior: -28K
8:30 US Average Hourly Earnings (MoM) FEB Exp: +0.3% Prior: +0.2%
8:30 US Average Hourly Earnings (YoY) FEB Exp: +3.6% Prior: +3.7%
8:30 US Average Weekly Hours FEB Exp: 33.7 Prior: 33.7
8:30 US Feds Mishkin speaks on Central Banking in Oslo, Norway
9:15 US Treasurys Kimmit speaks at the Competitive Forum in Madrid, Spain
10:15 US Fed's Kohn speaks at Banque de France Conference
14:15 US Fed's Hoenig speaks at Finance Conference in Brazil
15:00 US Consumer Credit JAN Exp: $7.0B Prior: $4.5B
16:15 US Treasury's Paulson holds briefing with NASDAQ CEO Bob Griefel in California
17:00 US Treasury's Paulson makes remarks at Bloom Energy in California
21:45 US Treasury's Paulson gives keynote address at Stanford
Fibonacci Retracement : Regarding the rumor about an emergency fed meeting today with an increase in TAF announced Friday and cut in haircut for collateral submitted to the facility , I read the same rumor you referenced above (in a prior post earlier this evening. There is a post ) concerning same at the Across the Curve site.... Anyone familiar with this site or has anyone here actually heard this rumor during the day ? Thanks for any input !
Can someone confirm the height of the ceilings at The WhiteHouse?
A recent study at the University of Minnesota suggests that ceiling height affects problem-solving skills and behavior by priming concepts that encourage certain kinds of brain processing.
Priming means a concept gets activated in a person's head, researcher Joan Meyers-Levy told LiveScience. When people are in a room with a high ceiling, they activate the idea of freedom. In a low-ceilinged room, they activate more constrained, confined concepts.
of currency research in London at Morgan Stanley, wrote in a research note. ``The recent sell-off in the dollar is both definitive and justified by economic and policy changes.''
The dollar fell to $1.5395 per euro, the lowest since the common European currency's debut in 1999, before trading at $1.5380 at 1 p.m. in Tokyo. It dropped to 102.46 yen, the weakest since Jan. 28, 2005, before trading at 102.76 from 102.67 late yesterday.
The yen slipped to 158.04 per euro from 157.92 and headed for a weekly decline as Japan's Finance Minister Fukushiro Nukaga said ``downside risks to the economy'' are rising.
Note: By statute, the upper limit of the low-reserve tranche is adjusted each year by 80 percent of the previous year's (June 30 to June 30) rate of increase or decrease in net transaction accounts held by all depository institutions.
Also, please note (while sitting in soft chair):
Low-Reserve Tranche Amounts and Exemption Amounts since 1982
Increase in: Exemption amount
The reserve ratio on net transactions accounts depends on the amount of net transactions accounts at the depository institution. The Garn-St Germain Act of 1982 exempted the first $2 million of reservable liabilities from reserve requirements. This "exemption amount" is adjusted each year according to a formula specified by the act.
For more history on the changes in reserve requirement ratios and the indexation of the exemption and low-reserve tranche, see the annual review in the H.3 statistical release.
OK: Annual Review of Break and Seasonal Factors for Reserves and the Monetary Base:
To make 2007 data comparable with historical data, the break adjustments to the 2007 data use estimates of the low-reserve tranche and the reserve requirement exemption that will take effect in January 2008. These estimated values are calculated by extrapolating net transaction deposits and total reservable liabilities to the end of June 2007, using actual growth rates from the end of June 2006 to March 2007.
E.g: Effective for the reserve maintenance period beginning December 22, 2005, the low-reserve tranche for net transaction accounts was increased from $47.6 million to $48.3 million. The reserve requirement exemption was raised from $7.0 million to $7.8 million. The actions lowered total required reserves by an estimated $369 million.
Any proposal for a sovereign wealth fund (SWF) to take a controlling stake in a US bank or bank holding company would be subject to Federal Reserve approval, Federal Reserve General Counsel Scott Alvarez told the House Committee on Financial Services today.
"It is an important step forward to make the capital requirements more risk-sensitive, so there is less of (these) arbitrage opportunities for banks," Kohn told the Senate Banking Committee during testimony.
He was referring to the practice of some banks of moving mortgage-backed loans into special investment vehicles that were subject to lighter capital requirements.
March 7 Roman emperor Antoninus Pius dies and is succeeded by Marcus Aurelius who shares imperial power with Lucius Verus, although Marcus retains the title Pontifex Maximus.
Marcus Aurelius, a Spaniard like Trajan and Hadrian, is a stoical, disciple of Epictetus, and an energetic man of action. He pursues the policy of his predecessor and maintains good relations with the Senate. As a legislator, he endeavours to create new principles of morality and humanity, particularly favouring women and slaves.
One more: Big Pow Wow @ "Banque de France " Friday and The Frogs are perhaps less drunk than The Crazy Americans....Oui?
In its February monthly bulletin, the Banque de France argues that financial innovations such as credit-default swaps boost the financial accelerator effect - the phrase coined by Fed Chairman Ben Bernanke to describe how weakness in the financial system can compound an economic downturn.
This may be an upward spiral or, as is the case at present, a downward spiral, the Banque de France writes in an unsigned analysis on how financial innovations impact monetary policy effectiveness. We currently refer to this effect as pro-cyclicality. But it is much more than that. As current events show, uncertainty increases and questions arise as to the robustness of the financial system since a weakening of banks capital would be both a threat to the economy as a whole and an impediment to the efficient implementation of monetary policy. It may also prompt stronger responses than otherwise necessary, as illustrated by the recent action by the Fed.
A Bloomberg news story initially interpreted the article as a critique of the Feds recent moves. A subsequent Bloomberg update included a statement from the Banque de France, noting the central banks bulletin was not meant as a critique but rather an observation because the Fed has recently implemented a strong change in monetary policy.
They have offered that program for years and hold some of the mortgages. Their standards stayed reasonably conservative though, and government employees in general are a lower risk. (And some might think twice about jingle mail to the folks holding their retirement.)
Are you aware of this: Poole is an influential Fed official who voted against the central bank's emergency rate cut of three quarters of a percentage point on January 22. He does not currently sit on the rate-setting Federal Open Market Committee, however, and he is retiring from the Fed shortly after next month's meeting.
Retiring!
As you may recall with my latest heart attack posts related to Warsh, we have a Fed Board with 5, versus 7 members.
Without going back to notes, all 5 have been appointed by Bush and IMHO, Warsh is highly inexperienced, so with Poole retiring......isn't this an Oh My God Moment, having less than 3 members to cover the overload of chaos??
Who should I get in contact with about a states own laws about mortgage broker bonds and as such, how would I get a mortgage bonds form? I life in England and am considering moving to America, dont know where yet however I was doing some general reading about housing and came across the term mortgage broker bonds and am a little confused, is it a mortgage or a loan to acquire a mortgage?
Also if I want to set up life insurance do I need insurance bonds? Or can I simply open a policy with a company? Im a little confused by some of the jargon. I am not moving anytime soon but thought I should be aware of things I will need to understand.
first again !!!
"Doesn't this feel like last February and March when the subprime market imploded"
Yes!!
Doesn't this feel like last February and March when the subprime market imploded?
Except for the continued surge in oil prices.
It's a Fed Chairman's worst nightmare.
Mortgage REIT business model broken?
Thoughts?
So, what's the pool contents now for announcements to come after market close tomorrow????
I think the phrase used was "containment" back then...
so agreed ... they can't blame the subprime buyers of overprice homes this time either as the pain -- alt-a, siv, auction rates securities, cdos, monolines, etc -- is sooooooooo much more widely spread
Same timing too, I guess the big dogs make the fun decisions in January.
So we have all these crisis going on at the same time. Credit markets becoming unhinged, Oil going nuts, a completely out of control federal budget and last but not least the stock market appears to be rigged. Hum, so where does one turn for financial safety:
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing.
Adj.\t1.\tunhinged - affected with madness or insanity; "a man who had gone mad"
unhinged - definition of unhinged by the Free Online Dictionary, Thesaurus and Encyclopedia.
Good word. Anyone smell panic?
Cheers,
Ho Hum, so where does one turn for financial safety:
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Backyard mason jar? Mattress?
I think people were looking over MBIA and Ambac and thinking "How could we be so foolish to think such bond insurers on risky debt could be a viable business strategy".
Then they moved down 2 inches on their holdings spreadsheet and saw Fannie Mae and Freddie Mac and a lightbulb went off.
Fannie mbia? Freddie ambac?
hey I wonder how "unhinged" translates into Japanese (re Nikkei...)
Nervous
Buy steel, copper and lead.
Specifically a Smith & Wesson with copper jacketed slugs.
All the commodoties you will need. (j/k)
4822,
"Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing."
ROFL.
Cheers,
Nervous --
Berkshire Hathaway stock.
Seriously. I bought more for myself today.
(By the way, if we get an emergency rate cut tomorrow, I am so claiming that I called it.)
Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing.
Didn't they increase their stake in AAA mortgages a couple months back too? Oh, isn't that what Peleton did too? Maybe a lot of Calpers workers won't be able to retire for a while...
Re mortgage REIT models being broken...Assume you're referring to NLY, CMO, etc. Isn't some/all of their assets fundable thru the FED window?
If tommorows jobs number is negative, I am going to rent Mad Max so I can see the future...
...what I'm curious about is 'timing'.
How much longer until ALL of this translates into public outcry over food prices, gasoline prices and the price of energy?
Not to mention the coming rash of job cuts.
When J6P (joe six pack) starts to VOCALLY complain in a public manner, well, bar the doors!
So here I sit on a bucket of money, and where do I turn.
Maybe time to buy a rototiller, a bunch of seeds, some fertilizer and turn your yard into a garden...
Well yeah - the markets read the news :
"We stand ready to do our part"
"OFHEO approves lifting of caps"
"OFHEO discusses removal of 30% capital requirements"
"conforming loans limit raised to up to 729,000"
"FNM, FRE ready to securitize jumbo conforming"
"Suggestions that FNM, FRE buy the subprime/defaulting resetting/modified mortgages that are guaranteed by FHA"
"FNM, FRE report billions in losses with more to come next quarter"
"WE STAND READY TO DO OUR PART"
And then people are surprised. Jeez...
-K
30-year fixed-rate mortgage bonds and 10-year government notes widened about 21 basis points
Question:
Do mortgage rates tend to follow the 10-year t-note more closely than the 30-year t-bond?
Common sense would suggest comparing like maturities, but I generally know better than to use common sense in these scenarios...
I believe mortgagr notes follow the LIBOR.
Do mortgage rates tend to follow the 10-year t-note more closely than the 30-year t-bond?
For some reason mortgage rates have been tied to the 10 year t-note. Is this because of the prevalence of ARMs in recent years? If most loans being done now are 30 year fixed loans will they become tied to the 30-year t-bond?
Products and Services Overview
19 of 20 ABX indices closed at their all-time lows...Captain, I can't hold this bucket of bolts together much longer....
Doesn't this feel like last February and March when the subprime market imploded? Except the problems in 2008 are more widespread.
That was just a dress rehearsal.
A showdown with The Borg at Wolf 359 awaits....
Patrick Swayze has 5 weeks to live and you're worried about the economy??? Get real.
"Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing."
Oh, they do. It's called feeding their hedgie and banker masters. Not good for the poor recipients, though.
Maybe time to buy a rototiller, a bunch of seeds, some fertilizer and turn your yard into a garden...
bofiz | 03.06.08 - 5:52 pm
Seriously, a friend and I are clearing some trees next week to create more playarea for the kids. The fence is also being moved back.
The playset is about to be put on the back burner and we're going to do a vegetable garden instead.
A friend also has some acreage of pasture a few miles away and I'm going to suggest to him that he do some gardening too.
First the Victory Garden. Now the Depression garden.
Wow.
"Backyard mason jar? Mattress?
giacutter"
If it's US currency, it better be pre-1964, and dimes, quarters, half-dollars, or dollar coins.
Krueggerands work, too.
Stay away from storing the fiat garbage of today.
ac and bofiz: my understanding is that the mortgage rates for 30 year fixed rate loans generally follow the 10 year treasury because that time frame is a better reflection of how long those loans are held (i.e., prepaid due to selling, refi, etc. before reaching maturity). The ARMs are tied to LIBOR (generally, but they can be tied to other indices, too). Again, my understanding regarding the rates on 30 year fixed is that the relationship is more of a coincidence than an actual correlation. I could be wrong, but that is my understanding.
"Basically the gears of capitalism are pretty much grinding to a halt," said Mirko Mikelic, portfolio manager for Fifth Third Asset Management.
Anyone see the MADVAC ad?
that's hilarious... those guys actually have a sense of humor advertising here...
more Conatainment of poop
Our President will make sure we're all taken care of...just like NOLA was.
WaitinginOC -
Given the level of refis and weird products in the last number of years, I seriously doubt that anyone can get a legitimate reading of what follows.
I believe that that model is shot.
"Utterly unhinged"...come on now, this is not the economic end of the world. A severe recession is survivable. This is not a nuclear war. What is wrong with these folks?
sk,
Yep, you nailed it.
Why would anybody be surprised that yields on agency bonds would skyrocket when they are being encouraged to dance on the edge of a cliff?
homedad: I agree that the model is shot. I was just giving my thoughts on what the model had been since they were asking. Looking at the rates shooting up while the treasury rates are declining shows that the two are not tied together, just that in the past these two generally moved together. As you said, the toxic crap loans and total absence of underwriting standards has now caused the investors to rethink (or, maybe more correctly, to start to think) about the appropriate risk premium.
every time this board has gotten this gloomy - a big bounce has immediately ensued. (still short and still REALLY nervous)
Hey, Boat, maybe they are smarter than you...
Help!!!! I can't stop smiling.
John Authers shortview today has some interesting charts on housing valuation in ounces of gold and S&P financials. Sounds very scared towards the end about the prospect that that "the US is headed towards absolute desaster"
FT.com / Short View
Banks Face New Accounting Issues
Banks Face New Accounting Issues
"determining fair value requires training, and many auditors may not have extensive training in valuation techniques."
Some critics believe that the massive writedowns the banks have been taking of late can be blamed in part on fair value accounting. The Financial Accounting Standards Board is planning to weigh in on the subject pretty soon. FASB Chairman Robert Herz recently told The Wall Street Journal that the board intends to look into the rules for how banks value off-balance-sheet vehicles, which have contributed to some of those huge writedowns.
Citigroup had $1.1 trillion sitting in off-balance-sheet vehicles last year. It's almost as if they wanted to go into competition with the federal government over deficit amounts if those assets go south.
Deninger had an interesting idea: allow borrowers to Put the home back to the county to manage assessed/market values.
The Market Ticker
Seriously, what if banks just said screw it and let the property go to tax sale- is the lien buyer than the owner of the prop? does the lien buyer than own the prop and have to pay prop taxes?
30 year mortgages are compared to 10 year notes as they have a similar duration (price volatilty). Despite the commentary by all the FNMA / FHLMC bears out there, its not just FNMA / FHLMC. GNMA's, which are full faith and credit are widening as well. If it was just a credit issue, they would be tighening like treasuries. Its just too many sellers, banks, margin calls, etc and there is no way that the street is going to put capital up (if they had it) to step in front of the train.
Stunning! But not surprising.
The Fed can't really save the mortgage market,'' di Galoma said.As they keep cutting, mortgage rates aren't going lower.''
Time to start monetizing long bonds, or agency debt directly.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUwbo74M.GkA&refer=home
Carlyle Fund Gets Default Notice After Margin Calls (Update9)
By Edward Evans
March 6 (Bloomberg) -- Carlyle Group's publicly traded mortgage bond fund failed to pay margin calls, prompting creditors to seek immediate repayment, as the burning subprime mortgage market scorches investors in even the highest-rated debt. The stock fell 58 percent.
Carlyle Capital Corp. missed four of seven margin calls yesterday totaling more than $37 million, the Amsterdam-listed fund said today in a statement. The company expects to get at least one more notice of default related to the margin calls...
ac, bofiz,
I thought it had to do with this.
here
Rings a bell. But as I'm feeling utterly unhinged right now, I could be mistaken.
Cheers,
"This is not a nuclear war. What is wrong with these folks?
Boat52"
You're right, the large poor classes will likely not all die out like in a nuke, but the rich will. They are only looking out for themselves. buyer beware.
Standard operating poop containment procedure calls for a rate cut tomorrow...and then again after the meeting but before options expiration...told you not to lower rates last year Ben...wait till I tell my wife about the Depression gardens...
Except the problems in 2008 are more widespread.
pun!
Will Hank come up in front of TV cameras tomorrow and say something about the "implicit government guarantee"?
For the longest time, I have been wondering what this "implicit guarantee" is about. I wonder if we were about to find it out.
"Depression Gardens"... Hey, I think that's gonna be the name of a condo development downtown.
I doubt an emergency rate cut unless Dow is down 4 figures or the unemployment report indicates a big vertical uptick.
Ben doesn't mind fear and unease, but won't tolerate a panic. Unwinding is ok as long as it's orderly.
I think CR needs to provide us with a new graph - namely the number of stories of financial meltdown chronicled by this blog over the last few months. Is it just me, or is it getting harder to keep up...
There is nothing unhinged in the markets. They just aren't reacting the way they want them to react.
This panic talk is just to try and whip up support for further rates cuts and taxpayer bailouts. Notice the mention of the fre/fnm support guarantees in the same article. They are just trying to panic the politicians into bailing them all out.
"Except the problems in 2008 are more widespread.
pun!"
That one gets the prize for CR ubernerd humor.
Mr Beckmann added that most of the reduction would come from repayments of existing loans but said that Citigroup would also explore the sale of some loans.
He said that, by the third quarter of this year, 90 per cent of new mortgages originated by Citigroup would either be securitised or sold to Fannie and Freddie - a move that was expected to reduce the companys capital and credit exposure.
Commodity prices are not going up so much as the value of the dollar against them vs the euro is depreciating. Its not an inflation problem, its a currency exchange problem, with people seeking gold and oil as a hedge. Unfortunately, we can't fix the currency problem without raising rates, which makes the housing problem worse. Or increasing savings, which will make the recession worse.
If your going to do a garden and there is a lot of deer in the area - go with 8 ft fencing, or dogs, or wolf urine.
yawp said: "...They are just trying to panic the politicians into bailing them all out."
Finally, somebody else here who's thinking like a criminal.
S.
quod gratis asseritur, gratis negatur
\t"what is asserted without reason may be denied without reason"
\tIf no grounds have been given for an assertion, there is no need to provide grounds for contradicting it.
The entire financial world is in denial, until they fail; we are doomed! Every Fed memeber, every CEO, every one in The Senate and Congress act as if they are realtors pulling for NAR and that this is a buying opportunity. God save us all! SOS!!
yawp,
They just aren't reacting the way they want them to react."
Right. And hedgies are thus blowing up. And these entities are all interconected, which means things are spiraling down.
Don't think unhinged, esp. if your up to your eyeballs to the casino, is an unreasonable description.
Cheers,
I suspect someone added Lithium to the bottled water on wall street.
Congress is going to have to swallow the implicit guarantee on agency paper. It will be a big gulp and should impact interest rates considerably when that is added to the national debt.
Nova,if you put the excess or spoiled produce outside the fence where there is a good backstop,you can harvest the deer.pick up a smoker cheap on CL and make your own jerky.
You know why this is happening - the upped the Fannie and Freddie limits today so they can now purchase crap.
High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000
High-cost mortgages just got cheaper - Mar. 6, 2008
Nemo said: "(By the way, if we get an emergency rate cut tomorrow, I am so claiming that I called it.)"
Myself, I wouldn't presume to time such a move like that, but I can see from the spread between the ^IRX and the Fed target that there's about 160 bp of (additional) potential easing.
S.
High-cost mortgages just got cheaper
My loan guy is telling me that it will be another 60-90 days before they are actually ready to handle these new conforming-jumbos. I suspect the fed would prefer them to move quicker...
High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000
NICE! My area goes to $729K (Whitelandia NJ)
Can I get 125% Cashout Refi with that? Oh, and no doc- I've been unemployed for 6 months- I promise to spend the extra 25% on completely worthless shit and NOT short the market or buy anymore GLD or DBE or USO. Cross my heart....
Any links on the initial conforming jumbo bond offerings by Fannie and Freddie?
How will those bonds compete with tax free munis running at 5%+?
I suspect someone added Lithium to the bottled water on wall street.
Or something.
I learned something today: that GNMA MBSs have explicit government backing, unlike FNMA's MBSs.
I read that GNMA's MBS premium to the 10 year Treasury bond was not that different from FNMA's, 1.9% vs. 2.4%. I was confused. Governement guarantee; why is there ANY premium to the 10 year bond?
So, I looked at GNMA's financial statements: $500B in MBS guarantees against $13B in equity.
So, I think I understand why GNMA has a premium to the 10 year bond; the market must have doubts about the government's ability to backstop those GNMA MBSs.
All I am saying is the markets are not "unhinged" or "financial system broken" as they claim when the VIX is below 30.
They know they won't get bailed out unless they can convince everyone it is a "systemic crisis". So they will run around acting as people can't conduct transactions. Just because I can't see at the price I want doesn't mean the system is broken.
They are just trying to scare the politicians into intervention.
Now in another few weeks we may see unhinged but you will know it when you see it.
It seems like if you are leveraged 32 times then unhinged is warranted.
Moody's cuts Thornburg to 'Ca'; rating on review dow
on the CNN money page:
odds these Millionaires in the making make it:
CNNMoney.com: 404 Page Not Found
I'm starting at 1,000,000 to 1
I am in the mortgage business. This has got to be the all time low of my 8 years.
Should I find a new career?
I do have about 30 people ready to refi if GSE MBS' come back down....what do I do?
In case anyone is interested the FNMA posted the new jumbo-conforming guidelines.
https://www.efanniemae.com/sf/mortgageproducts/index.jsp#
"High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000"
They can -- but how much will they really take? They're not obligated to take garbage, I assume. I assume that not a lot of jumbo deals will pass their smell test.
Bob Dobbs writes:
"High-cost mortgages just got cheaper
Freddie and Fannie can now purchase loans worth as much as $793,000, while the FHA can insure loans for up to $729,000"
Yeah, but the lenders haven't raised the caps yet....
Alabama County Won't Pledge $184 Million for Swaps
Alabama County Won't Pledge $184 Million for Swaps (Update3) - Bloomberg.com
Well: max 60 percent LTV for second homes and investor properties. But a max LTV of 90 percent on fixed loans? Ten percent is not going to protect them.
The other 10% comes from MI
But the MI companies have tightened up significantly. It will be very hard to get MI on these loans I bet.
Thanks, David J.!
Looks like the FNM Jumbos will only help those that don't really need help, just like I suspected.
Nervous writes;
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Nervous | 03.06.08 - 5:44 pm | #
Gold ~ yes
Commodities, ~nope
Foreign markets ~ Yes = Yen
Cash ~ Yes
So here I sit on a bucket of money, and where do I turn?
I dont know about you. But Ill be in my beautiful leased Condo in Florida for the spring/summer. Not paying much attention to this any longer. I had a Doctors appointment today and he told me I had high blood pressure. I said no shit. He wanted to give me medicine. I said my medicine is all paid for in Florida. Ill take 80mg baby aspirin a day and see you next year!
Not short/long any more. I have some very low GTC buy orders on a couple of things. All total 20% of my cash if they all get filled.
Bob Dobbs,
That 90% LTV requires an FRM, a FICO of 700+, full documentation, and a new appraisal!
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
So here I sit on a bucket of money, and where do I turn.
Nervous | 03.06.08 - 5:44 pm | #
gardens are good. with my weeding skills, I am better off stocking up in the canned goods section of the supermarket. already have the wooodpile. a few cans of gas stored in a safe location away from the house are also a good idea.
I have Cashpitulated.
So here I sit on a bucket of money, and where do I turn.
Buy euros. As many of them as you can.
who created XL capital assurance?
So here I sit on a bucket of money, and where do I turn.
Buy euros. As many of them as you can.
Screw that.... GO SHOPPING ! ! ! !
Re: "Alabama County Won't Pledge $184 Million for Swaps"
Was somebody here asking about the difference between swaps and insurance a while back?
Insurance policies rarely have a "we can cancel if we don't feel like paying" clause, although if you are poor and don't have a lawyer the insurance company might try to tell you otherwise.
CR-
Are you still in the shallow camp?
Redskins 0-16:
if you're stocking up on an asset allocation of canned goods, a home garden and gold coins in case of complete societal collapse, don't forget the automatic weapons to protect what's yours.
ask Sebastian how to get wolf's urine...
he seems to be of the type to drink funny concoction's
Love the CNN money advice. When the stock market goes down, it's no time for a 23 year old to invest for retirement.
I suppose they should wait until they're 60, and max out at 100% equities at market peak. Smart.
Can anybody explain when these spreads will make their way into actual mortgage rates?
"So we have all these crisis going on at the same time. Credit markets becoming unhinged, Oil going nuts, a completely out of control federal budget and last but not least the stock market appears to be rigged....
So here I sit on a bucket of money, and where do I turn."
Nervous | 03.06.08 - 5:44 pm | #
i just moved 5 yards of manure and mushroom compost for the depression garden..8 dollars per yard (brown gold)
this just sent to me by my mortgage broker friend:
It is becoming a little more evident that there may be some serious issues going forward with Thornburg, as we hope it all works out for them, going forward, locking or quoting their products is not something we want to do right now!!! This is just to be careful!!!We will keep you posted!!!
sounds like a death spiral to me.
ades writes:
So here I sit on a bucket of money, and where do I turn.
I'd recommend heading for NM (our own 3rd world country). It's working for me.
-- Hiding out
Help CR/Tanta,
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets (as reported by Bloomberg and others). It seems like a reverse repo is an investment and use of funds not a source of funds.
Can you explain how it works?
To Rob Dawg - In response to a comment last night (maybe 1000 messages ago - how do you people keep up with all of this - I think I've skipped over 700 comments tonight - I can't keep up and still live a normal life). I don't have time to do a blog. I barely have time to blow my nose most of the time. I do a little reading and writing here while I'm watching market and other news at the end of the day - right now I'm watching tomorrow's weather report - we have a storm front coming in.
I do not know everything about everything. But I do know a whole lot about a very limited number of subjects. E.g., with regard to fixed income markets - I know a lot about munis - not a lot about mortgage backed securities. Not that I didn't try. I read through several editions of Fabozzi when mortgage backed securities were the newest - latest - and greatest - quite a few years ago. And simply gave up. I never wanted to buy any fixed income product where I had to be a computer programmer to try to understand it.
I do know a lot about other small market areas - and nothing about others. Regarding the markets I'm interested in - I run about 30 charts a day - many with multiple pages - and have been doing that for over 15 years. They are my "market newspaper". I also know a lot about gardening in NE Florida - golf - dining - and cooking certain kinds of cuisines. Don't ask me who the favorites are for the Final Four
.
Like Dirty Harry said - a man's got to know his limitations. I'd rather know a lot about a small number of things than almost nothing about everything.
Still - I keep my ear to the ground when it comes to things that might affect me. And this mortgage backed and other asset backed crisis will affect all of us in one way or the other. IMO - it is a combination of irresponsible lending to people without pockets (much less deep pockets) - a lot of speculation on the part of real estate buyers - or people buying things they simply couldn't afford to buy - combined with too much leverage on the part of the people who traded in the asset backed securities. I don't know when or how the current crisis will end. I'm just glad I am not yet knee deep in piles of manure. And - I plan to stay in touch with what's going on - and - fingers crossed - wind up in the same position when this is all over.
BTW - people have implied that you have a blog. If so - could you post the name and URL? Roby
CEO of overstock .com patrick byrne,
(you remember the guy who gave the great interview on cnn several months ago about how many business models wont survive the coming financial crisis) (bold to say so me thinks)
well, the news just got worse as he gave a presentation to students in Utah
The Daily Utah Chronicle - Russian Mafia in bed with Wall Street, CEO says
"Byrne said when someone purchases a stock, there is a three-day stock settlement period during which a broker or a trader must provide a purchaser with that stock. However, through loopholes in the system, brokers and traders can legally not provide you with that stock almost indefinitely, giving the purchaser an IOU instead, Byrne said.
"It's my thesis that certain people have figured out how they can abuse that loophole, and flood the market...often in connivance with a broker dealer," he said.
Through this "flooding," the brokers can essentially issue the same stock to hundreds of people at no penalty. By increasing the supply of stocks, these dealers can dramatically drop the price according to the laws of supply and demand.
Byrne showed how the "cheating parties" make money off of a stock price dropping through a process called "naked short selling."
"I've been in this market for 30 years, I'm one of the senior citizens of the bond market, and I have never, ever seen such a confluence of negative events,'' said Marilyn Cohen, who manages $215 million in fixed income investments as president of Envision Capital Management in Los Angeles.Clearly the Fed has been rendered impotent on doing anything to end this credit crisis.''
Corporate Bond Risk Soars as Concerns of Bank Failures Grow - Bloomberg.com
"Well: max 60 percent LTV for second homes and investor properties."
That won't save the Bay Area. If you can't bring back rampant speculation, prices will just keep slipping. Bailout, my Fannie!
Anonymous writes:
Help CR/Tanta,
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets ...
Answer: In a "reverse repo" the party "sells" securities that he promises to "buy back" on a certain at "par" plus interest. (I.E. a collateralized loan.) The buyer is investing/lending to the "seller" for the period of the agreement. If the borrower is unable to buy back the securities the "lender" owns them.
-- Hiding Out
Waiting on Poole's remarks, but this was a start:
"The dangers of recession and inflation are both very real," said William Poole, president of the Federal Reserve Bank of St. Louis, who voted against the Fed's last interest-rate cut on Jan. 30.
"If inflation develops while the Fed is concentrating on avoiding recession, the consequence will be to delay recession but not to avoid it," Poole said.
Poole told the U.S. Monetary Policy Forum in New York that a delayed reaction would be "worse than a mild recession" right now, in remarks that directly contradicted testimony by Fed Chairman Ben S. Bernanke this week and added to the turmoil in financial markets.
tj & the bear writes:
Bob Dobbs,
That 90% LTV requires an FRM, a FICO of 700+, full documentation, and a new appraisal!
Also looked like the "Declining Markets Policy" adds another 5 percent to the Max LTV...thats most of the key markets in CA,FL and AZ...Not sure how many people in CA have 100k lying around for a down pmt.
That's the part I don't get, the genesis (if not the whole) problem was that there was no smell test.
"That's the part I don't get, the genesis (if not the whole) problem was that there was no smell test." Because the stinkers would be giving the test?
Look at the Nikkei plunge...
"The markets have become ``utterly unhinged,'' [said] William O'Donnell, a UBS AG government bond strategist "
Well, he would, wouldn't he?
(Mandy Rice-Davis for the origin of the phrase)
To Nervous:
P-- or get off the bucket (& we'll look after your cash).
Here yah go...............
March 6 (Reuters) - Lawmakers must not be too heavy handed as they react to the collapse of the U.S. subprime mortgage market and end up closing this source of credit forever, a senior Federal Reserve policy-maker said on Thursday.
St. Louis Federal Reserve President William Poole said the subprime market was now basically shut and might never reopen if the regulatory backlash was too onerous.
"The public policy problem is the danger that, with the sad record of so many mistakes and abuses in recent years, regulatory burdens to end the abuses will do so, but only at the cost of making subprime lending so costly and risky to lenders that they will have no interest in restoring this market," Poole said in prepared remarks.
A text of his speech at the University of Illinois-Springfield was released to the media in advance of delivery.
Poole, who retires from the Fed at the end of this month, did not directly address the economic outlook, but stressed the housing market's problems have been costly.
"The lessons have been expensive and painful and the pain is not yet over," he said. (Reporting by Alister Bull; editing by Gary Crosse)
"Other than overleverage, bad debts, sinking home prices, no jobs, shrinking wages, cash strapped US consumers, rising oil prices, a sinking US dollar, $500 trillion in derivatives not marked to market, rampant overcapacity, underfunded pension plans, looming boomer retirements, no funding for Medicaid, no funding for Medicare, and no Social Security trust fund, everything is just fine."
-Mike Shedlock
citizen,
Yeah that's nice.
Look at the $/Y
INO Foreign Exchange - US Dollar/Japanese Yen (FOREX:USDJPY) Price Chart and Quote
Cheers,
risk capital:
Too funny! I posted that quote on another thread. There's an NBR interview with her from Feb I think, Googleable.
Is anybody old enough to remember Kidder, Peabody? I'm not. Same, different?
JoeMortgage | 03.06.08 - 7:05 pm
Thanks...any encouragement is appreciated...
But effffffffff the Giants. I may hate Little Prick Dan Snyder but I have to love my Redskins.
OT - Topher - I'd rather screw around with the asset backed securities markets than high blood pressure. Take care of it - yesterday! If by any chance you will be in NE Florida - I'd be glad to give you the names of some good cardiologists.
To Rob Dawg - I know about some medical stuff too. My husband has MS and high blood pressure - and I know a lot about making sure he outlives me.
On topic - there was a statistic on CNBC today. Almost 50% of all mortgage problems are in California and Florida. I suspect of those in Florida - 75+% are in spec condos and similar in south Florida. There are more spec condos being finished now in south Florida (last number I heard was something like 25000+) - than all the single family houses on the drawing board where I live for the next 30 years What's the story in California?
I have absolutely no desire to bail out spec buyers in Florida. Perhaps I might be a bit more sympathetic to people in California if I knew more about them. I have a lot of sympathy for people in the midwest - but - since most don't have the jobs they used to have (and those jobs won't be coming back anytime soon) - I doubt the answer to their problems involves bailing out their houses.
In the 1970's or so - maybe earlier - a lot of people in the north of the UK lost their industrial jobs. But they wouldn't move to places in the UK - primarily in the south - where there were new jobs. Created a permanent/semi-permanent underclass - the slackers.
I don't think that's a great solution for the problems we're seeing in the midwest US these days. I know my SIL's parents - over 80 - in Cleveland - can't move and start a new life. But their grandchldren can.
I'd like to hear your opinions - particularly those of you in the midwest - about how to deal with the people in the midwest who are in trouble because their jobs have disappeared. Roby
Re: ... regulatory backlash was too onerous.
What regulatory concerns is he talking about? The Fed has bent over backwards pumping liquidity into these crooked operations and The SEC has looked the other way, no audits, no investigations, what is he talking about?
JoeMortgage | 03.06.08 - 7:05 pm
Also, there is a Burger King about a mile from my office...
Another lesson learned: 'rating agencies don't always get it right.'
'After recent experiences, the reputation of a first-class mortgage broker should matter more than the rating assigned by a rating company,' he said.
He is right there, the rating agencies need to be shut down for being conduits for fraud!
Things are moving fast. I think it's due to the fact that a shadow bank run has commenced.
Cascading cross defaults are becoming far more likely.
Cheers,
browncue-
still waiting for the bubble of all bubbles to pop, don't know when, but, it's gonna be something to watch.
risk capital
thanks for the link
read it and took a double shot of dewars
i used to drink clan mcgregor but was having panic attacks
jg suggested i switch to single malt but dewars was all my portfolio would allow.
doing better now esp with money in pms (thanks misean)...CDs (sorry FFDIC) and manure (is that ok rayonthefarm?)
Blowncue - I am not only old enough to remember Kidder Peabody - I had an account there. Then Kidder was bought out by Paine Webber - which in turn was bought out by UBS. I have dealt with the same broker there for over 20 years. He is sitting at the same desk he sat at 20 years ago. But the name on the front door has changed a few times.
BTW - My broker is in Minneapolis. I have never lived in Minneapolis - but he was recommended to me by a friend 20 years ago - and we have a good relationship. Have only met the guy once - a couple of months ago - when he was in a golf tournament here where I live (TPC at Sawgrass in Ponte Vedra Beach FL). Roby
Fibonacci Retracement | 03.06.08 - 7:55 pm
Dude, as a broker that is a non starter. The reps from Chase for example would come by and check out my apps and tell me to "bump up" there income and assets on the stated/stated deals. We did as told and closed loans.
However, all my clients had scores over 700 and not one has defaulted on a loan.
Ruth,
This is Rob Dawgs blog:
Exurban Nation
Fibonacci Retracement,
Regs are in place and unenforced. Lending requirements are being ramped up fast by the banks to save their hides. Perhaps Poole fears that regs lock in the fear overshoot by the market participants. Wouldn't be the first time.
Cheers,
Misean,
Im picturing wetlands and lots of wildflowers, in regard to cascading liquidity (I should be thinking in terms of
While not exceptionally high, the Niagara Falls are very wide. More than six million cubic feet (168,000 m³) of water fall over the crest line every minute in high flow,[1] and almost 4 million cubic feet (110,000 m³) on average. It is the most powerful waterfall in North America.[2]
The Niagara Falls are renowned both for their beauty and as a valuable source of hydroelectric power (Sir Adam Beck Generating Station)EST 1917. Managing the balance between recreational, commercial, and industrial uses has been a challenge for the stewards of the falls since the 1800s.
The Grand Coulee Dam is almost a mile long at 5223 feet (1586 m). This is almost as long as six Titanics laid end-to-end.[4] At 550 feet (168 m), it is taller than the Great Pyramid of Giza[5]; all the pyramids at Giza could fit within its base. Its hydraulic height, 380 feet (115 m), is more than twice that of Niagara Falls. The spillway is as long as 5.5 football fields. There is enough concrete to build a four-foot wide, four-inch deep sidewalk twice around the equator.[6]
Robyn, sorry my buddy is divorcing Ruth. Doh!
Exurban Nation
Credit Swaps Thwart Fed's Ease as Debt Costs Surge (Update4) - Bloomberg.com
The credit-default swap market is completely distorting reality,'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker.Given what these spreads imply about defaults, we should be in a deep depression, and we are not.''
Robyn. I had a reading of 152 over 95 Ill be fine. Nothing a baby aspirin and a 10mg Valium cant handle. I need to loose 20lbs also. No problem. Im like Bear in the winter I put on a little extra. Im only 46. He just wants more money out of me. I last saw him in 2003 I still have the BP prescription in my drawer.
bofiz writes:
Do mortgage rates tend to follow the 10-year t-note more closely than the 30-year t-bond?
For some reason mortgage rates have been tied to the 10 year t-note. Is this because of the prevalence of ARMs in recent years? If most loans being done now are 30 year fixed loans will they become tied to the 30-year t-bond?
bofiz | 03.06.08 - 5:55 pm | #
30 yr Mtg's tend to follow the 10 year because the effective durration is closer to the 10 yr. Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
Alert:
The banks that have been using correlation to calculate their risk will have to go back to scratch,'' said Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance.By using correlation models as the main means of risk management, the engineers threw out sound banking practices.''
Tavakoli is very smart, very hot on finance, listen to her!!!
PS: TY for your thoughts Roby
Hmm, did Poole's Alzheimer's kick in before he got to retire?
Is he saying, if the government stops lenders from throwing money at people who can't repay it to buy overvalued houses, we better be careful, because then people will stop throwing money at people who can't repay it to buy overvalued houses?
I'm not as smart as these Fed guys, so help me out here.
Robyn,
Little blue homepage thingy goes to people's homepage.
Fibonacci Retracement,
Born in Buffalo. Know Niagara.
Here's what cascading cross defaults mean:
FRB: Testimony, Greenspan -- Private-sector refinancing of the large hedge fund, Long-Term Capital Management -- October 1, 1998
The Limits of Central Banking by Gary North
Cheers,
Cascading cross defaults are becoming far more likely.
Cheers,
Misean | 03.06.08 - 7:56 pm | #
I think I have heard this mentioned somewhere before...
FYI,The REO backup may be starting to break for one company. Coldwell Banker just handed 73 REO's to a friends wife. No minimum price,she has full pricing authority. A flat 25% !!!! fee to do with as she pleases. Her only directive...Make em gone. I guess pricing the 2 previous she had correctly and selling them quickly was good for business(3days/2.5 weeks).
This is in North Port,Fl,FYI...
Chris
Re: correlation
The entire derivative pyramid is all about building synthetic bridges which are theoretical games that connect casino bets. This game is designed to jump one bet to another bet, one pile of money to the next, but the game is now inverted and they are jumping from debt to debt, from burning casino to burning casino, and this game is unregulated, uncontrolled and will result in financial collapse if this fire is not contained ASAP. The obvious problem is in the relationships between hedge funds and casinos and banks and government agencies that have built bridges that connect them all to a collusionary network of fraud which thrives on obstruction of justice and fraud.
As my best friend Einstein told me, "you can't solve a problem on the same level from which it was created".
He said that many times and yet, retards dont get it, they fail to see that a system run by crooks can not be changed into an honest game. The best we can hope for is the next Martha Stewart or a dead Ken Lay. Go figure!
Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
Dirk | Homepage | 03.06.08 - 8:04 pm | #
Considering the jingle mail, they may now be pricing to the 6 mos Tbill
Topher -- I am athletic (gym 3x/week), eat properly, and had high blood pressure and cholesterol, and had a heart attack at 49.
Fortunately, after a $120,000 4 day stay in the hospital and the implant of a stent, I am doing just fine.
The side effects (bleeding) of the stent implant nearly caused my death.
Wish I had taken the blood pressure pills and cholesterol pills earlier, I guarantee I take them now.
I'm sure you will do fine with Florida sunshine and a valium, but you might want to think about cheap insurance.
And when everyone is in de-levering mode, only two things can happen: Either markets stop working, or prices drop like rocks -- or both, of course.
What is a "shadow bank run"?
Commodities as a portion of overall assets serve to lower overall portfolio risk due to their negative correlations with the other major asset classes. While CalPERS may be buying at the local top, it could be said that they are buying insurance when it's high priced. Of course, the actual plan is to add to an existing exspoure over the next 2 to 3 years, not what has been interpreted by the press to be $7B this year (which, BTW, only represents 3% of the plan.) The benchmark index for the CalPERS allocation is up over 30% since the initial allocation to commodities was put it place last year.
The link below is to the MOSERS website, and if you read the article on commodities, you'll understand the reason plans invest in commodities and why the current price levels are more or less irrelevant. This article is almost ten years old, and is just as relevant now as it was when it was written.
http://www.mosers.org/assets/pdfs/inv_value/commodities_0898.pdf
There is no doubt watching Poole that he and the rest of the FED boys have avoided calculating risk of any kind in a very long time.
It looks critical indeed. Bears could press hard today into the market. Tomorrow and Monday are decisive as to where we're headed. The Jan 22 lows are in grave danger (DJ above, Nas + S&P below).
O-Joe
Interesting how Calpers, the California pension fund, is increasing their stake in commodities at this time. I hope they know what they're doing.
Or maybe this is the signal of the top in commodities. I have read many reports indicating that some of the panicked money going out of mbs and so forth is going into commodities. So the rise in commodities is based at least partly on speculators' demand, not on economic fundamentals--just like the rise in housing prices that got us to this point.
A bad recession really will cut demand for lots of commodities, even oil. So if you think commodities are a can't miss investment--well, I'm not sure there is any such thing.
What is a "shadow bank run"?
citizen | 03.06.08 - 8:18 pm | #
"Only the Shadow knows!" The Shadow Old-time Mystery Radio Show
or maybe Ken Howard The White Shadow - Wikipedia, the free encyclopedia
4822 writes:
"That's the part I don't get, the genesis (if not the whole) problem was that there was no smell test." Because the stinkers would be giving the test?
4822 | 03.06.08 - 7:38 pm | #
Meaning low interest rates and/or conforming loan limits were not the real source of the problem, so why were they the "go-to" variables for the solution.
People don't fret about a devalued asset provided that they can both enjoy it and afford the payment (think new car buyers). If the PTB fixed the exploding ARM payments* and suspended the smell test for these buyers they might find these people could G-A-SH whether their homes are worth 2/3's of the purchase price.
*Please don't flame me about contract law, I'm not that nuanced.
Once this Bubble deflates, people may start asking HOW this mess was allowed to happen. We are getting the solid play-by-play analysis. Not so much the HOW or specific WHY on the finance and economic blogs.
One answer to the Super Bubble collapse is recent banking deregulation...not a really popular topic on the blogs or MSM.
But IMO once banks were allowed to package and gamble in mortgage derivatives, the Bubble grew far greater and faster than the underlying risky mortgages.
The Fed(Greenspan) was advocating banking deregulation. Bill Clinton responding to this advocacy, signed the repeal(deregulation) of the 1934 Glass Steagall Banking Reform Act as I understand it.
So again IMo, we are primarily in this Crash because of specific banking deregulation and also the non-regulation and supervision of the mortgage lending practices by the Fed.
At a recent Senate Banking Committee hearing, it came out that the Fed was asleep at the wheel as this Bubble/Crunch/Crash unfolded. Why was the Fed sleeping? C'mon they really just went to sleep??
All this may make sense when America and its assets are bought at fire sales for ten to maybe 25 cents on the deflated dollar.
Cobra,
Hmmmm...
CB news is the kinda thing this market needs.
Cheers,
It feels like debt/credit being destroyed far faster than it's being originated.
JoeMortgage,
Shadow banking system is a term for the OTC derivatives market. Well known.
Beware our shadow banking system
http://shadowbankingsystem.com/St_USAToday-Rydstrom9-14-07FinalWEB-2.pdf
FT.com / Comment / Analysis - Out of the shadows: How banking’s secret system broke down
Cheers,
That 90% LTV requires an FRM, a FICO of 700+, full documentation, and a new appraisal!
Here's the thing:
This is the new era of "Yes, Virginia, you can refinance your principal and cram down that interest rate, too!" That, in conjunction with massively hiked GSE caps, means it should be no problem for any FB getting an option-ARM refi'd into a FRM.
Getting that 700 FICO should also be no obstacle for your motivated fraudster, thanks to consequence-free identity theft and sundy FICO manipulation schemes out there.
Full documentation an obstacle? Just like it was befiore the new regs? Please... Anyone out there got Photoshop or a copy machine?
New appraisal? I'm sure fraudsters will find the best Hit-The-Number appraiser money can buy.
Probable end-game: socialization of Wall Street losses via GSEs, followed by monetization of resulting government bad debt via inflation.
Optimistic Joe writes:
It looks critical indeed. Bears could press hard today into the market. Tomorrow and Monday are decisive as to where we're headed. The Jan 22 lows are in grave danger (DJ above, Nas + S&P below).
No rush O-joe, next interesting level is 10,500 on the dumpster.
Ho Hum, so where does one turn for financial safety:
-Gold
-Commodities
-Foreign markets (not so good lately to closely coupled)
-Cash
I can hook you up with a Leprachaun! They have a great record with gold anyway.
Think about it. If CalPERS did invest 3% in commodities, and they fell by 50%, what would be the implication for the other markets? Inflation would be lower, bonds would be up. The economy would benefit, and stocks would be up. I'd be willing to bet that the benefit to the 60% or so to equities would more than offset the loss of value of commodities. It would just take 2.5% of the 60% to offset the loss of the commodities allocation.
Now what would happen if commodities go up another 50% or so under the same scenario. . . .
Thanks Misean- I was just having a little fun while Rome smolders.
And thanks for the PM advice- done well on glod, should a bought the sliver- maybe i'll do that tomorrow.
Above tg was not me. Not that it matters much
Poole in Q&A bragging how "health care is 15% of GDP not counting medicare/medicade" and HB's "only 5% GDP"...like our upside-down health care system will save our upside-down housing mortgage mess. These FED people are MORONS....we are deep shite.
Thanks Hiding Out
Help CR/Tanta,
I'm trying to comprehend how TMA used reverse repurchase agreements to finance its assets ...
Answer: In a "reverse repo" the party "sells" securities that he promises to "buy back" on a certain at "par" plus interest. (I.E. a collateralized loan.) The buyer is investing/lending to the "seller" for the period of the agreement. If the borrower is unable to buy back the securities the "lender" owns them.
But from what I've read (very little Repurchase agreement) - Wikipedia, the free encyclopedia, that sounds like a repurchase agreement. The other party would have the reverse repo. Does Wiki have it backwards?
JoeMortgage,
I was wondering if you were snarking after I posted. Hold off on PM for at least a few days. They're kinda whipsawing now...get a line on the short term trend. Looks like silver is testing new resistance levels. Wait till next week to see if they hold.
24-hour Spot Chart - Silver
Cheers,
C-SPAN Schedule: Friday, March 7, 2008
10:00 AM EST: Executive Compensation
Oversight & Govt Reform
Angelo R. Mozilo
403 Forbidden
FFDIC,
What happens if there's a bank failure and customers have automatic electronic payments set up. Business as usual as long as the direct deposits are still coming in?
FFDIC,
I hope the Orange one reminds our "esteemed" rulers about all the money they took to look the other way every time a pointed question is asked. Glod that would be just GREAT!
The fraud didn't exist only in Tangelo's offices.
Cheers,
TO MOCK TURTLE> (and all interested)
Daniel Byrne posted his presentation about the naked short selling.
it is VERY interesting, if any place still has the link. I watched it (it's a very interesting slide show presentation) about 1 year ago or so.
It makes you SO mad.
it's called:
"Dark Side of the Looking Glass: The Corruption of Our Capital Markets."
it is here:
Darkside of the Looking Glass (full)
One of my colleagues sent me this hysterical depo transcript from a litigation between GMAC and HTFC, a soon-to-be-famous example of everything wrong with the world of mortgages.
From p. 9 (and how do I send this pdf to Tanta or CR?):
a. Hostile, uncivil, and vulgar conduct
Throughout his deposition, Wider sought to intimidate
opposing counsel by maintaining a persistently hostile demeanor,
employing uncivil insults, and using profuse vulgarity.
Q. [T]his is your loan file, what do Mr. and Mrs.
Fitzgerald do for a living?
A. I dont know. Open it up and find it.
Q. Look at your loan file and tell me.
A. Open it up and find it. Im not your fucking
bitch.
Q. Take a look at your loan application.
A. Do it yourself. Do it yourself. You want to do
this in front of a judge. Would you prefer to
[do] this in front of a judge? Then, shut the
fuck up.
Q. Sir, take a look--
A. Im taking a break. Fuck him. You open up the
document. You want me to look at something, you
get the document out. Earn your fucking money
asshole. Isnt the law wonderful. Better get
used to it. Youll retire when Im done.
Wider Dep., Nov. 8, 2007, at 418:25-419:17.
Robyn,
I lost my post, I am having a semi-junior senior moment. I am a russet potato when it comes to investing (e.g. small) I lose my password and have to "talk to Chuck" every month.
I was an educated yield-hound and then I got too busy and it got too hard.
I once came across a former bond trader who described the difficulties of trading...Treasuries...I think...in 1994 at Kidder, Peabody...today's action reminded me of 1994.
I was looking for your castle in the trees at the 17th hole but your landscaper has done a fine job. I hope you get a good deal on windows. Watch out for U-boats!
Part 2:
Q. And you have a hard time comprehending. Were
going to adjourn this deposition if this happens
again because you are offending every single
person.
A. Dont speak for anybody in here except yourself
fuck face.
Q. Im speaking for myself and Im speaking for the
Court Reporter.
A. If she had a problem with me she would say
something. She knows its [not] directed toward
her. Its directed to you because youre a piece
of shit and a piece of garbage and Im the only
person in your life that is fucking up your world
and I enjoy it. I enjoy it and when you sit there
and say Im perpetrating a fraud Im just better
at the law than you are and you cant get in the
fucking door and its pissing you off. Keep
trying.
Id. at 433:19-434:11.
Q. Have you spoken to Mr. Petinton about the subpoena
he received for documents?
A. He mentioned [it] to me. He laughed at you.
Q. What did he say?
A. He thought you were a joke.
Q. What else did he say?
A. That youre a joke.
Q. Did he say he had documents responsive to the
subpoena?
A. He had no documents. He doesnt discuss things
with me. He just said youre a joke.
Q. Thats what he said?
A. Yes.
Q. So he shares your opinion on these things as well?
A. Yes, youre a joke.
Id. at 437:24-438:15.
TO TOPHER:
If your florida + relaxing treatment doesn't work SOON (i.e. in a week or two max), then I'd recommend taking your BP meds or at least speaking with your doctor.
152/95 is very very very high, not just a little high. I'm doubtful that rest/relaxation will be enough. Starting exercise is good, but be careful and screen it with your MD first, as your heart and/or kidneys may not be able to handle it (depending on WHY you have elevated BP as example)
in my practice, we admit all people with BPs over 160. you are at risk for a stroke or other serious BP related illness (like heart attack, blindnes, kidney damage, etc)
Hypertension is a silent killer. one often feels fine until it's too late.
it's a testament to how glorious and awesome our bodies really are. even under extreme stress and pressure (pun) it performs so well that we can ignore it.
I say these things as a doctor (although not an internist) and also as a person who has watched a loved one have massive acute cardiac event with secondary brain injury, becoming a "vegetable" at age 51.
His typical BP prior to the massive event: 148/98. one day he passed out.
although it is true that some of the medications are not proven to help heart patients (*like some of the cholesterol drugs, where we can lower cholesterol but can't prove it's adding life expectancy), the BP meds are quite a different matter.
consistently elevated BP results in higher and higher BP through it's interaction with the blood vessel wall, the kidneys, and the heart/heart vessels itself.
elevated BP=bad bad bad bad bad.
Part 3:
Q. Do you know--
A. No, I dont know. Be specific.
MR. ZICCARDI: Let him finish the question.
Q. Sir, if you cant be a little more civil--
A. I am very civil.
Q. --in how you respond to my questions--
A. I am very civil.
Q. What we can do is we can have this deposition in
front of a judge.
A. We can do that.
Q. And the judge can--
A. Lets do that.
Q. No, no. Were not going to--
A. Lets do that; this way he can rip your ass out.
Q. Were not going to do that, sir, okay.
A. Then dont fuckin threaten me, asshole.
Q. Well, sir, I would appreciate it if you would
control your language in light of the people that
are present in the room and I would appreciate it
if you would be a little more courteous, okay.
A. Im very courteous.
Q. Okay. Now--
A. Lets go in front of a judge and shut up.
Q. Sir--
A. Shut your mouth.
Wider Dep., Sept. 26, 2007, 28:7-29:15.
if you're worried that your doctor is "gouging" you, call him/her
I do TONS of free care on the telephone all the time. Of course, nobody respects the fact that they get free care by telephone... but there it is.
"Full documentation an obstacle? Just like it was befiore the new regs? Please... Anyone out there got Photoshop or a copy machine?
New appraisal? I'm sure fraudsters will find the best Hit-The-Number appraiser money can buy."
whoever said such...
Yeah full doc was an obstacle. Banks were pushing the deals on us. Also, you don't need a copy machine. With stated/stated...they just turned their head and "believed."
Appraisal? Different story. Didn't use or run in to corrupt appraisers.
Robyn:
Glad you had a good experience with a broker, my sole experience sucked. FIL donated $ for first kid's college with stip that use his broker.
Jeez. Stuck me in a dog fund and I had to move after several years and lost profit.
Second kid's fund did much better when I told the broker that I'd be placing in other than what he recommended. Finally fired the guy.
Some years ago, FIL did too.
So...now what to do with the 529s?
All three are in conservative - mostly bond funds - but don't like the options. Most conservative is the MM option (fortunately through Vanguard) but it's still Commercial grade MM...
Explained some of all this to eldest child several weeks ago w/her account and will shift to 20/80 stock bond mix.
Fortunately, she's a rocket scientist...she's going to need it. BTW, whatever happened to Robert Cote?
John Stark:
Noted that one of the regulars sold out of gold at 300% the other day and clicked with recent conversation with the wife re gold and inflation/deflation.
I concur that gold and commodities are not ironclad. But how do you know when the top is hit?
Appraisal? Different story. Didn't use or run in to corrupt appraisers.
Ahhh but could they be coerced? Coercion is still acceptable until Jan 01, 2009.
la ca, post a link to that deposition. That's funny as hell.
After thinking a bit about how I follow our developing story mostly via CR and the comments (thanks everyone!) I hit the tip jar.
Glod, gotta love the Japanese CB. This:
INO Foreign Exchange - US Dollar/Japanese Yen (FOREX:USDJPY) Price Chart and Quote
in the face of this:
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT:DX) Price Chart and Quote
Race to the bottom.
Cheers,
Ross,
Chimera (the vulture spinoff of Annaly mortgage) shed 14% today. They must have hit the repo needle like the other mortgage REITs.
homedad-
nobody knows how high/low anything could potentially move in this environment.
The assumption that calpers and many others are making is that certain allocations are non-correlated and thus present diversification benefits.
In my opinion, when high degrees of leverage are involved, that argument is complete and utter bullshit.
In such an environment, assets that are normally non-correlated become correlated, if one has to sell due to margin calls, they are selling what they can until they can't, then they sell everything.
r_c,
Check.
I think that is what the shadow bank run is doing to commodities right now. Can't confirm it, but the hedgie problems of the last few days provide strong anecdotal evidence.
Cheers,
From my long past fixed income days, I recall that a repo is the same as a reverse repo. The only difference is the direction. The nomeclature is from the broker/dealers perspective. If the dealer is financing his inventory, it's repo. If the dealer is providing financing to the customer, it's a reverse repo.
Wider depo in detail:
Lawyer of the Day: Joseph Ziccardi(And Client of the Day: Aaron F**king Wider) - Above the Law - A Legal Tabloid - News, Gossip, and Colorful
Commentary on Law Firms and the Legal Profession
Jas Jain has taken control of the AP....WARNING...I repeat Jas Jain has taken control of the AP.
Housing Market Spirals, No End in Sight"
Still no reports of O-Joe or anyone else taking control of his senses.
Misean-
reports like this have surfaced for awhile, we know the IB's balance sheets are getting smaller, we have read reports of highr cost margin, decreasing lines/elimination of smaller players all together, if it has not hit the space yet, just a matter of time-
until then, party on darth, most seem to believe they are better than the rest and will be the first to exit-
I keep saying when it happens and it will, it will be a real show (where's neil? got popcorn).
Hey, I've been wondering:
Suppose the citizens of the country threw in their Social Security to bail out the financial system, in return for a promise of basic health, lodging, and services in our old age.
Would that be starting to look attractive?
Or would it be simpler to get the money from a few oil zillionaires and have a theocratic monarchy instead of a social democracy?
sorry, link-
Hedge Funds Squeezed As Lenders Get Tougher - WSJ.com
Where are mp and Conjure?
I find myself in a conundrum. A deep recession will crush a lot of decent folk (my God mother's rental car business in NYC, for example, which never quite recovered from 9/11). However, I feel it is necessary to reverse some of the massive mis-allocation of resources that has built up in credit bubble industries: housing is the most obvious, but how about casinos (every state has em now) or even higher education (paying 80,000 to get a degree that will net you 34,000 a year job).
What will be interesting is that there is an entire generation of people that have never experienced a deep recession (unless you were in IT, 2001 was very mild). Many of the survival skills needed (ie savings, basic DIY repairs) have been lost. Many of my friends don't know how to survive without running up CC balances. The shakeout will be interesting to watch.
OT:The Italian treasury has taken the highly unusual step of intervening in the debt markets to prevent a further surge in government bond yields as hedge funds with heavy exposure to the region scramble to raise liquidity.
A flight to safety has pushed the yield spread between 10-year Italian bonds and equivalent German Bunds to 55 basis points, the highest since the launch of the euro. A similar pattern has emerged across the southern belt of the eurozone, with spreads hitting post-EMU highs of 53 versus Greece, 44 for Portugal, 38 for Belgium and 36 for Spain.
Italy supports bond market as spreads soar - Telegraph
I guess the bond market has woken up to the fact that the EU member countries credit stands on it's own. There isn't any ECB backstop for reckless spending.
r_c,
Party on risk capital:
YouTube -
Cheers,
JoeMortgage writes:
Remember that relatively few people stay in their houses w/o refinancing for 30 years. When people move or refi, the mtg is paid off, thus shortening up the duration.
Dirk | Homepage | 03.06.08 - 8:04 pm | #
Considering the jingle mail, they may now be pricing to the 6 mos Tbill
JoeMortgage | 03.06.08 - 8:16 pm | #
Very true Joe, and what does that make the spread given a 6 month bill rate of 1.52%? Heck even if it should be pricing to the 3 year, thats at 1.46%!!! Of course jingle mail is not just a durration event.
Nuke, the first skill of choice will be bankruptcy. The second skill will be learning to live with your parents again.
"Suppose the citizens of the country threw in their Social Security to bail out the financial system, in return for a promise of basic health, lodging, and services in our old age."
That's exactly what is going to happen, except we won't get the basic health, lodging or services.
mp and conjure - no idea on whereabouts but since they were big fans of the euro i imagine the are doing alright.
Misean,
Yah, very pretty picture, one will need lots of film, or how you say, storage capacity and batteries!
If the settlement system ever fails, we will get what Greenspan has called "cascading cross-defaults." In defending the New York FEDs decision to call together a 1998 meeting of commercial banks to encourage them to bail out Long Term Capital Management, Greenspan told the House Banking Committee in October, 1998,
While the principle that fire sales undermine the effective functioning of markets may be clear, deciding when a potential market disruption rises to a level of seriousness warranting central bank involvement is among the most difficult judgments that ever confronts a central banker. In situations like this, there is no reason for central bank involvement unless there is a substantial probability that a fire sale would result in severe, widespread, and prolonged disruptions to financial market activity.
It was the judgment of officials at the Federal Reserve Bank of New York, who were monitoring the situation on an ongoing basis, that the act of unwinding LTCMs portfolio in a forced liquidation would not only have a significant distorting impact on market prices but also in the process could produce large losses, or worse, for a number of creditors and counterparties, and for other market participants who were not directly involved with LTCM. In that environment, it was the FRBNYs judgment that it was to the advantage of all parties including the creditors and other market participants to engender if at all possible an orderly resolution rather than let the firm go into disorderly fire-sale liquidation following a set of cascading cross defaults.
Cascading cross defaults are the greatest single threat to the world economy. They could push the worlds banking system into gridlock. Then our plastic, credit-based money would no longer buy things. This would create a monumental crisis.
Think of your situation at a distant gas station: a nearly empty gas tank, far from home, little or no cash, and the message box on the gasoline pump says "card rejected." All of your cards are rejected. All cards everywhere are rejected. Then what?
There are more spec condos being finished now in south Florida (last number I heard was something like 25000+) - than all the single family houses on the drawing board where I live for the next 30 years What's the story in California?
McMansion farms. Almost unimaginable. Entire cities with almost nothing but thousands of new 2,500 sq. ft.+ houses. Just one in South Orange County, Ladera Ranch, has 8,000 homes. It's now entering freefall. Oh, did I mention the city of Mission Viejo just approved another development of 14,000 just next to it?
More recent developments or more remote ones are often eerily empty. It was seeing some of these vast wastelands that converted Cramer into a housing bear. The ones he saw, out near Indio, are probably worse than anything I've seen, since I'm near the coast.
We have excess condos, but they are decidedly secondary.
25,000? Bah, pocket change.
CIT Group 5.85% 2016 bonds:
Price (Ask) 82.937
Yield to Worst (Ask) 8.733%
Ouch.
JoeMortgage:
You are probably correct. I was in the US last week, for the first time in 2 yrs. I stayed with my father, who is an academic researcher. At this point in his career, he has saved enough he can retire whenever he wants. Anyways, he told me that he senses a growing panic greater than what he felt in the late 70's. His conclusion was that leverage was the difference. When he was in his 30's, he put away about 7% of his paycheck every month; he could survive a period of unemployment (of which he had several in his life). Many of the younger people he works with will lose their homes if they miss a paycheck. The report we are getting of people paying their CC's while giving up their homes bares this out.
Fibonacci Retracement,
Live Free or CCD!
Coming to a theater this summer.
Serious note. The monoline legal fiction of AAA is what's holding this together now. The strength of their length in the chain is that of a pair of paper clips hanging on to 1/2 inch hardened steel.
Cheers,
Yearning to Learn | 03.06.08 - 8:52 pm | #
I will fill my prescription. Its for Zestril 10mg.#30. I think it is wise to not be so hard headed. I read up on it since my earlier post. I sure dont want to have a heart attack trying to relax. Thank You All
Surveying the blogosphere I am getting the following:
This is pure delevering, the sources on Bloomberg sounded panicked. Marilyn Cohen's comment really struck me in particular, as 1994 had big margin calls hitting Steinhardt and Cooperman, iirc.
There are rumors swirling. One I am not comfortable spreading. The other is of an emergency Fed meeting and TAF facility expansion with reduced haircut for collateral.
I do not have a ringside seat.
For nerds, tell Tanta to look at the Redwood Review from Redwood Trust because there are marks for 4q07 she might find interesting.
For those unfamiliar, they are not holding their positions on margin. Do not confuse their own exposure with underlying collateral performance. They said '06 and '07 vintages (jumbo prime, Alt-A) are performing worse than they expected--and their loss estimates were three times Street estimates, iirc. At one point they bought an ABS issue (AAA I think) at 40c on the dollar in q4. Later in q, illiquid trades at 33c on dollar! They picked up ('04-'05 Acacia) paper they helped originate at 52c on dollar.
Don't own RWT. I remember talking to George Bull, later Wally Weitz by phone in 1998 iirc. Little guy like me, that was really something.
Didn't Wider and his lawyer get sanctioned by the judge in that case?
Being public, Calpers isn't required by Pension Protection Act to bring their funding ratio up to 100% over time like private DB plans are.
But imagine if you are a private DB plan sitting there today with 60% of your assets in stocks and 20-30% in non-Treasury paper. You are getting creamed. If this continues much longer, we could be looking at a 65% funded ratio in private DB plans, which equals about a $1 trillion shortfall. Amortize that over 8-10 years and you're still looking at more than a $100 billion annual hit to corporate earnings over the next decade. Most of it is concentrated in 3-4 industries and 15-20 companies.
The U.S. auto industry is going to fail and then PBGC, and then the private DB plan gig will be up. A lot of public DB plans probably will give up, too. But Calpers won't be among the first of them.
If you're a California public employee, your retirement benefit is in the top 10% in terms of security, compared to PBGC-backed plans and smaller public plans.
Misean,
Yes, Live free; I used to live in NH and enjoyed the history there. I never cared much about The Revolutionary War, but as I have become an older, wiser person, that period is ahhh, a very great metaphor useful in seeing where we came from and what we as a nation have morphed into. I enjoyed the parks, and graveyards; swordfish and crab too>
Stark gained historical notoriety due to her husband's battle call of "There are your enemies, the Red Coats and the Tories. They are ours, or this night Molly Stark sleeps a widow!" before engaging with the British and Hessian armies. Stark is also known for her success as a nurse to her husband's troops during a smallpox epidemic and for opening their home as a hospital during the war.
rich,
I'm not sure that we Californian's can afford Calpers mistakes.
Muni's are getting premium rates and citizens are getting kicked in the balls.
It shall be interesting.
Cheers,
Yes, Live free; I used to live in NH
Actually, the motto is Live, Freeze and Die. Somewhere along the way it got corrupted.
And the state bird is the mosquito.
Re: There are rumors swirling. One I am not comfortable spreading. The other is of an emergency Fed meeting and TAF facility expansion with reduced haircut for collateral.
Misean -
And what would be those mistakes?
How would you allocate a $240b portfolio today for the long term? It takes a bit of time to move that amount around.
Man! Legalize and tax Ganja and I'm in!
Think of your situation at a distant gas station: a nearly empty gas tank, far from home, little or no cash, and the message box on the gasoline pump says "card rejected." All of your cards are rejected. All cards everywhere are rejected. Then what?
Fibonacci Retracement | 03.06.08 - 9:49 pm
Fibonacci:
Thank you for the elegant little example of what could be occurring if things aren't under control. Was trying to explain/exemplify to someone and had a horrible time doing so. I was totally dyslexic.
r_c:
Thanks for the clarification. In other words, when looting the store before the police arrive, don't stop to make comparison on the model of TV.
jkinthewoods,
I don't want to argue this tonight. Take a look at Calpers asset holdings. Google Calpers and poke around.
Outsider,
I was doing a Die Hard thing...Live Free or Die Hard...Live Fee or Die CCD.
Guess it wasn't very good.
Cheers,
Marcus Aurelius,
Im all in favor of Ganja Bonds and CDOs which would help support the war on subprime fraud! I think if I ran the press, I'd offer a TAF in a slightly new way!
Marcus Aurelius,
Hell legalize it all and the US sponsored debacle between Columbia, Venezuela and Ecuador disapears. Yeah that's gonna happen. Our masters' care so much about us that they just can't get rid of prohibition.
Besides they like killing innocent southeners. New weapon systems give them too much bribe...campaign contributions.
Cheers,
Watching some of these crashes I'm concerned about incentives for destructive behavior. Creditors of entities like Carlyle can manipulate bond prices to force defaults and pick up valuable collateral well below book. CDS provide a mechanism for manipulation as well as an additional methods to profit.
one of the reasons I like blogs, aside from my increased net worth, is that you see things like a doctor giving out advice to a fellow blogger about his health. I would not have bet that someone who spent 7 years in higher education would sign on with a handle of "yearning to learn". Kudos to the good doctor for his advice.
Misean -
It will always be easy to find poor performing assets in a large, globally diversified portfolio. Returns are not made by avoiding all risk, and not all risky assets will be good performers, by definition. For every dollar CalPERS pays out, 75 cents of it has come from investment returns. That's a tad better than "pay as you go".
Pick your asset class, you can always find an example of a member of the class which did not perform well.
I've read your comments for quite some time, you typically do much better than that.
JoeMortgage writes: "Millionaires in the making" (a couple trying for $1M by 50 years old*: among other things, article talks about them buying a 1-year old Ford Mustang for $19K)...
Heck, my first car was a Chevy Nova. He's 25, and already in $4K CC debt. Bad start.
That said, given his job as a used car salesman, his odds just went WAY up in the US: if he had had a productive job like an engineer, I'd have said no chance.
*(inflation not noted... BB may give them a great head start)
Man! Legalize and tax Ganja and I'm in!
Marcus Aurelius | 03.06.08 - 10:14 pm | #
federal deficit solved
The Canadian economy is slowing " quite rapidly," Guatieri said, as it feels the effects of "a U.S. economy that we think is already in recession."
jkinthewoods,
"I've read your comments for quite some time, you typically do much better than that."
I'll do some digging then. I've never found Calpers to be smart...lacksadaisical would be a better description. Too late tonight for anything good, but I'll try to puruse things tomorrow.
Just remember that Calpers essentially offs it's fiduciary responsibilities to 3rd parties. I'll try to get back...Calpers is not my main focus though.
I'm not saying you're entirely wrong, just that what I have doesn't jive with your position.
Cheers,
If anybody wants to see what that unbelievable scumbag Aaron Wider looks like, he's the one in the center in this picture:
Redirect Notice
A nebbishy douche.
Seems like a song is need for The Ganga SubPrime Bailout Bonds (GSBB)
YouTube -
No more sweet talk from-a culprit,
no more sweet talk from the hypocrites (oh, no hypocrites!),
no more sweet talk from-a culprit (wo-ah yeah),
no more sweet talk (no-no-no-no sweet talk) from the hypocrites (hey!),
no more sweet talk from-a culprit,
no more sweet talk (no-no-no-no sweet talk) from the hypocrites (no-no-no-no hey!).
OT (at 228 comments, I doubt it matters):
Has anyone looked at gold charts over the past couple of days? Big time sell-offs followed by immediate buying - bringing the price right back up to or near new highs. Sometimes the buying is rapid, sometimes gradual, but the demand is there (must be lost of mom and pop buying). It's like a damn cork.
Anyway, the sell-offs make me thing someone big (or several someones) need(s) liquidity. I have a feeling mom and pop don't feel so good about cash right now.
Fibonacci:
Glad you mentioned beer. Just opened a Golden Monkey by Victory Brewery...was going to drink tea but read the post and, hey.
Post several days ago mentioned that we should contact our representatives and demand action. While the sentiment is noble, I don't see what short-term action that they can take. If the problem is that some are not coming forward with what they know, then determine if it warrants a warrant and move forward accordingly. On what grounds? There are so many laws on the books anymore that they ought to be able to find something. If the long-term health of the financial system is an issue, then just move, dagnabit.
I agree that there should be severe and meaningful consequences. I'm leaning towards stocks in the midst of the NY Financial District, but there doesn't seem to be any sense of shame. I guess that I would like to see a fair number of trial and high - confiscatory? - fines.
This whole mess has gotten too far out of hand to leave to the political and financial classes anymore.
Marcus,
Gold charts are a part of all my tabs. Yeah...I think liquidity seekers are selling, whil investors are buying.
Cheers,
Fibonacci Retracement,
I prefer this:
YouTube - Megadeth-Symphony of Destruction
Cheers,
Golden Monkey is a powerful beer, though if I were having Victory I'd prefer a Hop Devil. I'm a hophead.
You score points for good taste, at any rate.
Re: Hell legalize it all
It is ironic that the USA wages a "war on drugs" and a "war on terrorism" but yet we have a war on the middle class and we have banks acting like terrorists and a government that seems to be at odds with its citrizens. We have people from The Fed either out of touch or blinded by greed, we have a President in denial, lost in the feeble belief that his Ownership Society is going to be his lasting positive contribution to this era, and that The War in Iraq has saved us from an enemy worse than than the embedded parasites and corporations who contrived in collusion to destroy America in search of greater profit, greater glory, greater greed, and now what have we left to look forward to? We have a society in chaotic decline which is failing, while these Patriots raise the flags of denial and walk arm-in-arm as an army of terrorists looking for the next way to take advantage of weakness!
Okay.
I just convinced myself after typing the last comment. I'm in.
Was asked last fall to consider running for school board. My response - seriously - was "Huh? Me?"
Too much else happening, move and three kids, no time.
Person asking me asked me to keep my options open re this topic and I'll contact her manana with a positive for next election in 2009. Got to start somewhere and do something...
Stocks outside the Stock Market? No one would look twice unless they could leverage it for lunch money.
We need to go after the money. Then they'll pay some goddamned attention. Top tier citizens (including politicians) need to see examples of the end results of malfeasance. Nixon should have done jail time. Michael Milkin should still be in jail. You think these asshats would have tried pulling this crap if they knew for certain they'd lose everything?
Think the Chinese will be having any trouble with their version of the FDA for, lets say, the next 50 years?
Misean -
No doubt about CalPERS hiring some outside managers for a portion of the assets. It's a function of the state not wanting to pay market rates for investment professionals, so they end up paying more in management fees to third parties. Most of the equities are indexed in-house, and most of the fixed income is managed in-house. Most of the fancier stuff is outsourced.
Don't forget the perpetrators of Iran-Contra, who were not only pardoned, but in some cases, (Eliot Abrams, John Poindexter) returned to heights of power under GWB!
A quick google search reminds me that yes, Golden Monkey is 9.5% alc . . . and that a long forgotten TV show once entertained me as a child.
Tales of the Gold Monkey - Wikipedia, the free encyclopedia
Gary:
Don't drink much beer anymore and yes, Golden Monkey has a punch. I'll try the Hop Devil manana; got the sampler case for Xmas and I like the brewery.
You should see what I typed before I went back and corrected.
Topher:
Good luck with your BP.
If you get on your diet/exercise plan, there's a chance you can come OFF the meds in the near future!
But never take med advice from a blog... CALL your doctor and talk about this with him/her on the phone (or at least his/her nurse)... they may help you with some of your questions!
and there may be a cheaper alternative ACE inhibitor to zestril as well... (like vasotec) but it depends on your personaly history, sid effects etc
lastly:
a relatively good site for med info in plain english is
mayoclinic.com
you can search in the search bar on that site for lots of med topics, like "ace inhibitor" or "high blood pressure" to learn more for yourself!
There's one in every car writes:
Wider depo in detail:
http://www.abovethelaw.com/2008/03/lawyer_of_the_day_7.php
Wow..unbelievable. Not knowing the context of the situation I can't begin to guess what Aaron Wider's hoped to prove/gain by this deposition (assuming he was of sane mind). Mostly aragont and offensive BS but I 'bout choked on this gem...
Q. My question is where are you currently employed?
A. Im not. I just told [you] I work for free.
Q. Okay. Youre not employed by HTFC Corporation?
A. No, I own HTFC Corporation. Be specific.
Q. Okay. And what do the initials HTFC mean?
A. Hit That Fuckin Clown. Thats what it means. Its an acronym.
Stop it. Just stop it with the beer talk. I can't handle carbonation anymore, so you guys are just making me angry.
Andy in NZ - Don't worry. I have a SIL - Ruth - who is a broker at ML. She is retiring in a few months and I hope she cashed in a lot of stock a while ago.
Topher - 150+ and 90+ = time for meds - especially if you're under 50. I am about 115 over 75 at age 60. When markets go crazy - my stomach falls apart - not my blood pressure. Different disaster strokes for different folks (sigh).
Fair Economist- Thanks for the California info. Very different situation than Florida - although the same disastrous results.
homedad43 - After a few missteps in the 70's - I have never used a broker as anything except a sales person who gets me the best stuff I'm looking for at the best possible price. I think most people are better off learning about the markets - figuring out what is in their best interests to buy (considering their time frames and how they relate to risk) - and then exploring the best place to buy the stuff. Can't say it is something one learns overnight. I've been at it for over 30 years - and am still learning.
FWIW - my goal these days is to earn 5% or so after tax - which is why good munis at 5% are attractive - as are callable CDs at 6% in retirement accounts. I am sure that no one likes these numbers - but they are realistic in terms of longer term planning IMO.
BTW - I do own other things - like physical gold. Which I bought on the way down in the early 80's. YOY return over the last 20 years is less than 1%. I look at it as a disaster hedge for a small portion of my portfolio. Roby
All right...
Beer then
YouTube -
Cheers,
Emergency Cut at 8:30am
50 bps as a tourniquet
If the equities can make it to the hospital by
mid March
50 bps at the Fed meeting
Might be to late though, she could be D.O.A
YTL:
Thanks for the info. Spouse is an internist and can't tell you how many times I've turned the phone over to her when an acquaintance/church member/neighbor calls.
She doesn't really get why I spend more time doing this, blogging with this site and following the financials, but she's seen significant changes in our financials in the past two years. Time online has ramped up significantly in the past several months; always been a history buff and while history doesn't always repeat itself, there are too many flags to past situations.
YTL:
Thanks for the info. Spouse is an internist and can't tell you how many times I've turned the phone over to her when an acquaintance/church member/neighbor calls.
She doesn't really get why I spend more time doing this, blogging with this site and following the financials, but she's seen significant changes in our financials in the past two years. Time online has ramped up significantly in the past several months; always been a history buff and while history doesn't always repeat itself, there are too many flags to past situations.
Misean:
Tomorrow will be very interesting for gold ; )
Asian markets getting slammed.
Robyn:
Reviewed the Zionsdirect site the other night.
Question for you. Didn't have time to call them in daytime and didn't see answer on site, but in what dollar increments are these sold? $10K? More/less?
Looked at PA munis and reviewed what they had available. Think that healthcare related (think hospital) (dad-burned Golden Monkey!) would be better able to survive and not blow up a la other munis.
Thanks
Marcus,
It's sourcing up to be.
I think I'll call it a night, have a samich and a beer, and watch Ramsey.
Cheers,
Keep it simple:
Oh come on, get in the spirit of this, this how they felt in Boston, not too long agao:
Their first manifestations were ridicule and derision, which the riflemen bore with more patience than their wont, but resort being made to snow, which then covered the ground, these soft missives were interchanged but a few minutes before both parties closed, and a fierce struggle commenced with biting and gouging on the one part, and knockdown on the other part with as much apparent fury as the most deadly enmity could create. Reinforced by their friends, in less than five minutes more than a thousand combatants were on the field, struggling for the mastery.
At this juncture General Washington made his appearance, whether by accident or design I never knew. I only saw him and his colored servant [possibly Will Lee], both mounted. With the spring of a deer, he leaped from his saddle, threw the reins of his bridle into the hands of his servant, and rushed into the thickest of the melee, with an iron grip seized two tall, brawny, athletic, savage-looking riflemen by the throat, keeping them at arms length, alternately shaking and talking to them.
In this position the eye of the belligerents caught sight of the general. Its effect on them was instantaneous flight at the top of their speed in all directions from the scene of the conflict. Less than fifteen minutes time had elapsed from the commencement of the row before the general and his two criminals were the only occupants of the field of action.
I just can't imagine Bush being able to do this. Kucinich, yes. bush, no.
Misean:
Looooong time ago.
Great sketch, great beer.
Beer,
By the grace of God, I am blessed withDeschutes Brewery Inversion IPA, but sad to say, it is not an Imperial IPA, nonetheless, I remain well and ready to search for Fed corruption and collusion.
Amen
I guess I really should go throw some snowball at Goldman, for the subprime auto loans they trade in, as Im wondering deep within, if these are no-doc loans???
"I keep saying when it happens and it will, it will be a real show (where's neil? got popcorn).
risk capital"
IIRC you last year didn't think it would be all that bad. When did you reconsider?
"Should I find a new career?"
Redskins 0 and 16 | 03.06.08 - 6:47 pm
Conjure Bag says, "Redskins, find a thick rug, get down on your knees, and pray."
``Given what these spreads imply about defaults, we should be in a deep depression, and we are not.'' said Henner Boettcher, treasurer of HeidelbergCement in Heidelberg, Germany, the country's biggest cement maker.
Nude | 03.06.08 - 8:02 pm
Conjure Bag says, "Herr Boettcher, the year is young."
Fibonacci:
What the hell are you drinking?
Know the incident to which you are referring, but can't place. Kucinich would do it, as would Paul. See, I'm ecumenical and both sides are represented.
Just have to be sure that the person has the character of Washington and not Mussolini.
Not Napoleon.
Kucinich and Paul walk into a bar and kick ass.
No joke.
Whoa. Conjure bag appears.
Vie geits?
homedad,
Snowball Fight in Harvard Yard
Boston 1775: Snowball Fight in Harvard Yard
I just finished my second and last beer, however, this economic activity is highly intoxicating the collusion has been getting the best of me.
clean sheets above.
sorry for you, KISIS. I'll relate a scaled down tale of woe. Several years ago I had my favorite beer of all time. It was delicious, it was sublime, the world was my oyster in my newfound glory. It was Stone Seventh Anniversary Ale . . . a limited edition, served at the Blind Tiger in the West Village. Then one day it was gone. And it dawned on me that I would never have it again.
O, discordia!
And that, folks, is a serious beer drinker.
BTW, whatever happened to Robert Cote?
homedad43 | 03.06.08 - 9:16 pm | #
You mean that nice sweet old man we used to call "Dove Cote"? I don't know. One day I started reading CR and he turned into that snarling Rob Dawg!
Re: "Herr Boettcher, the year is young."
From various blogs and stories, I get a very strong NAR-like denial set, which remains pervasive on one hand, but yet suggestive that denial is a matter of self-censorship, which can re-enforce and distort reality, like a drugged haze that a zombie is induced by.
I think this type of dis-connect will impact the election, as it did so, with the re-election of The Bush Coup. There is perhaps a large majority of under-educated, un-educated, un-aware, un-caring and dysfunctional element that may tip the balance in the fall. Be that as it may be, perhaps I am amongst them?
Thus, these pockets of polarity may not come to grips with the connection between the price of a burger, or the increase in oil, or the increase in wheat, or the matters related to a full scale systemic financial meltdown, which may at some point awaken them to the reality that the riddles going over their heads are not marshmallows or just pretty and puffy clouds.
These pockets of insanity will no doubt be a factor in sustaining the Ownership Society and remain as a highly flammable fuel which will help to enable the dream of not re-paying debt or to be accountable for the cost of that dream.
Wake up clowns:
Friday
3:00 US Fed's Fisher speaks at Banque de France Conference
5:00 US Fed's Yellen speaks at Banque de France Conference
7:00 CA Unemployment Rate FEB Exp: 5.9% Prior: 5.8%
7:00 CA Net Change in Employment FEB Exp: +3.0K Prior: +46.4K
8:30 US Fed's Mishkin speaks on Exchange Rates and Monetary Policy
8:30 US Change in Nonfarm Payrolls FEB Exp: +23k Prior: -17k
8:30 US Unemployment Rate FEB Exp: 5.0% Prior: 4.9%
8:30 US Change in Manufacturing Payrolls FEB Exp: -25K Prior: -28K
8:30 US Average Hourly Earnings (MoM) FEB Exp: +0.3% Prior: +0.2%
8:30 US Average Hourly Earnings (YoY) FEB Exp: +3.6% Prior: +3.7%
8:30 US Average Weekly Hours FEB Exp: 33.7 Prior: 33.7
8:30 US Feds Mishkin speaks on Central Banking in Oslo, Norway
9:15 US Treasurys Kimmit speaks at the Competitive Forum in Madrid, Spain
10:15 US Fed's Kohn speaks at Banque de France Conference
14:15 US Fed's Hoenig speaks at Finance Conference in Brazil
15:00 US Consumer Credit JAN Exp: $7.0B Prior: $4.5B
16:15 US Treasury's Paulson holds briefing with NASDAQ CEO Bob Griefel in California
17:00 US Treasury's Paulson makes remarks at Bloom Energy in California
21:45 US Treasury's Paulson gives keynote address at Stanford
Gotta be a down day tomorrow, what with that clown parade.
Fibonacci Retracement : Regarding the rumor about an emergency fed meeting today with an increase in TAF announced Friday and cut in haircut for collateral submitted to the facility , I read the same rumor you referenced above (in a prior post earlier this evening. There is a post ) concerning same at the Across the Curve site.... Anyone familiar with this site or has anyone here actually heard this rumor during the day ? Thanks for any input !
Evil clown parade.
Can someone confirm the height of the ceilings at The WhiteHouse?
A recent study at the University of Minnesota suggests that ceiling height affects problem-solving skills and behavior by priming concepts that encourage certain kinds of brain processing.
Priming means a concept gets activated in a person's head, researcher Joan Meyers-Levy told LiveScience. When people are in a room with a high ceiling, they activate the idea of freedom. In a low-ceilinged room, they activate more constrained, confined concepts.
Oval office: 5'.
yearning to learn
i watched the video you linked regarding Byrne and his presentation about the fraud within the BD and clearing house process....FTDs,etc
horrific
the system is truely riddled with holes.
hard to sleep at night. hope Byrne has cover.
thanks for giving me a lesson...always prefer knowing to living in a fairy tale.
http://www.federalreserve.gov/releases/z1/Current/z1.pdf
Ahh humm (cough)
Thursday
March 6, 2008
Flow of Funds Accounts
of the United States
Nonfinancial business debt rose at an annual
rate of 12 percent in the fourth quarter of 2007, the same as in the previous quarter.
Z.1, March 6, 2008 Flow of Funds Matrix for 2007
(Billions of dollars; All Sectors -- Assets and Liabilities)
Miscellaneous -6651.9 (Instrument Discrepancy)
** That was -3785.6 in 2004 FYI
R.100 Change in Net Worth of Households and Nonprofit Organizations
Billions of dollars; not seasonally adjusted
2007 Q4 = -666.1 (ehhh!!)
Holding gains on assets at market value (2)
(2) Calculated as change in amount outstanding less net purchases during period.
Re: Oval office: 5'
LOL
ROTFLMAO
Nikkei looking more realistic all the time, down 421; just think, they were only overvalued by 50% a month ago!
of currency research in London at Morgan Stanley, wrote in a research note. ``The recent sell-off in the dollar is both definitive and justified by economic and policy changes.''
The dollar fell to $1.5395 per euro, the lowest since the common European currency's debut in 1999, before trading at $1.5380 at 1 p.m. in Tokyo. It dropped to 102.46 yen, the weakest since Jan. 28, 2005, before trading at 102.76 from 102.67 late yesterday.
The yen slipped to 158.04 per euro from 157.92 and headed for a weekly decline as Japan's Finance Minister Fukushiro Nukaga said ``downside risks to the economy'' are rising.
Wow baby,
Check this out. Im amused by almost anything but:
Reserve Requirements
Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.
http://www.federalreserve.gov/monetarypolicy/reservereq.htm#table1
Note: By statute, the upper limit of the low-reserve tranche is adjusted each year by 80 percent of the previous year's (June 30 to June 30) rate of increase or decrease in net transaction accounts held by all depository institutions.
Also, please note (while sitting in soft chair):
Low-Reserve Tranche Amounts and Exemption Amounts since 1982
The reserve ratio on net transactions accounts depends on the amount of net transactions accounts at the depository institution. The Garn-St Germain Act of 1982 exempted the first $2 million of reservable liabilities from reserve requirements. This "exemption amount" is adjusted each year according to a formula specified by the act.
For more history on the changes in reserve requirement ratios and the indexation of the exemption and low-reserve tranche, see the annual review in the H.3 statistical release.
OK: Annual Review of Break and Seasonal Factors for Reserves and the Monetary Base:
http://www.federalreserve.gov/releases/h3/hist/annualreview.htm#reservetr
To make 2007 data comparable with historical data, the break adjustments to the 2007 data use estimates of the low-reserve tranche and the reserve requirement exemption that will take effect in January 2008. These estimated values are calculated by extrapolating net transaction deposits and total reservable liabilities to the end of June 2007, using actual growth rates from the end of June 2006 to March 2007.
E.g: Effective for the reserve maintenance period beginning December 22, 2005, the low-reserve tranche for net transaction accounts was increased from $47.6 million to $48.3 million. The reserve requirement exemption was raised from $7.0 million to $7.8 million. The actions lowered total required reserves by an estimated $369 million.
Alright, I'm sorry...
Any proposal for a sovereign wealth fund (SWF) to take a controlling stake in a US bank or bank holding company would be subject to Federal Reserve approval, Federal Reserve General Counsel Scott Alvarez told the House Committee on Financial Services today.
Federal Reserve Counsel says SWF bank investments subject to review - Forbes.com
Ok, one more, then I go to the studio:
"It is an important step forward to make the capital requirements more risk-sensitive, so there is less of (these) arbitrage opportunities for banks," Kohn told the Senate Banking Committee during testimony.
He was referring to the practice of some banks of moving mortgage-backed loans into special investment vehicles that were subject to lighter capital requirements.
But wait, one last one:
March 7 Roman emperor Antoninus Pius dies and is succeeded by Marcus Aurelius who shares imperial power with Lucius Verus, although Marcus retains the title Pontifex Maximus.
Marcus Aurelius, a Spaniard like Trajan and Hadrian, is a stoical, disciple of Epictetus, and an energetic man of action. He pursues the policy of his predecessor and maintains good relations with the Senate. As a legislator, he endeavours to create new principles of morality and humanity, particularly favouring women and slaves.
One more: Big Pow Wow @ "Banque de France " Friday and The Frogs are perhaps less drunk than The Crazy Americans....Oui?
In its February monthly bulletin, the Banque de France argues that financial innovations such as credit-default swaps boost the financial accelerator effect - the phrase coined by Fed Chairman Ben Bernanke to describe how weakness in the financial system can compound an economic downturn.
This may be an upward spiral or, as is the case at present, a downward spiral, the Banque de France writes in an unsigned analysis on how financial innovations impact monetary policy effectiveness. We currently refer to this effect as pro-cyclicality. But it is much more than that. As current events show, uncertainty increases and questions arise as to the robustness of the financial system since a weakening of banks capital would be both a threat to the economy as a whole and an impediment to the efficient implementation of monetary policy. It may also prompt stronger responses than otherwise necessary, as illustrated by the recent action by the Fed.
A Bloomberg news story initially interpreted the article as a critique of the Feds recent moves. A subsequent Bloomberg update included a statement from the Banque de France, noting the central banks bulletin was not meant as a critique but rather an observation because the Fed has recently implemented a strong change in monetary policy.
Calpers is fine. They sold billions of their RE close to the peak.
Calculated Risk: Housing: Calpers is Selling
They even have a pretty nice mortgage program for their members.
CalPERS Home Loans - CalPERS Loans for Buying a Home or CalPERS Home Loan Refinance
Mortgages
They have offered that program for years and hold some of the mortgages. Their standards stayed reasonably conservative though, and government employees in general are a lower risk. (And some might think twice about jingle mail to the folks holding their retirement.)
Are you aware of this: Poole is an influential Fed official who voted against the central bank's emergency rate cut of three quarters of a percentage point on January 22. He does not currently sit on the rate-setting Federal Open Market Committee, however, and he is retiring from the Fed shortly after next month's meeting.
Retiring!
As you may recall with my latest heart attack posts related to Warsh, we have a Fed Board with 5, versus 7 members.
Without going back to notes, all 5 have been appointed by Bush and IMHO, Warsh is highly inexperienced, so with Poole retiring......isn't this an Oh My God Moment, having less than 3 members to cover the overload of chaos??
Who should I get in contact with about a states own laws about mortgage broker bonds and as such, how would I get a mortgage bonds form? I life in England and am considering moving to America, dont know where yet however I was doing some general reading about housing and came across the term mortgage broker bonds and am a little confused, is it a mortgage or a loan to acquire a mortgage?
Also if I want to set up life insurance do I need insurance bonds? Or can I simply open a policy with a company? Im a little confused by some of the jargon. I am not moving anytime soon but thought I should be aware of things I will need to understand.
Can you tell me what Surety Bonds are? I have heard of Corporate Surety Bonds but I dont understand what they are, can you help?