David Zanoni

Options Trader Friday Outlook: Up, Up and Away

I don't think your end of the world sentiment is reality. Many economic indicators are improving, although slowly. We're past the armegedon stage.


On Sep 11 10:45 AM Warm_Paw wrote:

> I'm of the opinion we'd be in free fall right now if the public was
> allowed to know the truth. Delinquincies are easing only because
> mortgage resets are easing. Next summer will be the next wave of
> downturn as Option ARMS reset at a pace close to the sub prime resets
> we've just worked through.
> Banks have been allowed some accounting rule changes which don't
> truly reflect where they really are.
> When mortgages were lent, the banks booked real time value on mortgage
> backed securities that weren't really of the quality the banks were
> lead to believe. With each foreclosure, banks are learning what exactly
> their mbs is really worth.The banks haven't had to show the public
> what their market value is at this point. They're still showing book
> value as if the foreclosures were a non event. Like someone soon
> will repurchase the property and pay the outstanding mortgage, giving
> value back to their mbs. Banks would like to write off losses if
> they could only realize them. As each foreclosure occurs, the bank
> truly holds less money. It would be interesting to know where the
> banks are in losses. The part that closes the bank is the fact they
> need X amount of capitalization to what they lend the public.
> If we learned what their losses were, they'd have to find cash to
> recapitalize and there's nowhere to find that cash. Everyone else
> is hurting too. The Fed won't have enough to give again.
> Fractional Reserve Banking reuses money deposited so banks usually
> actually own probably 1/5 of the actual dollars they circulate.<br/>The
> FDIC is almost broke so the depositor is going to get a 1929 feel
> to this downturn.
> America is out of gas and if manic efforts to rally this market fail
> - it's going to be a fire sale to people who have no money.
> Ironic how the whole house of cards is built on faith and the value
> of anything is only what someone else will pay for it at any given
> moment.
> If people knew the truth not only would they not invest, they'd keep
> deposits to a minnimum.
> I pick September 17 2009 as the day someone points out the emporer
> isn't wearing any clothes.
> It's the beginning of the next wave of resets.