Mr kumar

Goldman Sachs: Earnings Bad News for Doomsayers

I would like to see what earning Bear stearns might have reported this quarter if it had filed.
Would its earnings have been "not as bad as expected" too and its stock would have risen mightily had it not been bought by JPM

Explaining Bear Stearns' Current $7 Price

The shareholders will definitely hold out for a new deal , it doesnt make sense for them to vote yes to a 99% loss on their investments.
We should remember that the FED was desperate to save Bear Stearns from being bankrupt since it would have sent nasty ripples across the market.
This whole deal is to save the rest of the market , but unfortunately it smacks the shareholders , their argument would be that why should they take a huge loss when everyone else profits.
As long as they have the power to stop the deal , they will definitely do that. If they keep blocking this deal and if there is no other option then the FED might have to come in and increase the offer to the shareholders
How much is the $256 million dollar question

Please, China, Sell Your Treasury Notes!

That will never happen, the ideal will never sit well with majority of the politicians here.
How can they justify blocking deals for a chinese buyout of 3Com this year, CNOOC buying UNOCAL and Dubai ports acquiring US ports
and then allowing them to buy GSE securities.
People will get fits about the fact that chinese and middle eastern bankers will now own the most important securities of the american dream

Flow of Funds Report: Maybe Bernanke Is Onto Something

we dont need bernanke to say that principal reducing by the banks would definitely help the borrower. And the economy if it will be figured out who will eat the loss without adversely effecting the economy.
The real issue is the over dependecne on home equity by the home owners, it was okay when the home prices are rising , but not when the home prices are falling.
will the home owners who took out cash in the boom times return the cash back. It as likely as angelo mozilo returning his millions he made in the boom times.
This will set a very bad precedent , if investors/banks are forced to eat the losses ( boosted by tax writoffs ) , will they be willing to lend money again without factoring this in all future loans.
Bernanke must not intervene in this , yes there will be hard times because of this ( just as there were good times because of raising home values in the boom times ), that has to be figured out by the market.

How to Solve the Housing Crisis

Hello,
The solution that david suggested may not be feasible.
However the point that vivek raised will be helpful immediately and instantly. Most of the people ( dunno the exact number ) have been patiently waiting for more than 8 years and deferring important decisions in life like buying a house for the simple reason, that they dont have a green card.
I will just give my example, I came here in 1997 to do a masters degree in US , obtained great experience and education for more than 10 years, however i still do not have the green card yet, Even though i have saved significant amount of money for a down payment and can easily afford any downturns in the housing market , i have chosen to rent instead of buying a house in expensive NJ.

Being in this situation ( i anticipate another 4 years or more before i get the card ) a lot of people like me are unsure of the comittment needed to purchase a house in the USA. If this situation doesnt improve a lot of people who can afford to buy , may make the decision to move back to their countries. which will take away much needed buyers with good credit from the market.

Ambac, MBIA Are Still Shorts Amidst This Wink-and-Nod

Hi All,

Its totally expected that the rating agencies will give the AAA ratings to ambac and mbia. Remember that the rating agencies are compensated by the banks. If the ratings agencies downgrade these 2 companies then the banks will loose hundreds of billions in write-downs.
Its like this, give the ratings , and stick with them till this crisis is solved. I dont believe that even after Q1 results these ratings will be downgraded, however bad these Q1 results may be.
The rating agencies , regulators , GSE's , govt will move any possible
number of goal posts to stop the banks from taking more losses.
If losses can be prevented by assurances from rating agencies, GSE's , govt etc , all sort of assurances will be given.

However as usually happens , its the actual market that decides the losses for these banks , GSE's. Investors are already behaving as though the ratings for these companies is junk , investors will behave that the bonds insured by them also are below par value.
This is a good sign , since the credibility of the ratings agencies will be diminished , along with credibility goes blind trust o them.
So investors will do their own due dilligence instead of relying on these agencies

How to Help Both Homeowners and Lenders, at No Public Cost

i think this solution is not practical either, there are a lot of questions remain
True the lender gets a certificate, how can the lender sell it in the secondary market, and who is going to buy it.
How does it get securitized, how are investors going to trust these sub-prime warrants.
Do the current home owners get a loan that is equal to the market value of the house? , if they dont qualify then do they get a loan that they actually qualify for based on their income ( this will lead to a much bigger valued certificate )

I think none of such approaches help in the long run, because the truth is that home prices have reached an unsustainable level at most places.
They are not sustainable in relation to incomes and assets in most areas

I think the best way , is to let free market forces prevail, the home owners who are under water right now , do not have a lot of stake in the house , since they havent put a lot of money down MUST walk away from their homes and rent instead. Its better for them to hand over the keys and cut their losses now , since they will be paying more towards interest and little towards equity anyways.
The lenders, investors in mortgages , speculators must take the fall for this, some genuine unfortunate home owners will be effected, but thats unfortunate.
Any bailout , plan etc , will lead to bigger problems later on.
Its better to suck it up, take the loss, learn and move on.

I am sick of the financial induced bubbles that have been recurrent recently, it seems to effect every one else except the perpetrators of these non-sense.
The bonuses of these wall-street whizards keep going up and up, whether the company is going good or doing atrocious as whats happening now, thats because they KNOW that they will get bailed out all the time. Its time that the govt must not intervene and let them pay for their stupidities

kumar

Kumar

Should the US Government Buy Distressed Bonds?

i disagree, this will set a bad precedent going forward , banks will continue reckless behavior and will look at the fed to bail them out by buying the junk.
If Buffeet thought that even at the bargain basement prices these securities had value , he would have made a move against buying them from any of the banks.
Some other investor might have a move also , instead buffett made a move only to take over only the muni business.
I am completely against the fed rate cuts also , thats like bailing out these institutions and encouraging bad bevaior.
Its not a bailout for all the home-owners who purchased homes with ARM's within the last 3 years, with the so called lower interest rates , even if they qualify into a fixed rate mortgage , they will still be paying mostly INTEREST to these financia institutions , these people are paying high amount of INTEREST on a deprreciating asset.