SA Guest

Worrying About Large-Deposit Bank Runs

bangkokdog wrote: I think Felix Salmon is missing the whole picture. At this point it 's not important anymore if people ....

________________

Salmon is absolutely correct that large deposits will be reallocated - it's happening now - but I think Bankokdog has identified phase two, which is the flight to safety a la Marc Faber and Jim Rogers - (time to convert the bank notes in the safety deposit box to Vienna Philharmonica)

www.cnbc.com/id/158402...

Where's the Bottom? Still Anybody's Guess

Great article, reminds me of the BCA Research commentatry from back on Sept '07 titled "An Inflection Point in the Debt SuperCycle"

www.beearly.com/pdfFil...

Housing Market Tracker - Homebuilders Criticized for Benefitting From Foreclosure Bill

Here is one of the interesting paragraphs from the foreclosure prevention act -

"THIS NOTICE SUMMARIZES PROVISIONS OF S. 2636, THE FORECLOSURE PREVENTION ACT OF 2008.

TITLE IV - HELPING FAMILIES SAVE THEIR HOMES IN BANKRUPTCY

SUBTITLE A – MINIMIZING FORECLOSURES

Special Rules for Modification of Loans Secured by Residences

In a nutshell, the substitute (or Foreclosure Prevention Act) changes the bankruptcy code to allow judges to modify the principal terms of a debtor’s mortgage (current law prohibits this) so that judges can reduce the principal balance of a loan and the rate of interest of the mortgage.

The substitute (or Foreclosure Prevention Act) authorizes a bankruptcy plan for individuals with regular income to:

(1) Modify an allowed secured claim secured by the debtor’s principal residence if the debtor’s income is insufficient to retain possession of the residence by curing a default (returning the debtor to pre-default conditions) and maintaining payments while the case is pending;

(2) Provide for payment of such claim for a period not to exceed 30 years;

(3) Permit the addition of certain costs to secured debt under specified circumstances; and

(4) Waive any prepayment penalty on a claim secured by a debtor’s principal residence.

Industry experts estimate that the cost of allowing judges to modify a debtor’s mortgage could substantially increase uncertainty for lenders thereby increasing the risk associated with making a mortgage loan. The costs associated with this increased risk would be passed on to consumers in the form of higher interest rates.

The additional cost to consumers has been estimated to result in an interest rate increase of 1.5 to 2 percent. Every quarter point increase in mortgage interest rates would prevent 1.1 million Americans from being able to afford a home. Accordingly, this change in the bankruptcy code could potentially prevent 9 million Americans from owning a home.

This policy will cost the average American homebuyer an extra $60,000 in interest costs over the course of a 30-year mortgage (assuming the U.S. average home price of $166,000).

In 2008 and 2009 alone, this provision will drive up mortgage interest rates for an estimated 11 million home buyers."

rpc.senate.gov/_files/...

Housing Market Tracker - Homebuilders Criticized for Benefitting From Foreclosure Bill

Here is the link to the "Foreclosure Prevention Act"

rpc.senate.gov/_files/...

Meredith Whitney Threatens Severe Deflation For Your Portfolio

Further to Mr. Mortgage's comment you may want to read David Merkel's excellent article

seekingalpha.com/artic...

and related to that this article referenced in one of the comments that follows Merkel's article

www.geocities.com/ecoc... from which the following quote by George Soros was taken:

"The generally accepted theory is that financial markets tend towards equilibrium, and on the whole, discount the future correctly. I operate using a different theory, according to which financial markets cannot possibly discount the future correctly because they do not merely discount the future; they help to shape it"

Meredith Whitney Threatens Severe Deflation For Your Portfolio

I have followed and respected Whitney for her forthright comments and even posted a link to her CNBC interview from Thursday PM above. Tonight, Friday March 28, I happened to see her on a CNN special report on the mortgage crisis. Suffice to say I am now suspect of her motivations.

As for the CIBC link to Oppenheimer I also posted a link above that references their acquisition of many CIBC assets – of interest however is Oppenheimer Hold Co's Toronto HQ with a board that includes an interesting cast of characters including the likes of John Bitove (former caterer to the Greater Toronto Airport Authority). I do not agree with the author’s perspective on a conspiracy, but I have observed that many financial pundits appear to bite their tongues as they reference her analysis.

Of interest are her comments in the March 27 interview, which do in fact seem to contradict her comments from an earlier interview on March 17.

I have posted the links to both interviews below - they need to be copied and pasted into the address bar of your browser and take about 30 - 90 seconds to load. (Windows Media Player)


March 17

plus.cnbc.com/results/[e-mail]%26key%3DR7ik...


March 27

plus.cnbc.com/results/[e-mail]%26key%3DWcbq...

Meredith Whitney Threatens Severe Deflation For Your Portfolio

Oppenheimer Closes Previously Announced Acquisition of a Major Part of CIBC World Markets’ U.S. Capital Markets Businesses

www.opco.com/public/ab...


Meredith Whitney, Oppenheimer & Co. on the banks - CNBC video clip - March 27 PM (30 seconds to load)

plus.cnbc.com/results/[e-mail]%26key%3DWcbq...