Warm_Paw

Financial Crisis: Remembering What Got Us There Is Critical

It was George Bush JR who created ballistic credit.
After his Father's one term in office, the family showed America what happens to a country when they punish him for saying "Read My Lips"
and then having to eat his words for the sake of the country.
After Clinton gave us a surplus, George JR gave everyone a home.
The larder was empty, to finance ballistic credit, the American businessman made extra profit exploiting third world labor, but everyone got a house, or a new car, or renovations with that Home Equity Loan (second mortgage).
I could understand why George JR wasn't concerned with why the bill would have to some day get paid.
That was the lesson.
Greenspan was actually promoting ARM's while Suzy Orman was giving the sound advice of Fixed Rate mortgages.
When does a Fed chief take on the role of mortgage broker while being the trigger guy on interest rates?!?!?!
George Bush SR believed Greenspan cost him a second term.
I believe it too.
I doubt it was intentional.
My opinion is that Greenspan was doing as he was told.
Maybe there was the argument this would prick a real estate bubble. Greenspan may have bought into that knowing not to buy into it would be his undoing. He sure baled when the poop hit the fan. Bernanke's doing pretty good as the fall guy. This crisis is getting handled better than I thought it would. There's still two more years to it. 2010 is past sub prime and into option ARMS - 2011 is a surge of option ARMS coming due as large as the sub prime surge.
Markets are happy because the heat begins next spring.
I see a major correction November, not on the toxic assets, but on the dollar falling apart. Fed will have to raise rates to keep the mass exodus from happening.It's a no win situation, as US dollar rises, Wall Street exits commodities. As dollar falls, inflation suppresses growth.
As for who is responsible to keep the crooks from generating false profits on Wall Street?
The SEC. Why does the SEC have no teeth or claws. Because politicians write their legislation.
As long as the govt looked to be prospering - leave the crooks alone.
What is lobbying? Bribing politicians....
In the 1500's you could pay pennance to a priest before you committed a crime. That's lobbying!

Counterparty Risk Subsides: Is the Worst Over for Financials?

Notice on the chart how overall baseline risk continues to increase upward to 2009.
Notice how the more serious risk spikes while CDS' come due.
This chart says things are getting worse and that no one knows what the next spike will bring.
We have to ride it out until the next bundle of CDS' come due to find out how much of the next wave of maturities are toxic, worthless and AIG must then reimburse a bank with money it doesn't have.
AIG reports in August, they may not even be around for the next spike. That would put the toxic assets solely on the banks.
Goldman will have paid itself handsomely just in time to get egg on their face. We're only half way, we're not out of the woods yet.
Probably why Goldman's in a hurry for their bonus!

Wall Street Breakfast: Must-Know News

Bank earnings aren't being reported as they used to be.
Earnings are over positive to hype the economy.
Notice this crisis centers around toxic assets on bank balance sheets yet no one discusses the percentage of toxic assets unwound for each bank, or the amount of these assets left on bank balance sheets.
We have at least two more death spirals dealing with the unwinding of these assets. The public's obviously not to know that.
The public's to take the hit buying bank stocks so they can dump these mortgage backed securities.
The very idea citi or Goldman want to give larger pay to bank execs has me wonder why the tax payer should be on the hook to bail them out.
Let them fail. Greedy pigs should get slaughtered. As for throwing the economy into a tail spin, it's inevitable.
These banks need to go the way of the car companies.
The real challenge is bringing manufacturing back to America.
Jobless people don't pay taxes.
The few working people won't be able to shoulder the burden.
Of course we could raise the tax rates on bankers and right the countries woes.