Warm_Paw

U.S. Handling of Financial Crisis - A Less Optimistic View

I for one am not blaming Obama for this mess. It began in 1999 2000.
The problem is, Obama's been handed the problem and is listening to the people who created this problem and are lining their pockets on his presidency. Half of the bailout money was handed out pre Obama leaving Obama holding the bag in handing out the other half.
There's no way one wins a presidential election and can be up to speed with the finances of the country.
Bush handed Obama a time bomb.
The problem I have is that Obama continues down the path of his own destruction by not getting his own people, or even expert advice on what is occurring. He's relying on the crooks who did this to inform him. A fox watching the henhouse.
Even yet the people who are responsible for this systemic risk, fight regulation. Guess why that is?
Obama should let whatever institution that took the risk, fail.
Strong institutions are there to pickup business from the risk takers.
No one knows what the result would have been had these institutions had not been bailed out.
They've been bailed out and the average citizen is not enjoying any signifigant change because of that. Just the banks are enjoying survival at the expense of the tax payer.
A naive president believes everything everyone tells him when it offends the senses.
The emporer is wearing no clothes.

Fannie and Freddie: Not Worthless Yet

It's bullshit articles like this (FRE & FNM are in conservatorship) that keep giving hope to the uninformed public.
Speculating is fine, you'd have better luck in Vegas playing black jack, but after the next wave of Option ARMS coming to maturity it's going to be obvious the govt will bankrupt the country continuing to prop up the GSE's.

Too Big to Fail - Even Greenspan Is Speaking Out

Goldman Sachs runs the United States of America.
Obama's just this token black guy puppet.
I think Obama's coming to realize that.
When the REAL power says SHIT! he comes slidin'

The Dow: Ominous Parallels to the 1929-1930 Era

I couldn't finish the article.
It wasn't making sense to me.
Past performance is no indication of future performance.
I will say this, the truth about banks and AIG has been suspended.
As long as transparency is deferred, the market will chug higher.
But the truth will come out and then the picture won't be so rosy.
As for AIG, the only reason it's still trading is the Fed.
It's the Feds way of using tax dollars to insure the Credit Default Swaps. Is AIG still a company that earns money - NO.
At this point in time - with the banking system broking - I can only wonder how the DOW is around 9500?
It should be at 5000 and that's being generous. It's probably the influx of govt stimulus floating the market.
No one has a clue what earnings are anymore, if not suspended, earnings are being skewed by accounting changes.
Until the smoke and mirrors susbside, an investor is on a slippery slope putting their money in. No matter what you buy, should the truth surface, you will lose.

Taylor Bean: A Cautionary Tale for Ginnie Mae

The banks have to rid themselves of these toxic assets without taking too big a loss. Once the banks have clean capitalization they can free up reserve money and lend it. Lending it gets money flowing and circulating again.
On a crisis of this size, those toxic assets have to go somewhere.
The GSE's are the logical dumping ground.
The toxic assets are close to worthless only while everyone abandons their mortgage. If these mortgages were left in a pile somewhere until each mortgage was allowed to either come to maturity or be defaulted on, the existing mortgage backed toxic assets would then find one third of their value as worthless, one third reduced and one third of quality value.
The GSE's are a staging area just to seperate the toxic assets.
They can't be unwound until they come due or are defaulted upon.
Any toxic asset where the original borrowers continue to meet payment, isn't a toxic asset. Only time will allow discovery.
If all three GSE's - Ginnie, Fannie and Freddie were to hold all the toxic assets, the banks would be freed. The govt continues to prop up the GSE's until the toxic assets are unwound. Quality MBS's would remove the GSE's losses as they're seperated. Partial losses and total losses leave the GSE's with the property to now hold instead of the securities. Who better to organize that transition than Ginnie, Fannie and Freddie?
Who better to resell to when the banks are restored in balance sheet and capable of lending money to home buyers?
The alternative was the collpase of the financial system of America and many countries around the world.

Stuffing Uncle Sam: Is More Trouble Coming for Mortgage Market?

The dollar will fall apart in 2010.
People with money will lose major purchasing power.
People without money will be homeless.
Which is alot of homeless because there's alot of homeless right now.
Inflation will skyrocket and interest rates will have to rise substantially, snuffing out any kind of recovery.
The debt will seem less because inflation will buffer the high level of dollars used, but there's no catalyst to put people back to work which will circulate money here.
The third world seems to be getting a rise in standard of living while America is brought down to a third world level.
There was a reason for protectionism and it dates back to the 1780's. Businessmen know only profit, not country and businessmen have sold out America.

67 Stocks Returning 50%+ This Past Month

These stocks lose a thousand percent and once in the single digit range, they gain 50%. Sounds like a positive trend to me.
As for Sirius Radio.
We've had free radio since it was invented, who in their right mind thinks the majority of people will pay for it?
People who do pay for it remind me of people who pay $3 a half quart for bottled water packaged in Mexico.
Tap water is actually regulated and healthier.

The Coming Consequences of Banking Fraud

This is a good article. It's obvious there are no shortage of negatives in the face of this bull run.
The cause of the crisis is the sub prime mess.
No one discusses the sub prime mess anymore.
Just like it went away over night.
Is it reality that markets are being promoted to unwind those toxic assets on the unsuspecting public.
To recoup share price on zombie banks to some acceptable level and leave the public holding the bag when that level is reached?
I believe sub prime mortgages come due mid november and that option ARMS then peak in coming due right into 2010.
The options ARMS are in larger volumes than what we've experienced with the sub prime mortgages.
With low employment, the world economy in a holding pattern, oil amassing to the point there is little storage remaining,taxpayers going bankrupt and now a deficit (not spiraling) but instantly out of control, I'm not very bullish either.
The media use percentages to claim certain stocks have gained fifty percent over the last three months after the given stock has collapsed 1000%. A $1 stock gaining .50 is fifty percent. Percentages are deceiving.
As the economic indicators continue their downward trend the stats are being discussed as not as bad as what investors expected.
Who decided what investors expected?
Downward is downward, no amount of lipstick will help the pig.
Greed seems to keep the high rollers coming back. Or is it stimulus dollars being used to prop up an otherwise barren landscape.
As for sideline money - you don't lose trillions of dollars of wealth and still have sideline money. There is no cavalry. Come up with a new source of eternal springing hope.
Sideline money is a dead horse.
Mid september the pain begins.
Of course AIG will be worth $100 a share while having an intrinsic value of -$38 billion dollars. Such is the ability to manipulate these days. Either way, my moneys to precious to have it pulled out from under me like a rug.

Six Things to Learn from the Financial Crisis

I don't think the average investor understands how serious our situation is. To invest right now will become a loss that one will not recover from in their life time.
As for diversification or leverage, this is a time where you get your money OUT of the market. You'll get a good deal when blood is running in the streets which isn't far off. October I figure.
But of course you can write articles like this is 1986 and all is well.
This is a different world where all is not going to end well.

Banking Bailouts by Other Means

The truth emerges just as cream rises.
You can keep shaking the milk, but the minute you quit shaking, the cream begins to rise.
The govt may be shaking like hell, but they can't shake forever.
CNBC has lost it's reassuring tone that all is well and green shoots are everywhere.
A 200 point drop in an hour has put some shrill in their ever manic voices.
They can keep telling us "it's alright" but the public knows the truth.
The number $500 billion is the amount of the next wave of stimulus.
The worst of this mess plays itself out in 2011, when Option ARMS come due in the highest volume yet.
We should have buried these banks and moved on. Built on their ruins.
The markets destroy wealth as preperation for the creation of new wealth. New wealth in areas we logically have demand. We now subsidize car companies that still don't get the picture.
GM no longer builds a pick up truck that has a manual transmission.
It's long been a fact that manual transmissions are more fuel efficient and ecologically friendly.
GM deserves it's fate.
The Chev Volt is a $40,000 vehicle. Anyone at GM realize the country is going bankrupt. The heady days of credit one didn't deserve have come and gone.
The people at the upper levels have lived in delusion for far too long.

Now Showing: The Market Zombie Movie

The Zombies dominate the markets because the govt wants their money back!
Talk about transparency - whoever's buying these zombies is more manipulative than Goldman Sachs.
Maybe it is Goldman Sachs. LOL
This is so obvious it's ugly.
Stay on the sidelines people. Nobody knows where this rides going!

Agency Mortgages: Pulling Back the Curtain

All is not well with Fannie Mae and Freddie Mac.
I believe this route of destruction was Fed created by the fact Alan Greenspan was promoting option ARMS before they imploded.
Is this the Fed's way to prick a bubble?
Did they underestimate the domino effect this would have?
When does a Fed Chief promote any type of mortgage?
Suzy orman was promoting fixed rate mortgages. She was giving sound logical safe practical conservative advice.
Why would Greenspan feel compelled to promote ARM's while he was at the wheel in deciding interest rates?
He's the man that needs to testify to hard questions in front of congress.
Didn't this kind of issue occur with Long Term Capital Management years before, on a smaller scale?
Wouldn't we have learned from that?
Who created Credit Default Swaps and when?
Were they regulated?
The whole down spiral stinks. Is it the crisis that injects trillions into the cash flow so the next round of inflation carries capitalism into the next century? If so, why couldn't we just dump the cash into the existing monetary system? Inflation?
So many questions...
So is this well choreographed?
Are we to emerge chugging along on all cylinders with inflation putting the money values behind us?
Or did globalization and the off shoring of American manufacturing give China and India the next super power potential while the US soon becomes the next third world country?
Texans illegally crossing the border into Mexico in search of work?
Not sure what the powers that be are working toward but this looks like a crap shoot in an alley.
Time to take our lumps and let those that are supposed to fail, get it done so we can rebuild from the ashes.
Time to recognize why protectionism occurred in the first place.

The Illicit Relationship Between Goldman Sachs and Paulson

Finally a reporter who says it like it is.
The world needs more REAL discussion.
The fact the editor allowed this to get to print means Seeking Alpha
hasn't been squeezed...yet.
Hope it never happens.
It's time the masses were allowed to know the truth.

The Nefarious and Destructive World of TARP

AIG saw easy money in insuring Credit Defaults thinking real estate prices would forever climb and therefore no defaults would occur.
Knowing housing prices were climbing many people used home equity loans (second mortgages) to pay for their homes riding this increase in home price.
When everyone realized they owed more than their equity and their teaser rates expired, they all handed in the keys at the same time.
The more selling, the more falling of house prices.
The more credit defaults.
Real Estate prices ramped up out of thin air, property value increased for no other reason than demand.
That value is now coming down again.
All a state of mind.
So to keep AIG from being yet another problem to add to the economic mess, while riding out the change in the state of mind, the govt has chosen to bail them out.
The Govt understands the way to mitigate our way out of this mess is to buffer the impact of the falling giants until the state of mind changes.
Yes at the expense of the tax payer, but the tax payer will know what true chaos is if their financial giants all collapse in a heap of dust.
No work, no taxes, no giants, no civilized infrastructure.

The interesting thing is the value of anything rides on human emotion and trillions are made and lost in the value investors deem a company or a home, to be worth.

The questions to be asked, where does the money come from when property increases in value, and where does it go when the same property loses it's value?

AIG not being able to pay the bank on it's insurance claim causes the banks to fail. The banks made very risky investments believing that insurance companies truly could cover the investment if the investment went bad. Banks and Insurance companies knew when the defauly swaps were larger than their own capital that would be impossible.
That's were greed overtook reason.

The bank implosions are also helped along by fractional reserve banking. This form of banking mutates the true amount of physical currency held by banks. They deem themselves at a higher value of money than is truly held and when the depositors all want their money back, the banks have to unwind money amounts they never truly had amassed thus making them go under faster.

I'm amazed there's no regulatory cap on a bank's capital and that they're allowed to leverage on money they don't have even if they can purchase insurance to cover the failure of their investments.

Surely AIG understood they couldn't cover the losses looking at their own capital. There should be a regulating body making sure these institutions can cover their worst case scenarios.

Bush's Peculiar Wall Street Speech

Bush doesn't know the details! He's giving a from the hip overview of his limited knowledge and honestly, as a president with the amount of circus acts going on during his presidency, how could he be expected to know in great detail, everything going on.
The banks are running the show. They shut Wall St. down when they don't get their way.
Now they promise not to use the bail out for bonuses.
The heck with a promise, make it criminal to do so.
Hank Paulson's learning how deep and nasty this situation is and realizes trillions won't bail out what happens to FRE and FNM on November 17.
They were supposed to report Nov 4 but notice how the earnings date has moved to the 17th, two days after the cut off for selling for this years tax loss.
I think FNM is looking at a minnimum -$7 a share.
Hank's going to have to decide if they live or die and death means a 7 trillion dollar hit until the dust clears.
That much loss will self perpetuate the downward spiral of housing prices and it's going to take a long time to get this situation out of vapor lock.

When Hank only realizes this days from ground zero - there's no wonder Bush doesn't know what he's talking about.