Kinja Rules

Credit Card Cancer

The Chinese as well as All other Govt's of the World will always have their own best interests @ heart. It is a given. What is Shocking is that w/o a bullet fired China could easily topple the US, by sales in various bond related instruments. This is Really Sad. On the other hand, they still need US...

V Bottoms and the Twin-Peaked Bear

Think of it this way; someone has to buy the rally. It was time for a Bear Rally, the Shorts Covered a lot last wk. It seems to be cautious of lower vol up days...

Freddyv, I think you are seriously under rated, I'm in complete agreement w/your posts.

The poster who basically said, never under estimate the power of greed, is right. This may be true of the Gambler. On the other hand the US Mkt's have been cushioned by 401K's & IRA's for many yrs. Boomers are turning 60 by the day & can not afford to gamble. If they are so Lucky as to have Full Time Employment w/a Retirement age of 65, many don't. Some may be fine, but many are already eating into their savings before they can qualify for SS...What happens later if they Bet Wrong? Hummm, Greed vs Fear-Better Something than Nothing.

Another has said there are too many on the short side, FDIC, MM, etc...Some people actually Need to be there, it is Logical for them b/c of their age. If you have 65K & that is what you have other than SS. Losing 30-40% or more over the past few mos is Not Good. People forgot security until recently. This is all Very different if you are 35 floating 500K & trading. I think this is actually good to see some of the Really Risk Intolerant people being conservative. I only give 2 examples but Big Money will & should always chase returns. Maybe we just started figuring out who we really were again? Smart is Conservative if you have little to work w/& Gambling is just that until the ticker turns. Many Investors are just like the 65K person I mentioned earlier, most.

Last, Amitabha interesting theory if you are 25, working w/12K. I like your idea of splitting up the capital & getting in slowly. On the other hand, the chances of C or BAC folding are low, yet as w/all restructuring, the Share Holder is Wiped Out. Many who hold gold won't sell until they see real recovery of the system, b/c it is not a trade but rather a store of wealth. Similar to R/E purchased inexpensively.

Recent Policy Decisions and a Greater Depression

Great Comment! Some see this but many do not. The Media is not doing any service to this thought, which is wrong. People who pay NO TAXES are all up in arms about how Their Tax Money is being spent w/ no clue about where it is going or why. Teletubby's, What the Tube Says is How It Is. Ouch!


On Feb 20 09:00 AM Tim H. wrote:

> I disagree with your analysis and here is why: A few years ago I
> had a discussion with my brother when the Iraq war was looking like
> as McCain said: "we will be there 100 years." Spending billions more
> on Iraq in process while this country's infrastructure decayed. Why
> were you not writing an article a few years ago stating the significant
> increase in cost of Iraq war was leading to a huge national debt
> and the Bush tax cuts of 2001 needed to be rescinded to help pay
> for the cost of war? My post is not an anti-war or anti-Bush rant.
> Merely my point is it seems to be okay to spend billions of US tax
> money to fund a war of choice. Yet when the government roles out
> stimulus bill which is more than just creating jobs but rebuilding
> the county's infrastucture. The people who were silent about the
> money spent in Iraq are now screaming bloody mary about the stimulus
> bill? Just seems kinda screwed up that this country spends billions
> on another country and that's okay. But if this country spends billions
> on itself. That's not right. Explain to me please why that is? I
> will use an example: There is $8 bil in bill to build high speed
> rail across country. This intent is to help decongestion our nation's
> roadways and air travel and promote conservation of energy. Being
> more energy efficient whether it's weather proofing, higher mileage
> in auto's or using power sources that use less energy (solar panels,
> energy efficient light bulbs) all lead USA to becoming more energy
> independent. So that stimulus bill is just not to create jobs but
> to upgrade this country's infrastructure. As for the foreclosure
> help... Fact is until the massive foreclosing's stop's this country's
> economy is never going to get revved back up. I understand the argument
> those people agreed to those terms but the foreclosing's need to
> be slowed down so people can stay in their homes. How does a foreclosed
> home that sits with no buying occupant help anyone? I find it really
> interesting that despite columns such as the one above and wall street's
> lack of excitement over what Obama is doing. His poll rating still
> remain high. Wall Street made alot of money in past few years and
> now the punch bowl has been taken away. Main street seems to approve.
> That bailout money is in loans so it is suppose to be repaid to tax
> payers years from now. As for the debt that is being created today.
> Under Reagan the national debt significantly increased yet I saw
> few columnist stating we were on our way to a great depression. Early
> in Reagan's term we were in a very bad recession too. No doubt down
> road the debt being created needs to be repaid and Obama has acknowledged
> this fact. Personally I think after economy recovers... A national
> gas tax is quickest way to repay that debt. This would force consumers
> to not go back to old driving habits, conserve energy and promote
> alternative energy travel. An author of a book about alternative
> energy said the technologies are there but to get the green energy
> infrastructure moving a base in the price of gas needs to be established.
> Bottom line is I disagree with this article but if the article is
> correct. Then Obama will have failed and as he told that audience
> in Florida: "We will have a new President." I hope Obama doesn't
> fail because it will be good for the country if he succeeds!

Contemplating the Demise of Bank of America, Citi and JPMorgan

Why do banks always fail when a Bush is in Office ?

B/C Kinja Rules...Check it out~Jimmy Buffett

Thriving in this Economy less than Hopeful for these & many others. The way out, from everything I've read is an Experiment @ best. So, we wait. If you have no understand of what is going on, wait until you do. This has been my motto for many yrs. Opportunity lost is little against Capital lost for good. People are rather tired of losing, on Bank Stk's or other. This sentiment is rising Fast in the 60+ crowd as far as I can see.

So, where does the Fresh Capital come from; other than the Govt? It is really questionable if the Experiment will work from the FED. I read a Great News Letter that answered Questions I've been asking for months.
Maudlin's Front Line. There was a Guest Writer, who backed it all up by chart, time & econ theory over 125 yrs. Well, it made sense to me. I don't agree completely w/the final conclusion, but do feel that Hard Assets are of Value @ a Discount...Capital Preservation. Seems a Prudent Call today. Mine anyway.

Friday Outlook: Commodities, Emerging Markets

Thank You!

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

Complex Problem, many are right here. The Complexity lies in the Owner of the Property's ability to pay the debt back.

Owner 1: Has had the Property for many yrs, w/fixed rate loan...Needs to move to another City. Over Supply is Driving Prices Below what the Owner Must get to Rent the House, selling isn't going very well.

Owner 2: Took out an ARM 2 yrs ago which is resetting, they have little/no equity in the home & they can't make the new reset payment.

There are many other types of owners. I use these 2 examples b/c Owner 1 has equity, but can not rent w/o a refi. House will be able to be sold in a yr or two as it is in a really good area. Owner can not make the negative cash flow. This person should be refi'd @ a lower rate as they are an Excellent Credit Risk & the Crisis has been the real problem.

Owner 2, made a dumb loan & bit off more than they can chew but they aren't underwater on the house. To Refi the existing owner @ a lower fixed rate is a good plan right now. Assuming the people really want to stay in the house.

If we allow the Inventory to Explode due to Foreclosure Rates any more than what has to be we lend ourselves to a much longer down turn. One Very astute commenter mentioned the Available Buyers are far less than the current inventory. Someone else mentioned demographics which is going to be a much more serious problem later. Price are going down, prices will continue to go down. If the stats are 1 in 10 are in Foreclosure or late, if we can keep 5 of those who can rent or stay in the home in them, this may in time stabilize the Lower Prices. Avoiding a Snowball affect.

My reasoning for lower interest rates is simple: We have massive layoff's all over the Country. Wages haven't gone up in yrs. Jobs have been outsourced that used to be Mom's 2nd job (call centers.) Young people have it Much Harder than we did. It was rather simple if you had a good Education you got a good job. Other jobs were available for the less academically inclined. These people are having a difficult time w/2 degrees. I know I was blessed to be born when I was, more blessed to be able to retire early & relocate before this mess started playing out.

If the Taxpayers can Bail Out the Banks, the Banks must be force to lower real Mortgage Rates on those that can pay. It is only fair. Someone said-Repair your Credit & Move on. I agree if you are 10-20% upsidedown on the property, but you don't bounce back from losing a House for many yrs...

I guess in the end it is a mute point as interest rates are moving lower & the Banks are beginning to realize that REO is Very Expensive to keep on your books & there aren't many buyers...In the end it is a Business & I do hope that the better judgment of the Bankers is in the favor of not creating further destruction. On the other hand there many desirable properties to be taken for a song from Credible Owners who were real Victims of this Crisis.

People w/Bad Credit Can't get Loans and the Business is going back to actually Properly Qualifying Buyers for Loans. If there aren't lower interest rates across the board, there are going to be many more vacant homes. The Wise Folks who have gone into areas inundated may find themselves upsidedown when this crisis continues down another 20% in value. Cheap Rentals is a Great Retirement Plan, but not if the other area homes are Vacant & you got in a little early...TX exploded in '83, some of those homes stood vacant for 5 yrs. Some regained the orginal value of the Loan by the mid '90's. This is National, the scope of which we haven't seen since the '30's. They did try to raise rates in the early 30's right...

Scott, you did write a good article. I just strongly disagree w/the concept.

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

Complex Problem, many are right here. The Complexity lies in the Owner of the Property's ability to pay the debt back.

Owner 1: Has had the Property for many yrs, w/fixed rate loan...Needs to move to another City. Over Supply is Driving Prices Below what the Owner Must get to Rent the House, selling isn't going very well.

Owner 2: Took out an ARM 2 yrs ago which is resetting, they have little/no equity in the home & they can't make the new reset payment.

There are many other types of owners. I use these 2 examples b/c Owner 1 has equity, but can not rent w/o a refi. House will be able to be sold in a yr or two as it is in a really good area. Owner can not make the negative cash flow. This person should be refi'd @ a lower rate as they are an Excellent Credit Risk & the Crisis has been the real problem.

Owner 2, made a dumb loan & bit off more than they can chew but they aren't underwater on the house. To Refi the existing owner @ a lower fixed rate is a good plan right now. Assuming the people really want to stay in the house.

If we allow the Inventory to Explode due to Foreclosure Rates any more than what has to be we lend ourselves to a much longer down turn. One Very astute commenter mentioned the Available Buyers are far less than the current inventory. Someone else mentioned demographics which is going to be a much more serious problem later. Price are going down, prices will continue to go down. If the stats are 1 in 10 are in Foreclosure or late, if we can keep 5 of those who can rent or stay in the home in them, this may in time stabilize the Lower Prices. Avoiding a Snowball affect.

My reasoning for lower interest rates is simple: We have massive layoff's all over the Country. Wages haven't gone up in yrs. Jobs have been outsourced that used to be Mom's 2nd job (call centers.) Young people have it Much Harder than we did. It was rather simple if you had a good Education you got a good job. Other jobs were available for the less academically inclined. These people are having a difficult time w/2 degrees. I know I was blessed to be born when I was, more blessed to be able to retire early & relocate before this mess started playing out.

If the Taxpayers can Bail Out the Banks, the Banks must be force to lower real Mortgage Rates on those that can pay. It is only fair. Someone said-Repair your Credit & Move on. I agree if you are 10-20% upsidedown on the property, but you don't bounce back from losing a House for many yrs...

I guess in the end it is a mute point as interest rates are moving lower & the Banks are beginning to realize that REO is Very Expensive to keep on your books & there aren't many buyers...In the end it is a Business & I do hope that the better judgment of the Bankers is in the favor of not creating further destruction. On the other hand there many desirable properties to be taken for a song from Credible Owners who were real Victims of this Crisis.

People w/Bad Credit Can't get Loans and the Business is going back to actually Properly Qualifying Buyers for Loans. If there aren't lower interest rates across the board, there are going to be many more vacant homes. The Wise Folks who have gone into areas inundated may find themselves upsidedown when this crisis continues down another 20% in value. Cheap Rentals is a Great Retirement Plan, but not if the other area homes are Vacant & you got in a little early...TX exploded in '83, some of those homes stood vacant for 5 yrs. Some regained the orginal value of the Loan by the mid '90's. This is National, the scope of which we haven't seen since the '30's. They did try to raise rates in the early 30's right...

Scott, you did write a good article. I just strongly disagree w/the concept.

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

Niner is Right~It is All About the Payment.

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

Great Idea! Destroy the Value of all property so that the mkt can clear. Therefore the foreclosure rate hits 25% or more. Brilliant! The Best Interests of the Banks are Served best by lowering rates & refinancing those that don't have to become REO. This has to happen to clear the mkt of the people w/unsellable homes, but the ones who have homes they can rent or sell to make the full value of the loan should be refinanced. What are you thinking??? When Dr's are losing homes b/c of forced moves in an illiquid mkt, we have a Serious Problem. The other minor pt is that people who have held a Credit Score over 700 until the last yr should be considered on that basis as well. These Are Responsible People Caught in an Unseemly Situation.

If the R/E Mkt really implodes to drain the rest of America's Savings, God Help the Baby Boomers & the Govt that is going to have to address this Problem. 4.5% across the board for all even if it has to go long for 40yrs then the Loan is Paid Back & the People-People Stay in Their Home. The average time of a Home Owner in a Home is 8.5 yrs.

So lets see? You bought a home 6 yrs ago, you have been quite happy where you are, then you are forced to move b/c you job did...You should lose all your equity? You should let it go back to the Bank? You should stay in the house w/no income??? This is Destroying Wealth of Innocent People who have done the Right Things. Not the people who Must Sell b/c of the Move for the Job...The Entire Neighborhood! This is the kind of reasoning that is just Stupid. Some areas are down by 40% today, others have 21% foreclosure...this is wholesale destruction of wealth for the benefit of the Banks by the reasoning of this article.

The rule of 72 works w/any intrest rate. The Bank gets all of it's initial investment back w/in 72 mos which is 7yrs. They did this to our Children & I think it is about time they didn't take everything away from them by way of debt. Give them a Credit Card @ 18-19...By the time they are out of College they are up to their ears in debt, w/cards & student loans. They get a job & buy a house...Now this? Apparently, we Eat Our Young, to hell w/anyone but ourselves. You see the problem here is that they have their own kids now, they are in their 30's. If you are insulated, Look Around you. There are entire displaced Family's living in Cars! Grapes of Wrath you say? There is a Damn Good Reason the Mort Brokers are Fighting this for the people as best they can. Some are really good credit risks w/great properties, w/great locations. No one young could have planed for this. Older people attempting to educate their kids drew $ out as well, 5% decline OK, 10% decline...OK, but people never expected to be completely unable to sell a Really Nice Property @ any price in some area. I see the sharks say...there is always a price @ which it will sell, yes there is but not if You Can't Find a Qualified Buyer!

If people get the clever idea that they will be wiped out no matter what they do...They will get as much as they can before they do, thereby wrecking what's left of the Financial System. This is the Only time I have ever been really irritated w/an Article & my most aggressive post so far. Prices are down & will go down more. What we need is the TARP $ Forcing Banks to Refinance if they receive the Money NOW. This is only fair as the Tax Payers have put these funds up to Save the System.

R-rrr

Think before you write?

Why AIG Gets Billions While GM Gets Scorn

True, this article is going to be emailed far & wide by me. This article Needed to be written. Your comment is the God's Truth. "The Human Cost far exceeds the dollar cost..." People need to understand this.

Our fearless leaders have gotten US into this, & it will take All of US to get out of it. Many yrs...Look @ Japan! Did their Govt's help their Auto Industry when their entire economy went down the shute? I didn't notice any of them Bankrupting. Nissan was in Big Trouble as I recall.


On Dec 12 06:55 PM market ace wrote:

> If you look into the details the AIG bailout did more to help foreign
> banks than anyone. Their failure would have set off a bad dominoe
> effect, but the exposure to all of those derivatives has not been
> solved, addressed or ecen understood by congress so nothing was accomplished
> except pissing away a lot of tax dollars The psychological effect
> of destroying the automakers will be far worse that the small billions
> required to keep them alive. Then when congress decides tha they
> can better mangage an auto cpmpany than the current mangement it
> is just laughable, since they look like total idiots when pretending
> to understand AIG and why it needs a $173 bbl bailout.
>
> Then for everyone to cry that GM is mismanaged, when all of the supposed
> foreign automakers that "did everything right" are all asking their
> govt's for bailouts now says there is a really a much bigger problem
> in the industry especially when hundreds of thousands of foreign
> cars are piling up on the docks of Long Beach.
>
> The human cost of not bailing out the big 3 far exceeds the dollar
> cost and the same repugs that added $150 bbl in pork to the Wall
> Street bailout bill to now cry about a few billion to save America;s
> last manufacturing companies and millions of jobs really smells.

Freddie Mac First to the Trough

No, Just No. If the Powers that Be Can Restructure the loans outstanding for a longer duration, even w/a lower Interest rate. The Govt Wins! The People Win! This isn't brain surgery. You finance X for 7 yrs, the $ comes back in 7 yrs. OK, even if the interest rate is Low...40yrs = 4.4 X's the original investment w/interest.

Don't Buy the Bad Loans! Don't give the Money to the Banks! Just restructure the Loans! The FDIC has the right idea that will work for this problem.

The Volatility Is Killing Me: Explaining My Sale of Expeditors International

A strict plan is best right now. On the other hand I feel that there is nothing that is a buy here in the US mkt. Some of the beaten down world mkt's yes.

You are Right. When a mkt settles, it is stationary. This mkt hasn't settled yet, nor will it for some time. Look for the flat line for a few mos.

You did the right thing.

Some Credit Crunch Realities

You don't bring a conclusion. By the chart it looks as if the the multiplier did fall sharply. I understand your pt about the lending not in fact happening. You brought no conclusion.

Surviving the Short-Term to Participate in the Long-Term

Thank You Richard. It is difficult to say what you did; against the opinion of the mainstream media & most FC's. "Their own self interests" is correct. Few realize that they will have no clients if the client goes broke. Smart one's know this, but they too are stuck being ""Company"" people.

The Truth in "a one size fits all investment plan," was perfect. Until we can see some of the dust settling it is just wise for older people to reposition as you mentioned.

I disagree w/only 1 point: High Quality Bonds. Treasury's have no yield, as well as the International risk of Sale, from China or others. Other formerly Hi Quality Bonds are Questionable, Muni's as well. The Ins Factor was always a consideration, that is now in question today. All the Brokerages have a Bond Desk...But, I don't trust them either. Persons w/ many yrs of experience have been burnt here. The novice is a deer in the headlights.

70's Stagflation Survivor-I have been studying the same '28-'08 Dow Chart & have sent them out to many. You add to this, Thank You. Did you notice that the stoclastics fell farther than '29? Let us hope there are more shorts fearful of Bear Rally Wed. I can't see any conviction on the Buy side. Money Flow was fairly flat on this grand up day...

Fundamental Valuation: How Low Could We Go?

InviticusRose~Thank You, you are a Good Sport! I am too. Agree w/the board posting relevance...Your take on the DD of most people is Sad, but True.

This isn't even a mkt to short right now on the ETF's! As you said: "Betting Against All the Central Bankers." Don't fight the FED. This Worries Me. If the shorts are reluctant to short in a Real Bear Mkt this somewhat alarming. It will make Rally's that much harder to achieve. I really wish they would halt all Global Mkt's until they have some of this in perspective. The perception may be much worse than the reality, or Unwinding these things behind the ticker may be much better for all. I still disagree about the "Plan," a total system failure would have caused more pain/chaos on Main St. There is a logical reason to call Time Out.

The catch the falling knife crowd are picking up a bit in the buying but the Margin Calls are still coming as well as distributions. What part of: The Charts have fallen apart for now & the ViX is hitting New Highs doesn't hit home?

If the Global Mkt's were closed short term, this would give the Counter Parties time to settle. The Wealth Destruction does not need to continue if this was done. I was Very Successful this time about getting most out early. Yet, the ambivelant or chronic traders were caught. Some in my sphere have taken death blows. Yet many others are sitting in cash, CD's & Gold.

I would short, if this Crash was not so un-precidented. That Logic would dictate a closure of the mkt's until they can sort this out...In closing, your conclusion about the mishandling, etc...Of Everything is Sadly Correct as well.

IF we had to implode, I wish it would have happened in the middle of an Administration rather than the end of one. There is no possible future call @ this time, as we have no clue how the next Administration is going to continue this process.