meta99

Baltic Dry Index: The Best Economic Indicator You've Never Heard of

This has got to be the stupidest thing I've ever seen. +34%!!! BS, its down, just on this chart alone, from 1210 to 1030, a drop of 15%. Any idiot can take the high and low of a chart and find an up pattern. What this chart DOESN'T show is that this index peaked at 11,600!!! Talk about a collapsing parabola, I wouldn't touch shipping with a 10 foot boat anchor! Any time you get a parabola of this magnitude collapsing, it will take YEARS before things get good again. Please ignore these dead cat bounces, they are only good for day traders. You will catch your lunch if you think otherwise.

Peter Schiff Answers His Critics

It's not always coincidence. People follow a herding instinct, even when they're plunging off a cliff. Its only in hindsight that most can see clearly. This housing bubble was CLEARLY easy to see, if you could look at it objectively. I mean, who did they think was going to buy all the homes they were building. It's the same with the lending practices, the excessive consumer and government debt and the printing of trillions of dollars to flood our money supply. Peter and others have studied the facts, it was and is only a matter of time before the massive deleveraging showed its full effects. This is not luck, it is a study of history and perspective. We don't know if Mr. Schiff and others will correctly call the end of this period, and that could be his undoing, but clearly his initial warnings should have been taken more seriously.

Peter Schiff Answers His Critics

Your analysis is careful and well thought out. However, I do disagree on one major theme, the "middle road" approach. While I believe that this approach was the best one in the past, I would now beg to disagree. Worldwide fundamentals have changed so drastically, economic numbers have become so alarmingly poor, and our debtor situation has deteriorated to such an extent that I think the middle road approach will end in failure for at least the next decade.... let me give some ammunition for my assertion. Middle road would not have worked for anyone investing in the late 1920's through the early 40s. I'm not saying we have a repeat of the Great Depression, but IT IS one possibility. However, as with all periods of underperformance, things will be different this time. I personally believe we will call this period the Great Stagflation.

Bailouts: The Moral Imbalance

Gramps.........
Great commentary..... keep up the good stuff. One more point from my last post; So far the ONLY indication of what this stuff is worth is the sale of the Merrill Lynch assets to a hedge fund for 20 cents on the dollar. Lehman had so much toxic waste that no one would buy them despite some very valuable properties and an alleged book value in excess of $20 per share. So realistically, how can these mortgages be anywhere close to what J Livermoor suggested above?

Bailouts: The Moral Imbalance

There's a lot of long winded arguments here but I can give you a simplified opinion of how much these mortgages are worth.....
HIstorically home prices appreciated about 4% per year for the 50 years leading up to 1995. From 1995 to 2005 home prices appreciated about 8% per year, nationally. That means that home prices appreciated about twice the norm, and in 2005 they were 40% overvalued. Allowing for some inflation in the past 3 years, if home prices corrected 30% or so they would be close to fair value.
However, this only represents PROPERTY VALUE. THe mortgages that the Fed would buy are the JUNK class, usually overly indebted stuff that no one wants, many of whom were written far in excess of the actual underlying value, so cut that 70% in half.... that gives you 35 cents on the dollar. Merrill sold some of this junk for 20 cents on the dollar.....granted that was a distressed price. My guess is that the fair vlaue of this toxic waste is between 25-35 cents on the dollar. Hopefully there will be buyers for this crap but it sure won't be anything I'll put my money into.

I'd Rather Hang Myself - Cramer's Mad Money (9/16/08)

You're out of your mind picking Wachovia. Their exposure to the housing market is so huge, that alone should take them down. The Golden West purchase was the biggest bonehead play of the century, I still can't believe the board went along with it. I know, I know the mortgages are supposedly high credit quality; thats a joke too. The mortgage default rate has now spread even to the prime sector, and ITS JUST STARTING to get bad.The brokerage sector is also under attack; they've purchased Prudential Securities and AG Edward, and who knows how many regional banks. The mortgage default rate has now spread even to the prime sector, and ITS JUST STARTING to get bad there. Their greed led to overleveraging; now its time to pay the piper. Wachovia will go bust before the end of this year.

Why I'm Buying Circuit City Calls

No one has apparently made a comment on this for over 8 months. All I can say is, it appears that CC is headed for certain bankruptcy. One thing David missed on the negative side was the fact that the consumer has been overextended for some time now, and the full effects are just being felt. Jobless numbers continue to pile up, and soon the recession will be acknowledged by all. In a better economy, CC might have survived. I fear now it's too late to turn the ship around