Malkiel

Financials To Resume Meltdown Momentarily

"we always under estimate the consumer and their need to spend on themselves and their children without including intangibles"

Be that as it may, over 2 million households will have been foreclosed by this time in 2010. I see those as households whose financial and emotional crises will take them out of the consumer economy for a decade or more. Doesn't 2 million households sound like a lot to you? I can't imagine the consumers returning to their place as the engine of the economy any time soon. Especially when the credit card debtors discover what the real estate debtors have, that there's safety in numbers and defaulting with the crowd is a sound strategy for the overextended.

As for short selling, indicting a couple of traders and brokerages should do the trick. Nothing like a good execution now and then to keep order on the street...

Credit Cards: The Next Subprime?

In the 90's there was alarm because credit card debt per capita was skyrocketing as credit card middlemen Visa and Mastercard whipped up tons of new debt for their bank customers; then those customers got out from under their debt by using cash from mortgage refinancing, new debt that mortgage company middlemen whipped up for THEIR bank customers; now the consumers are getting out from under their mortgage debt by transferring debt back to their credit cards. There are two interesting points here: firstly, banks are suckers for the machinations of middlemen; second, all forms of debt are probably being shouldered by the same few dumb banks, so expect more writeoffs for credit card losses from the people who had to write off mortgage losses...

Banks Using Leverage to Force Home Equity Repayments

If "borrowers with strong credit" are the ones doing the refinancing then they are not "subprime" borrowers, are not the intended targets of bailout, and probably only took on an ARM in order to milk equity. They should be forced to clean up their second liens and outstanding balances in exchange for the consideration they're getting. At the end of it all they're getting to continue living in some of America's most exclusive or even luxurious housing in some of the most desirable locations. Privilege has its price...

As Credit Lines Dry Up, Homeowners in Withdrawal

It seems that Bernanke, Paulson, and the talking heads on CNBC do the scientifically rigorous thing--read trends from statistics--which is causing them to be unable to see what's really bringing on a recession, which is psychology at ground level. I don't know any ordinary working people who aren't being affected by these trends, talking about them, and acting on them, either through fear, ignorance, or wisdom. If companies aren't ramping down their activity at the moment, that doesn't mean we're not suffering an economic downturn, it more likely means they haven't detected and reacted to it yet. In the living rooms of America, though, plans are already being made and bills are going unpaid...

Proposals for a Depreciating Housing Environment

I think it's a fair proposition that the government should only buy mortgages where speculative excess has been wrung out of the price--which in this case means the bank rather than the seller has blinked first and taken a loss. Whether the loss is taken by the mortgage issuing bank or the seller is not as important as making sure that speculative excess is wrung out of the pricing so that we can return to a normally functioning housing market where prices bear a viable relation to the income levels of the buyer...

Housing Decline Will Begin Weighing On The Consumer

I have trouble understanding where the people who are calling various bottoms to the housing implosion are coming from; the fundamental facts of this problem are tightened lending standards which choke off marginal borrowers (including first-timers) and ARMS mortgage resets. Resets will be building to a crescendo through this time next year, and the market and government haven't figured out how to restructure mortgage lending products and policies yet, so no bottom can be in sight for any part of 2008. Unless restructing of some kind heads off the ARMS foreclosure tidal wave, bad things will continue to happen throughout 2008 and perhaps even 2009...

Miracle: Bush To Part The Bankrupt Sea

Every public promise or commitment ever made by this president has turned out to be rhetoric for effect with no follow-through. Expect the White House to take no concrete administrative or legislative action to actually effect the proposals. We will probably not be able to trace the inaction until the first ARMS rollover foreclosure waves begin in a couple of months, by which time people will have forgotten that Bush even said anything. This president is the most relentlessly incompetent chief executive imaginable and Wall Streeters should know that by now...

Is Zecco.com Any Match for Wells Fargo and Bank of America?

Interesting point about the subprime lending.

One of my other brokerages recommends against counting on trailing stops, the reason being that the underlying mechanism of execution depends greatly upon which automated subsystem in which exchange handles the transaction. Some subsystems may still depend upon manual matching by specialists who control the stock; others will have no means of matching your price if it's falling too fast.

I find that Zecco has been improving and since it has Penson working its backroom stuff I have no fear that it is somehow less "legitimate" than other brokerages. I don't find the $30 IRA fee unreasonable given that all of the trades are free.

It's been interesting how the mainstream financial media doesn't even want to mention Zecco when they do their pieces on falling brokerage fees, as though they are afraid to cause a stampede that will upset their paying advertisers. But it won't stay hidden forever, because free is good when it's real...