It All Worked As Long As House Prices Were Rising
Some housing bubble news from Wall Street and Washington. Bloomberg, “Rhinebridge Plc, the IKB Deutsche Industriebank AG structured investment vehicle that has lost about half its value, is unlikely to repay all its debt. Rhinebridge suffered a ;mandatory acceleration event; after IKB’s asset management arm determined the SIV may be unable to pay back debt coming due, the Dublin-based fund said. Rhinebridge had $1.2 billion in commercial paper outstanding as of Oct. 5, according to Fitch Ratings.”
“Rhinebridge’s mandatory acceleration event means all of the SIV’s debt is now due, according to a company prospectus. As of late August, 79 percent of Rhinebridge’s holdings were in the U.S. and 80 percent in mortgage-backed bonds, Fitch Ratings estimated in an Aug. 22 report. Eighty-three percent of the assets had the highest-possible AAA rating, Fitch said.”
“Yields on overnight asset-backed commercial paper, rated A1+ by S&P and P1 by Moody’s Investors Service, the highest for such debt, rose to 5.15 percent yesterday, according to Bloomberg data.”
“That yield is 40 basis points more than the Federal Reserve’s target rate for overnight loans between banks, compared with an average of about 8.5 basis points in the first half of the year. The wider difference signals that investors are still wary about holding asset-backed commercial paper.”
“The amount outstanding has tumbled 25 percent since the week ended Aug. 8 to $888 billion, according to the Federal Reserve in Washington.”
The Associated Press. “Wachovia Corp., the nation’s fourth largest bank, said Friday its profit fell 10 percent in the third quarter, hurt by $1.3 billion in losses and write-downs related to turmoil in the credit markets.”
“The Charlotte-based company also quadrupled its loan-loss provisions in the quarter and signaled increasing credit troubles ahead.”
“Capital One Financial Corp. posted a third-quarter net loss Thursday, hurt by charges from shutting down its GreenPoint Mortgage business.”
“It also recorded $898 million loss from discontinued operations related to the shutdown of GreenPoint Mortgage, which is largely complete, the company said. In acquired GreenPoint in December as a part of a $13.2 billion purchase of North Fork Bancorp, which operates banks in New York, New Jersey and Connecticut.”
The Star Tribune. “MoneyGram International Inc. disclosed late Wednesday that it is the latest casualty of the subprime mortgage crisis. In an effort to reap higher returns, MoneyGram invested hundreds of millions of dollars of customer deposits in bonds backed by the high-rate mortgages. Now that many of those homeowners can’t make their monthly payments, these bonds have plunged in value.”
“MoneyGram said it would take a $230 million loss on mortgage-related investments, forcing the company to consider selling one of its largest business units.”
“‘The question is: Are these losses just the beginning?’ said Brett Horn, an equity analyst at Morningstar. ‘No one seems to know for certain.’”
“As of June 30, MoneyGram had $1.5 billion invested in residential mortgage-backed securities, on top of the $384 million in subprime mortgages. MoneyGram could try to sell part or all of its investment portfolio, but that may be difficult in the current marketplace, and the company could suffer significant losses.”
“‘Who wants to buy a portfolio when a lot of the risk is unknown?’ asked Robert Dodd, a senior analyst at Morgan Keegan & Co.”
From Biz Journal. “The parent of Corus Bank, one of South Florida’s largest condominium construction lenders, said its profit fell 31 percent during this year’s third quarter.”
“Corus reported $200 million in non-performing loans for Sept. 30. That gave it a 4.89 percent ratio of non-performing loans to total loans. Corus also said it has three South Florida condo loans — totaling $91.6 million — on completed projects that are experiencing ‘presale fallout.’”
“At the end of the recent quarter, Corus had $7.3 billion in loans outstanding and committed on 129 condo construction and conversion projects. That included 22 projects with loans totaling $2.1 billion in South Florida.”
“Corus said: ‘At this point in the housing cycle, we are experiencing a disappointing decrease in origination volume, and a certain, albeit very manageable, degree of problem loans. We anticipate that problem loans could get worse before they get better.’”
The Wall Street Journal. “Earlier this week, Cheyne Finance PLC, a SIV managed by London-based hedge-fund group Cheyne Capital Management, halted payments to its creditors. Its receivers said they expect to complete a sale of its assets in the next two to three weeks. Cheyne had roughly $6.6 billion in assets as of August.”
“A U.S. real-estate fund has sued HSBC Holdings PLC, alleging that the British bank’s U.S. mortgage-trading operations took advantage of the crisis to profit at the expense of the fund.”
“Luminent Mortgage Capital Inc., a San Francisco firm that invests in residential-mortgage securities, claims that HSBC’s New York office placed an improperly low valuation on nine subprime-mortgage bonds, which the fund’s subsidiaries had put up as collateral for loans.”
“According to the complaint, HSBC bought the bonds at a deep discount to their fair value, in at least one case employing an auction that included only one other bidder.”
“The dispute highlights a problem that many banks and investors faced this summer as troubles in subprime mortgages triggered a broader credit crisis. Market prices for many types of securities all but disappeared, forcing holders of the securities to come up with estimates of their value.”
“Because those estimates often involved subjective criteria, they left ample room for possible dispute.”
“Irwin Financial Corp., a lender focused on small business and consumer mortgage loans, said Friday it expects to report a third-quarter loss of $15 million to $20 million due to discontinued operations.”
“‘Our provision in the third quarter has created significant reserves for larger potential losses from future repurchase demands in the discontinued operations and loan losses in our consumer home equity portfolio,’ CEO Will Miller said.”
From Reuters. “St. Louis Federal Reserve President William Poole said on Thursday the recent U.S. housing market cycle diverged from past experience because it had been fueled by developments in the securities markets.”
“‘This cycle was really quite different and the boom was driven importantly by the growth of the subprime market and the securitization of those markets,’ Poole told a monetary policy conference.”
“‘(It) all worked as long as house prices were rising — and it all collapses when house prices stop rising. Obviously, this segment of the market, it is going to be a long time before it comes back,’ Poole said.”
“‘I think this housing cycle is … in many respects quite different from previous housing cycles, and has unique characteristics from the housing cycles from the postwar period, and is unlikely to give us much insight into the housing market for the longer run,’ he said.”
“Billionaire Warren Buffett said he was skeptical about the U.S. Treasury’s plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.”
“‘I don’t see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself — whether people can make the payments,’ he said. ‘It would be better to have them on the balance sheets so everyone would know what’s going on’”
From MarketWatch. “Residential builder NVR Inc. on Friday said its third-quarter net income fell 30% from a year earlier as the industry continues to wrestle against a softening housing market.”
“The Reston, Va.-based builder said its results included land-deposit impairments of about $96.5 million. NVR noted activity slowed ’significantly’ in August and September due to tightening in credit markets.”
“The average new-order price in the third quarter fell 9% from a year earlier to $330,100, the firm said. The cancellation rate rose to 27% from 16% in the second quarter.”
“First American LoanPerformance today announced the release of its August 2007 LoanPerformance Home Price Index. ‘This latest home price index confirms that property values in key mortgage markets like California, Nevada, Florida, and Arizona continue to exhibit on-going declines,’ said Damien Weldon, VP of collateral and prepayment analytics for First American LoanPerformance.”
“‘Within these States, cities like Los Angeles, Las Vegas, Miami and Phoenix are leading the market downwards. At the ZIP code level, the picture is often much bleaker because there are individual ZIP codes that are down nearly 20 percent compared to last year,’ added Weldon.”
Rhinebridge suffered a ;mandatory acceleration event
fasten your seatbelts
Things are unrevelling so fast that talk of the super fund to help SIV will be just that talk. there won’t be enough time to save these SIV. with all the bickerings among banks, it will take months for the super fund to be created and by then it will be too late. well, it’s already too late. Super fund creation is just stupid.
The choice is to say you are going to do something to mitigate an obvious disaster, or play mum while the disaster plays out and let the rival party’s barking moonbat brigade criticize you for doing nothing.
Which alternative would you choose?
I didn’t believe you guys at first that this was mostly lip service, but they’ve been so slow to get any legislation moving for such an urgent matter. Too little, too late.
I’d let it all unrevell.
liquidate assets, labor and capital
That worked out just great in the 1930s, didn’t it?
Someone explain this to me please. Why doesn’t the FED hold the SuperSIV? Afterall, they are the bank of last resort and $100B is just the beginning. What prevents Bernanke from taking a repo on SIVs and prevent the blowup?
I thought it was funny when the Treasury Department (of all organizations) was officially/unofficially “sponsoring” the SIV action.
Made me wonder whether the obvious stuckee, the Fed, was not already approached, and declined participation.
I don’t know, but the Federal Reserve is restricted by Congress. They only have certain options, and they’re not as politically isolated as they should be.
Amy,
I have a case of beer riding on it with Hoz (that it will not be created ; )
My logic is simple: The SIVs are too large and the fools did not package them properly.
Businessweek had an interesting article quoted by Ben yesterday that expressed doubt as to the SuperFund’s effectiveness IF created.
The SF would ONLY buy the best MBS, so the remaining loan pools would become less and less stable over time, making them more prone to blowup.
Sounds like it’s equivalent to evacuating all the gold bars from a sinking ship. The only problem is that the rescue boat is inextricably tied to the sinking ship.
** BREAKING NEWS **
It’s Official: Cheyne, IKB SIVs Default on Commercial Paper as Assets Fall
Oct. 19 (Bloomberg) — Cheyne Finance Plc and IKB Deutsche Industriebank AG’s Rhinebridge Plc, two structured investment vehicles that bought securities backed by home loans, defaulted on more than $7 billion of debt as the value of their holdings fell.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aG5Nw73ZH6Tg&refer=home
Just saw this on the Ameritrade sit:
European structure investment vehicles (SIVs) are already beginning to sell assets. Just yesterday, two SIV funds, Tango Finance and Rhinebridge, which had approximately $16 billion in assets last summer, were reported to be in the process of selling off assets or on the verge of doing so. The news come as Citigroup (C) announced it has secured funding through the year’s end for the $80 billion in SIVs it manages. The bank was forced to dump $20 billion in assets after this summer’s global credit turmoil. (From WSJ)”
I haven’t seen the original article yet, but if this is true then U.S. banks are toast. The rule is don’t panic, but if you do, make sure you panic first. While U.S. banks are trying to cover up their losses, EU banks are dumping - making it impossible for U.S. banks to hide their own losses, without buying the EU banks garbage (which they don’t have capital to do). And now U.S. banks are going to get even less when they finally do sell what’s in their SIV pipeline.
Arggg!
sit=site
and it should be: “..buying the EU banks garbage at bubble inflated price which will ammount to digging an even deeper pit for themselves.”
well said devil; if i were a bank, i would dump as much junk as i can now. always be the first to bail ship;Bernanke can go down with it.
The other team usually isn’t prepared for a punt on 3rd down, so kick away.
OK, Aladin, educate me now on why it’s good to punt on third down (unless it’s third and 30). I would think that just because the other team doesn’t expect it, that doesn’t make it smart to do.
Also, Dow down 243 with 97 minutes left to trade.
I played on a team that did that sometimes. The coach was a well regarded old-school guy and we ran the single-wing, or as some called it, the box. It is a true four down offense, and we would end up getting the tenth yard many times on fourth down. If we lost a lot of yards and were facing, say, 3rd and 25, and depending on the field position, he would call a 3rd down surprise punt by the quarterback. We (the players) didn’t like doing it, really, but it would catch the other team by surprise and the ball would roll and roll. He was a very successful coach and our team did very well.
They call it “a quick kick”.
REhobbyist…
Punters, (the term for gamblers, in much of the English world) are woefully misunderstood
Every day longer that one waits, to off their stocks, is another day closer to a disaster and the possibility that liquidity, is no more.
I’m merely advising that being one of the 1st to get in a lifeboat, made for a bettor chance of survival…
On an enchanted evening, 95 years ago~
If the Europeans sell, there will be market prices for what they have sold. Are they holding the exact same stuff as the US banks are or is it just similar but from their own markets? If it is the same, then won’t they have to mark to the market price? If it is just similar, won’t they be obliged to take the market price of the similar investments into account in their “models”?
None of the stuff will be exactly the same, but it can be the same rating, by the same ratings agency, same vintage, same type of loans.
That’s the bad side of the securitization–if you sell each tranche to enough different buyers, it takes only one of those investors willing to sell at the market clearing price to bring down the whole tranche.
I hate to say it, but I am very afraid that this government is desperate to support our economy, even to the extent that through some agency, whether the Fed or Treasury, to buy these bad mortgage instruments and in the end crash the dollar…
Do not underestimate the government’s stupidity…
Hang on to the handrails, this ride is only just beginning…
PS: do not do anything stupid, and invest all your assets in bear funds, because you do not know what a desperate govt. will do do!!!
I feel FED taking a long (or very long) repo on these suspense SIVs of unclear value may be the least painful way to shrink the crisis and prevent a credit implosion.
Too late. We already have a credit market implosion!
The fact is no one wants to pay face value for this junk anymore. That’s why they are trying to ‘fix’ the prices. They are trying to avert market reality. The market for junk loans imploded and they don’t want to accept the fact.
Total unsubstantiated rumor here: I cannot remember where I read this–most likely a slightly-unreliable site like Freemarketnews.com or such–but has anyone ever heard the rumors about the Federal Reserve setting up off-shore hedge funds in the Cayman Islands to handle this unknown buying of support?
Tin-foil hat stuff, of course, but wouldn’t that make sense for them to do something like that? It’s Enron on a fantastic scale, but the bigger the lie, the bigger the chance it’ll work.
Never heard of it, but remember that the Federal Reserve is regulated by Congress. They can’t just do anything they want.
Hello, Congress? Fed here. Listen, we got an issue, but we also got a solution. We need to save the economy, right? Well, in the interest of national security, we need to do whatever we like, kay? But to prevent public panic we need to do it sort of quiet. OK, cool, thanks. See ya.
OK Big V, you’re making me dig down into my bag of quotes
Greenspan, Jan of 97′
“When there is confidence in the integrity of government, monetary authorities — the central bank and the finance ministry — can issue unlimited claims denominated in their own currencies and can guarantee or stand ready to guarantee the obligations of private issuers as they see fit. This power has profound implications for both good and ill for our economies.
Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. They can discount loans and other assets of banks or other private depository institutions, thereby converting potentially illiquid private assets into riskless claims on the government in the form of deposits at the central bank.
That all of these claims on government are readily accepted reflects the fact that a government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.”
“claim on the government”
How is that Greenie? You say it is “fiat” which means arbitrary, without any basis. How can that produce a claim? If i give a pile of dirt to FED and it gives me cash in exchange, that is perfectly legal and it is the end of it. No claim, no nothing.
Well if the european SIV’s are getting dumped then the paper is going to be marked to market. This will only expose the stupid economy and tank the dollar even more, also with all these CDO junk paper sloshing around who will be buying them and loaning money to us anymore? I think we are at the cusp of something that will unravel at terrifying speed.
“‘I don’t see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself — whether people can make the payments,’ he said. ‘It would be better to have them on the balance sheets so everyone would know what’s going on’”
That Warren Buffet guy cracks me up. Transparency on the balance sheet! He’s so old-fashioned.
Damn, that is exactly what I wanted to say about Buffett! How dare he think that investors have a right to know what their company is doing behind closed doors! Seriously though, it’s nothing but a shell game and Buffett is right. Eventually reality must set in and we’ll all see that the emporer has no clothes. The fact that these banks can come out and suggest such an obvious con game is a shining example of how corrupt our nation has become. Oh yeah, not to mention financially retarded.
Poor Warren had to go on TV the other day to dispell rumors (no doubt started by the companies themselves) that he was buying both Bear Stearns and Countrywide.
Of the latter he said, “I never even came close.”
Bwahahah….
That’s in the article I posted. I believe it reports their stock prices are way down and he doesn’t think they are undervalued…
Yep. You also posted that little ditty on NVR. They are a local builder in my area - I remember the catchy tune in the ads they used to run in the mid-90’s, when the stock was in the mid-nine dollar range.
It just missed hitting $950 (not a typo) at the peak, in summer ‘05. A one hundred bagger…incredible.
I wonder what the stock price will be when the catchy tunes come back to local radio?
It does…..I read that and laughed myself silly.
Weren’t many of these investment banks and mortgage companies (including those debt-consolidation folks), and Wall Stree investment firms counting on borrowers defaulting, so they could foreclose on properties at ever-escalating “values,” reaping huge profits? And weren’t they deliberately giving loans to people they knew could never pay them back? Weren’t investment pools banking on the same thing? Yet, when the escalating “values” started plummeting, they all started screaming bloody murder, and acting as if they were victims of something or other.
Since the whole idea was to rip everyone off, maybe the executives of these companies should be required to pay back their salaries and bonuses, plus interest, before they can even suggest any kind of government intervention. Ditto for the borrowers, who should not profit from “equity liquidation” followed by turning in the keys.
I’m not sure they were counting on lots of defaults. They were counting on the FBs coming back every year or two to refinance (new mortgage = another round of commissions) based on the appreciating value of their millstones.
I knew it. When I first heard those rumors, I thought “WTF?” Buffet has been eschewing this entire fiasco for years, long before it actually blew up. I guess the guy really is smart, unlike that MORON Trump.
“Transparency on the balance sheet!”
A quaint notion is that.
We live in the era of balance sheet opacity.
Corus said, “we are experiencing a disappointing decrease in origination volume.”
They don’t say whether it’s for lack of qualified borrowers, or more broadly from lack of wannabe borrowers. My suspicion is, the latter is a powerful contributor. People are strongly influenced by the MSM, which is now putting out the message that house prices are going down.
Corus is a construction and development lender. How many developers and builders are cranking up? Corus needs new ADC loans to generate accounting income (fees and accrued interest) to offset the big losses it will incur on its portfolio. In any event, Corus is set up for FDIC receivership and increased volume will only postpone the day of reckoning.
BTW, Corus Bankshares stock has fallen from $33 in the Spring of 2006 to about $11 today.
topsy turvy CD’s for me , weeeeeeee
If you’re looking for a safe place to park cash for 3 to 6 months consider the following:
The spread between insured, brokered, 3-month CDs and 3-month T-Bills is now about 120 basis points. The spread for 6-month instruments is now about 90 basis points.
As long as you remain within FDIC limits (100k regular, 250k IRA), you can do well by taking advantage of bank liquidity problems. I expect these spreads to widen as banks continue to switch funding from CP to retail CDs.
Believe it or not, almost all of my money is in CDs right now. They were up to 5.50% a few weeks ago. I then started a 6th CD when suddenly the Fed’s lowered the rate, thus my new rate would be 4.75%. Still not bad for having an investment that requires no risk. Unfortunately I am soon to reach the FDIC insures amount, so I will have to consider other options. Probably get a second bank.
I’ve been telling people to get CDs for almost a year.
I’m looking at something that would work like a checking account, but has a higher rate of return. Doesn’t Vanguard have something like that? I think it’s some sort of investment account that you can write a limited number of checks against.
Many money market funds have check writing privileges. The manager sets up a bank checking account and funds are swept from the MMF to the account to satisfy payment orders. Make sure you pay attention to the fund’s holdings. Conventional money market funds are loaded with junk paper in order to keep yield up, currently about 5%. So called “government” money market funds are full of FNMA and FHLMC paper. Treasury money market funds are in T-Bills which currently yield 4%.
Also, look at management fees and expense ratios; they vary widely. The Vanguard funds seem to have the lowest fees and expenses.
thanks TJ, you just answered a few questions I had.
Okay, Tuxedo, here’s my thinking. I’m leaning toward a Treasury money market fund. Even if the yield is only 4%, that’s better than what my checking account is paying me now. (It isn’t paying me any interest.)
If anyone else would care to chime in, I’d be happy to hear your advice.
Years ago I gave up on squeezing out every single dollar of income from may assets. I even used to open up brokerage accounts just to get the $100 to $200 bonus then closed the account six months later.
Now, with my checking account balance usually at $4,000, I no longer care about the lost income on it. Say I could get 4%. Then after taxes I would clear about $100 a year. Sure, 100 bucks a year is 100 bucks a year, but I’m not going to keep switching accounts for such a paltry sum. I’m satisfied simply with no fees.
American Century capital preservation fund… All government short term paper (T-bills etc), no FNMA and FHLMC. When I sold my house (2002) I put evrything in there, then parcelled it out as I found some other place for it. Still keep most of my non-speculative money there. Recommeded by Weiss (Safe Money).
I have most of my cash in a CA Municipal Bond Fund. Low yield, but very tax efficient, and at the end of the day, pretty safe.
Property taxes get paid first, then assessments. What I really like is that I can read through the portfolio of holdings and understand what the money was lent for–sewer district improvement bond for such-and-such City, road improvement bond, etc., etc., etc. Each particular bond is for a few million $ out of several billion $ in the entire fund (wide diversification).
I was getting sketched out by reading the portfolio holdings of other MM funds and not having any idea what the instrument held.
With the Muni Bond fund, I can’t write a check against it, but I can sell some and the next day have the funds available (that are swept into a more traditional MM account).
I switched to Charles Schwab’s investor checking… unlimited checks, no atm fees, and 4.0% apr. when you have a brokerage with them.
Slim, I use Fidelity Cash Reserves. Currently yielding circa 5%. Check writing but I think it has to be 250 or greater. I thought I also heard they were introducing some type of more traditional checking account, but don’t know the details.
I like to ladder our CDs. That way if we need to we always have access every few months. I have 3 CDs right now. We are allowed 2 penalty free withdrawls on 2 of the accounts.
I have always been able to negociate a better rate than what my bank was offering by bringing them a CD rate list from bank rate dot com. My bank was offering 4.75, I got them to give me 5.30 because that’s what La Jolla Bank was offering.
Nice! I’ll have to try that next time.
“Unfortunately I am soon to reach the FDIC insures amount…”
Having all that moolah must really suck for you….
Yep, sounds like a happy problem to me.
Same here Jetson while the 401k is vested in a saving only UC account which hold zero crap paper and T Bills through the Fidelty short term. The CDs are doing much better then the 401k but at least I’m not losing (what a strange way to view a 401k with 30 yrs to go).
Hey Gwynster:
That UC savings fund is the best I’ve seen in a retirement account. A good way to weather uncertain times.
I have a completely different viewpoint about “investments” in CD’s, treasuries and the like. Your dollars are losing at least 10% of their value every year through inflation. We can argue about what is inflation forever, but just look at what a dollar today can buy, compared to a year ago in terms of Euro, oil, precious/basic metals, energy, health care, housing, food, etc. Forget what the govt says inflation is, because that’s bullsnot.
Anyway, investing at 4-5% means you are losing 5-6% per year in terms of dollar purchasing power. You’d be much better off just exchanging your dollars for Euro’s, yen, oil, gold, basic “stuff” - at least you hold your purchasing power. Yes, in general you don’t earn interest on “stuff”/commodities, but with the dollar depreciating at 10%+ per year, that is better than losing 5-6% in purchasing power per year.
because when the sh!t hits the fan. I’ll need to be liquid. All that crap I bought under your plan will not be liquid and will have lost value besides.
RE: because when the sh!t hits the fan. I’ll need to be liquid
So the shit hits the fan and the government immediately bans the sale of guns and ammunition.
I have a couple of extra .45autos and 2000 rounds in my closet.
You have an IOU from the FDIC for your deposits in a “temporarily” closed bank and maybe some pieces of paper with ink and official looking faces on it stuffed in a drawer.
With all due respect, I wish you well with your liquidity.
It’ll get you far.
How are strong foreign currencies not liquid? Forex is the most liquid market on earth.
That being said — How does one go about opening a euro-backed account being in the US. CitiBank and others are franchises and told me that I would have to open the account overseas… I would rather not wait until next summer to do that!
Everbank.
I also have several currencies with Everbank. I opened a couple of offshore accounts in different currencies to get a much better interest rate (e.g. 6.25% on my sterling). It was a bit of hassle setting them up but I feel worth it on a couple of levels.
Just buy Euro money-market ETF.
Hi Motepug:
I think many on this blog are saving for a specific purpose (buying a house), and are in no position to take much risk with the money.
That’s exactly what I’m doing - will be buying a house, with cash, in probably 2-3 years. I don’t want to lose the purchasing power of my dollars.
I’m semi-retired and simply cannot afford the Fed and govt’s hidden 10%+ inflation. I view commodities as pretty low risk these days, considering the continuing inflation and devaluation of the dollar. The dollar looks very risky and investments in CD’s and treasuries are a guaranteed way to lose purchasing power.
FDIC insurance on CD’s is real, but highly inflationary - if a couple of big banks go under, the Fed will have no choice except to print money to make good the FDIC promises.
This has been my approach. Moved all my dollars to Euros, Sterling, etc last year (though have been moving out of sterling over the last month), Gold on the dips, some CAD stocks but missed the big jump last month….
I feel that the dollar is going to fall further. FDIC insurance does not make me feel secure at all.
William Poole sez….“‘I think this housing cycle is … in many respects quite different from previous housing cycles, and has unique characteristics from the housing cycles from the postwar period, and is unlikely to give us much insight into the housing market for the longer run,’ he said.”
Meaning what? That the shitty mantra of “real estate always goes up” is going to hold?
Poole only opens his mouth to obfuscate. He finds the declining dollar and the housing bubble ‘inexplicable’ and doesn’t even want to discuss them. He’s a Fed sock puppet.
“The most deadly phrase in the market is ‘this time is different!’. - http://www.stock-market-crash.net/forecast-crash.htm
I read it as “I can’t tell how bad it is, so beats me how it’s going to shake out.”
–
Meaning we have do idea and we are shooting in the dark. Sorry, if we end up financially killing the inocents.
Jas
All the long run insight real estate investers need can be summarized in a simple mantra: “Real estate always goes up, in the long run.”
Yes, at Schiller’s estimated 3-5% per year, less than the safest vehicles. The trick is knowing when to buy real estate, which, thanks to this blog, is far more predictable than the stock market. Sadly, it’s going to be a long time before real estate is a good investment again, say, 20 years, if you feel that the current economy is similar to the 20s.
“‘I think this housing cycle is … in many respects quite different from previous housing cycles, and has unique characteristics from the housing cycles from the postwar period, and is unlikely to give us much insight into the housing market for the longer run,’ he said.”
However, is it like the 1980s commercial real estate cycle?
woof, commercial is cracking here 24 months after residential- not much, yet
RE: However, is it like the 1980s commercial real estate cycle?
We’re in a new age demographic.
I remember things goin’ to beat the band during the Ronnie Regan era in the mid to late 80’s. Greatest Gen Grampa’s & Gramma’s were in their late 60’s/early 70’s travelling to beat the band, while 30/40YO boomers were settin’ up households and making their way in a time when the US actually made something.
Fast forward to today-Gram & Gramps are either dead or in nursing home. Boomer’s haven’t saved a wit between six figure college educations, divorce, and taxes.
And now the beginning wave is now lining up to grab their Federal old age entitlements to be funded by a substantially smaller grab bag of Gen XYZ’er’s and immigrants.
It’s the end of the WW II era Ponzi schemes. And the Pig-men saw the writing on the wall and looted the till once last time.
It is indeed different this time.
“‘This cycle was really quite different and the boom was driven importantly by the growth of the subprime market and the securitization of those markets,’ Poole told a monetary policy conference.”
“‘(It) all worked as long as house prices were rising — and it all collapses when house prices stop rising. Obviously, this segment of the market, it is going to be a long time before it comes back,’ Poole said.”
A FRB President describing a Ponzi Scheme that was under his jurisdiction - wow!
Exactly. He acts somewhat surprised by this whole securitization thingy. Like, “Oh my! I can’t believe it.” It’s funny because that’s the line I use when friends and family tell me their RE bets have gone bad.
Many in the banking and regulatory industry seem to have adopted their own version of it. It wasn’t long ago, however, many of them were championing securitization. It was like discovering sliced bread.
“‘The question is: Are these losses just the beginning?’ said Brett Horn, an equity analyst at Morningstar. ‘No one seems to know for certain.’”
Indeed…
I’m willing to go out on a limb…
Who is this “no one” person I keep hearing about? This person seems to have predicted everything that has happened so far, and seems to know exactly what will happen next, not to mention how it will all end. OK. Which one of you is No One?
No One is Not Me’s brother. You know Not Me? He’s the guy responsible for this whole mess.
“Earlier this week, Cheyne Finance PLC, a SIV managed by London-based hedge-fund group Cheyne Capital Management, halted payments to its creditors. Its receivers said they expect to complete a sale of its assets in the next two to three weeks. Cheyne had roughly $6.6 billion in assets as of August.”
Might this be interesting to watch- assuming that it is relatively transparent? 6.6 billion in August= ??? million in November?
Update on Cheyne.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aaDlk0QDdcGA&refer=home
The article says SIV’s have dumped $75 billion of securities since July. Where did all this stuff go??
Toxic waste sites in Utah?
Maybe some of it went to our pension fund. Not good.
““St. Louis Federal Reserve President William Poole said…the recent U.S. housing market cycle diverged from past experience because it had been fueled by developments in the securities markets…This cycle was really quite different and the boom was driven importantly by the growth of the subprime market and the securitization of those markets…..(It) all worked as long as house prices were rising — and it all collapses when house prices stop rising…I think this housing cycle is … in many respects quite different from previous housing cycles”
We told you we told you we told you we told you! We told you that the fundamentals of housing prices couldn’t support these high prices! We told you that it was the ease and abbundance of easy (insane?) credit, coupled with speculation, fear, and greed that was driving up the prices. *Not* new affordability paradigms, and *not* wage increases. We told you that many people would lose their homes once the credit markets tightened again (which we knew they must)!
But *everyone* thought were were a bunch of crazies! “How could we have a housing downturn?” they said, “you need a recession for a housing downturn, people losing their jobs, and right now the economy is in ‘Goldilocks’ mode”. And things were different this time. Everyone wanted to live here (wherever ‘here’ was). Rich people have discovered the area and want to live next to me. (Rich) Baby boomers are retiring here and will forever keep the prices high. Buy now or be priced out forever. Renting is throwing money away. If you don’t own your own home, you are not quite an adult yet.
They all thought we (the ones predicting a housing crash) were CRAZY.
And now look at things.
Idiots.
“…and it all collapses when house prices stop rising…”
There’s the rub to assets whose persistent pattern of price inflation convinces investors their values always go up without risk.
PB:
That sounds like a good way to judge the timing of bubbles. When you meet people who are investing in a certain asset, if you ask them what the % chance is of a decline in the next year, if they all say “zero”, it’s probably a bubble.
Arroyogrande,
Its even worse than that. This whole mess threatens our economy and even our national interest in a big train wreck chain reaction.
All this consumer spending will halt as the housing ATMs dry up and after the indefatigable spending americans will then drain/borrow against their 401Ks and run up their credit cards in the last gasp of maintaing an unrealistic lifestyle. This will hurt us all, already the tourism is dropping here in Hawaii as the $ dries up. Eventually jobs will go.
As our dollar plummets foreign interests ie Red China, which is a Communist country last I checked, with their strong currencies can snatch up American properties and businesses giving them a strategic advantage on our turf. Dollar dropping at the same time the asset prices drop - a real bargain to the foreigners.
They can jerk us around with our massive debt exposure to them. Absolutely brilliant !! - the way the Chinese can castrate us without firing a shot.
China, having our worthless IOUs, is hardly getting stronger. They are actully the biggest suckers, because they’ve been hoarding all the junk, while suppressing their own vastly poor population. Already China and India are having problems with social unrest because of tremendous local inflation. In the coming crisis they will have to deal with a lot of problems before they think of going on a spending spree.
Well said Arroyo. Well said. (Applauding)
We told everyone until we were blue in the face. It’s a good thing we found each other on this blog. It’s a reality bunker.
It’s a good thing we found each other on this blog. It’s a reality bunker.
Also well said.
‘Harley-Davidson Inc said on Friday its quarterly earnings fell more than 15 percent, blaming ’sluggish’ sales in the United States, it biggest market. In a conference call following the results, Chief Executive Jim Ziemer said the current business climate was ‘tough’ as falling housing prices have made consumers reluctant to buy big-ticket toys such as motorcycles, boats and motor homes.’
‘Popular Inc, the parent of Banco Popular and Puerto Rico’s largest bank, said on Friday third-quarter profit fell 56 percent, hurt by the U.S. housing downturn and a weak Puerto Rican economy. Chief Executive Richard Carrion also said the company is “evaluating strategic alternatives” for all non-core businesses, after the housing slump caused loan losses to more than double.’
Popular said its U.S. operations lost $44.7 million in the quarter. Popular said it set aside $148.1 million for loan losses in the quarter, up from $63.4 million a year earlier. It said the increase was primarily the result of deterioration in residential mortgages, mainly subprime. Net charge-offs nearly doubled to $112.7 million.’
‘Popular has more than 300 banking offices in Puerto Rico and more than 140 in California, Florida, Illinois, New Jersey, New York and Texas. It ended September with $47.3 billion of assets.’
Pardon me for being clueless, but what do falling house prices have to do with buying a boat? I grew up next to a family of avid boaters, and if they could swing it financially, they bought a boat. Ttheir house price had nothing to do with this decision.
I should also add that the parents in this family originally bought the house to raise their four kids in. And they did. They were at that address for almost 20 years.
Arizona - falling house prices are historically indicative of broader, economic downturns. Usually, unemployment leads housing declines. “It’s different this time” in that generally, peoples’ circumstances have not changed - only their mortgage payments have (going up).
Anyway, if you read a book on how to buy a boat, you will learn it’s wise to look in an area with depressed housing prices for the best deals. The connection is that boats are non-essential items - frivalities, if you will. Folks let go of that stuff first and cheaply.
Had this discussion with a friend the other day - he pointed out the same is true of pool tables. If you want either, now is good time to start looking.
Falling house prices are historically linked to broader, economic downturns, that’s what. If you want a boat (or a pool table, for that matter) it’s a good time to start looking. I’ll bet next spring brings some great deals on boats….
…motorsickles too. I’m trolling for a cheap heloc Harley. I’m betting that I’ll be able to find a garage queen at my price point before riding season ‘08.
I have been looking for a Lotus Elise or older model Acura NSX and they are finally coming up with more reasonable prices. Some of the for sale info is mentioning mortgages. Very interesting. Its hard for me to get a hold on just how many people could be living hood rich.
You’re thinking in the old economy… this is the new economy where debt is now considered an asset and cash is considered an unsophisticated investment vehicle… In other words, if the house price goes down, people can’t refinance and take on more debt (investment) to buy a boat.
Most people buy a boat by refinancing their house or taking out a HELOC. When house prices go down, FBs have little equity, no equity or even negative equity. Not too many lenders want to talk to such people these days.
I just thought you were being sarcastic. Falling house prices have NOTHING to do with boats, bikes etc. unless you’re using your home equity as an ATM.
Yeah, what Bill said.
FWIW, Pacific Seacraft of Dana Point, CA went in to bankruptcy recently and was liquidated. Among the finest American yacht manufacturers - a dwindling breed.
They always say that there are two ‘best’ days in a boater’s life: The day they buy their first boat and the day they sell that boat…
Just sold mine. Best day in my life. Can’t wait to get a new one!
“Chief Executive Jim Ziemer said the current business climate was ‘tough’ as falling housing prices have made consumers reluctant to buy big-ticket toys such as motorcycles, boats and motor homes.”
Does that mean next year’s Sturgis, SD Biker Rally is going to flop? That’ll destroy the local economy. Better dump you Sturgis house while you still can.
Just wait until Harley has to compete with all the toys it already sold coming back onto the market. When I was living a town that had just undergone big layoffs in 1994 there were full dress mint condition Harleys on the street every block with for sale signs.
Ah Chit, Banco Popular is E-Loan, where I keep the majority of my home savings. Maybe they’ll raise their interest rates to raise cash.
Seems like we’ve blown through another $15 Billion or so today, on this thread alone…
“‘I think this housing cycle is … in many respects quite different from previous housing cycles, and has unique characteristics from the housing cycles from the postwar period, and is unlikely to give us much insight into the housing market for the longer run,’ he said.”
See? The housing bulls were right: It’s different this time!
At a time in the future, (1 year, 18 months?) Mr. Poole will be ‘asked’ to sit before a panel of high-minded Representatives and answer for his astonishing lack of vision and helpful analysis concerning the housing disaster. It will be fine theater.
What’s been going on this week on Wall Street is what we here have been predicting all along. Housing was recklessly used as a heavily leveraged segment of the economy. Is the credit crunch simply going away? No and not for a long time. When you place the well-being of the US economy into the hands of the average US citizen primarily in the form of debt, you get a recession. Simple as that.
The money necessary by banks now holding larger reserves that will have to continue to grow will slow the economy further. So, we are seeing credit dry up. If you hold money, as a lender,that shrinks the money supply.
Capital One Financial of McLean posted its first quarterly loss ever, from the expense of shutting down its mortgage lender, and warned of additional challenges in the credit card and auto finance businesses.
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/18/AR2007101802454.html
Does that mean that they’ll stop sending me all those card offers? I’ve been sending them right back to Capital One (sometimes with rude comments) for years.
Yeah, I find it ironic that out of all debt pushers they most closely resemble the predatory lenders depicted in their commercials. Have you ever read the fine print on one of their card offers? You’d have to be retarded to sign up for that kind of punishement.
Now, Dog, stop that. You just gave me more ammo.
I can’t wait for that great day when Crap-ital One sends me another “offer.” They’re really gonna get it back from me.
hey guys, dont bother sending back any 3rd class or bulk rate mail. big waste of time.
talked to a postal sup years ago / told me ” sure, go ahead & mark return to sender but we just end up throwing it away out back. too expensive to the USPS to return bulk mail. ”
lovely, eh?
83% of the assets were held in the highest esteem, Triple AAA Rated~
You don’t want to know what the other 17% was…
“Rhinebridge’s mandatory acceleration event means all of the SIV’s debt is now due, according to a company prospectus. As of late August, 79 percent of Rhinebridge’s holdings were in the U.S. and 80 percent in mortgage-backed bonds, Fitch Ratings estimated in an Aug. 22 report. Eighty-three percent of the assets had the highest-possible AAA rating, Fitch said.”
83% of the assets were held in the highest esteem, Triple AAA Rated~
You don’t want to know what the other 17% was…
“Rhinebridge’s mandatory acceleration event means all of the SIV’s debt is now due, according to a company prospectus. As of late August, 79 percent of Rhinebridge’s holdings were in the U.S. and 80 percent in mortgage-backed bonds, Fitch Ratings estimated in an Aug. 22 report. Eighty-three percent of the assets had the highest-possible AAA rating, Fitch said.”
“Rhinebridge Plc, the IKB Deutsche Industriebank AG structured investment vehicle that has lost about half its value, is unlikely to repay all its debt.”
What the globalized SIV industry appears to need is an intergalactic Superfund-SIV with a mechanism for bundling all the toxic subprime debt and rocketing it off to bagholders on some distant planet.
But couldn’t that work both ways?
I guess that would depend on the level of financial sophistication of our inter-galactic trading partners.
Actually, they will solve their problem by bundling their non-performing assets into an even larger SIV. Maybe a parallel-universe SIV.
Maybe a black hole SIV. (Which brings me back to the question of why they don’t just let Fannie buy all the bad mortgage debt from the SIVs?)
Got CDO-Risk-Transporter?
Actually this is kind of scarey. I’ve told my wife for some time that eventually our leaders will tell us that the one world order is necessary to forestall an alien invasion (from outer space, not to be confused with the real alien invasion that they are determined to do nothing about). And then there was that wierd question to Guliani the other day about being prepared for an invasion form outer space, and he didn’t miss a beat.
When they get desperate enough, I wouldn’t put any rediculous hair-brained sceme like this beyond our corrupt “leaders”. After all, they only have to convince the majority, or even a sizable minority for it to work. And considering the number of people who bought into the debt-is-wealth mantra, that might not be very difficult.
OT: Why does it seem that every analyst and trader say the “global economy or global fundamentals” will save the stock market and the economy? They imply that the U.S. economy just isn’t as important anymore. I don’t believe that day is here yet. I understand certain companies generate a significant portion of their revenues and earnings outside of the U.S. which has been helped recently by the low dollar. What I don’t understand is how the global market, especially China and Asia, can counterbalance a recession in the U.S. Most of the “stuff” China and Asia mfgs goes to the U.S. and Europe, it’s not like their selling a significant amount to each other or even domestically. If the U.S. consumer slows down, China and Asia’s mfg is going to slow down. So then, how can the so-called “global fundamentals” save the economy if fewer people in the places that count the most, are buying fewer of the things that China and Asia are manufacturing? (I also have to believe that the Chinese stock market is a huge bubble which will explode when the U.S. slows down.) On top of that, I have to believe that most Americans are not employed by multinationals so the benefit of the low dollar and higher exports to them has to be minimal and again, can’t stave off a recession. Why then does nearly every analyst say the global economy will save us, what am I missing?
Saying that “global fundamentals” are going to save the stock market is merely the mantra of the globalist cheerleaders.
I do think that with the collapsing dollar, the US market for Chinese goods is and will continue to slow down, while Europe will perhaps stay strong. I would assume that the domestic economy in China will have to grow significantly over time in order to pick up the slack. China does have the potential to build their domestic economy as it has 1.3 billion people. Most of these folks have to be lifted out of poverty in order to consume even a fraction of what is sent to the US, but I do believe this will happen. It could take years as it is a gradual process.
I believe it will take several decades before China’s domestic economy can pick up the slack from the U.S. There is still lots of poverty in China. Plus, several decades from now, China’s population will be on a steep decline thanks to the one-child policy and the current preponderance of males.
I discovered that the lead paint on the Chinese toys comes off the lips of a grand child pretty easily with turpentine.
I’m glad you brought this up. Who really knows what “globalization” is? There are those apologists for the “globalization” scam that claim it is merely free trade among countries. To that degree, globalization has been around for centuries. For others, (like me), it is a sinister mechanism to bring the world under one rule, using markets, commodities and political movements to accomplish this end. And for those who think this is some “tin foil hat” idea, you should have read Greenspan’s comment the other day about politics and globalism. Or Vicente Fox’s admission of the NAU and Amero. It’s right out there in plain sight and no one’s denying it. In order for true globalization of this nature to take place, the US MUST be destroyed as an entity and its citizens degraded. Beyond that, I won’t elaborate at this time.
As to analysts and traders with their verbal global diarrhea, pay no attention when they spout off about “global fundamentals”. Cripesallmighty, as we’ve seen, they don’t even have a clue about household fundamentals, let alone US fundamentals, let alone “global” fundamentals.
Buzzwords come and go. Right now, “global” is a buzzword. Most people use it and haven’t a clue what the hell they’re talking about, or don’t realize that the people they’re discussing the subject with understand it as one idea, while their own idea might be quite different.
“I also have to believe that the Chinese stock market is a huge bubble which will explode when the U.S. slows down”.
I believe this too. It can’t happen soon enough for me.
“Or Vicente Fox’s admission of the NAU and Amero. It’s right out there in plain sight and no one’s denying it.”
That’s what stunned me too. Fox announces that this is the plan he and Bush agreed to on Larry King, and there is no denial, nothing from the White House.
So much for all those disparaging “tin-foil hat” comments. Augur-in’s links were right on the money.
as if you can trust anything that comes out of the pie hole of our beloved leader.
Amen, Palmetto!
chinese housing bubble:
SWEATING in the bright afternoon sun, the men and women stand on the sides of the roads like homeless people clutching wrinkled cardboard signs. Waving the boards, the real-estate agents call out to cars zooming by.
“Come take a look.”
“You’re welcome to visit.”
“Over here.”
Surrounding the agents in this upmarket neighbourhood are swathes of empty apartments that a few months ago were selling for record high prices.
The housing market in this city of 14 million adjacent to Hong Kong is among the first casualties of China’s efforts to cool an economy it fears may be overheating.
http://tinyurl.com/2fjdq6
Fuggliest McMansion award goes to…
http://online.wsj.com/article/SB119275544010164314.html?mod=todays_us_nonsub_weekendjournal
Remember the run for the bonuses at the end of last year? Sure, some underlings will get hurt due to these losses and some downsizing. Do you think the managers & traders really care about the institutional losses after their multi-million bonuses last year? I just hoped they socked it away - while a few don’t, trust me, many did.
Where did they put? Or did they double down?
“‘Within these States, cities like Los Angeles, Las Vegas, Miami and Phoenix are leading the market downwards.”
Funny — the latest DataQuick release shows LA prices up YOY (no mention of leading the market down). What gives?
I was listening to Dave Ramsey today. A distressed wife called in whose husband is in the mortgage business with $0 income last year after expenses. They have a first mortgage about $275,000 a second $75,000 and a third for a business loan @ $96,000. The house is now worth less than the first and second. The bank wants their money on the third or they will foreclose. Foreclose on what?
“Foreclose on what?”
Do they have children? Because in the global turd world, the poor sometimes sell off their children to factories for labor, or for sex, to pay debts, etc. and there are those who think we need to get into the “spirit” of competition with the turd world.
Beware when banks start binding your “successors, heirs and assigns”. (Geez, I’m in a mood today)
they need to start reading the bible, specifically that book of leviticus.
Meanwhile, is anyone watching this stock market? mmm-hmm-mmm-hm-mmm!
Time to buy the dip. The stock market always goes up, in the long run.
“Time to buy the dip.”
Make mine a Dairy Queen Chocolate Dipped Vanilla with jimmies.
If it is chocolate dipped, won’t the jimmies just fall off? Or do you do the jimmies first and anchor them with the chocolate dip?
Inquiring minds want to know.
Remind me of that advice when the S&P hits 1200.
Amen, WT. Another 300 down and then we’re talking. Right now, it’s just fun to watch 14,000 recede further.
Whoa, geez, I was just kidding, but looka that…
Getting interesting. COMP and trannies have broken support now.
If it does not rally and move up 50 I would be very surprised. PPT is just about ready to push the BUY BUY BUY button…
Yeah, but they’re waiting an awful long time to pull the trigger…
Hank must’ve taken off early to view some fall foliage…
The SIV news is new news to Wall Street. Traders thought this was all about subprime and a few rate cuts could ‘fix’ things. It’s a solvency crisis not a liquidity crisis. Plus, foreigners are probably pulling the plug on US assets. From Bloomberg:
“The fear is back,” said Thomas Roth, head of U.S. government bond trading in New York at Dresdner Kleinwort, one of the 21 primary securities dealers that trade directly with the Fed. “Where there’s smoke, there’s fire, and people are just running back into Treasuries.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aRuNBleoakdo&refer=home
Geez, I’ve completely lost faith that the middle class in the US will pull it together. Look at this response on a message board when someone had the unmitigated gall to suggest that people who can’t make their bills should consider a second job before going bankrupt so that bankruptcy can be reserved for those in real crisis:
“I understand your humility and will raise it with knowledge of law. Bankruptcy is a legal decision. There is no qualifying criteria such as yours. Bankruptcy is not an emotional decision. Those who are facing bankruptcy are not deadbeats who aren’t “doing enough”, whatever that subjective qualifier may be. To trivialize a decision to go through bankruptcy as merely a matter of taking a job or two or three is clearly ignorance of law and failure to understand each unique petition, the mechanics of the trustee’s office, the Federal court system and the Constitution of the United States of Amerca. Yes, bankruptcy is a Constitutional right guaranteed by law and anyone claiming another does not have the right to exercise any United States Constitutional Right because of your subjective opinion or any other irrelevant credo is tippy-toeing on some very shakey ground. Do you have a right to vote in this country? Why? Are you old enough, ill enough or handicapped enough to vote? Are you doing what I think you should be doing in order to vote, or enjoy your freedom of speech? Let’s look at your personal religious beliefs and if you are “up to my standards” in whether or not I think you should really have access to the right to practice your religion. Your opinion is your opinion conveniently made in the safety of your home. An opinion is not fact and certainly has no place in arguing against anyone exercising any of their Constitutional Rights.
Sweeping judgments and emotional arguments against people in dire straits doesn’t hold a lot of water with me and finding fault or assigning some level of blame against people in need, and claiming some reason why another should not have full access to the law, especially the fundamental rights guaranteed by the US Constitution, is thinly guised bias. It’s highly discriminatory. It is also very damaging to those who are considering bankruptcy, poised to file, going through and having successfully completed personal bankruptcy. FWIW a bias against those who have filed bankruptcy violates Constitutional law.
Simply said discrimination is never ok IMHO.
Have a nice night.”
Blah blah blah. The Bankruptcy Code provides that people cannot be discriminated against in employment because of a bankruptcy (section 505 if I recall correctly). This person is just a bleeding heart.
blah
Bleeding heart law school grad who just failed the bar again with lots of time on his/her(don’t want to discriminate) hands……
Wow, it ain’t 1987 but I’ll take it after this crappy year!
I hate having to dump January puts but letting half go at the close. Not the least bit bullish but I’ve seen them take this junk back up too many times already.
It’s been a great week!
kudos to you, tx, kudos. Can we squeeze 400 down before close?
I think so.
BTW, look at PMCS for a play if anyone’s interested. I took it back. 52 week high on gigantic volume even in a horrendous market. It has extremely high short intensity and had a good quarter.
For all the google cowboys, PMCS is up much more on a percentage basis.
Nah, guess not.
There’s still time.
PMCS is to be watched if anyone thinks things will bounce. Breakout to new high on huge volume.
I took it back.
“There’s still time.”
Apparently so. Geez, I’m all jazzed and I don’t even have any skin in the game. Really, it feels like being at the races.
It’s different this time. Main Street banks are taking losses.
Yep. Wachovia.
The Crash of 1987 took place on a Monday. The Friday before was options expiration, as today was, and the Dow was down about 150, a bigger % move than today but today’s move was still pretty outsized.
We’re not over yet.
Just realized txchick wrote this… obviously you know this.
BK: A lot are Deadbeats.
From MSN
If there was any good news on this lousy day, it was this: It was not anything at all like Oct. 19, 1987 when the Dow Jones industrials dropped nearly 23% in a day.
Yeah but it’s not Monday!
LOL. In other words, in a Goldilocks economy, it was bad, but not that bad…
That’s why I didn’t dump all the puts
By the way, when the S&P approaches 1375 again and it will (a potential triple bottom)
http://stockcharts.com/charts/candleglance.php?SPY|D
I wouldn’t be so quick to grab it at that point. I think it will buckle the next time it gets there.
Offers taken on half.
Toddo on Minyanville says that exp. imbalance was 10-1 on the buy side.
How far down would this market be if there wasn’t that demand!!!!!
I made enough this week to buy a freaking house myself!
I LOVE Maria Bartoromo when the market is down 350+
RE: “Luminent Mortgage Capital Inc., a San Francisco firm that invests in residential-mortgage securities, claims that HSBC’s New York office placed an improperly low valuation on nine subprime-mortgage bonds, which the fund’s subsidiaries had put up as collateral for loans.”
Oh, woe is me…a “low valuation number” for the mortgage wholesale hucksters.
LMAO…Not as easy to coerce or influence a necessary number, this time around, eh boys?
Always the whiners.
Lesson #1-Paybacks are a bitch.
jinwc:
Yes, Maria’s headless-chicken impersonation is impressive. Three stars out of four today.