# The Global Financial Crisis



## Uncle Festivus (24 February 2009)

> *SAN FRANCISCO (MarketWatch) -- Secretary of State Hillary Clinton wrapped up a state visit to China Sunday by urging her hosts to continue to invest in U.S. Treasury instruments and underscoring the two countries' interdependence, according to published reports.*
> 
> "It would not be in China's interest if we were unable to get our economy moving again," Clinton said in an interview with a Chinese television journalist, according to reports.
> "So by continuing to support American Treasury instruments, the Chinese are recognizing our interconnection. *We are truly going to rise or fall together*," she said.



Well there we have it - translation "Please buy our bonds & debt instruments because if you don't we are all stuffed". How deep are the Chinese pockets?



> After months of speculation about a sharp oil-driven rise in prices hitting the world's second largest economy, the rapid global economic downturn has rekindled fears that Japan may be slipping back into a deflationary cycle.
> 
> Such a cycle is likely to have negative implications for the broader economy in that it would lead to lower corporate profits, prompting firms to continue downsizing their operations and cutting their payrolls.



No kidding Sherlock? Turning Japanese? Global deflation here we come, for a decade or 2? What do you expect when you give the world money at zero interest for 10 years,  sowing the seeds of the GFC. 



> “Should these conditions continue, we could say that the Japanese economy is at risk of falling apart,” Finance Minister Kaoru Yosano said in the Diet in Tokyo on Feb. 18.






> The deal will likely serve as a blueprint for rivals General Motors Corp. and Chrysler LLC as both companies work to secure further federal funding and stay out of bankruptcy. The two domestic automakers, which already have received $17.4 billion, asked the Treasury last week for a total of up to $39 billion in low-cost loans.
> GM and Chrysler, as part of their loan agreements, are required to get the union to accept equity payments in lieu of cash to fund the health-care trust. GM owes about $20 billion to its VEBA.



Companies making things that nobody wants, or can afford. So the negative contagion cycle continues. GM filing bankruptcy could be the beginning of the end?


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## Bushman (24 February 2009)

Uncle Festivus said:


> Companies making things that nobody wants, or can afford. So the negative contagion cycle continues. GM filing bankruptcy could be the beginning of the end?




I am watching the action over at General Electric. Could be a real doozy if GE falls into further trouble. 

Should have stuck to white goods!


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## nunthewiser (24 February 2009)

Bushman said:


> I am watching the action over at General Electric. Could be a real doozy if GE falls into further trouble.
> 
> Should have stuck to white goods!





 she, ll be right ... wazza bought some


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## Bushman (24 February 2009)

Good old Wazza - didn't he pick up some Goldman Sachs too? 

Anyway you know the GFC has gone Main Street when you start reading stories likes this one about Amex and the general state of consumer finance. Guess I wont be getting any of those 'you have automatically been approved for a $20,000 loan' credit card offers this year. 

Amex and GE - surely they wont bail-out the trinket financiers as well? Ouch its gonna hurt! 

Marketwatch:
*American Express offers some holders $300 incentive to cancel accounts*

By Lauren Pollock
Last update: 1:59 p.m. EST Feb. 23, American Express is offering a $300 incentive for customers to cancel their accounts as the card issuer grapples with surging loan delinquencies and soft card-member spending. 
The company is offering a $300 prepaid card, which can be used anywhere American Express is accepted, to certain customers who pay off their entire balance between March 1 and the end of April. Enrolling in the deal automatically cancels the customer's account, regardless of whether he successfully pays off the balance.


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## GumbyLearner (24 February 2009)

Bushman said:


> I am watching the action over at General Electric. Could be a real doozy if GE falls into further trouble.
> 
> Should have stuck to white goods!




GE and Hilary look to China.

*China Hands: U.S. Charts New, Greener Course on China Relations*

http://blogs.wsj.com/environmentalc...charts-new-greener-course-on-china-relations/

record, lower per-capita emissions of greenhouse gases: “But this year the Chinese surpassed us. And we can’t look at per capita basis, we have to look at absolute emissions, and how we reverse that.”

She also threw down the gauntlet on the role developing countries will have to play in crafting a successor to the Kyoto climate protocol: “It is also clear that it is not only the developed countries, it is economies like China and India that have to become full partners.” 

But China has reason to be pleased with the new approach, too. Ms. Clinton specifically defended China’s right to economic development, which is part and parcel of the administration’s environmental approach to China, as outlined by Mr. Stern, the climate envoy. “The people in China deserve to have a rising standard of living,” Ms. Clinton said””they just shouldn’t repeat the mistakes made in the West. 

And what was the backdrop to it all? A new, hyper-efficient gas-fired power plant outside Beijing that heats one million homes (and the U.S. embassy) with half the emissions of China’s regular power plants. That plant was a joint project using General Electric’s technology and Chinese-built turbines””further evidence that companies like GE that straddle the old- and new-energy landscapes are well-positioned to benefit from the new approach.

“This is the kind of thing that we need to do more of. It is creative, it is effective, and it is rofitable,” said Mr. Stern.


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## gfresh (24 February 2009)

Interesting perspective on the UK middle class being walloped. 

http://www.telegraph.co.uk/news/4788246/UK-recession-how-are-the-Coping-Classes-faring-now.html

Excerpt.. how many in Australia are at the moment believing the same down the bottom?



> Lorraine Smallwood, a solicitor from Solihull, was shocked to the core when she was made redundant last summer. Smallwood, 43, who is single, specialised in conveyancing and had made partner in a local law firm. But when the bottom fell out of the property market, she found herself laid off, and hasn’t worked since.
> 
> “I was absolutely devastated,” she says. “I’ve always put my career first and given my all to work, and becoming partner had always been my ambition.
> 
> ...


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## Aussiejeff (24 February 2009)

My impression of where the world is at right now is "an awful lot of politicians & treasury officials making an awful lot of vague speeches in trembling voices, to try and instill confidence".

Frankly, I don't think their game is working to plan. The jig might almost be up....


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## MrBurns (24 February 2009)

Aussiejeff said:


> My impression of where the world is at right now is "an awful lot of politicians & treasury officials making an awful lot of vague speeches in trembling voices, to try and instill confidence".
> 
> Frankly, I don't think their game is working to plan. The jig might almost be up....




It could go either way, we dont know who owes how much to who. I really think we are on a precipice and the object now is to protect capital, you can move it to gold to cash to shares but you dont know what will happen if there is a major collapse of the system.

I just moved a lot of cash to the Commonwealth Bank to split it up to protect the Govt Guarantee entitlement , beyond that I'll buy property but not at the KRudd bribe and zip interest rate, artificially inflated prices.


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## Glen48 (24 February 2009)

Maybe some more facts might help the experts to decide:
from Money & markets
Indeed, just in his first month in office, President Obama has quickly earned the distinction of becoming the single biggest spender in history.

First, he got Congress to pass a $787 billion stimulus package ...

Next, Treasury Secretary Timothy Geithner unveiled the administration's bank bailout plan, which could cost up to $3 trillion. 

And last week, Mr. Obama rolled out his $275 billion anti-foreclosure plan. 

Add it all up, and it comes to more than $4 trillion, an amount nearly ten times larger than the budget deficit for all of 2008. All in just 32, short days!

Four trillion is such an immense number that few people can grasp how massive the implications really are ”” both in terms of the great magnitude of disease and the massive unintended consequences of any cure.

Look at it this way: If you were a very rich man living at the time of Christ ... and you could have started saving $1 billion per year every year thereafter, you'd still be only half way there! You'd need still another 2000 years to finance what Obama has committed to spending in just the one month since he began his presidency. 

If you could borrow $4 trillion at 6% interest, your interest payments alone would be $240 billion per year, $548 million per day, $761,000 per second.


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## Julia (24 February 2009)

Is anyone prepared to paint the scenario of just what would happen if world political leaders, in conjunction with central banks, all just decided to cease their current bail out stimulus actions and just allow the GFC to take its course?

i.e. what would happen with banks?

with property?

with shares?

with employment?


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## Bushman (25 February 2009)

Glen48 said:


> Add it all up, and it comes to more than $4 trillion, an amount nearly ten times larger than the budget deficit for all of 2008. All in just 32, short days!
> 
> Four trillion is such an immense number that few people can grasp how massive the implications really are ”” both in terms of the great magnitude of disease and the massive unintended consequences of any cure.




The Chinese stimulus package is around the $4 trillion mark as well and no one bats an eye lid 

Couple of facts for ya: 
1. The erosion of wealth across the globe brought to you by our friend the GFC (sounds like the BFG, just not so friendly) is estimated by the World Bank to be *A$92trillion*. Obama's stimulus package is just a drop in the ocean when compared to that bad boy. 
2. Current capital in the US banking system is $1.4 trillion versus $2 trillion in total estimated loan losses. They are insolvent friends and should be nationalised - but they wont be due to a 'head in the sand' irrational adherence to free market principles at all cost. 

This is big baby, real big, and it needs a big response if we want to return to 'normal' service. Now if it is the right thing to do in the long-term, well history shows that government intervention just shifts the problem to another generation. The thing to watch here and judge OB on will be in a few years to see if he has the will to wean US privates off the hand-out trough. 

My 2c


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## MrBurns (25 February 2009)

Julia said:


> Is anyone prepared to paint the scenario of just what would happen if world political leaders, in conjunction with central banks, all just decided to cease their current bail out stimulus actions and just allow the GFC to take its course?
> i.e. what would happen with banks?
> with property?
> with shares?
> with employment?




Probably what will happen anyway, only faster.

The intervention also creates ongoing problems into the future.


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## tasmart (25 February 2009)

Julia said:


> Is anyone prepared to paint the scenario of just what would happen if world political leaders, in conjunction with central banks, all just decided to cease their current bail out stimulus actions and just allow the GFC to take its course?
> 
> i.e. what would happen with banks?
> 
> ...




I am more worried about the potential outcome if they are wrong and the 'stimulus packages' don't improve the situation. Then we we have very broke governments in enourmous debt who can't cover their interest payments. 

The scenario then is massive public sector job losses and potentially massive default of govt debt. 

Then the s**t whill really hit the fan!


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## numbercruncher (25 February 2009)

tasmart said:


> I am more worried about the potential outcome if they are wrong and the 'stimulus packages' don't improve the situation. Then we we have very broke governments in enourmous debt who can't cover their interest payments.
> 
> The scenario then is massive public sector job losses and potentially massive default of govt debt.
> 
> Then the s**t whill really hit the fan!





very possible situation ....


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## Aussiejeff (25 February 2009)

Miracle worker Benny "Chopper" Bernanke makes uber-optimistic speech that US will recover strongly later this year.

US markets soar. To the extent that he may well have included this subliminal message - 

_"Believe, oh supplicants, believe! Have faith in us, The Messiahs. And Heaven on US soil shall be yours......"_


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## Glen48 (25 February 2009)

Watching some Dr. from ABN Amro on ABC last night he claims we are in a  credit squeeze not a bubble.


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## Beej (25 February 2009)

Glen48 said:


> Four trillion is such an immense number that few people can grasp how massive the implications really are — both in terms of the great magnitude of disease and the massive unintended consequences of any cure.
> 
> Look at it this way: If you were a very rich man living at the time of Christ ... and you could have started saving $1 billion per year every year thereafter, you'd still be only half way there! You'd need still another 2000 years to finance what Obama has committed to spending in just the one month since he began his presidency.




LOL - if you ACTUALLY did really "save" $1B per year every year since the time of Christ, you would have a fortune FAR greater than the 4 trillion you are trying to demonstrate the size of.

In fact, even if you only earned 3% compounding interest on the FIRST $1B you saved in that first year, today you would have more than $60 TRILLION TRILLION!! (Yes that trillion is there twice). 

Cheers,

Beej


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## Uncle Festivus (26 February 2009)

Ben "Bullwinkle" Bernanke _thinks_ the worst might be over and all will be rosy in time for Christmas; the annual 'second half recovery' prediction. 

If the worlds creditor nations are doing it tough, basically falling of a financial cliff, who's going to finance the US debt?



> Feb. 25 (Bloomberg) -- Japan’s exports plunged *45.7 percent* in January from a year earlier, resulting in *a record trade deficit*, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics.
> The shortfall widened to 952.6 billion yen ($9.9 billion), the biggest since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The drop in shipments abroad eclipsed a record 35 percent decline set the previous month.
> Exports to the U.S. tumbled an unprecedented 52.9 percent from a year earlier, and shipments to Asia and Europe also posted the *largest-ever declines* as the global recession deepened. The collapse is likely to force Japanese companies to keep firing workers and closing factories, worsening an economy that shrank the most in 34 years last quarter.




http://www.bloomberg.com/apps/news?pid=email_en&refer=japan&sid=aLFHweAZae38


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## MrBurns (26 February 2009)

Uncle Festivus said:


> Ben "Bullwinkle" Bernanke _thinks_ the worst might be over and all will be rosy in time for Christmas; the annual 'second half recovery' prediction.
> If the worlds creditor nations are doing it tough, basically falling of a financial cliff, who's going to finance the US debt?




No one will finance it, in fact China might start asking for some back it's all about confidence building now they're starting to run out of bullets. Confidence wont pay off the debt or put food on the tables of the unemployed though.


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## Trembling Hand (26 February 2009)

Uncle Festivus said:


> Ben "Bullwinkle" Bernanke _thinks_ the worst might be over and all will be rosy in time for Christmas; the annual 'second half recovery' prediction.




What do you call an economist with a prediction? 

Wrong!


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## Aussiejeff (26 February 2009)

MrBurns said:


> No one will finance it, in fact China might start asking for some back it's all about confidence building now they're starting to run out of bullets. *Confidence wont pay off the debt or put food on the tables of the unemployed though.*




*Obi Wan Benwankee* and his henchmen tried to pull the ol' con(fidence) trick over the world economies running up to Mid 2008. Look what happened since.  

Now, having run out of most of their ammo, they are banking EVERYTHING on one last, big CON trick. 

Frankly, I wouldn't trust the spit that dribbles off his bottom lip, let alone what passes for soothing words...


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## CanOz (26 February 2009)

Finally,some good to come out of a conservative banking system.

http://www.bloomberg.com/apps/news?pid=20601109&sid=afWw27XA56jM&refer=home

I wonder if that will be reflected in the currency?

CanOz


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## Uncle Festivus (26 February 2009)

CanOz said:


> Finally,some good to come out of a conservative banking system.
> 
> http://www.bloomberg.com/apps/news?pid=20601109&sid=afWw27XA56jM&refer=home
> 
> ...



The problem with the Canadians is that they are riding on the past commodities blip, much like Aus. We, & they, are only just beginning to catch up with the rest of the world with the downturn ie the increasingly large bulk sackings? Their trade with the US has fallen sharply.

I think it's a cruel joke to play on all those first home buyers - sucker them in then be forced to sell in 6 months time.

Now this report is really depressing, pardon the pun? There is still a glut of housing to purge before they get close to the bottom?



> Manufacturing and housing in the US collapsed in January, government reports showed, as the Obama administration unveiled new proposals to stem what may become the worst recession in the postwar era.
> The Federal Reserve’s industrial production index dropped 1.8% to 101.3, the lowest level in more than five years, the central bank reported today in Washington. Housing starts plunged 17% to an annual rate of 466,000, the fewest since records began in 1959, Commerce Department data showed.
> General Motors has asked for new loans and said it plans to cut 47,000 more jobs worldwide as sales plunge, while builders struggle to trim the glut of homes propelled by the surge in foreclosures. President Barack Obama pledged $275 billion in a program that includes cutting mortgage payments and encourages loan modifications to keep Americans in their homes.
> “The recession news could hardly have been worse,” said Roger Kubarych, chief US economist at UniCredit Global Research in New York. “*There is no evidence whatsoever that the US downturn is close to bottoming, whether in hard-hit manufacturing or in the housing sector*.”




http://business.theage.com.au/busin...sing-starts-plunge-20090219-8bmv.html?page=-1


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## Uncle Festivus (4 April 2009)

What drug's are these journo's & economist's on? Unemployed comes in 'better than expected"??? Previous months revised to even worse figures? Good enough reason as any to BUY!?



> WASHINGTON (MarketWatch) - American workers were hammered again in March with large job losses, pushing the total number of jobs lost since the recession began to 5.1 million, the Labor Department reported Friday.
> 
> 
> U.S. nonfarm payrolls fell by 663,000 in March, close to expectations, while the unemployment rate jumped to 8.5% as expected from 8.1%. Payrolls in previous months were revised lower by a total of 86,000.
> ...





http://www.marketwatch.com/news/sto...x?guid={CF54164C-6F7B-4501-B6FB-D7D1C8D710B9}


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## inenigma (4 April 2009)

investcdn said:


> Does Bernanke know something the rest of us don’t?




Obiviously.

The organic matter is hitting the oscillating device.


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## wonderrman (4 April 2009)

Don't listen to anything these government officials have to say. They caused the problem in the first place, then they come and say they can fix it. They've got absolutely no idea. Helicopter Ben coming out and saying we will see a recovery in the second half is an joke. They should be sent to jail because of all their damn lies.

w


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## wonderrman (4 April 2009)

http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

AIG was responsible for bank's Jan & Feb Profitability 

These companies are disgracful, the claims the Citi, Bank of America etc. were profitable in the start of the year are true, but because of one off cash injections by AIG. 

These "one off profits" helped cause this market rally. This then allows the banks to sell more expensive equity to investors because they can sell the line that equity markets are improving. 

These blokes truely are criminals and should be behind bars. w.


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## wonderrman (4 April 2009)

Sorry about so many posts, but the Baltic dry index is down quite a bit. Of course it hasn't been mentioned though on the tv or papers .... chart enclosed.

_"whereas CNBC would chirp every 5 minutes when the Baltic Dry was up, up and away beginning in January, very little attention has been brought to the fact that the BDIY has dropped over 31% over the past month... but nobody cares about the "China factor" anymore, as the US can brave the depression, er, recession (sorry, Cramer corrected me) on its own."_


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## Glen48 (4 April 2009)

The 20 Grand a hour (G20)  is going spend $250 B to get shipping going again which will be good for OZ the Japs can sail over and pick up un-sold Toyota's and Datsun's and take them back and we can claim under the revised banking laws we are now exporting cars to Japan and our GDP is up so the markets will rise.


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## moneymajix (13 April 2009)

*William K. Black​*Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
Posted March 28, 2009 | 05:12 AM (EST) 


*The Two Documents Everyone Should Read to Better Understand the Crisis*


As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional. The FBI has been warning of an "epidemic" of mortgage fraud since September 2004. It also reports that lenders initiated 80% of these frauds.1 When the person that controls a seemingly legitimate business or government agency uses it as a "weapon" to defraud we categorize it as a "control fraud" ("The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman 1982; The Best Way to Rob a Bank is to Own One. Black 2005). Financial control frauds' "weapon of choice" is accounting. Control frauds cause greater financial losses than all other forms of property crime -- combined. Control fraud epidemics can arise when financial deregulation and desupervision and perverse compensation systems create a "criminogenic environment" (Big Money Crime. Calavita, Pontell & Tillman 1997.) 

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.

Don't ask; don't tell: book profits, "earn" bonuses and closet your losses
The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation: 

Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.
Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files. Paper loan files are bulky, so they are photographed and the images are stored on computer tapes. Unfortunately, "most investors" (the large commercial and investment banks that purchased nonprime loans and pooled them to create financial derivatives) did not review the loan files before purchasing nonprime loans and did not even require the lender to provide loan tapes. 

The rating agencies never reviewed samples of loan files before giving AAA ratings to nonprime mortgage financial derivatives. The "AAA" rating is supposed to indicate that there is virtually no credit risk -- the risk is equivalent to U.S. government bonds, which finance refers to as "risk-free." We know that the rating agencies attained their lucrative profits because they gave AAA ratings to nonprime financial derivatives exposed to staggering default risk. A graph of their profits in this era rises like a stairway to heaven [PDF]. We also know that turning a blind eye to the mortgage fraud epidemic was the only way the rating agencies could hope to attain those profits. If they had reviewed even small samples of nonprime loans they would have had only two choices: (1) rating them as toxic waste, which would have made it impossible to sell the nonprime financial derivatives or (2) documenting that they were committing, and aiding and abetting, accounting control fraud. 

Worse, the S&P document demonstrates that the investment and commercial banks that purchased nonprime loans, pooled them to create financial derivatives, and sold them to others engaged in the same willful blindness. They did not review samples of loan files because doing so would have exposed the toxic nature of the assets they were buying and selling. The entire business was premised on a massive lie -- that fraudulent, toxic nonprime mortgage loans were virtually risk-free. The lie was so blatant that the banks even pooled loans that were known in the trade as "liar's loans" and obtained AAA ratings despite FBI warnings that mortgage fraud was "epidemic." The supposedly most financially sophisticated entities in the world -- in the core of their expertise, evaluating credit risk -- did not undertake the most basic and essential step to evaluate the most dangerous credit risk. They did not review the loan files. In the short and intermediate-term this optimized their accounting fraud but it was also certain to destroy the corporation if it purchased or retained significant nonprime paper. 

Stress this: stress tests are useless against the nonprime problems

What commentators have missed is that the big banks often do not have the vital nonprime loan files now. That means that neither they nor the Treasury know their asset quality. It also means that Geithner's "stress tests" can't "test" assets when they don't have the essential information to "stress." No files means the vital data are unavailable, which means no meaningful stress tests are possible of the nonprime assets that are causing the greatest losses.

The results were disconcerting
A rating agency (Fitch) first reviewed a small sample of nonprime loan files after the secondary market in nonprime loan paper collapsed and nonprime lending virtually ceased. The second document everyone should read is Fitch's report on what they found. 


Fitch's analysts conducted an independent analysis of these files with the benefit of the full origination and servicing files. The result of the analysis was disconcerting at best, as there was the appearance of fraud or misrepresentation in almost every file. 


[F]raud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding. Fitch believes that this targeted sampling of files was sufficient to determine that inadequate underwriting controls and, therefore, fraud is a factor in the defaults and losses on recent vintage pools. 


Fitch also explained [PDF] why these forms of mortgage fraud cause severe losses. 


For example, for an origination program that relies on owner occupancy to offset other risk factors, a borrower fraudulently stating its intent to occupy will dramatically alter the probability of the loan defaulting. When this scenario happens with a borrower who purchased the property as a short-term investment, based on the anticipation that the value would increase, the layering of risk is greatly multiplied. If the same borrower also misrepresented his income, and cannot afford to pay the loan unless he successfully sells the property, the loan will almost certainly default and result in a loss, as there is no type of loss mitigation, including modification, which can rectify these issues.

The widespread claim that nonprime loan originators that sold their loans caused the crisis because they "had no skin in the game" ignores the fundamental causes. The ultra sophisticated buyers knew the originators had no skin in the game. Neoclassical economics and finance predicts that because they know that the nonprime originators have perverse incentives to sell them toxic loans they will take particular care in their due diligence to detect and block any such sales. They assuredly would never buy assets that the trade openly labeled as fraudulent, after receiving FBI warnings of a fraud epidemic, without the taking exceptional due diligence precautions. The rating agencies' concerns for their reputations would make them even more cautious. Real markets, however, became perverse -- "due diligence" and "private market discipline" became oxymoronic. These two documents are enough to begin to understand: 

- the FBI accurately described mortgage fraud as "epidemic" 

- nonprime lenders are overwhelmingly responsible for the epidemic


- the fraud was so endemic that it would have been easy to spot if anyone looked


- the lenders, the banks that created nonprime derivatives, the rating agencies, and the buyers all operated on a "don't ask; don't tell" policy


- willful blindness was essential to originate, sell, pool and resell the loans


- willful blindness was the pretext for not posting loss reserves


- both forms of blindness made high (fictional) profits certain when the bubble was expanding rapidly and massive (real) losses certain when it collapsed


- the worse the nonprime loan quality the higher the fees and interest rates, and the faster the growth in nonprime lending and pooling the greater the immediate fictional profits and (eventual) real losses


- the greater the destruction of wealth, the greater the (fictional) profits, bonuses, and stock appreciation


- many of the big banks are deeply insolvent due to severe credit losses


- those big banks and Treasury don't know how insolvent they are because they didn't even have the loan files


- a "stress test" can't remedy the banks' problem -- they do not have the loan files 


1 "Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts" (2007). Tenth Periodic Case Report to the Mortgage Bankers Association, produced by MARI.



http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html


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## MrBurns (13 April 2009)

Someone sent me this , there's a bit of truth in it.




> A Boss Who Tells It like It Is
> 
> Date: 4 February 2009
> 
> ...


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## Largesse (13 April 2009)

MrBurns said:


> Someone sent me this , there's a bit of truth in it.





Omg not again....... 

At least 3rd time thats been posted

/facepalm


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## MrBurns (13 April 2009)

Largesse said:


> Omg not again.......
> 
> At least 3rd time thats been posted
> 
> /facepalm





Never seen it before, delete if it's a duplication, doesnt worry me


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## Uncle Festivus (13 April 2009)

Another disturbing trend is emerging, although initially it would appear to be a good one, until you delve deeper into the facts.



> SHANGHAI, April 8 (Reuters) - China's iron ore imports  surged to a new record in March, its transportation ministry  said on Wednesday, the latest sign of tumbling spot prices and  relatively strong domestic demand in the world's largest steel  producer.
> China imported a record 51 million tonnes of iron ore in  March, preliminary data from the ministry showed, taking total  purchases in the first quarter to 130.5 million tonnes, up 18  percent from a year earlier.



So far so good - looks like _demand_ is picking up?? Then the rest - 



> The import surge, just when global iron ore demand is  expected to contract for the first time in more than a decade,  reflects a recovery in production at Chinese steel mills,  spurred by the government's economic stimulus package.
> China is the sole global producer which is increasing   output, although Beijing is aiming now to curb production by 8  percent this year as massive overcapacity -- amounting to the  total annual production of second-ranked Japan -- threatens  recovery.









So there could not only be sharply lower iron ore prices this year but a glut of finished product as well? This could have implications for BHP, RIO and the Aus indexes, making the recession more prolonged than economists have guessed?


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## Largesse (13 April 2009)

Uncle Festivus said:


> Another disturbing trend is emerging, although initially it would appear to be a good one, until you delve deeper into the facts.
> 
> So far so good - looks like _demand_ is picking up?? Then the rest -
> 
> ...




Chinese are gaming by trying to pump up their stockpiles so they can screw RIO/BHP/Vale down on the contract prices and volumes.

Good article on theage.com.au about it today actually


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## Uncle Festivus (13 April 2009)

That would be here

http://business.theage.com.au/busin...eel-for-iron-ore-advantage-20090412-a42b.html

Didn't see anything about overproduction though?


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## moXJO (13 April 2009)

moneymajix said:


> *William K. Black​*Assoc. Professor, Univ. of Missouri, Kansas City; Sr. regulator during S&L debacle
> Posted March 28, 2009 | 05:12 AM (EST)
> 
> 
> *The Two Documents Everyone Should Read to Better Understand the Crisis*




Here’s an interview with him. It explains how the ceo's of banks created this mess for their own profit. It’s amazing that this amount of fraud can go on to this extent


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## Wysiwyg (13 April 2009)

Are the record car sales in China an indication the worst of this economic down cycle is over! 



> 12.04.2009 07:29 AM
> 
> *The China Association of Automobile Manufacturers reports that the country's auto sales hit a monthly record of 1.11 million vehicles in March*, spurred by tax cuts and rebates for small car purchases.
> 
> ...




Genuine, affordable, big ticket item sales or just consumers duped into debt (again).


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## moneymajix (13 April 2009)

Another interview on The Young Turks.

Associate Professor, William K. Black Criticizes the Bailout Plan -- 
Might Destroy the Obama Presidency


A giant fraud.
Instead of arresting the bankers they are giving them money.

Obscenities re Paulson and Goldman Sachs.


http://www.youtube.com/watch?v=m9HKKyNPe4k&NR=1


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## moneymajix (13 April 2009)

Interesting results from the Bill Moyers interview with William K. Black (posted earlier on this thread).



*Geithner, Paulson named in $200 billion lawsuit*
AIG-related case claims they violated shareholders constitutional rights

--------------------------------------------------------------------------------
Posted: April 10, 2009
10:45 pm Eastern

 © 2009 WorldNetDaily 



A $200 billion lawsuit filed on behalf of shareholders of American International Group has been amended to include Treasury Secretary Tim Geithner, former Treasury Secretary Henry Paulson and former Securities and Exchange Commission Chairman Christopher Cox as defendants. 

The case, filed earlier by a public interest law firm, Freedom Watch USA, is on behalf of shareholders of AIG who have watched the value of the company plummet by some $214 billion. 

The class action lawsuit filed in federal court in Los Angeles is a "wide reaching" claim that will do what Congress cannot, said Freedom Watch USA founder Larry Klayman. 

"The American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue – who under successive administrations played a central role in the meltdown of the U.S. financial system and economy," Klayman said. 

The amended complaint now alleges that the additional defendants violated the constitutional rights of the shareholders by denying them the right to their property, the shares themselves. 

_"The inspiration for this amendment was information disclosed by University of Missouri professor William K. Black on the Bill Moyers' PBS television show last Friday, where he implicated these government officials in a massive cover up of the banking scandal, mostly for the benefit of Goldman Sachs, the former employer of both Paulson and Geithner, in which they held a significant financial interest," Klayman reported. _

"As for Cox, his reckless and intentionally impotent oversight at the SEC is the basis for the claim against him," he said. 

Klayman noted that under precedent established by the U.S. Supreme Court, U.S. vs. Bivens, the defendants can be named as individuals, as well as officials. 


http://www.worldnetdaily.com/?pageId=94539


:


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## Aussiejeff (14 April 2009)

moneymajix said:


> _"The inspiration for this amendment was information disclosed by University of Missouri professor William K. Black on the Bill Moyers' PBS television show last Friday, where he implicated these government officials in a massive cover up of the banking scandal, *mostly for the benefit of Goldman Sachs*, the former employer of both Paulson and Geithner, in which they held a significant financial interest," Klayman reported._




Unsurprising therefore that Goldmen Sux are _outperformers_ of the US bwanking sector - and are now claiming they wish to pay back their TARP loan quickly via a new multi $USBillion capital raising?


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## moneymajix (14 April 2009)

Nationalize the Federal Reserve and support Dennis Kucinich's Bill says Andrew Gause


http://www.youtube.com/watch?v=g7zefJlIiWg


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## Glen48 (4 May 2009)

If you think GW GFC is bad have a look at this:

http://www.youtube.com/watch?v=6-3X5hIFX


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## Uncle Festivus (4 May 2009)

Glen48 said:


> If you think GW GFC is bad have a look at this:
> 
> http://www.youtube.com/watch?v=6-3X5hIFX




Link not working??


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