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Or, the usual perverse reverse logic - hey, the Fed only cut by 25 bp's, so maybe things aren't so bad after all - let's buy! Bounce this arvo, tonight, tomorrow?
Imminent and severe market correction
- Thread starter Uncle Festivus
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explod
explod
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Exactly, same with their job numbers, the rumour mill says they are going to be a certain very bad number, the new number comes out not so bad, so hellelujar, yee haar. Never mind that the new number is verymuch worse than last month. Up goes the index, no worries
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Ah yes, the job numbers - never has there been a more contrived and manipulated 'official' statistic. If you ever get to research how they are derived you know how rubbery they are. Even the relevant department says they are highly prone to large errors.
On a par with the cpi/inflation figures - keep it low so we don't have to pay all those people on welfare. In the end we end up where we are at right now - the reality that there's no more gold to be spun from the fiat money straw bale, and asset values will be re-rated - down. Be prepared and trade it (Can't have Goldman Sachs making all the money eh?.
Trembling Hand
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But when has this not been the case in the past. This is not just a Subprime effect issue. Trading has always been about counter moves from the expected or logical.
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True & No & True
The dif this time is that I think the fundamentals are changing, but have not been factored in as yet. All those Billions lost after being marked to market and the index's are only just shy of their all time highs. Something's gotta give??
Knobby22
Mmmmmm 2nd breakfast
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Unc
Do you have a handle as to what percentage of GDP would the bad loans account for? And what percentage was not sold on to foreign interests?
This would give an idea to how bad it could get.
Do you have a handle as to what percentage of GDP would the bad loans account for? And what percentage was not sold on to foreign interests?
This would give an idea to how bad it could get.
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Bad, BAD BOY Benny!
That reaction has real comedic value for mine... a bunch of spoilt brats epitomized by the foot stomping, ranting, fuming Cramer idiot. (capitalize profits, socialize losses etc)
ROTFLMAO
You added Cramer
can't leave him out .What I find comical is that the "plan" and the rate cut were not done to help investors and homeowners , or the infamous ARM dilema would see them stand back and let the market sort it out .
The banks are screaming FRAUD and the plan is to help them from falling prey to the fraudsters . Of course this doesn't negate the fact that banks appraisals , both in house and external , had either lost the plot or were complacent , perhaps even to the point of complicity .
Now there will be solicitor queues longer than the lines at the MCG finals , as contracts and assessments of appraisals are poked and prodded .
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This is from Sundays San Fransisco Chronicle .
MORTGAGE MELTDOWN
Interest rate 'freeze' - the real story is fraud
Bankers pay lip service to families while scurrying to avert suits, prison
Sean Olender
New proposals to ease our great mortgage meltdown keep rolling in. First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.
Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.
But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.
The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.
The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.
And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it.
I can hear the hum of shredders working overtime, and maybe that is the new "hot" industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."
Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe?
The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.
The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.
Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?
What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic - not five years from now.
Those selling the "freeze" have suggested that mortgage-backed securities investors will benefit because they lose more with rising foreclosures. But with fast-depreciating collateral, the last thing investors in mortgage bonds ought to do is put off foreclosures. Rate freezes are at best a tool for delaying the inevitable foreclosures when even the most optimistic forecasters expect home prices to fall. In October, Goldman Sachs issued a report forecasting an incredible 35 to 40 percent drop in California home prices in the coming few years. To minimize losses, a mortgage bondholder would obviously be better off foreclosing on a home before prices plunge.
The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower's real income and asset information later when he refinanced!"
The key is to refinance borrowers whose current loans involved fraud in the origination process. And I assure you it was a minority of borrowers whose loans didn't involve fraud.
The government is trying to accomplish wide-scale refinancing by tricking bond investors, or by tricking U.S. taxpayers. Guess who will foot the bill now that the FHA is entering the fray?
Ultimately, the people in these secret Paulson meetings were probably less worried about saving the mortgage market than with saving themselves. Some might be looking at prison time.
As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.
Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble.
Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans.
If a mortgage bond investor sues Goldman Sachs to force the institution to buy back loans, could Paulson be forced to testify as to whether Goldman Sachs knew or had reason to know about fraud in the origination process of the loans it was bundling?
It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it.
I suspect that such a group first sat down and tried to figure out how to protect their financial interests and avoid criminal liability. And then when they agreed on the plan, they decided to sell it as "helping working families stay in their homes." That's why these meetings were secret, and reporters and the public weren't invited.
The next time that Paulson is before the Senate Finance Committee, instead of asking, "How much money do you think we should give your banking buddies?" I'd like to see New York Sen. Chuck Schumer ask him what he knew about this staggering fraud at the time he was chief of Goldman Sachs.
The Goldman report in October suggests that rampant investor demand is to blame for origination fraud - even though these investors were misled by high credit ratings from bond rating agencies being paid billions by the U.S. investment banks, like Goldman, that were selling the bundled mortgages.
This logic is like saying shoppers seeking bargain-priced soup encourage the grocery store owner to steal it. I mean, we're talking about criminal fraud here. We are on the cusp of a mammoth financial crisis, and the Federal Reserve and the U.S. Treasury are trying to limit the liability of their banking friends under the guise of trying to help borrowers. At stake is nothing short of the continued existence of the U.S. banking system.
Sean Olender is a San Mateo attorney.
MORTGAGE MELTDOWN
Interest rate 'freeze' - the real story is fraud
Bankers pay lip service to families while scurrying to avert suits, prison
Sean Olender
New proposals to ease our great mortgage meltdown keep rolling in. First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.
Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.
But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.
The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.
The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.
And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it.
I can hear the hum of shredders working overtime, and maybe that is the new "hot" industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."
Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe?
The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.
The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.
Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?
What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic - not five years from now.
Those selling the "freeze" have suggested that mortgage-backed securities investors will benefit because they lose more with rising foreclosures. But with fast-depreciating collateral, the last thing investors in mortgage bonds ought to do is put off foreclosures. Rate freezes are at best a tool for delaying the inevitable foreclosures when even the most optimistic forecasters expect home prices to fall. In October, Goldman Sachs issued a report forecasting an incredible 35 to 40 percent drop in California home prices in the coming few years. To minimize losses, a mortgage bondholder would obviously be better off foreclosing on a home before prices plunge.
The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower's real income and asset information later when he refinanced!"
The key is to refinance borrowers whose current loans involved fraud in the origination process. And I assure you it was a minority of borrowers whose loans didn't involve fraud.
The government is trying to accomplish wide-scale refinancing by tricking bond investors, or by tricking U.S. taxpayers. Guess who will foot the bill now that the FHA is entering the fray?
Ultimately, the people in these secret Paulson meetings were probably less worried about saving the mortgage market than with saving themselves. Some might be looking at prison time.
As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.
Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble.
Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans.
If a mortgage bond investor sues Goldman Sachs to force the institution to buy back loans, could Paulson be forced to testify as to whether Goldman Sachs knew or had reason to know about fraud in the origination process of the loans it was bundling?
It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it.
I suspect that such a group first sat down and tried to figure out how to protect their financial interests and avoid criminal liability. And then when they agreed on the plan, they decided to sell it as "helping working families stay in their homes." That's why these meetings were secret, and reporters and the public weren't invited.
The next time that Paulson is before the Senate Finance Committee, instead of asking, "How much money do you think we should give your banking buddies?" I'd like to see New York Sen. Chuck Schumer ask him what he knew about this staggering fraud at the time he was chief of Goldman Sachs.
The Goldman report in October suggests that rampant investor demand is to blame for origination fraud - even though these investors were misled by high credit ratings from bond rating agencies being paid billions by the U.S. investment banks, like Goldman, that were selling the bundled mortgages.
This logic is like saying shoppers seeking bargain-priced soup encourage the grocery store owner to steal it. I mean, we're talking about criminal fraud here. We are on the cusp of a mammoth financial crisis, and the Federal Reserve and the U.S. Treasury are trying to limit the liability of their banking friends under the guise of trying to help borrowers. At stake is nothing short of the continued existence of the U.S. banking system.
Sean Olender is a San Mateo attorney.
Kauri
E/W Learner
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Well, who would have guessed it, the spin is coming thick and fast...already... and the ink has hardly dried on the ann.. Seems that the US really does believe in Santa Claws.
Cheers
........Kauri
annnndd...
aaaaannndd...
Business as usual it seems
Cheers
..........Kauri
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All smiles as they gather for the group photo , I can just see it .
What I don't understand , is that the twits that were in control are now the ones formulating the rescue plans .
I sat and watched the chap from Countrywide giving advice on the box yesterday , and was amazed the interviewer didn't go anywhere near the subject of his blunders .
Ockams razor hat ......... I was watching an ad , disguised as an informative pile of cr@p .
What I don't understand , is that the twits that were in control are now the ones formulating the rescue plans .
I sat and watched the chap from Countrywide giving advice on the box yesterday , and was amazed the interviewer didn't go anywhere near the subject of his blunders .
Ockams razor hat ......... I was watching an ad , disguised as an informative pile of cr@p .
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You'll love this one Kauri ......
James Glassman is taking over from Karen Hughes , the Middle East looks his next hot spot .
People may remember Glassman when the last bubble was rolling along in the 80's , he declared the Dow would hit 30 odd thousand during it .
King of spin and they've set him up to go play in the sand with the Sheiks .
James Glassman is taking over from Karen Hughes , the Middle East looks his next hot spot .
People may remember Glassman when the last bubble was rolling along in the 80's , he declared the Dow would hit 30 odd thousand during it .
King of spin and they've set him up to go play in the sand with the Sheiks .
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That's not the basis for the growth as reality has it .
It's the past we have to make up for , certain financiers etc. , would have us believe we can just invent them away .
I posed this question somewhere , but if it takes 1.2 units of credit to make a dollar unit , is it viable .......... the answer would easily be no , but the so called growth has been achieved at 7.4 known units of credit , to achieve the production of a dollar unit .
Financiers and Bankers have ignored this fact for the last 20 odd years .
Everything has been calculated with the USD as the based reserve currency , then usually bunched together and sold on .......... now it has to sort itself out , the ...... cough , cough , cough ..... interventions . Will hardly stop anything , except debt levels of banks etc. from being revealed until later , if it ever really get's published .
I was looking at something with growth in the UK and all I could really find as a safe bet was PPI . Market callers and analysts on forex have been all over the place , more so on the Euro and the Yen . But the Euro is one of the monsters Europe has learnt to live with at these levels , where as the calls on the Yen have been on anything but what it's following and that's the Dow at present , forget the Carry trade news , that may well have started , (well it looked like an unwind last night again) , but it swings on the Dow , it starts in the futures then gets itself in a frizzy until it collapses . Then does it all again .
Which is just about what Bens going to have to do now , he's p'd the peanut gallery off . they'll be lobbying for his sacking soon .
( tongue in cheek )So I would think the next will be .25 or to save his head and not play Mary Antoinette .50bps .
Boy has he taken the wrong job !
The market may determine price , but the human body determines what it needs to survive ..........
............... everything the human body needs has soared .
Now imagine if the USD lost its Reserve Currency Status , due to unconscionable .............. , causing a massive sentiment change .
But ..... China .
What would happen if you locked a group of children in a sweet shop ?
They would gorge themselves until , they eventually had to be excused to lighten the load , colourful , but not particularly nice .
They've just got this wonderful new thing called credit , cars , tv's , internet and ........... a stockmarket to speculate in .
As all pioneering efforts of emerging economies , they will overshoot , or have ..........
At present the capitalistic plague has hit the coast and capital , gearing up for a massive infection at the Olympic Games . .......... And we'll get to see it on Prime Time , if you've subscribed ........
Japan ........ well the growth stories .... fables we have heard never mentioned the only real growth is in Tokyo . The currency is dominated by USD and a dependency on the US and European consumer , that's a bad drug to get addicted to .
Now here's the cliche , if the Fed keeps cutting Fed Bonds will be kissing 2.75/80% , imagine if they end up with say 150 to 200 basis points to carry the weight .
Sorry ..... MOOOOOHAAHAAHAAHAA
The original credit unit output will increase and the dollar unit will also be revalued .
In all it says a lot for things like wheat , corn , soya , um ahh ..... oh yeah gold , doesn't taste too good , but I've heard it does have medicinal values .
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Just listened to the Lehman report , the CNBC commentator just said " fixed interest made a loss , but that was expected " .
Doesn't sound like a fixed interest to me .
talk about brushed over ............
Doesn't sound like a fixed interest to me .
talk about brushed over ............
Kauri
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Just another day, all a bit ho hum... I expect the spinners will be able to get a googly out of it...
Cheers
.........Kauri
all a bit ho hum... I expect the spinners will be able to get a googly out of it...Cheers
.........Kauri
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Not looking good for them hey mate .
I would say they have a lot more to come out .
Pure Karma is my view , I still bear a grudge when one of their SSB brokers rang me at home one morning ( a churning mission ) he convinced me their would be no further bids on Normandy in it take over and it was a done deal , well two further bidders later , it soared .
My complaints to SSB and ASIC were ignored . the broker was moved on , ending up with Bell Potter , heaven helps his clients there .
I would say they have a lot more to come out .
Pure Karma is my view , I still bear a grudge when one of their SSB brokers rang me at home one morning ( a churning mission ) he convinced me their would be no further bids on Normandy in it take over and it was a done deal , well two further bidders later , it soared .
My complaints to SSB and ASIC were ignored . the broker was moved on , ending up with Bell Potter , heaven helps his clients there .
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since when is an ASF thread a guage on the confidence of investors to.....ummm invest ?
what i ask is..........where have all the bulls gone ?
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Down to the feed lot first , then the ones that haven't been knackered , get turned into sausage meat .
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Let's pose a question .
The Central banks are worried about inflation , yet they never state which inflation they are worried about .
Why have they just plastered the globe with monetary inflation ?
This could only be because they are scared stiff of deflation and would rather tempt fate and tease the monsters they have already unleashed , stirring them to a cresendo could in itself cause hyperinflation if they put a foot wrong . Now they wouldn't do that surely .................
If they are worried about inflation , why stoke it ?
The Central banks are worried about inflation , yet they never state which inflation they are worried about .
Why have they just plastered the globe with monetary inflation ?
This could only be because they are scared stiff of deflation and would rather tempt fate and tease the monsters they have already unleashed , stirring them to a cresendo could in itself cause hyperinflation if they put a foot wrong . Now they wouldn't do that surely .................
If they are worried about inflation , why stoke it ?
wayneL
VIVA LA LIBERTAD, CARAJO!
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The best question of the year.
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