Imminent and severe market correction

[Kauri]

alls well with the world.. time to plow back in with your ears pinned back...

President Bush commented that a recent report that has just been completed by his staff reveals that the economy is "structurally sound", but is facing short term uncertainties. It's one in the eye for the doom and gloomsters coming from that widely accepted economists economist...
Cheers
.........Kauri

 

[GreatPig]

the economy is "structurally sound"

Just like the twin towers were...

GP

 

[explod]

Just like the twin towers were...

GP

Yer lucky dat Big Chief Burnin Bush aint pally wid de sherrif of yo'd hav'ta leave town with comments like dat paal.

Becomin a bit cracked, "wees all saved agin"

 

[Whiskers]

Originally Posted by Kauri
the economy is "structurally sound"

Just like the twin towers were...

GP

What isn't structurally sound is what's between his ears!

If for nothing else I like watching Letterman for the famous moments in presidential speeches segment. Can't believe the 'absent-minded moments' this bloke has!

 

[ithatheekret]

The problem is idiopathic to them .
Just like they never really understood Y2K , again they don't understand the situation in the credit markets . Many holding structured vehicles don't know what they are worth , or how much they have lost yet . The unknown factor just keeps being avoided by spinners that would have us believe it's all under control .

If it doesn't have a low Beta , I don't want to know personally , if I want risk , I can get that with forex .

 

[Kauri]

To be ann. at US a.m by US treasury
Six major U.S. banks are to take part in a program to help borrowers in the U.S. called project lifeline. The plan will allow seriously overdue borrowers to suspend foreclosures for 30 days, to enable lenders to work out a viable repayment option. Buys a bit of time... for the banks... avoid those dreaded writedowns.. temporarily... untill they take the new ball and it doesn't spin as well... but hey.. the Dow and S+P will probably fly.. for a while..
Now to work out and position in FX.. gold et al...
Cheers
..........Kauri

 

[numbercruncher]

Feb. 11 (Bloomberg) -- American International Group Inc., the world's largest insurer by assets, fell the most in 20 years in New York trading after its auditor found faulty accounting may have understated losses on some holdings.

So-called credit-default swaps issued by AIG, which protect fixed-income investors against losses, declined by $4.88 billion in value in October and November, four times more than previously disclosed, the company said today in a regulatory filing. AIG's auditors found ``material weakness'' in its accounting for the contracts, and the firm doesn't know what they were worth at the end of 2007, the filing said.

http://www.bloomberg.com/apps/news?pid=20601103&sid=axfNBsHVBagY&refer=news


Seems noone knows whats anythings worth now-a-days !

 

[Whiskers]

To be ann. at US a.m by US treasury
Six major U.S. banks are to take part in a program to help borrowers in the U.S. called project lifeline. The plan will allow seriously overdue borrowers to suspend foreclosures for 30 days, to enable lenders to work out a viable repayment option. Buys a bit of time... for the banks... avoid those dreaded writedowns.. temporarily... untill they take the new ball and it doesn't spin as well... but hey.. the Dow and S+P will probably fly.. for a while..
Now to work out and position in FX.. gold et al...
Cheers
..........Kauri

This is one of the initiatives that I saw coming when I said some people are suffering from a bit of hypochondria with the subprime fallout. There will be more to come, because people do whatever they have to do to mitigate bad consequences as much as they can.

It's all in the mindset. I see so many people able to recite all manner of statistics and information, but are effectively oblivious to the mindset of the people who affect their circumstances. One thing I have found about the most successful people is their natural or learnt psychology skills, (intuition) as in being able to perceive the mindset of other people to meet their needs or get a step ahead of them whatever the situation is.

Back on topic; sure it doesent resolve the intrinsic problems in the US, but initiatives like this and more interest rate cuts ( geez I can feel dhukka climbing all over me already ) will effectively deminish any severe knock-on consequences for the rest of the world and Aus in particular.

http://biz.yahoo.com/ap/080211/mortgage_mess_rescue.html

 

[Kauri]

This is one of the initiatives that I saw coming when I said some people are suffering from a bit of hypochondria with the subprime fallout. There will be more to come, because people do whatever they have to do to mitigate bad consequences as much as they can.

It's all in the mindset. I see so many people able to recite all manner of statistics and information, but are effectively oblivious to the mindset of the people who affect their circumstances. One thing I have found about the most successful people is their natural or learnt psychology skills, (intuition) as in being able to perceive the mindset of other people to meet their needs or get a step ahead of them whatever the situation is.

Back on topic; sure it doesent resolve the intrinsic problems in the US, but initiatives like this and more interest rate cuts ( geez I can feel dhukka climbing all over me already ) will effectively deminish any severe knock-on consequences for the rest of the world and Aus in particular.

http://biz.yahoo.com/ap/080211/mortgage_mess_rescue.html

The planned mini-bailout of the monolines seems to have failed, possibly because the real sums needed were beyond the bailees who were/are desparately seeking bailouts themselves... this is just something to replace that in the "talking heads" spin arsenal... but really it is only delaying tactics.. putting off the day of reckoning... but hey... if one was ahead of the game it gave an opportunity to get set.. I hope..
now... what comes next??? any takers???
Cheers
........Kauri

 

[dhukka]

Back on topic; sure it doesent resolve the intrinsic problems in the US, but initiatives like this and more interest rate cuts ( geez I can feel dhukka climbing all over me already ) will effectively deminish any severe knock-on consequences for the rest of the world and Aus in particular.

Whiskers,

I have no objection to people making statements like these if they can support them. However you supply absolutely no evidence for such a claim. You may well be right, but without any support it just sounds like wishful thinking.

Someone posted earlier on another thread a link to Nouriel Roubini's latest piece on the The Twelve Steps to Financial Disaster which paints a pretty grim picture of the global economy, much worse than I expect. However regardless of whether you agree with him you have to admire the depth of his arguments.

 

[sassa]

Warren Buffet's "lifeline" to the muni-bond market had nervous investors grabbing his offer and shooting the market up.But when looked at,commentators have different ideas-

People weren't fleeing [the market] because of problems in the muni-bond business. Default rates are less than 1%, so reinsuring the muni-bond business is a no-brainer for anybody," he said, calling into question the longevity of enthusiasm over Buffet's bid.

As a potential way out of the bond-insurance mess, this buoyed investor optimism and boosted stocks ahead of the opening bell," commented analysts at Action Economics.
'I really don't think this does much for anyone but Warren Buffett.'
”” Kevin Giddis, Morgan Keegan & Co.
While helping lift sentiment, Boockvar and others said that, in reality, Buffett's move would do little to stem the damage in the credit markets.
"I really don't think this does much for anyone but Warren Buffett, as the thought of an insurer 'giving away' its best business and only means of surviving this mess in return for the rest of its 'junk in the trunk' should leave them cold," said Kevin Giddis, fixed-income analyst at Morgan Keegan & Co.

 

[Kauri]

With its normal impeccable timing and determination to not spoil a good party, just after the stock market closed, S&P came out with mostly "unfavorable" actions on US mortgage insurers and subsidiaries. These include revising the outlook for Genworth Financial from stable to negative. PMI Group has been placed on CreditWatch with negative implications and has lowered its rating on Radian Group and may cut further. S&P has also put Triad Guaranty Insurance Corp on CreditWatch with a negative outlook with a negative outlook for United Guarantee Corp as well.

Cheers
...........Kauri

 

[Kauri]

With its normal impeccable timing and determination to not spoil a good party, just after the stock market closed, S&P came out with mostly "unfavorable" actions on US mortgage insurers and subsidiaries. These include revising the outlook for Genworth Financial from stable to negative. PMI Group has been placed on CreditWatch with negative implications and has lowered its rating on Radian Group and may cut further. S&P has also put Triad Guaranty Insurance Corp on CreditWatch with a negative outlook with a negative outlook for United Guarantee Corp as well.

Cheers
...........Kauri

and a latecomer to the sales party.. in comes S&P who is cutting 66 ratings on US CDO of ABS transactions worth $6.751 bln.

 

[Kauri]

HoHum... the market will fly...
UBS Q4 Net Loss CHF12.45 Bln, $13.7 Bln Subprime Losses

 

[numbercruncher]

Heres the story for those Interested

Feb. 14 (Bloomberg) -- UBS AG posted the biggest ever loss by a bank in the fourth quarter after $13.7 billion in writedowns on securities infected by U.S. subprime mortgages.

Europe's largest bank by assets had a net loss of 12.5 billion Swiss francs ($11.3 billion), compared with a profit of 3.4 billion francs a year ago, the Zurich-based company said today. UBS reported on Jan. 30 a preliminary loss of about 12.5 billion francs for the period, after increasing writedowns.

The company reiterated that it expects 2008 will be ``another difficult year.'' Rising U.S. subprime-mortgage defaults led to more than $145 billion in writedowns and loan losses at the world's biggest financial companies. The Group of Seven nations estimates the markdowns may swell to $400 billion, German Finance Minister Peer Steinbrueck said on Feb. 9.

``The rot is spreading to other residential areas,'' ABN Amro Holding NV analysts Kinner Lakhani and Omar Fall said in a note to clients on Feb. 6. They recommend investors ``avoid'' UBS shares and forecast as much as $10.8 billion of possible further writedowns at the bank

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahfcVB8YJ80Q&refer=home

Will be interesting to see the markets reaction to this toxic blowup ( apparently Jan 30 had already announ. Prel. loss, so maybe no reaction ? )

 

[Real1ty]

Heres the story for those Interested



http://www.bloomberg.com/apps/news?pid=20601087&sid=ahfcVB8YJ80Q&refer=home

Will be interesting to see the markets reaction to this toxic blowup ( apparently Jan 30 had already announ. Prel. loss, so maybe no reaction ? )

The futures aren't showing any adverse reaction........yet

 

[ithatheekret]

Of course ABN is straight out with a bit of jargon . Mob of crumbed patties they are ............ got a flat tyre ? Need a heart pump ? ABN is a one stop shop .

 

[CamKawa]

Heres the story for those Interested



http://www.bloomberg.com/apps/news?pid=20601087&sid=ahfcVB8YJ80Q&refer=home

Will be interesting to see the markets reaction to this toxic blowup ( apparently Jan 30 had already announ. Prel. loss, so maybe no reaction ? )

Maybe not that much of a reaction because according to MarketWatch "The fourth-quarter loss and total write-down were in line with a warning the bank issued in January." so this might already be priced in.
http://www.marketwatch.com/news/sto...x?guid={437BE769-2441-45AB-AD82-D0890D31FC6A}

 

[Whiskers]

The planned mini-bailout of the monolines seems to have failed, possibly because the real sums needed were beyond the bailees who were/are desparately seeking bailouts themselves... this is just something to replace that in the "talking heads" spin arsenal... but really it is only delaying tactics.. putting off the day of reckoning... but hey... if one was ahead of the game it gave an opportunity to get set.. I hope..
now... what comes next??? any takers???
Cheers
........Kauri

I agree all initiatives will not work, but impotantly it is only human nature to delay impending disaster where one can to buy time to find relief or remedies. It can only give people, particularly those most affected time to more rationally (less panic) assess their situation and make better decisions about their future.

Originally Posted by Whiskers
Back on topic; sure it doesent resolve the intrinsic problems in the US, but initiatives like this and more interest rate cuts ( geez I can feel dhukka climbing all over me already ) will effectively deminish any severe knock-on consequences for the rest of the world and Aus in particular.

Whiskers,

I have no objection to people making statements like these if they can support them. However you supply absolutely no evidence for such a claim. You may well be right, but without any support it just sounds like wishful thinking.

The operative word being severity, I would have thought that avoiding a rushed panic sell off of financial markets with monetry policy, intervention and or regulation to give businesses a chance to restructure and home owners better opportunities to refinance or a chance to make-up their late payments would be obvious evidence of deminishing the severity of knock-on effects.

It was the banks and other financial organisations who were essentially the cause of this problem with their poor economic judgement. I happen to believe that the banks always anticipated a high number of foreclosures as seen in the almost non-existant options borrowers had once a default occurred. Banks expected to recover their mortgage and then some with extreme penalties and fees.

With banks ramping up interest rates slugging customers to recover losses for their own bad financial management, as their borrowing costs were being substantially cut was always going to be seen as unconscionable and get up the ire of people and flow onto consequences for politicans if they didn't rein in the greedy banks.

An example of market failure that I mentioned earlier in the gold thread, where government intervention is necessairy to support average consumers from excessive profit gouging by these institutions abusing the recognised custom of Reserve Bank interest cuts.

The knock-on effect from banks increasing rates and forcing millions into immediate homelessnes and hardship is far less severe than the banks wearing the responsibility for their own greed and/or mismanagement.

Buffet foreshadowed what could/would happen. His offer while dismissed by many similar thinking commentators as the banks, will help resolve the financial crisis. The problem is that these insurers want to keep their cake and eat it too like the banks. The sale of their better quality assets wil go a good way to meeting their obligations with the lower assets and maintain their credit rating so they can live to grow another day.

If their credit rating gets cut they will be worse off. If they fold an administrator may well take Buffets offer anyway. In any case time and intervention inititiaves works to lessen the severity of the consequences outside the US.

The banks always knew they were in a unique position to be a price setter to maintain their margains.

I had an example with an Aus bank who substantially increased certain fees. The bank put a little notice on the statement and back dated the fees. I immediately phoned and insisted they be refunded. They refunded the next fee as a 'jesture of goodwill' but refused to refund the previous. I emailed insisting they provide in writing the reasons why they refused to refund the fees and to state which law or clause in the terms or conditions they relied upon to increase the fees.

A few days later they refunded the full amount without any refenence to their justifiable right to claim them.

The Rudd gov is also getting more proactive with banks breaking the custom with reserve interest rates. A sign that if these financial institutions don't stick to conventional interest rate custom and continue gouging customers in the so called right to offset their investment losses with increased fees and interest charges, then more severe intervention will come.

 

[Kauri]

Yikes.. early US market slip is being put down to UBS writedowns...