US mortgage carnage

[ithatheekret]

No big deal mate , fundamental exposure that's all . But if you understand the business it negates the risk .

 

[ithatheekret]

Okay , I know those questions are stumblers ...... that's why I asked them .

My answer is YES to all of them .

The values are about to be rewritten . But this is not the end of fiat , just a clean up of its stuff ups . Men in white coats picking up zealot Keynesians that went a few digits too far .

The Treasury rerating that will have to accompany the freeze attempt will ensure that . Treasuries will have to be rerated , then there's the families with mortgages that have treasuries as hedges for their mortgages , as is the usual smart custom in the US . The pinch will send a proportion of these into the market as sellers , and these are the ones that are the payers .

The tier system that the miracle pill is suppose to save will widen eventually , as the resets strike out line after line of loans . This cannot be avoided and from what I can see in the structuring of the details in the " plan " , it will be relatively easy to corrupt . For starters you can get on the first list , by not paying your utilities , it is very easy to corrupt , because they have used the FICO score as a measuring stick .

I keep saying this " If it wasn't so sad it would be a joke " .

The FICO manipulation got these twits in the frypan .

________________________________________________________________

[Rule of thumb in lending is to never borrow more than 3 yrs of annual salary/ies , I know this ancient principal has been tossed out , I forget when , but it has always bitten those that stretch it to the limits . A simple variation will do it for starters .]

But ..... the equation for doubling your money in bank funds has barely moved from the 21 year principle .

 

[ithatheekret]

If we play back the last 10 years what have we seen evolve right in front of our eyes ?

Just about every one of the inflations on the board has moved higher , even wage inflation is making itself felt albiet slowly .

The Money supply has had double digit growth , a main cause of one of the inflations we are feeling .

But although it has reached the point of consistent inflation , which is comonly called stagflation , the fact of it being prominent is denied by administrations .

Right in front of their eyes a devaluation is growing , it's not a mere depreciation in the exchange rate .

The value of money is determined by the interaction of money supply and money demand . This is the model they adhere to , and yet the rule book has been shredded , and we are to believe their will not be a consequence to come because of it .

The stimulus junkies have infected the whole planet and it will take a long withdrawl process to wean it back to health .

Now America is going to witness inflation effects in its exchange rate , and just about everyone thought it had been dumped , oversold , about to bottom ..... yada yada yada ..... it's being devalued to new levels and prices are acting accordingly to their own demand ratios .

That by itself lends to the notion that all other values will change . Those values that are linked to the USD will be revalued the most .

The inflation they keep hushed about and out of sight of the big book , will either go hyper or deflate ...... and then they will export it .

The most amazing concept by a democratic administration is just about to be released , a socialistic concept . Endorsed by a US President .

Russia and China must be laughing their heads off .

 

[Knobby22]

ithat

I agree with you however the US is a strong country and a decent President could fix it. The rapacious behaviour of the US financial market has caused the rest of the world not to trust them and that is not going to change without some major market changes within the US.

Unfortunately Bush and Cheney are going to be there a bit longer.

 

[ithatheekret]

It starts offshore , just like the financial crisis , the copper crisis ( with help from Mr 10% ) ......... it's what happens offshore first , the currencies joined at the hip or predominantly USD based . Like the last time with the Thai Baht and the ensuing inflation it attracted at a consumer level .

Imagine that happening to America , but imagine policy being the catalyst to opening the lions cage .

There's enough problems offshore pointing the finger at the US already , the grand plan will just be enough to open the next detrimental door , when it widens , the next President is going to have a major problem .

The Petrodollar anguish ......

Now it has turned to revaluation screams that are being warned

One example is below C/- reuters from indias economic times , but there are many more than just this .

Remember we are only partially buffered by ores . The BHP offer for RIO as it stands is enough to buy a swag full of banks if it can be put in comparison .

UAE warns markets against betting on dirham revaluation

DUBAI/MANAMA: The United Arab Emirates warned markets against betting on a dirham revaluation as investors piled pressure on the region's dollar pegs, expecting Gulf rulers to change currency policy at a summit next week.

The UAE was able to withstand pressure from speculators who drove the dirham to a 17-year high on Friday, al-Khaleej newspaper quoted Central Bank Governor Sultan Nasser al-Suweidi as saying, echoing a warning from Bahrain's central bank.

Suweidi ratcheted up expectations Gulf oil producers would sever links to the tumbling dollar, when he called last month for the region to track a currency basket to check inflation.

The speaker of Bahrain's parliament joined a chorus of calls for currency reform, proposing the government track the dinar against a currency basket as fellow Gulf oil producer Kuwait has been doing since May, al-Ayam newspaper reported.

In remarks carried by Dubai-based Khaleej, Suweidi moved to quell investor expectations that a change was imminent. "Their speculation will not yield the gains they expect," Suweidi said in remarks initially aired on state-owned Dubai TV, according to the newspaper.

Bahrain's central bank threatened to take action against anyone betting on dinar appreciation and accused foreign banks of spreading revaluation rumours, Middle East Economic Digest reported after an interview with Governor Rasheed al-Maraj.

Kuwait's central bank also warned investors against speculating on a revaluation in March. In May it dropped the peg to the dollar saying the US currency's slide was fuelling inflation by making some imports more expensive. Suweidi said the UAE central bank was not "currently" considering dropping the peg and any decision would be made by the government with other Gulf oil producers preparing for monetary union as early as 2010, Khaleej reported. Gulf rulers meet in Qatar on Monday and Tuesday.


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PS.. It was only last week that a high OPEC official stated the markets determine the price , above is what's really happening .

 

[wayneL]

ithat

I agree with you however the US is a strong country and a decent President could fix it. The rapacious behaviour of the US financial market has caused the rest of the world not to trust them and that is not going to change without some major market changes within the US.

Unfortunately Bush and Cheney are going to be there a bit longer.

The current mortgage crisis ain't nuttin' to do with Bush and Cheney. Look to Alan Greedscam and now Uncle Ben for the source of the crisis. That won't change with a change of gu'mint.

 

[ithatheekret]

ithat

I agree with you however the US is a strong country and a decent President could fix it. The rapacious behaviour of the US financial market has caused the rest of the world not to trust them and that is not going to change without some major market changes within the US.

Unfortunately Bush and Cheney are going to be there a bit longer.

Hey the woods have only been enter though .............

Those CDO's we keep hearing about are the ones linked to mortgages , they've got near the tree line and stepped on the first mine . As the widening of the tier structure in the " plan " eventually widens , which should be pretty quick if the average mortgage payer decides to stop paying utilities and gets the FICO score down enough for entry .

Then there's the "other " batch of CDO's that are made up of the fantastic plastic debts . Even here at home you can guarantee your high end credit card debt is held with a batch of others in a CDO .

So far , I have been able to account for $1.3 Trillion USD in total CDO debt related to both above mentioned . The reported figures or administrative data ( spin ) is well under that .

But I am totally amazed at the idealogy shift in American policy and there will be massive consequences from it . Just look at the banks that signed on , without a murmur of dispute or even questioning the breakdown of the model .
My Ockhams razor hat once more for that says this is soooo deep they are chit scared to tell us .

In fact the side view of Paulson when George was speaking said heaps , he's really idiopathic in relation the problem , and George .... he's lost it , just as J.H. did , but George has never really had a fiscal understanding .

Everytime Paulsom has opened his mouth and said strong dollar , I have generally sold it . I believe it has further to fall , anywhere between 18% to 29% , but the overshoot worries me deeply . Periods of these types usually create wars , when the already inflation caused esculates and adds even further pressure on poorer regions .

It will strike here , J.H. opened that cage , we can't blame Kev for it . He will have to risk fical inflation with the support of the ores/energy sectors . That means the new roads ports etc , because transport and highways are the mainstream to any economy . ports move that product as an export and the miners once the can effectively export , will create jobs enmasse .

Look please don't get the wrong perception of me here , but , I used to Mod at another site where members used to pay entry , I took a holiday and let's leave it at that . But I called gold to first reach $400 and the Pound / Euro etc . all the metals nickel etc. a few stocks that weren't no brainers , and so on . Each have done exaxtly as projected , my crystal ball and tea leaves work fine . But I now see a further deepening about to go splash , there are others , but I will go into them only once the data has been collated .

The only international entry I am looking at present , due to the latest news on US banks and there climbing over each other to sign up for the " plan " , is one in Singapore , they have a critical financial expert at the helm , really a hardline number cruncher , but was elevated .

 

[macca]

There is one thing playing around in the back of my mind, that I have seen no comment on.

The US dollar is used as a defacto currency in most of the third world, eg South America, Africa and all of the drug dealers

I did read once that there are more USD outside USA than there is within.

My thoughts are, should all of these USDs be swapped to Euros, then the USD becomes a peso.

Does anyone have any figures or actual info on this ?

 

[ithatheekret]

Yes your right , the figures bantied about are all over the place , but a source within the US once stated that it could be as high as 4 : 1 .

 

[Kimosabi]

The current mortgage crisis ain't nuttin' to do with Bush and Cheney. Look to Alan Greedscam and now Uncle Ben for the source of the crisis. That won't change with a change of gu'mint.

Unless Ron Paul gets in and gets rid of the Federal Reserve. The good thing is that a lot of people are waking up to the scam that is called Central Reserve Banks.

The ones that are meant to control inflation even though the make the inflation. Work that one out...

 

[ithatheekret]

The ones that are meant to control inflation even though the make the inflation. Work that one out...

Inflation cannot be controlled , it is a man made beast , that can only self destruct .

By that I mean inflation either kills itself or continues to gather pace and go hyper , been there , they're nasty ones .....
or they succumb to some of the dettol , savlon and bandaids and form other infections , such as deflation .

 

[wayneL]

Inflation cannot be controlled , it is a man made beast , that can only self destruct .

By that I mean inflation either kills itself or continues to gather pace and go hyper , been there , they're nasty ones .....
or they succumb to some of the dettol , savlon and bandaids and form other infections , such as deflation .

So deflation fixes inflation? I would never of thunk it.

(Sorry, just had to )

 

[dhukka]

Well it's that time of year again - earnings pre-announcements from the major banks and brokers and you know what means, more profit warnings and writedowns:

UBS to Sell Stakes After $10 Billion in Writedowns

UBS AG will write down U.S. subprime mortgage investments by $10 billion, the biggest such loss by any European bank, and replenish capital by selling stakes to investors in Singapore and the Middle East.

Europe's largest bank by assets plans to raise 13 billion francs ($11.5 billion) selling bonds convertible into shares to Government of Singapore Investment Corporation Pte. and an unidentified Middle Eastern investor, Zurich-based UBS said in a statement today.

UBS scrapped a forecast for a fourth-quarter profit and may post a full-year loss, the company said. The collapse of the U.S. subprime mortgage market has led to about $76 billion of losses and markdowns at securities firms and banks this year. UBS follows Citigroup Inc., the largest U.S. bank, in taking on strategic investors to bolster capital.

Click on the link for the full story:

 

[ithatheekret]

Goldman Sachs has been untouched to date .


So were they already geared up for a housing crash ?

if so ...... the CDO's they were selling , would surely have to come under scrutiny . If they are geared up for it then it can be questioned that the vehicles they had rated were done fraudulently .

 

[ithatheekret]

Now here's a local that went and took nice big Yen loans around the 120's etc. and that Babcock and Brown , and fortunately for them and Goldmans I here ( who bit both apples US and Yen ) , that recessionary effects are expected to push the Yen lower on economic concerns at home and the US .

The unwind is slowing their relief .


PS.. .Yen outlook for 2008/early 09 is 128 , a far cry from the 102's taunted to the greedy , that's me too , I followed the run ....baaaaaa baaaaaa , but was lucky enough to spot the reversal then . I'm taking my crystal ball back to LG and will try a Simpson Pope ............

 

[Aussiejeff]

OOPS!

After opening UP around 250 pts overnight (after the announcement by the Fed and some major central banks of *EXTRA SPECIAL ADDITIONAL* measures to free up liquidity in financial markets), the early traders euphoria seems to have DIED with the DOW now plummeting around 300pts in the last hour or so.... wonder where it will end by end of trade?

Sigh....



AJ

**FLASH** ... a teeny-weeny dead cat bounce in the DOW just observed.... is there life left???

 

[Kauri]

OOPS!

After opening UP around 250 pts overnight (after the announcement by the Fed and some major central banks of *EXTRA SPECIAL ADDITIONAL* measures to free up liquidity in financial markets), the early traders euphoria seems to have DIED with the DOW now plummeting around 300pts in the last hour or so.... wonder where it will end by end of trade?

Sigh....



AJ

**FLASH** ... a teeny-weeny dead cat bounce in the DOW just observed.... is there life left???

yesterday when the traders didn't get what thet wanted from the Fed by way of cuts they threw a hissy fit, and lo and behold the Fed came through with some liquidity. Initially it looked good but the traders have decided it is not enough and are trying the hissy fit again to see what else they can get.. Believe it... or not
Cheers
.........Kauri

 

[Aussiejeff]

..DOW back UP 30+pts... I'm getting seasick following the volatility...

AJ

 

[dhukka]

The Fed throwing around liquidity is too little too late. Particularly when the problem is one of solvency not liquidity. Anyway back to the mortgage carnage. Bank of America, Wachovia and PNC financial Services all visited the confessional yesterday announcing higher than expected losses on their mortgage portfolios. Interestingly PNC announced bigger than expected losses on Commercial Real Estate. Right on schedule Commercial Real Estate is following Residential into the toilet. Click on the link for the full story.

Banks Raise Loss Estimates

 

[Kauri]

The Fed throwing around liquidity is too little too late. Particularly when the problem is one of solvency not liquidity. Anyway back to the mortgage carnage. Bank of America, Wachovia and PNC financial Services all visited the confessional yesterday announcing higher than expected losses on their mortgage portfolios. Interestingly PNC announced bigger than expected losses on Commercial Real Estate. Right on schedule Commercial Real Estate is following Residential into the toilet. Click on the link for the full story.

Banks Raise Loss Estimates

Might be a couple more to come yet??
Cheers
........Kauri
lingering talk of large losses at US financial institutions, including reports on BoA, Wachovia, Goldman Sachs and Morgan Stanley, look to be spurring selling.