http://www.businessweek.com/magazine/conte...68000575390.htm
The Home Equity Crisis Ahead
Even banks that dodged the subprime bullet face losses from loans based on homes now at risk
Subprime mortgages have taken a lot of blame for banks' big losses. But there's another problem lurking behind the mess: home-equity lending.
Buoyed by rising prices, borrowers increasingly tapped into the equity on their properties to finance a new car, renovations, or even a down payment, making equity a key source of consumers' strength. But with the housing market in disarray and prices plunging, the business of home-equity lending is souring. At least $14.7 billion in loans and lines of credit were already delinquent through the end of September—the highest level in a decade. "After subprime, home-equity lending is the biggest problem the industry has right now," says analyst Frederick Cannon of Keefe, Bruyette & Woods.
What's more, there's little that can be done to prevent the pain from the deterioration of this $850 billion market. A lender on a mortgage has the first claim on the underlying property. In the case of foreclosure, it can sell the property and recoup some money. The bank with the home-equity piece has no such collateral and is usually out the money. "The home-equity lender is going to get hosed," says Amy Crews Cutts, deputy chief economist at mortgage giant Freddie Mac (FRE).
JPMorgan Chase (JPM), Washington Mutual (WM), IndyMac (IMB), Countrywide Financial, and others are getting hit. On Jan. 16, JPMorgan announced it set aside an additional $395 million for troubled home-equity products in the last quarter, compared with just $125 million for subprime mortgages. Washington Mutual reported in the latest period that its bad home-equity loans and lines of credit surged by 130% from the end of 2006, forcing the bank to up losses by $967 million. Even lenders of a conservative bent, those that managed to sidestep much of the subprime mess, are getting hammered: Wells Fargo (WFC) took a recent $1.4 billion writedown, largely from home-equity lending.
Full Version: Credit Derivative Meltdown In Progress
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QUOTE (tenant super @ Jan 18 2008, 11:55 PM) 
Thanks CGNAO and everyone I've been followng this thread in awe, may I throw in a couple of questions at this juncture?
1) Does such a firesale of bonds have any precedent or are we entering new terrain here ?
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
1) Does such a firesale of bonds have any precedent or are we entering new terrain here ?
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
1) Unprecedented because it's global
2) Only a very small fraction, and even those only at distressed interest rates (20-30% or more)
QUOTE (tenant super @ Jan 18 2008, 10:55 PM)
Thanks CGNAO and everyone I've been followng this thread in awe, may I throw in a couple of questions at this juncture?
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
That is what the entire western financial system has been desparately NOT to find out for the past year or so.
p-o-p
Just a question for the inflationists on here - what's your argument against the deflationary effect of the enormous contraction in credit that the downgrades of the monoline insurers could lead to?
This argument was better expressed on a blog I've been reading;
http://optionarmageddon.blogspot.com/2008/...-next-shoe.html
Quote:
[.., this is a big reason many argue inflation really isn't a big threat right now. Inflation literally refers to currency losing its value. Currency loses its value when there is more of it relative to the amount of goods and services available in the economy for purchase. How is money created? Primarily through fractional-reserve banking, which is a technical term that basically means money is created by banks when they make loans. To the extent that banks aren't able to make new loans, because the capital on their balance sheets that would otherwise be available for lending is being written off, they are taking money out of the economy. That's why Japan faced the threat of deflation for so long even though their interest rates were effectively zero. Banks didn't have any money to lend.]
I'm not convinced either way, just want to hear the arguments.
This argument was better expressed on a blog I've been reading;
http://optionarmageddon.blogspot.com/2008/...-next-shoe.html
Quote:
[.., this is a big reason many argue inflation really isn't a big threat right now. Inflation literally refers to currency losing its value. Currency loses its value when there is more of it relative to the amount of goods and services available in the economy for purchase. How is money created? Primarily through fractional-reserve banking, which is a technical term that basically means money is created by banks when they make loans. To the extent that banks aren't able to make new loans, because the capital on their balance sheets that would otherwise be available for lending is being written off, they are taking money out of the economy. That's why Japan faced the threat of deflation for so long even though their interest rates were effectively zero. Banks didn't have any money to lend.]
I'm not convinced either way, just want to hear the arguments.
Just a sample of what's coming.
Without bond insurance it'll soon become extremely difficult to sell bonds at anything below distressed yields.
http://www.ft.com/cms/s/0/d615dd74-c523-11...00779fd2ac.html
Market woes force Glitnir to cancel bond issue
Published: January 17 2008 22:34 | Last updated: January 17 2008 22:34
Glitnir, the Icelandic bank, has been forced to call off a planned bond issue after investors grew increasingly nervous about the stability of the nation’s financial sector amid the global credit squeeze.
It said on Thursday that sharp movements in the credit default swap markets – which allow investors to buy insurance against default of banks via derivatives – had scuppered the proposed bond issue.
The bank was trying to sell the issue to investors in the US at the same time as its five-year CDS widened from about 200 basis points to about 320bp.
The bank said in this environment any issue would have been too expensive. Its last US fundraising in 2006 of just over $1bn was priced at 6.375 per cent, 210bp over US treasuries.
Glitnir declined to reveal the size of the delayed issue, but emphasised it has more than €6bn ($8.8bn) in funds available, compared with funding requirements this year of €3.5bn.
Market participants said Glitnir’s problems were compounded after Gnupur Investment, an Icelandic investment company, was forced to announce an emergency recapitalisation programme.
Without bond insurance it'll soon become extremely difficult to sell bonds at anything below distressed yields.
http://www.ft.com/cms/s/0/d615dd74-c523-11...00779fd2ac.html
Market woes force Glitnir to cancel bond issue
Published: January 17 2008 22:34 | Last updated: January 17 2008 22:34
Glitnir, the Icelandic bank, has been forced to call off a planned bond issue after investors grew increasingly nervous about the stability of the nation’s financial sector amid the global credit squeeze.
It said on Thursday that sharp movements in the credit default swap markets – which allow investors to buy insurance against default of banks via derivatives – had scuppered the proposed bond issue.
The bank was trying to sell the issue to investors in the US at the same time as its five-year CDS widened from about 200 basis points to about 320bp.
The bank said in this environment any issue would have been too expensive. Its last US fundraising in 2006 of just over $1bn was priced at 6.375 per cent, 210bp over US treasuries.
Glitnir declined to reveal the size of the delayed issue, but emphasised it has more than €6bn ($8.8bn) in funds available, compared with funding requirements this year of €3.5bn.
Market participants said Glitnir’s problems were compounded after Gnupur Investment, an Icelandic investment company, was forced to announce an emergency recapitalisation programme.
QUOTE (cgnao @ Jan 18 2008, 11:04 PM)
1) Unprecedented because it's global
2) Only a very small fraction, and even those only at distressed interest rates (20-30% or more)
2) Only a very small fraction, and even those only at distressed interest rates (20-30% or more)
QUOTE
That is what the entire western financial system has been desparately NOT to find out for the past year or so.
p-o-p
p-o-p
Thanks chaps, I wasnt certain that AMBAC backed only the 'at risk' markets or provided insurance for perfectly servicable debt also. Bloody hell what a system it's hardly robust is it , so the hedge quants central assumption that the monoliners were NIL risk was not just wrong, it was proven to be wrong at the front end of the first wave of defaults. I dread to think what other "assumptions" will prove erroneous when this process inevitably escalates.
QUOTE (tenant super @ Jan 18 2008, 10:55 PM)
Thanks CGNAO and everyone I've been followng this thread in awe, may I throw in a couple of questions at this juncture?
1) Does such a firesale of bonds have any precedent or are we entering new terrain here ?
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
1) Does such a firesale of bonds have any precedent or are we entering new terrain here ?
2) Do the bonds have an inherent value that makes them an attractive proposition for the masters of the universe to pick them up on the cheap to shore up their own off balance sheet punts or are they crud anyway?
Ta.
1. Not sure
2. Most of the bonds insured are municipal and will have an underlying, inherent value with low default rates. This used to be their sole business, where they have run into problems is in insuring asset backed securities where they clearly haven't understood the risks. The problem now is that all the relatively safe municipal bonds have been downgraded along with Ambac and have lost value, and as Free Trader pointed out on another thread the cost of insuring future municipal bonds is going to rise. This in turn, as I see it, means either government services and infrastructure projects get cut or taxes go up. Neither option looks good heading into a likely recession. I read somewhere that the budget for the State of California shrank for the coming year, I will look for a link.
QUOTE (The Emperors New Clothes @ Jan 18 2008, 11:22 PM)
...To the extent that banks aren't able to make new loans, because the capital on their balance sheets that would otherwise be available for lending is being written off, they are taking money out of the economy. That's why Japan faced the threat of deflation for so long even though their interest rates were effectively zero. Banks didn't have any money to lend.]
I'm not convinced either way, just want to hear the arguments.
I'm not convinced either way, just want to hear the arguments.
Same mistake as usual: yes, NEW credit might dry up, but there is all the existing money out there already. This money can only be destroyed through (1) paying off debt, and (2) real bank defaults that destroy deposits. (1) is only happening slowly, (2) is not going to be allowed. So, the money (vast amounts) stays there and tries to get into the next big thing, which happens to be commodities.
QUOTE (Goldfinger @ Jan 19 2008, 12:11 AM)
Same mistake as usual: yes, NEW credit might dry up, but there is all the existing money out there already. This money can only be destroyed through (1) paying off debt, and (2) real bank defaults that destroy deposits. (1) is only happening slowly, (2) is not going to be allowed. So, the money (vast amounts) stays there and tries to get into the next big thing, which happens to be commodities.
2. This is the real crux, do the powers that be have the means at their disposal? What are those means? Can they provide enough solvency to the right places?
QUOTE (The Emperors New Clothes @ Jan 19 2008, 12:19 AM)
2. This is the real crux, do the powers that be have the means at their disposal? What are those means? Can they provide enough solvency to the right places?
It is already happening. Look what Darling did today (£30bn/NR). Basically they take stuff the market doesn't want anymore (price zero) and then sell it as a treasury (AAA) and effectively guarantee to come up for the shortfall (by issuing even more debt, I suppose).
It's happening right in front of our eyes.
QUOTE (Goldfinger @ Jan 19 2008, 12:23 AM)
It is already happening. Look what Darling did today (£30bn/NR). Basically they take stuff the market doesn't want anymore (price zero) and then sell it as a treasury (AAA) and effectively guarantee to come up for the shortfall (by issuing even more debt, I suppose).
It's happening right in front of our eyes.
It's happening right in front of our eyes.
They've managed that with Northern Rock and it's driven a coach and horses through the nations finances. What happens with further failures? How many times can this trick be pulled... at what stage would UK debt stop being AAA any more? Is there the political will to be able to do it?
Lots of questions late at night, thanks for your input. I should get out more instead of worrying about this stuff! Wish I knew how it's going to pan out, it don't look good either way.
QUOTE (The Emperors New Clothes @ Jan 19 2008, 12:03 AM)
1. Not sure
2. Most of the bonds insured are municipal and will have an underlying, inherent value with low default rates. This used to be their sole business, where they have run into problems is in insuring asset backed securities where they clearly haven't understood the risks. The problem now is that all the relatively safe municipal bonds have been downgraded along with Ambac and have lost value, and as Free Trader pointed out on another thread the cost of insuring future municipal bonds is going to rise. This in turn, as I see it, means either government services and infrastructure projects get cut or taxes go up. Neither option looks good heading into a likely recession. I read somewhere that the budget for the State of California shrank for the coming year, I will look for a link.
2. Most of the bonds insured are municipal and will have an underlying, inherent value with low default rates. This used to be their sole business, where they have run into problems is in insuring asset backed securities where they clearly haven't understood the risks. The problem now is that all the relatively safe municipal bonds have been downgraded along with Ambac and have lost value, and as Free Trader pointed out on another thread the cost of insuring future municipal bonds is going to rise. This in turn, as I see it, means either government services and infrastructure projects get cut or taxes go up. Neither option looks good heading into a likely recession. I read somewhere that the budget for the State of California shrank for the coming year, I will look for a link.
Thanks TENC. Thats harsh on the municipals, but why cant they simply re-appropriate a triple A via a different monoline?
QUOTE (The Emperors New Clothes @ Jan 19 2008, 12:33 AM)
They've managed that with Northern Rock and it's driven a coach and horses through the nations finances. What happens with further failures? How many times can this trick be pulled... at what stage would UK debt stop being AAA any more? Is there the political will to be able to do it?
I have a standard answer for this one:
QUOTE (Goldfinger @ Jan 11 2008, 12:24 AM)
I think one day some SWFs and sheiks wake up and say: 'Hey, wait a minute. I gave you $200bn, and now you want another load? What do I get in return?'
They'll say: 'Shares, your Royal Highness, shares'.
He goes: 'Your shares have plunged 80%. You suck. You get no billions no more. Go, burn in hell.'
And that's when it'll be GAME OVER.
They'll say: 'Shares, your Royal Highness, shares'.
He goes: 'Your shares have plunged 80%. You suck. You get no billions no more. Go, burn in hell.'
And that's when it'll be GAME OVER.
Think raging/hyper-inflation (since all the money is handed back to the US/UK) and IRs over 20% to save the currency. If this doesn't work, the system will go Zimbabwe.
QUOTE (tenant super @ Jan 19 2008, 12:39 AM)
Thanks TENC. Thats harsh on the municipals, but why cant they simply re-appropriate a triple A via a different monoline?
The municipals lose out going forward as the cost to insure their bonds will have increased. The institutions holding the Ambac insured bonds are the ones who lose out on the initial drop in values, but only if they sell. They may hold the bonds to term without the municipal defaulting and have no problems. One of the issues here is that certain risk averse institutions (e.g. pension funds) have rules that state they will only hold AAA bonds which is where we get into a fire sale situation.
I'm no expert though, anyone else feel free to correct me if I've got this wrong. All my knowledge has come from reading up on this recently.
QUOTE (tenant super @ Jan 18 2008, 10:55 PM)
1) Does such a firesale of bonds have any precedent or are we entering new terrain here ?
The depression of 1873 (in the US, not the European end) was primarily precipitated by a bond crisis. Railroad companies overexpanded and defaulted on their bonds (Jay Cooke & Co set it off when they got lumbered with a load of Northern Pacific Railroad bonds - similar to the investment banks today with their CDOs).
QUOTE (FreeTrader @ Jan 19 2008, 12:56 AM)
The depression of 1873 (in the US, not the European end) was primarily precipitated by a bond crisis. Railroad companies overexpanded and defaulted on their bonds (Jay Cooke & Co set it off when they got lumbered with a load of Northern Pacific Railroad bonds - similar to the investment banks today with their CDOs).
So that didnt pan out too great. Thanks Freetrader, good stuff.
Bloody hell.
QUOTE (tenant super @ Jan 19 2008, 01:54 AM)
So that didnt pan out too great. Thanks Freetrader, good stuff.
Bloody hell.
Bloody hell.
Oh it's worse.
Back in the day the government didn't "help" and these things fixed themselves in a period of 1 to two years. With the statists in charge, it's going to be a decade or so, IF the state survives.
It more and more seems Cgnao is right
We are on the Titanic it's mortally wounded.
Seems cgnao is on the deck of the Titanic trying to get us into the lifeboats, the ship seems familiar and safe, the golden lifeboat seems risky.
In the real Titanic the first lifeboat capacity 65 sailed away with 12 on board, people just would not believe it was safer than the big ship.
We are on the Titanic it's mortally wounded.
Seems cgnao is on the deck of the Titanic trying to get us into the lifeboats, the ship seems familiar and safe, the golden lifeboat seems risky.
In the real Titanic the first lifeboat capacity 65 sailed away with 12 on board, people just would not believe it was safer than the big ship.
QUOTE (Compounded @ Jan 19 2008, 02:58 AM)
It more and more seems Cgnao is right
We are on the Titanic it's mortally wounded.
Seems cgnao is on the deck of the Titanic trying to get us into the lifeboats, the ship seems familiar and safe, the golden lifeboat seems risky.
In the real Titanic the first lifeboat capacity 65 sailed away with 12 on board, people just would not believe it was safer than the big ship.
We are on the Titanic it's mortally wounded.
Seems cgnao is on the deck of the Titanic trying to get us into the lifeboats, the ship seems familiar and safe, the golden lifeboat seems risky.
In the real Titanic the first lifeboat capacity 65 sailed away with 12 on board, people just would not believe it was safer than the big ship.
Compounded you are right. He has been calling the shots along with a few others too, finger firmly on the pulse,
First it started with the write downs from the sub prime. Now we have ever increasing write downs without an end in site. Then the spill over into the consumer credit markets and now bonds with fire sales to follow. Just as predicted.
Did you see the story yesterday about the Scottish Equitable blocking investors from taking their cash out of the company.
This is another warning sign for sure!
http://business.scotsman.com/bankinginsura...s-to.3687708.jp
Let's hope Captain CGNAO and others keep us in the know in a time when we are being fed lies, spin and manipulation from certain Govt, Media and Financial institutions.
QUOTE (SaintJay @ Jan 18 2008, 09:42 PM)
AMBAC lost its AAA rating...
http://www.bloomberg.com/apps/news?pid=206...&refer=home
now the fun starts
http://www.bloomberg.com/apps/news?pid=206...&refer=home
now the fun starts
http://www.ft.com/cms/s/0/94be2b12-c5f8-11...00779fd2ac.html
The triple-A credit rating of the bigger bond insurers is important because any demotion could lead to downgrades of the $2,400bn of bonds they guarantee. This could force banks to increase the amount of capital held against bonds and hedges with bond insurers.
-----------------------------------------
they/we are f...ed .... $2,400bn will go down by 10-20% at least ....
QUOTE (The Emperors New Clothes @ Jan 18 2008, 11:22 PM)
Just a question for the inflationists on here - what's your argument against the deflationary effect of the enormous contraction in credit that the downgrades of the monoline insurers could lead to?
I'm not sure I want to get dragged into another one of these discussions again but to summarise where I think we all got to was....
1. Capital being wiped out or having to be allocated to assets coming back onto balance sheets - is deflationary in itself as it reduces EXISTING credit capacity (via net repayments, write downs)
2. However the inflation already evident in certain assets (property, mortgage bonds) will flow into other assets that provide a better return (e.g. commodities) and this will show up as 'price inflation' depending on your basket of goods and services.
3. Then the big unknowns (to some) is what the Central Bank will do to avoid the 'scourge' of deflation and the consequences of their actions. Some think their actions will trigger inflation or even hyper inflation.
I think that's it in a nutshell. I will now try and not get involved.
http://www.jsmineset.com/
Here the mentioned Economist article: http://www.economist.com/daily/news/displa...ory_id=10553166
QUOTE
Posted On: Sunday, January 20, 2008, 2:59:00 PM EST
Could This Be "The Mother of All Wakeup Calls"?
Author: Jim Sinclair
Dear Friends:
This is it and even the prestigious "Economist" knows the truth.
The Default Swap and Default Derivative (herein called bond default insurance companies) meltdown that will follow the cut of the bond rating on Ambac, a bond insurer, is referred to as a DOMINO EFFECT.
What this means is that the side of the derivative special performance contract that is required to perform cannot perform and may in fact not even be there.
In my exchange with Monty yesterday, I named his concept the “Resurrection Trust,” as in Lazarus. However, in this case Lazarus does not rise because in all probability he will not even be there at rising time.
Pop Goes the Weasle of derivative madness in the form of 2.1 trillion dollars. I see this entire matter as the crime of all time, not simply the Great Train Robbery.
Once again these geeks have killed us all to some degree. For those who refuse to protect themselves, you are certainly going to be a victim.
When will people realize that these companies could never perform on the products they sold even when they were flush with money?
Default swaps and derivatives were always a scam if you consider their inability to do what they had contracted to do. No one ever imagined that multiple credit problems could occur simultaneously. That means no one ever did or considered the “What If” in this whole fiasco. All that existed was world class unbridled GREED.
How thick can people be that they can't see that the entire financial world is now threatened with a problem for which there is no practical solution?
Tax cuts, lower interest rates, and putting $800 in every consumer’s hands is not going to put a dent in this juggernaut of unwinding derivatives that are hell bent on producing a Financial Apocalypse.
The potential now is akin to the Weimar Republic case study. Yet many sleep comfortable in their imaginary world, seemingly immune to what's about to happen.
Could This Be "The Mother of All Wakeup Calls"?
Author: Jim Sinclair
Dear Friends:
This is it and even the prestigious "Economist" knows the truth.
The Default Swap and Default Derivative (herein called bond default insurance companies) meltdown that will follow the cut of the bond rating on Ambac, a bond insurer, is referred to as a DOMINO EFFECT.
What this means is that the side of the derivative special performance contract that is required to perform cannot perform and may in fact not even be there.
In my exchange with Monty yesterday, I named his concept the “Resurrection Trust,” as in Lazarus. However, in this case Lazarus does not rise because in all probability he will not even be there at rising time.
Pop Goes the Weasle of derivative madness in the form of 2.1 trillion dollars. I see this entire matter as the crime of all time, not simply the Great Train Robbery.
Once again these geeks have killed us all to some degree. For those who refuse to protect themselves, you are certainly going to be a victim.
When will people realize that these companies could never perform on the products they sold even when they were flush with money?
Default swaps and derivatives were always a scam if you consider their inability to do what they had contracted to do. No one ever imagined that multiple credit problems could occur simultaneously. That means no one ever did or considered the “What If” in this whole fiasco. All that existed was world class unbridled GREED.
How thick can people be that they can't see that the entire financial world is now threatened with a problem for which there is no practical solution?
Tax cuts, lower interest rates, and putting $800 in every consumer’s hands is not going to put a dent in this juggernaut of unwinding derivatives that are hell bent on producing a Financial Apocalypse.
The potential now is akin to the Weimar Republic case study. Yet many sleep comfortable in their imaginary world, seemingly immune to what's about to happen.
Here the mentioned Economist article: http://www.economist.com/daily/news/displa...ory_id=10553166
QUOTE (Errol @ Jan 20 2008, 10:28 PM)
your money is never really your money it seems, but people just don't seem to understand this. They just hit the 'NO for 12 months' option on their software, then by that time all the major shareholders have already dumped their shares, company goes t1ts up, depositors/investors get nothing.
Do you realize that when (not if) banks and building societies start limiting withdrawals it will no longer be possible to protect yourselves?
I URGE you all to protect yourselves NOW.
I URGE you all to protect yourselves NOW.
Surely each Monoline can raise money by issuing bonds - and get another monoline to issue a CDS for them?
QUOTE (cgnao @ Jan 20 2008, 11:03 PM)
Do you realize that when (not if) banks and building societies start limiting withdrawals it will no longer be possible to protect yourselves?
I URGE you all to protect yourselves NOW.
I URGE you all to protect yourselves NOW.
what do you suggest is the best way to protect myself?
would you invest £36,000 in 2kgs of gold or 92kgs of silver?
I URGE you all to protect yourselves NOW, before bank runs start.
http://www.reuters.com/article/reutersEdge...dge&rpc=401
Ambac, MBIA woes could spark more bank losses
Wed Jan 23, 2008 8:03am EST
NEW YORK (Reuters) - Further credit-rating troubles for bond insurers Ambac Financial Group and MBIA could spark a new wave of bank losses and batter the value of billions of dollars of insured mortgage investments.
...
Global banks have already announced nearly $100 billion in potential losses, according to figures from brokerage Friedman Billings Ramsey.
But a severe downgrade of the bond insurers "could have truly systemic implications for the global banking system," Stracke said.
http://www.reuters.com/article/reutersEdge...dge&rpc=401
Ambac, MBIA woes could spark more bank losses
Wed Jan 23, 2008 8:03am EST
NEW YORK (Reuters) - Further credit-rating troubles for bond insurers Ambac Financial Group and MBIA could spark a new wave of bank losses and batter the value of billions of dollars of insured mortgage investments.
...
Global banks have already announced nearly $100 billion in potential losses, according to figures from brokerage Friedman Billings Ramsey.
But a severe downgrade of the bond insurers "could have truly systemic implications for the global banking system," Stracke said.
QUOTE (cgnao @ Jan 23 2008, 06:19 PM)
I URGE you all to protect yourselves NOW, before bank runs start.
How about stopping your gold ramping nonsense?
You may even have something worthwhile to contribute.
http://www.bloomberg.com/apps/news?pid=206...&refer=home
Banks, New York Regulators Meet on Rescue for Bond Insurers
By Erik Holm
Jan. 23 (Bloomberg) -- New York State's insurance regulators met today with U.S. banks to discuss raising new capital for bond insurers, said a department spokesman.
Talks in New York with the unnamed banks are part of Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the market's financial condition, said agency spokesman Andrew Mais in an interview.
New capital may help preserve the top credit ratings for the bond guarantors such as MBIA Inc., the industry's largest, and halt any erosion of investor confidence in the $2 trillion of assets they guarantee. Ambac Financial Group Inc., MBIA's biggest rival, lost its AAA grade from Fitch Ratings this month on concern about rising defaults tied to subprime mortgages.
Banks, New York Regulators Meet on Rescue for Bond Insurers
By Erik Holm
Jan. 23 (Bloomberg) -- New York State's insurance regulators met today with U.S. banks to discuss raising new capital for bond insurers, said a department spokesman.
Talks in New York with the unnamed banks are part of Insurance Superintendent Eric Dinallo's effort to stabilize the bond guarantors and bolster the market's financial condition, said agency spokesman Andrew Mais in an interview.
New capital may help preserve the top credit ratings for the bond guarantors such as MBIA Inc., the industry's largest, and halt any erosion of investor confidence in the $2 trillion of assets they guarantee. Ambac Financial Group Inc., MBIA's biggest rival, lost its AAA grade from Fitch Ratings this month on concern about rising defaults tied to subprime mortgages.
Given the amounts involved, bailout = hyperinflation. 100% correct, guaranteed.
Dow Jones swung up 500 points in last 3 hours.
These just realised the banks have been given unlimited free money!
These just realised the banks have been given unlimited free money!
QUOTE (BandWagon @ Jan 23 2008, 06:49 PM)
How about stopping your gold ramping nonsense?
You may even have something worthwhile to contribute.
You may even have something worthwhile to contribute.
I find all of these 'ramping' accusations dreadfully amusing. The idea that you can ramp a global market like gold by posting on HPC.co.uk is hilarious. People should get gold because it is one of the few ways of protecting yourself. Does there always have to be a hidden agenda?
QUOTE (STR2007 @ Jan 23 2008, 08:44 PM)
Dow Jones swung up 500 points in last 3 hours.
These just realised the banks have been given unlimited free money!
These just realised the banks have been given unlimited free money!
500! This is supernatural. I am concerned. Looks like Zimbabwe, the whole thing.
QUOTE (Goldfinger @ Jan 23 2008, 09:09 PM)
500! This is supernatural. I am concerned. Looks like Zimbabwe, the whole thing.
It was closer to 700 points by the close.
Can you imagine the DOW being allowed to fall 700 points in 3 hours? It's not even come close to it the whole time the market has been in "turmoil"!
But nice if you're long though
QUOTE (Frizzers @ Jan 23 2008, 09:13 PM)
But nice if you're long though
In gold, all this looks less impressive. I've just created a chart with the FTSE100 in gold. Looks really bad.http://www.housepricecrash.co.uk/forum/ind...st&p=939837
Anyone seen the article on the home page today by the FT about banks capitalisation ratio's VS write offs and care to comment? I think this is relivant to this thread and would appreciate what others think
Regards
TBS
Regards
TBS
TRIFECTA
Three days three bailouts:
Friday: Bailout #1 - Bush gives everyone free money $800 check
Monday: Markets Closed (no bailout)
Tuesday: Bailout #2 - Bernanke reduces rates by 0.75 points
Wed: Bailout #3 - All Bond insurancers to be bailed out
These bailouts are inflationary.
Soros stated on CNBC that all big banks should be told they would be bailed out like NR if required. He also stated that all shareholders of these banks should be wiped out!
Soros is no fool, the fact he mentioned this is worrying.
Protect your lolly before it goes poof.
Three days three bailouts:
Friday: Bailout #1 - Bush gives everyone free money $800 check
Monday: Markets Closed (no bailout)
Tuesday: Bailout #2 - Bernanke reduces rates by 0.75 points
Wed: Bailout #3 - All Bond insurancers to be bailed out
These bailouts are inflationary.
Soros stated on CNBC that all big banks should be told they would be bailed out like NR if required. He also stated that all shareholders of these banks should be wiped out!
Soros is no fool, the fact he mentioned this is worrying.
Protect your lolly before it goes poof.
QUOTE (cgnao @ Jan 20 2008, 11:03 PM)
Do you realize that when (not if) banks and building societies start limiting withdrawals it will no longer be possible to protect yourselves?
I URGE you all to protect yourselves NOW.
I URGE you all to protect yourselves NOW.
Why would banks impose withdrawal restrictions during hyperinflation? They'll be awash with cash surely?
Fair enough, you won't get much for your money but I can't see it being particularly difficult to get hold of.
Surely if cash is restricted this will increase demand for it and therefore INCREASE its value.
The people over on the ticker forum all appear in agreement that what we are seeing is 100% correct, guaranteed DEFLATIONARY holocaust. I think it would make an excellent debate for you to have tyour arguments out with them, it is certainly a debate I would follow with interest. The link to the relevant tickerforum thread is on the monoline thread.
QUOTE (frozen_out @ Jan 23 2008, 04:55 PM)
Why would banks impose withdrawal restrictions during hyperinflation? They'll be awash with cash surely?
Fair enough, you won't get much for your money but I can't see it being particularly difficult to get hold of.
Surely if cash is restricted this will increase demand for it and therefore INCREASE its value.
The people over on the ticker forum all appear in agreement that what we are seeing is 100% correct, guaranteed DEFLATIONARY holocaust. I think it would make an excellent debate for you to have tyour arguments out with them, it is certainly a debate I would follow with interest. The link to the relevant tickerforum thread is on the monoline thread.
Fair enough, you won't get much for your money but I can't see it being particularly difficult to get hold of.
Surely if cash is restricted this will increase demand for it and therefore INCREASE its value.
The people over on the ticker forum all appear in agreement that what we are seeing is 100% correct, guaranteed DEFLATIONARY holocaust. I think it would make an excellent debate for you to have tyour arguments out with them, it is certainly a debate I would follow with interest. The link to the relevant tickerforum thread is on the monoline thread.
The only way a pure deflationary holocaust would occur is if the banks were allowed to fail alla 1929. It is clear from todays actions from the Fed that this will not be allowed to occur - that is why all financials rallied on wall street today. In 1929 the dollar was backed by Gold, today this is not the case, so limit less amounts of cash can and will be generated. Please read my TRIFECTA post for details of this weeks bailouts.
QUOTE (Pluto @ Jan 23 2008, 10:02 PM)
The only way a pure deflationary holocaust would occur is if the banks were allowed to fail alla 1929. It is clear from todays actions from the Fed that this will not be allowed to occur - that is why all financials rallied on wall street today. In 1929 the dollar was backed by Gold, today this is not the case, so limit less amounts of cash can and will be generated. Please read my TRIFECTA post for details of this weeks bailouts.
I think you are probably wrong, all these 'bailouts' will do is leave lots and lots of institutions owing the FED lots of money, once this is done the FED will promptly raise interest rates to milk these institutions for all they are worth. And that my friend is the fundamental rule of capitalism.
This is exactly what they did with the World Bank and Third world debt.
QUOTE (frozen_out @ Jan 23 2008, 10:55 PM)
Why would banks impose withdrawal restrictions during hyperinflation? They'll be awash with cash surely?
Fair enough, you won't get much for your money but I can't see it being particularly difficult to get hold of.
Surely if cash is restricted this will increase demand for it and therefore INCREASE its value.
Fair enough, you won't get much for your money but I can't see it being particularly difficult to get hold of.
Surely if cash is restricted this will increase demand for it and therefore INCREASE its value.
http://www.nzherald.co.nz/section/3/story....jectid=10488139
Zimbabwe central bank blames banks for banknote shortage
12:10PM Tuesday January 22, 2008
HARARE - Zimbabwe's central bank on Monday blamed banks for the country's cash shortages which have persisted despite the injection of new, higher denomination bank notes last week.
The shortage of bank notes, reflecting a severe economic crisis blamed on President Robert Mugabe's policies, has prompted the central bank to issue higher denomination bills to keep up with galloping inflation. Zimbabwe has the highest inflation rate in the world at nearly 8,000 per cent.
I URGE you all to protect yourselves NOW before major banks start blowing up.
http://www.bloomberg.com/apps/news?pid=206...&refer=home
Societe Generale to Raise EU5.5 Billion After Fraud
By Gregory Viscusi
Jan. 24 (Bloomberg) -- Societe Generale SA, France's second- largest bank by market value, plans to raise 5.5 billion euros ($8.1 billion) selling shares after a trading fraud and subprime- related writedowns depleted capital.
The bank found out last weekend that a trader in Paris had secretly set up positions that will cost the company 4.9 billion euros before tax, Societe Generale said in an e-mailed statement today. The trader, who wasn't identified, went beyond permitted limits on futures linked to European stock indexes.
http://www.bloomberg.com/apps/news?pid=206...&refer=home
Societe Generale to Raise EU5.5 Billion After Fraud
By Gregory Viscusi
Jan. 24 (Bloomberg) -- Societe Generale SA, France's second- largest bank by market value, plans to raise 5.5 billion euros ($8.1 billion) selling shares after a trading fraud and subprime- related writedowns depleted capital.
The bank found out last weekend that a trader in Paris had secretly set up positions that will cost the company 4.9 billion euros before tax, Societe Generale said in an e-mailed statement today. The trader, who wasn't identified, went beyond permitted limits on futures linked to European stock indexes.
EUR 4.9bn? How stupid are these french guys letting one person reap up losses like that? Nick Leeson was peanuts compared with this. 
QUOTE (Goldfinger @ Jan 24 2008, 07:55 AM)
EUR 4.9bn? How stupid are these french guys letting one person reap up losses like that? Nick Leeson was penuts compared with this.
haw haw hee haw mon ami. Ill lose dees only wunce
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