Yes.



Empires have powerful armies. They do not.

RED pill please.

It seems strange to me, how none of the major stockmarkets seem to see the inevitable coming financial holocaust (FTSE up again today), and yet with only a bit of googling the inevitable demise becomes so self evidently clear - especially when reposted and highlighted in Red.

Greed and self preservation are two of the most powerful human instincts.... so either the individual traders and financial organisations must collectively just be plain dumb.... OR there is to be no financial apocalypse.

... Hmmm, I wonder which.

& following on the same note......
that's why no-one believed us when we said the housing market was crashing right now because the VI's, media etc were all saying that hpi was rampant....

why would someone believe me for example over all these professional bodies ?

How many saw the Great Depression in 1929 coming?

Rising markets are what you would expect in an inflationary situation anyway.

BAAAAAAA!

Yes, I will correct my original statement:

"In reality the Eurozone is a cluster-fook full of basket case countries.

Can we have some evidence that the downrating of this company to AA from AAA will mean pension funds have to sell please?

Your critique / interpetation on the article is scary no doubt. But I need proof.

Thanks



Doesn this mean that someone will bail these out too, in order to prevent the downgrade to avoid the situation. I would guess so?

http://uk.biz.yahoo.com/21112007/323/thoms...nvestments.html



By downgrading a AAA (investment) to AA or A (Mezanine) the pension funds are not allowed to hold anything other than investment grade.

So it says 'mainly' and 'may' and concludes by saying there are ways around it too.

Sorry but you havent convinced me of carnage, but please keep the debate up. I have an open mind.

The Fed caused the Great Depression!

Here's the proof, Thomas.

http://www.bloomberg.com/apps/news?pid=new...id=aOjl_Hy9ibBI

Forced Sales

Moody's and Fitch, both based in New York, are examining the insurers on concern that a slide in the credit quality of some of the 80,000 securities they guarantee has eroded their capital so much that they no longer deserve AAA ratings.

The ratings companies said New York-based Ambac, FGIC Corp. in New York, and CIFG Guaranty of Hamilton, Bermuda, have a high or moderate chance of being told to add capital or forfeit their top status. Fitch and Moody's said MBIA has a low risk of a downgrade.

Borrowers would see their costs increase if they lose top rankings. Municipalities ranked A pay $190,000 more a year in interest on $100 million of debt than those with AAA bonds, according to index data compiled by New York-based Lehman Brothers Holdings Inc.

Lower Ratings

Lower ratings would force some investors to sell securities. About 110 municipal bond mutual funds are required to hold most of their assets in AAA debt, according to data compiled by Bloomberg.

As many as half of all municipalities have an underlying credit strength equivalent to AAA, according to Lehman Brothers strategist Peter DeGroot. If yields on half of all insured munis were to rise by 19 basis points, reflecting the difference between AAA insured yields and A rated yields, the loss in value would be $9 billion.

Mainly and May... remove the VI spin and put in mostly and have to.

Agreed the article states that there are options to DEAL these. If I have a sh*tty Fiat Panda worth $500 and you have a BMW 6 series worth $100,000 would you deal me that as a straight swap or if i sweetened the deal with $50,000 and you MAY recoup the additional 49,500 if the Fiat Panda ever becomes a valuabel classic?

Sure there are ways to pedal sh*t you just have to find a bigger mug than yourself.

http://en.wikipedia.org/wiki/Doubting_Thomas

Or 0.2% more in simple language. Which isnt a big deal surely.

Well surely you enjoy a good debate?

I remain open minded

Thanks

Man you're thick! 0.2% on 4% is 5%, which is very significant. It's like your mortgage interest going up by 0.2%, which for sure can be painful.

Besides, 0.2% (20 basis points) is just the difference in yield between AAA / A muni bonds in normal market conditions.

If, as it is about to happen, a forced sale of hundreds of billions of downgraded muni bonds begins, yields will skyrocket by hundreds of basis points, triggering huge defaults, hence even more insurers downgrades.

Failure to understand this simple fact will doom your financial future for many years to come.

EDIT (on 4%, not of 4%)

Paying 0.2% (0.19%) more interest on the whole balance is tiny. If my mortgage (Or rent - I STR btw) went up by 0.2% it would be relatively insignificant.

Please supply evidence that the forced sale of hundreds of billions will begin.

Your original article quoted 9bn - IF the insurers are downgraded, which might not happen if a VI injects capital. Not a lot compared to what we have already seen.

Thanks

Look for evidence on Bloomberg. It's there for all to see.

Don't bother replying, you just joined my ignore list. I am sorry, but you are an incurable idiot and a waste of time. Bye bye.

Im sincerely sorry that you have chosen not to debate your opinions, provide references and resort to insulting me. I do feel you make an interesting point, hence trying to engage you in debate.

The first lesson I was taught in A-Level Economics (some time ago now) was how to distinguish the difference between normative and positive statements in press articles.

http://www.tutor2u.net/economics/content/t...e_economics.htm

For the benefit of the other mathematically challenged reading:

Municipality borrows $1 billion by issuing 5 year bonds. Interest coupon 4%. Annual interest bill = $40 million.

Interest goes up 0.2% to 4.2%. Annual interest bill goes up to $42 million.

$42 million is 5% more than $40 million.

Furthermore, 0.2% is just the difference between AAA/A yields in normal market conditions.

Ask the banks and SIVs who are trying to sell their mortgage bonds. The yields there have skyrocketed by tens of percentage points....

In addition, think of the municipality with a $1 billion in 5-year bond issued in 2002 at 3% coupon, expiring shortly. They have to roll it over, but they'll have to pay more, much more.

This is the municipal equivalent of subprime on steroids, only bigger, greater and scarier.

0.19% of a 100k mortgage works out at £15.83 per month. I dont see many people rushing to sell at that increase......

Methinks you are not understanding the way markets are propelled - i.e. BY SENTIMENT. You are applying your own logic to your own personal circumstances and extrapolating from there - at least, I think you are. What should never be underestimated is the nature of herds - they STAMPEDE! Humanity (at least as far as finance is concerned) responds to two signals - greed and fear - and there's not much of a dwell between. These two sentiments can and do cause massive market movements in very short time spans. CGNAO is offering one of several possible routes for the resultant fear stampede, and his ideas should be factored into to any thinking man's plans for the future - at least, that is what I think, but you are of course entitled to ignore his posts. Personally, I find them useful as I attempt to construct my own understanding of what is going to transpire in the coming months. I value his contributions however extreme they may appear at the moment.

Seconded; keep it coming CGNAO.

I think I understand sentiment.

I'm not applying my own logic to my own circumstances. I'm reviewing the articles that cgnao kindly posts links to and debating the interpretation of them. Trying to stick to positive statements not normative ones.

I would not make any potentially serious decisions based on normative statements. However I will act if I see sufficient positive ones.

I've already said I value his posts too. However this is a discussion forum and debate should be encouraged.

Thanks

You need to review your A Level Economics notes on

1. Fisher's equation of exchange
2. Speculative bubbles
3. The role of the IMF

Zzzzzzzzzzzzzzzzzzzzz

How does this thread stay on the main forum?

With all the bad news, we need a little light comedy relief.

Added to my ignore list too.

A complete numpty.

buy bye.

Watching a re-run of Newsnight just now - Poxo has lost it, he always was a tool IMO. Panel of the economics great and good, 5-6 of them and all of them CLUELESS beyond compare. Irwin Selzer, well IMO he knows exactly what is going down but he's spinning the plates like billy-o, he's connected, and he's doing what he's paid to do. Ditto the editor of the FT. Ken Clarke - clueless, all predicting just a bump in the road...

I don't think it is healthy to end up restricting the circle of people you listen to to only the people who agree with you.

It's not like leedsproperty was being insulting or unreasonable.

It's good

Moving it now might upset Cgnao and I for one would miss his brill posts.

Wise

You mean if it was moved Cgnao would leave AGAIN????

I say move it, along with the Gold thread.

you're joking right?

guy's a pedant and thick as 2 short planks

life is too short

i read all his posts and i want to read no more

cheers!

see what i mean jimmymac and compounded?

muttley is just another shit-stirring troll

if he does not like this or the gold thread then he can ****** off and not bother those of us who are studing the macro picture in relation to the hpc

another troll on my shit list

woof woof

buh bye

I'm not here to debate or listen to anyone.
There is an extremely serious situation out there which I am privileged to be aware of.
I am only sharing the unalterated truth, nothing more.
You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe.
You take the red pill, you stay in Wonderland and I show you how deep the rabbit hole goes.

I agree with cgnao.

Whilst a hpc is serious whether it happens or not, it pales in comparison to the broader picture.

There are plenty of other threads at HPC for these immature and retarded trolls to stink up with their serial idiocy.

BEGONE!!!!!!!




Royal Bank of Scotland Reports $3 Billion Writedown (Update2)

By Ben Livesey and Jon Menon

Dec. 6 (Bloomberg) -- Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, reported 1.5 billion pounds ($3 billion) of writedowns caused by slumping credit markets and said earnings will exceed analysts' estimates this year.

Royal Bank shares rose the most since Nov. 12 after it said in a statement today that operating profit is ``well ahead'' of forecasts. Analysts had said earnings would probably climb 6.5 percent to 9.8 billion pounds. The writedowns, which included U.S. subprime securities and leveraged loans, matched forecasts.

``The fact that they are well ahead of profit estimates is very good news indeed,'' said Simon Maughan, a London-based analyst at MF Global Securities Ltd., who rates the shares ``neutral.''

Edinburgh-based Royal Bank is the last of the largest global banks to disclose losses in the subprime rout, which forced financial institutions to write down about $70 billion of assets. Royal Bank said the 16 billion-euro ($23 billion) acquisition of ABN Amro Holding NV's securities and Asian units accounted for 300 million pounds of the writedown.

Royal Bank rose 7.5 percent to 500.5 pence at 8:15 a.m. in London, valuing the company at 50.1 billion pounds. The stock is down declined 25 percent this year, underperforming the Bloomberg Europe Banks and Financial Services Index, down 15 percent.

Royal Bank, Europe's No. 1 provider of loans used to finance leveraged buyouts, will write down about 950 million pounds in assets backed by U.S. subprime mortgages, including collateralized debt obligations, and 250 million pounds on leveraged loans. The writedowns were partially offset by an accounting gain of 250 million pounds on Royal Bank's debt.

`No Guarantees'

``This an attempt to capture what the total losses will be'' in the bank's debt securities operations, Chief Executive Officer Fred Goodwin said today on a conference call with reporters. ``There are no guarantees. The second half was not a barrel of laughs,'' he said.

Barclays Plc, which dropped out of the contest to buy ABN Amro, wrote down 1.3 billion pounds in the year's second half, it said Nov. 15. London-based HSBC Holdings Plc, Europe's biggest bank by market value, wrote down $925 million for the third quarter.

Royal Bank's second-half net income will decline 4.4 percent to 3.1 billion pounds from a year-earlier, according to the average estimate of 15 analysts surveyed by Bloomberg. The bank got about a quarter of pretax profit from the U.S. before it teamed with Banco Santander SA and Fortis to buy Amsterdam-based ABN Amro.

``We feel we are in a much better position'' with the acquisition of ABN Amro to face a global slowdown, Goodwin said on the call. ``We now anticipate better financial returns than we envisaged at the time of the bid.''

It will of course have to be monetized by the FED.

More hyperinflationary fuel for the gold rocket.

http://online.wsj.com/article/SB1196909662...s_us_whats_news
'Super Fund' for SIVs, Hoped for $100 Billion, May Be Half the Size
By Robin Sidel

Companies Featured in This Article: Citigroup, Bank of America, J.P. Morgan Chase

The three banks assembling a "super fund" aimed at helping to ease the global credit crunch are scaling back its size due to a lack of interest from financial firms that are supposed to benefit from the plan, according to people familiar with the matter.

Originally envisioned as a $100 billion fund that would buy assets from the struggling investment vehicles, the fund may now wind up being about half that size, these people said.

This is a discussion forum. Not a blog.

Why would they cough up the money? When they know their stooge in the Fed will just add it to the taxpayer's tab for them if they hold off.. Big banks and the elite shouldn't be expected to PAY for their mistakes now should they? That's what the taxpaying 'middle class' are there for!

http://www.bloomberg.com/apps/news?pid=206...&refer=home

That is the mark of the derivative beast, 100% correct, guaranteed.

This is the derivative beast. 100% correct, guaranteed.

http://uk.reuters.com/article/marketsNewsU...06?rpc=401&
Discount window borrowing highest since Sept.
Thu Dec 6, 2007 10:27pm GMT

NEW YORK, Dec 6 (Reuters) - U.S. banks reluctantly tapped the Federal Reserve's discount window with a burst of borrowing on Wednesday, possibly reflecting renewed tightness in credit markets, according to Fed data released on Thursday.

The weekly average remained a tame $342 million. But the draw on Dec. 5, at $2.15 billion, was the highest since mid-September, with loans concentrated in the New York area.

The Fed has encouraged banks to borrow from its emergency facility in order to promote better functioning of clogged financial markets, with little success.

A spike in Libor, a key interbank lending rate, may have forced financial institutions back to the central bank for extra funds, said Michael Feroli, economist at J.P. Morgan.

Markets have taken a turn for the worse in recent weeks, with investors worrying about the possibility of further mortgage-linked losses at large financial institutions.

Many believe that, in addition to cutting its benchmark federal funds rate by a quarter-percentage point when it meets on Tuesday, the Fed may also slash the discount rate by a half percentage point.

The full Fed report, which also includes data on foreign debt holdings held by the central bank, can be found on:

www.federalreserve.gov/releases/h41/ (Reporting by Pedro Nicolaci da Costa; additional reporting by Tamawa Kadoya; Editing by Dan Grebler)

"U.S. mortgage assets in collateralized debt obligations have lost so much value that the top classes of the securities may be worth as little as 20 cents on the dollar in a liquidation,..."

Um, and thinking parochially, Northern Rock?

Considering the UK base rate was cut today, you would think this turd would bounce a little:

http://finance.yahoo.com/charts#chart8:sym...ource=undefined

Just goes to show you there is no confidence in the markets - none. Once the mortgage markets collapse so will credit cards and vehicle loans. My theory is you prime borrowers will start defaulting on every other loan before they stop paying their mortgages.

This will spread to every credit market out there.