aaron said...
Not sure if anyone hear reads the 'Financial Week' but there was an interesting article in this week's edition about the top bankers not sure whether the system is over exposed in the derivatives market.
I have it in hardcopy but you can read it here if you are registered:
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20070219/REG/70219021/1023/OTHERVIEWS
basically it states Ben doesn't want banks tied down by regulation, the NY fed president states banks have no clue how exposed they are, Paulson thinks hedge funds reduce the risk banks are exposed to by purchasing these and the German Finance minister and G-7 are trying to head off the domino effect this could have on the system.
Basically what will happen will make the S&L crisis look like small potatoes. No one is will to admit it though!
Rob Dawg replied...
Wow, "Financial Week." This is one wired-in collective. Yes like you, I'm concerned that the hedge/deriviatives/tranching/futures/etc markets are doing to the world economy what "The Producers" did to Broadway productions.
Thus I call a new thread. We all know that ultimately California earthquake insurance premiums end up at a post office box rented by the month in Kansas. If there is ever a big one, there's no one to cover the losses. This is worse.
32 comments:
I agree 100%
I don't think anyone has any idea how fast things could get...and FAST.
It isn't just LTCM living on the fringe any more. Everyone is disregarding risk and scrounging for yield. Too many possible triggers in my opinion. Obviously the subprime implosion has the greatest possibility of spreading but there are plenty of other bombs waiting to go off.
GM or Ford filing BK.
Run on the Dollar.
Iran and Dubya.
Just three off the top of my head.
When (not if) everyone rushes for the exit it will be FUGLY.
***I don't think anyone has any idea how fast things could get...and FAST.
S/B
I don't think anyone has any idea how UGLY things could get...and FAST.
Argentina.
Not only am I not the sharpest tool in the shed, I'm not the biggest either. I made gobs last fall on lunber declining because of housing, then more on transports moving stuff and now gold as people get nervous. The dollar is next. I'm thinking a Nordic basket deposit account. No more currency exchange gambling for me. I learned that lesson with the Aussie. But this is all bluster, no one should care that I had my head handed in cotton or Aussies, or that I took heads in lumber and gold. What is important is the uncharted territory aspect. Things are happening faster than ever beofe and for some strange reason this surprises many. The run up was fast and the decline has the advantage of happening later.
Don't get upset with being called Baghdad Bog, he's one of the most outrageous characters of all time.
http://www.welovetheiraqiinformationminister.com/
My favs are:
"We have them surrounded in their tanks"
"Lying is forbidden in Iraq. President Saddam Hussein will tolerate nothing but truthfulness as he is a man of great honor and integrity. Everyone is encouraged to speak freely of the truths evidenced in their eyes and hearts."
You gotta love the guy!
You've done well Robert. I really have not had a chance to play the markets recently. Played in 99-01. got burnt big time being a rookie and thinking everything must go up. Stupid of me with my background but i was naive. lesson well learned. now that im married and have a hefty mortgage, etc i dont have money to play with...until now.
My PST(profit sharing trust) here at work I have no control over as im not a partner. Bust basically its earning 10% on average ever since iv been here. We started putting in the max we can into Roth IRAs and I am researching what to invest in. I feel nervous as I really think the market is in need of a correction shortly so i dont want to jump the gun.
You mentioned money you've made recently. Is this in retirement accounts or unprotectec accounts? (please disregard if it's to personal
Thank you so much for the fresh new thread. I've been paralyzed with the recession/depression news but also being an amatuer historian I like to see the correlations, especially the 1880's land speculation in California. However today's link in the Atlantic Free Press called the Second Great Depression sure hits home.
http://www.atlanticfreepress.com/content/view/1033/81/#jc_allComments
good article 2ndGD.
The scary thing about that is....what will the scenario be. Will there be a run on the stores for essentials? riots? seriously if you think about it it could be a very ugly scene.
You've done well Robert.
For the record, I've lost a lot of money between trades and fees. I always considered both to be learning experience. Difference tween me and Casey is I could afford it and I learned my lesson. No more managed accounts. I should of known this from Eddie Murphy and Dan Ackoryd in "Trading Places" but noooo I had to learn it myself. Both versions of "Sabrina" should have been warning enough as well. Secondary lessons are personal; I can't trade on short term trends nor weatrher sensitive events.
As to my personal situation, no mystery or privacy issues. As a small business owner (Sched C for 20+ yrs) and having accounts going back decades I have lots of legitimate and honorable latitude wherein to assign transactions. I've also got kids nearing college so that is another bucket to work with. Retirement accts are awesome. I cannot imagine anyone ever saying "I wish I had not saved so much."
There's lots on this subject, I'll stop preaching now.
Aaron/Rob,
Could you please post the article for the unregistered?
Thx
Will there be a run on the stores for essentials? riots?
No, reallly no. If I would go out on a limb on any aspect this would be it. This won't be bread lines for a limited supply, this is a demand crisis. The US is an unbelievably wealthy nation. I throw out $30 worth of avocados every week. Couple hundred in olives every year. I've got room for thousands more in crops just like what was here before the house was built. Heck, I could feed my family with squirrel, rabbit. veggies and fruits from my measly 3/4th acre.
The US is so far beyond self sufficient even without "oil" "energy" or any of that that it isn't worth discussing.
i can scan it in. Rob do you have a place where i can submit the pdf documents?
aaron,
techscan at adelphia dot n e t. Ill get it up someplace. I'm a bit busy making EN version 2.0 by popular demand and an outpouring of seed money via the tip jar.
new post...and he says, "At least I tried."
tried what?
@anon 2:40
He tried to sell the house with a short sale..give credit where credit is due. In between naps, sweet deals in the works, late night denny's business meetings, cashing in the checks from the utah house and running from the law, he did try to lose the banks more money by short selling the house.
By the way, what I don't think the moron realizes, is that his houses have ALREADY been foreclosed on, even if the auction has been postponed, he has already lost the house.
Modesto "may get delayed"? It's set for Monday morning and it's mid-afternoon Friday now. I'd place more faith in another 11th-hour act of God.
A lot more trying in the comment: trying to moderate, trying to do taxes, trying to make it to the auction. Oh, he tries. It's the actual doing that he has trouble with.
Odd too the contrast between the post -- three lackluster photos and the resignation of "at least I tried" -- and the comment's bouncy "awesome things are coming". (It's like "great things" only better!)
Our little hero is on a rapid cycle. Maybe he did a few guru affirmations ("you're a tiger! grrrr!") between posting and commenting?
What is important is the uncharted territory aspect. Things are happening faster than ever before and for some strange reason this surprises many.
I agree. Last year I was already scared stiff at what I was seeing. 2003 I told a friend of mine to watch for what happens in about 3 years. I also mentioned that I didn't now what the outcome was going to be. I mentioned on piggington.com that I wish I knew who was picking up all these securitized loans. If it is our own system/retirement funds, we have a whale of a problem. If it is in countries like China, it might quickly offset the trade imbalance. (China has had to pick up some US denominated assets to prevent currency adjustment).
Played in 99-01. got burnt big time being a rookie and thinking everything must go up
Similar happened to me, made me much wiser. I didn't think things would always go up.. but I didn't think things were as bad as they would turn out. On the way down, I ended up identifying companies with high leverage and dumping them, held on to those with good balance sheets and cash (damage control). Something that Casey Serin will probably never learn. Built up cash until 2003, then bought. I could have executed better, but its a continual learning experience (yet another thing that CS will never get).
At least I tried…
ROFL LOL LOL FOMCL SMSL LOL LOLROFL
FOMCL SMSL?
@lawnmower man A lot more trying in the comment: trying to moderate, trying to do taxes, trying to make it to the auction. Oh, he tries. It's the actual doing that he has trouble with.
Yes! I told Casey weeks ago:
YODA: No! Try not. Do. Or, do not. There is no try.
BJ,
I'm fairly certain china has picked up quite abit of these loans. HOWEVER, the articles I have read and the one I mentioned in this thread hints at hedge funds owning large amounts. Hedge funds also make up 30% of the action on the markets. Imagine if you will their derivatives going south fast....Then since they are so highly leveraged they have to sell stock. As I said and Robert and a few others realize. This will be closer to the 30's than the S&L crisis, etc. According to the article $381,000 billion($381 trillion) is in derivatives. It would only take a percent or 2 to cause staggering ripple effects.
At least I tried...
Can't...stay...awake...
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ
I don't buy that this offer is gonna be strong enough. I say auction on both houses is a fait accomplit.
"At least I tried…"
No you didn't, Casey. You jerked off for the past year, wasting thousands of dollars on crap like the latest PDS and a new computer, wasting your time napping and working on a blog, and not getting a job. You haven't done ONE DAMN THING to save those properties from foreclosure.
As I said and Robert and a few others realize. This will be closer to the 30's than the S&L crisis, etc.
I hope not, but that was one of my concerns in 2005 when I saw how 'creative' people were getting in the loans. Now it is kind of like the silence waiting for the other shoe to drop.
The problem was not the drop in interest rates.. it was what happened when they went up. Panic ensued with people worrying that they were going to get priced out of the Real Estate market permanently combining the the avarice of flippers and many R.E. agents/brokers/mortgage brokers. If the loan qualification hurdles were not lowered around 2003, we would not be looking at something this bad (price appreciation in housing actually increased when interest rates went up, contrary to standard behavior)
It is going to be hard trying to find something that will not be affected by this.. everything is going to be hit and how the fed plays in this also controls how it gets hit.
I mentioned on piggington.com that I wish I knew who was picking up all these securitized loans. If it is our own system/retirement funds, we have a whale of a problem.
---------------------------------
totally agree. The end result of this housing bubble will be the final transer of wealth (i.e., gutting) of the middle class. First, the homes will be taken by the banks. Then, the retirement funds (pensions and 401ks) disappear when the MBSs go bad.
Sigh. When I think of what's coming, it's a real downer.
BJ,
The problem is the media. It is now meant for the slightly above illiterate folks. They buy into the hysteria of you have to get in now or else so then you get these Interest only, negative amortization etc. loans.
The sad thing is that the media(mainstream) paints everything fairly rosy. Even when they are negative it is not that negative. It's dumbed down and almost always they have an agenda.
At my office we get about 4 dozen weekly periodicals that involve our line of work. The 'Financial Weekly' is one of the better ones' that I read. They don't take a side they just report things from a neutral base and let the reader take it in and form his/her opinion. Something you don't normally get in most things you read(on both sides of the spectrum). I am lucky in that I don't have to pay for any of them :)
The end result of this housing bubble will be the final transfer of wealth (i.e., gutting) of the middle class.
I don't agree here.. I think it is more the gutting of the stupid... The family I came from, and myself are middle class, but working hard on improving ourselves. Myself, I am nearing 7 digits worth of liquid assets(via hard work)... and if I do things right, I'll come out great.. if not, oh well... If you used the drop in interest rates to refinance your rate down with a fixed without any equity out, you are set almost no matter what happens. (Tried to get my parents to do this in 2003, though they do have quite a bit of equity built up before the run-up). Not all rich people are bright (many of them hold hedge fund assets that are in mortgage backed securities or credit swaps)... hang onto your hats, its gonna be a bumpy and unpredictable ride - class is now in session.
The problem is the media. It is now meant for the slightly above illiterate folks.
I agree. It seemed to get worse when the news-services went 'for profit'. Now what sells is more important than news. The reason for the first amendment has been forgotten. Our education system hasn't helped much either. Financial education anyone?
Jose has just graduated High School and did real well in his Chicano studies. He feels real good about being Hispanic. He just closed on a new house too.. neg-am loan. He was real surprised he could afford the monthly payments(for now...) -- note: This could apply to any race, not singling out Hispanics.
BJ,
the problem is if the majority are stupid, we are all screwed, smart and stupid alike.
Guess who bails out the stupid? Yup, the smart. Or is forced to attempt to. This time the stupid well outnumber the smart, unfortunately. Although Casey is an extreme example, the majority of people think like him.
It's not that the fundamental numbers are bad for many, but the attitude is bad as well.
::in a fine British stiff-uppah lip accent::
Translations for the following:
FOMCL
Falling Off My Chair, Laughing.
SMSL
Splitting My Sides, Laughing.
Thank You.
Anon 10:43
Is that you SJ? We love you.
King, BJ:
I agree with both of you. I am continuously amazed at the intelligence(lack of) that I see everyday. I guess I take my education for granted. Everyday things like figuring out what something cost, comparing etc. that I do in my head other's can't do. This is remedial math for crying out loud.
King we will be the few bailing out the many. Basically our children and our childrens' children are screwed. Education can at least help them keep their heads above water though.
@Akubi
Who else uses these: ::::?
I was just too lazy to type out my name--as I am again tonight. Had too much wine at Red Lobster. What a shite-hole that place was. It's a good shite-hole though, because you can fill up a table with friends and family, drink profusely, and be as loud as you like--and nobody cares. When we left, it looked like hurricane Katrina had come to the table. Leave a few bucks for the poor sucker who has to clean that up, and you're good. I actually had good fun. G'Night
SJ--Anonymously of course.
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