Got your popcorn? When doing your research, note which companies are bag-holders in addition to issuers. Wells Fargo for instance sells their junk as fast as they can to Wall Street firms, who then sell it off to who-knows-where (hedge funds, China, etc).It's the bag-holders that get killed on this grand game of duck-duck-goose. Goose!
32 comments:
We haven't heard about anything at Wells Fargo yet. They are way ahead of the others. Maybe it's time to short them
Speaking of lists, how about a milk carton post featuring the lost HP trolls? Since the revelation of HSBC and NEW Thursday they've given up. Oh well, every trade needs a loser to go with the winner...
a lot of them are in folks' pension funds too, unfortunately.
Read this :
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/11/cnhsbc11.xml
Vd the comment about HSBC:
HSBC targets migrants to salvage US loans
An equally strange sort of snobbery has crept into the unfolding crisis over at HSBC. As bad debts spiral seemingly out of control at Household, its US lending division, the bank is in danger of giving even American trailer trash a bad name.
There is nothing wrong with lending to poor people with poor access to credit - often euphemistically known as consumer finance - as long you keep your eyes open. General Electric and Citi have made a fortune from pricing this risk in a way that keeps loan sharks out of business and everyone else happy. So news that HSBC is planning to increase its US exposure by targeting new immigrants is not automatically as crazy as it looks: it would be illogical to champion HSBC's lending to Mexicans in Mexico as a healthy sign of its emerging market strategy, but fret about lending to the same people when they try to make a new life for themselves in the world's richest economy.
The trouble is HSBC shows every sign of having lost control of the process and losing control of the message. Letting news of Household's woes trickle out slowly rather than face up to the worst fears of its investors is a sure-fire way to confirm suspicions that the problems are symptomatic of wider managerial malaise. Until this is addressed, few will be willing to give the bank the benefit of the doubt when it redoubles its push into these markets.
So how do cash heavy HP'ers play their CD's when many of them have money at BofA and Wells? Do you trust the 100k FDIC insurance? How long will it take you to get your money in a bank failure?
What a coincidence! I did a search yesterday, keywords Bank Exposure Subprime Mortgage Loans and got some figures on banks like WF and WM. I would bet WM is in trouble. One of the articles said that B of A exposure was non-existent.
"So how do cash heavy HP'ers play their CD's"
I Don't. I'm lazy, unmotivated and an underachiever, I buy short term treasuries.
In my play book, prime or sub-prime are irrelevant except as regards timing.
The sub primers would merely be the first to go.
However, once house prices drop 20% and show no sign of bottoming, even some fixed, prime mortgage holders are going to bail or short sell.
The insane lending is still going on in Los Angeles. A verifiable (not quirks) percentage of the houses in West Los Angeles sold recently for 4x-7x their pre-bubble prices even while some houses in the same area are losing value. This shows there is still some stupid money out there and lenders willing to throw away the future just to get the commission.
Thursday may have been the beginning of the end of western civilization. Monday is looking more and more to be a bloodbath of epic legend.
Right now I'm moving as much as I can into the GLD and SLV ETFs and puts on the mortgage companies, though that worries me too because, like in the 1930s, the government may just choose to confiscate all the gold.
I'm getting some hard cash out today just in case we do see a run on the banks.
Granted, this is a worst case scenario but we already have a worst case bubble popping.
The biggest crash of all to come, Fannie Mae, I cannot short invest in because I do not understand how far the government will go to bail it out since it was started in the Roosevelt Era, and you know how Democrats are about Rooooooosevelt stuff. It's already been given a pardon and not de-listed from the Stock Exchange for failing to report. In my mind this means it's already rotted completely from the inside, and is merely a facade. All someone has to do is kick in the front door and the whole rotten thing will collapse.
Our economic infrastructure has grown beyond the ability of an archaic govermental system to control. It moves too fast and our two party system means we have a house divided constantly and nothing important gets done or fixed. Utter destruction will be the result.
I don't think it's too late to get in on shorting the mortgage lenders.
There is a lot of unfounded optimism still in existence re housing. There is still a lot of stupid money out there for a Bear to harvest.
Countryslide Feb40 puts were still .15 ask price a share on Thursday. That shows an utter disregard for the risk of CFC going to 40 before Feb17. Sometime during Friday those same puts were worth .30 a share as Countrywide reported sub-prime problems also.
There's an Option One advertisement banner on this site yet they're a dreaded SubPrime lender too?!
Check out this chart/graphic about the exposure Downey Savings and Loan has..
http://tinyurl.com/yutkl3
And I understand that it's similar for WAMU and other large banks. Seems like shorting them is a no-lose proposition
Question: Which bank(s) do you keep your money? Any suggestions for a good bank in the US, Europe or Asia(Singapore) would be highly apreciated.
"The biggest crash of all to come, Fannie Mae, I cannot short invest in because I do not understand how far the government will go to bail it out"
A friend of mine mentioned that FNM is useful as a sentiment indicator and that's about it.
"I wish I had followed the Sub Prime lenders better...this would be a great time for a Dead Pool!"
ml-implode.com
re anon- 4:45
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So how do cash heavy HP'ers play their CD's when many of them have money at BofA and Wells? Do you trust the 100k FDIC insurance?
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My wife handles that side of things and yup we rely on FDIC insurance to protect us - and spread the money around in shorter that 1 year CD maturity and also MMs.
Oddly, she's noticed that SAVINGs accounts have made a comeback - HSBC with 6% till April, CountryWide with 5.6%.. I've noted the BofA "Keep the Change" ad campaign where they round up a debit card transaction deposit the change in a Savings account.
That is odd-I wonder if lack of liquidity is playing a part here in some weird way - it has to be a weird way because the banks have had a zero reserve requirement as per the Fed since 1995 - and their use of sweep accounts has converted all demand money into deposit money - so I can't see why they should be short of a bob or two to lend out and can't see why Savings Accounts are back in Vogue. I can't see anything in the BASEL capital requirements that banks ought to adhere to that could cause this either. Any ideas ?
Maybe its purely a matter of catching the public mood - After all this SPEND SPEND SPEND mentality perhaps people are turning to "saving" again and bank, attuned to that mood change, are enabling it.
-K
Fellows, if you buy gold, realize, you're buying a systemic risk hedge so GLD, being an ETF, isn't the real deal; neither is e-gold unless you're looking to diversify out of a paypal only cash flow system, if you run an e-business.
Look at getting a real gold depository account like Perth Mint (Perth, Australia) or a Hang Seng (Hong Kong). Also, since gold's been demonetarized and distributed around the world, the govt will only tax you when you decide to sell it which is why an overseas gold depository might do the trick if you're worried about a repeat of 1933. Also, during that time, silver went from $0.25/oz to $0.75/oz, from '33 to '38, so PMs are a good hedge against even deflation.
Can't wait to see WaMu go down like a little bitch.
I personally agree with your thought here but i would also like to remind the consumers out their that the so called profesional broker that are DRE licensed and un-licensed are a big part of the problem for these lenders. especially the un-licensed brokers that are hiring these people that have no clue about the business or even how to help the consumer,SHAME ON THE CFL BROKERS FOR THIS OUT OF CONTROL PROBLEM,They are supposed to be educated people so they can help the average consumer BUT not so, all they want is the commission. I am a licensed broker that really cares about our industrie, we have to for get about the money and start helping the consumer insted of making the problem wores. i am truly imbarrest by the way we as professionals have handaled this crisis.
we are the people that is the eyes and ears for these banks, We have more power than what people give us credit for.
We as professionals are responsable for wheather the consumer can and will make the mortgage payment. Think about this with all of the new loan programs like the pay option arms a great product for the right case, deffently not for the FIRST TIME HOME BUYER! most brokers have faild as educated professionals because they are more interested in the money than doing whats right for the consumers financial well being.It makes me sick when i have a client that comes into my office and say's i or we need help! we can't afford our payment! i believe because we are the educated professional broker We need to take the time and make sure our clients are taken care of for the long term,just because a person has challanged credit does not mean we tell the client we can not help them acheive the altiment goal,just because the mentality of the broker is the more work the less money.
sorry for the mispelled words.
LESS CLEAN UP THE LENDING AND REAL ESTATE INDUSTRIES. WE NEED TO BE ACCOUNTABLE TO OUR COMMUNITIES WE LIVE IN.
Someone mentioned that the cost of Resolution Trust (see S&L Bailout of 1989) is still revolving on the national debt credit card. . .guess Resolution Trust 2007 will be added to the trillions the great grandchildren will need to pay off. . . banks will just offload this on the public, or the credit markets. . .a few high-profile people might make the "perp-walk", but most likely it will be blamed on the underlings - just like Enron's Jeffrey Skilling "didn't know these things were going on." . . .
On a related matter - here is an interesting article from the Canton, Ohio newspaper about food stamp use doubles in Ohio. . .note - Ohio's population has been flat since 2000
http://cantonrep.com/index.php?ID=335583&Category=13
My theory - we ARE in a depression disguised as prosperity - instead of 20% unemployment like 1930's, but have 20% working poor. . .
Either the gubbermint bails out the foreign investors or they get sick of the bull$shit, could be trouble for the dollar either way.
BofA ... always thought that security was crap, now I think even moreso.
Also, they bought MBNA, and are now destroying everything that made MBNA great. Good work, BofA
"it would be illogical to champion HSBC's lending to Mexicans in Mexico as a healthy sign of its emerging market strategy, but fret about lending to the same people when they try to make a new life for themselves in the world's richest economy."
Other than the
1) lack of legitimate, reliable identification
2) lack of authentically documentable income and employer records
3) the flight risk
4) lending to the most economically vulnerable and risky part of society
what could possibly go wrong????
(snort)
It is very logical to say that lending money to Mexicans in Mexico is entirely different. This isn't an ethnic issue of "lending to Mexicans" as if there is some essentialist nature which transcends the obvious diversity of people.
They'll be lending to middle class Mexicans who are in the system, work legally, have a stable home base and assets which can back up the loan. The fact that they aren't breaking laws might be another good characteristic for a borrower to have, but I guess that is just soooo 19th and 20th century.
Would it be logical for HSBC to lend to illegal Guatemalan immigrants living in shanty towns in Mexico? No, it would be idiotic.
(Mexico has its own Federal 'la migra' of course, looking for and deporting illegals to Central America)
I'm no banker but barely a minute's thought makes it pretty clear.
Unless I'm mistaken, I don't think that bank CD's pay that much more (and often less) than t-bills.
Why worry about FDIC and all the paperwork opening up at this bank and that bank.
Do what the big boys do, and buy t-bills and t-notes and GNMA's (only GNMA and not FNMA bonds!) at auction, with an account from a major discount broker.
Since that's what the really rich people have (they don't bother with piddly 100k CD's), the government is unlikely to do anything to disrupt this.
If you go to Interactive Brokers you can buy all sorts of stuff from your account. The usual stocks and bonds, but also foreign stocks and bonds directly as well. Buy long-dated oil futures. Whatever.
OK, here's my question. If you have a mortgage through one of these fine institutions (specifically National City), and they go out of business, what exactly happens to your mortgage? Does it get sold to another bank on bankruptcy? There isn't any chance of anyone demanding full account paid by the individual who takes out the loan, correct?
Understand this is valuable information, just trying to figure out what to do with it...
"Unless I'm mistaken, I don't think that bank CD's pay that much more (and often less) than t-bills."
And a t-bill has less tax consequences if I recall. Although, I'd hate to own t-bills when China exits for cash.
Anonymous said...
BofA ... always thought that security was crap, now I think even moreso.
Also, they bought MBNA, and are now destroying everything that made MBNA great. Good work, BofA
February 11, 2007 9:38 PM
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I'm no fan of BOA, but I despise all the credit card companies out of Wilmington DE. MBNA was the biggest parasite of them all leveraging the cushy DE banking/usury laws to exploit Americans all across the country for MBNA & Delawhere's gain not giving a damn that they were burying people in debt & runining people's credit and lives.
The CEO of MBNA made Wilmington MBNA's little fiefdom, building a huge complex in the middle of that rotten little $h!th0le of a ghetto. They had employee housing bought & paid for by MBNA (i.e. all the contrived bogus fees they charged when to free housing for them while the got you evicted due to all the interest & fees they'd screw you with).
Corporate jets & choppers, sponsoring all these charities etc so that the scum of wilmington could slop at the trough. Then MBNA got into a huge jam financially, they pulled in the gravy train & slapped some lipstick on that pig to get BOA to buy them out (save their a$$es).
BOA is slowly dismanteling the MBNA fiefdom, heads are rolling and all the scum from wilmington that use to stick it to the rest of America are now getting it stuck back right at them. Serves them right for being just a bunch of parasites.
I cannot wait for this bubble to burst, b/t all the credit card companies & banks in Wilmington they will get hit with the 1-2 punch of defaulting mortgages (HSBC, INGDirect, Chase, BOA etc) and the sudden pull back of plastic due to a drop in consumer spending (BOA, Chase/Capital ONe, BArclays/Juniper). Thus heads will roll making the BOA layoffs look like nothing. Serves that rotten little $h!th0le of a ghetto right. They need to stop being a parasite on America and actually produce something other foisting debt & misery upon the rest of us.
Just desserts for them, no sympathy just satisfaction.
If you must buy treasuries, you can just do it by setting up an account directly with them:
www.treasurydirect.gov
But, nope, they don't pay as good a rate as one you'd get by searching for good rates ( www.bankrate.com as a starter ) - whether CD, MM or even savings account.
-K
roxrok,
roxrok,
they probably have a clause to
call in the loan.
Yeah but Forbes said that real estate stocks are doing good. No need to worry.
So come on all of you financial experts. Where do you place your money? Several posters have requested advice.
I know my broker has plenty of ideas. Only problem is he is the only one who makes money. Do I trust him? Hell no!
Let's do a good deed today and try to help out the little people that mow your lawn,wash your car, serve you meals.
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