March 05, 2007

NEW, FMT and LEND pretty much bit the dust today. This subprime implosion is fascinating isn't it?




NEW stock plummets another 69%
FMT down another 33%
LEND off 26%
CFC off 5%

Does anyone else have some serious dot-com deja-vu today?

This meltdown won't stop with subprime and the lenders. Nope, that's not where it ends. That's where it BEGINS.

NEW YORK, March 5 (Reuters) - Shares of New Century Financial Inc. dropped 69 percent on Monday on fears it could go bankrupt as rising concerns about defaults triggered a broad sell-off in the mortgage-lending sector.

Subprime lenders, which make loans to people with poor credit histories, suffered the biggest declines.

But the meltdown also spread to Countrywide Financial Corp, the largest mortgage lender, whose shares fell on concern that even homeowners with good credit scores will miss more payments.

"We think there is further downside risk, possibly to $0," wrote Merrill Lynch & Co. analyst Kenneth Bruce. "Bankruptcy seems a likely course of action."

Many subprime lenders are being forced to buy back loans at a loss, and several have quit the business or have gone bankrupt in the last three months.

48 comments:

Anonymous said...

http://video.google.ca/videoplay?docid=895517723413961249&q=debt+duration%3Along

Anonymous said...

First, Why the market did'nt get lower I dunno, but there's more bad news than good, so give it a day or two.

Mort said...

yeah, MER is taking a dump too, maybe it was something they ate, like that poison pill First Franklin. Bwahaha! I'm sorry sir, but your stock just went negative, you owe us an additional $10 per share.

anon#1111 said...

Hey, FED down about 7% too. Good call Keith.

Anonymous said...

Remember the Republican platform: Regulation is anti-business.

Well, regulation could've prevented Great Depression 2.

Anonymous said...

Go Hank Go!

Secretary Paulsen is workin' hard to boost the Nikkei.

Jambu said...

Lenders failing left right and center. A slowing housing market following a 5 year boom especially in California. A jittery Wall St. A possible recession on the way. A growing trade deficit especially with an Asian powerhouse. A growing national debt. A war in the middle east. Skyrocketing oil prices. George Bush in the WH with a Democratic House and Senate. A growing population of illegal aliens. A shrinking manufacturing base. Troubles at GM and Chrysler with massive layoffs from both. Concerns over global warming.

2007?

Nope. 1990. Subsitute subprime with S&L and today is a carbon copy of 1990. And look where the NASDAQ, DOW and median home prices were during 1990.

DOW: 3000 vs. 12,100 today
NASDAQ: 500 vs. 2300 today
Median home: $78K vs. $210K today

17 years later DOW is 400% higher, NASDAQ is 425% higher median home price is 300% higher. I'd say we recovered more than OK wouldn't you?

Give all that, someone please tell me why THIS TIME IT'S DIFFERENT. Why will the next 17 years be any different.

borkafatty said...

........................................
........................................................
Yes it is and in High Definition

Mark in San Diego said...

I told everyone there would be no one left standing to sue. . .Elvis has left the building!

It does remind me of my favorite internet stocks - EPAWN - with offices in Boca and Trenton NJ. . .(now boys and girls, when you see NJ and Boca in the same sentence, RUN for cover). . .I bought it for 50 cents, from the Purple Gang recommendation (another scam group) and sold at $10. . .they were predicting $40. . .needless to say it went BK. . .ah yes, the great internet era. . .I get misty eyed just thinking about it. . .CyberCare - another scam - bought at .80 and sold at 15 - also BK. . .the trick??? Get in and get out FAST.. . .just like all the insiders at our favorite lenders.

Anonymous said...
This comment has been removed by a blog administrator.
borkafatty said...

great read:

http://tinyurl.com/2so35a

raynla said...

.







Message to the folks in the "OC"

Don't worry about LAST CENTURY on a Death March into the
IMPLODOMETER...


"It's different down here"

Shakster said...

Fascinating how those June 07 puts on the DOW made a 9.6%gain today on a .59% decline in the Dow.Fascinating how I didn't get any too.

Anonymous said...

CFC is the new Enron. Watch the CEO try and hide the true results as long as he can.

He's credit is drying up.

I think the credit markets have much more potential for fast flameouts then equity. Especially with all the derivatives floating around.

Anyone know how I can buy options on CDS (Credit-Default Swaps)

Phil

Anonymous said...

Nothing to see here.

Move along please.

Anonymous said...

last night there was a leaked e-mail on several financial blogs from a FMT
exec saying the fdic had completely shut down their
lending, both commercial and residential - I haven't
seen any follow-up today -
did it turn out fake???
what is happening to FMT deposits - I would think there would be runs - are
their retail offices open
normally?

Halifax said...

OK NEW Mar 07 7.50 puts went from $0.10 to $3.80.
Anyone have this trade?

Anonymous said...

Wow, this is boring!

showmethenouns said...

Dang that 1 year graph of NEW is a hoot.

http://finance.yahoo.com/q/bc?s=NEW&t=1y

Now *that* is the funniest thing I've seen in a long while.

Stuck in So Pa said...

looks like the credit bubble will sink us much faster than the housing bubble! Gee, when did this happen?????

Anonymous said...

It's finally clear to all reasonable clear headed people: We have finally reached a bottom.

Note use of the indefinite article 'a'.

Anonymous said...

listen, this is a correction not a crash. Relax, the fundamentals of the global economy are strong. Are you listening to me? There will be no recession in the US. Did you hear what I said? There will be no recession in the US.

Anonymous said...

I sold my LEND puts for $350 each this morning on the opening panic. I should have waited even longer!

Niiice.

The dolts keep shovelling money into these losers. I just don't get it.

Who Knows said...

There once was a hermit named Dave,
Who kept a dead whore in his cave,
She had one tit, smelled like shit,
But look at the money he saved!!!



I bet Dave wouldn't buy one of these poorly built stucco shitboxes, with the first thing you see is the garage. Because he defenitly knows value.

Anonymous said...

1920 - 21 U.S. stock market crash
• 1929 U.S. stock market crash, followed by the Great Depression
• 1987 U.S. stock market crash
• 1997 - 98 U.S. financial crisis
• 2000 U.S. Dot Com bubble burst
• 2001- 06 September 11 + Iraq war + Globalization + Offshoring + Real estate bubble + Highest budget and trade deficits in U.S. history
• 2007-17 What are the prospects for the U.S. economy?

Anonymous said...

Like domino's, when one begins to fall, the others won't soon be far behind.

Anonymous said...

LONGLIVETHEBUBBLETHEREISNOBUBBLE

wawawa said...

This is just the begining. Just wait and see what will happen to CFC, WM, and FNM and etc. They all have dirty laundries, very dirty indeed.

2007 will be recorded in U.S. financial history as a year when Ponzi pyramid collapsed.

GowdTeef$ said...

What about some other lesser-known companies that are heavily exposed to subprime, but that havent gotten as much media exposure yet? Anyone got some good ideas now that the cat is long out of the bag on the big names?

oh golly gee said...

First the RE market and now the stock market - how will those baby boomers retire? Will WalMart and McDonald's have enough jobs for 78 million baby boomers?

BTW - Over 58% of boomers don't think they have enough money for retirement. Another 32% are in denial. Florida is expecting 100% of those boomers to move to their state and buy $800K condos in retirement. So is Arizona, Nevada, the Carolinas, Tennessee, Arkansas, Texas, Georgia, Hawaii, Colorado and New Mexico.

Anonymous said...

Who Knows said
Always remember when you can't sell what you want to, you have to sell what you don't want(gold)to . Gold will be back, rest assured.

Great post

Anonymous said...

Goldman, Merrill Almost `Junk,' Their Own Traders Say (Update2)

By Shannon D. Harrington

March 2 (Bloomberg) -- Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.

Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody's Investors Service. For Goldman, Morgan Stanley and Merrill that's five levels below the actual Aa3 rating on their senior unsecured notes and two steps above non-investment grade, or junk.

Traders of credit derivatives are more alarmed than stock and bond investors that a slowdown in housing and the global equity market rout have hurt the firms. Merrill since 2005 has financed two mortgage lenders that subsequently failed and bought a third, First Franklin Financial Corp., for $1.3 billion.

``These guys have made a lot of money securitizing mortgages over the years in a mortgage boom time,'' said Richard Hofmann, an analyst at bond research firm CreditSights Inc. in New York. ``The question now is what is the exposure to credit risk and what are the potential revenue headwinds if they're not able to keep that securitization machine humming along.''

http://www.libertypost.org/cgi-bin/readart.cgi?ArtNum=179024

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

bwa ha ha ha

Goldman and Merrill are now junk status? Man I've read some crazy shit on this blog, this has to be up there.

I may be somewhat biased having worked at Goldman for 2 years and at Merrill for about 2 minutes, but still, boys you need to put the pipe down on this one.

And libertypost.com? Was wnd.com and newsmax.com down or something? You might as well give Jimmy the shoeshine boy as a source, it's about as credible.

Anonymous said...

the source of the article above is bloomberg, although liberty picked up the article

http://www.bloomberg.com/apps/news?pid=20601103&sid=a0j4oiYE3Bfw&refer=us

still gonna argue with it?

things have changed

Anonymous said...

things have changed

you mean as in this time it's different?

bozonian said...

Gold and Silver seemed to have bottomed.

Holding their value, even up a bit in international trading.

Maybe time to get some up in my portfolio.

Anonymous said...

The trolls have been lively the last couple of days. I detect some nervousness in the natives. Two months ago I got completely out of the markets and my CPA nearly had apoplexy. I talked with him today and he sounded shaky, I think his other clients are fretting a bit.

Anonymous said...

Went from Goldman to Merril? Boy you must have messed up big time going from Tiffany to Walmart! What now selling real estate or stocks at a strip mall?

Anonymous said...

jambu--"17 years later DOW is 400% higher, NASDAQ is 425% higher median home price is 300% higher. I'd say we recovered more than OK wouldn't you?

Give all that, someone please tell me why THIS TIME IT'S DIFFERENT. Why will the next 17 years be any different."

Incomes 400% higher? No? Unsustainable.

Agent #777 said...

Yeah, I have my money in Gold and Silver miners. I figure those will take a hit too, but what else am I gonna do - simply have my cash in FDIC-insured accounts?

Anonymous said...

Gold and Silver seemed to have bottomed.

Aha. Housing is crashing 70%, the DOW will crahs 50%, but gold has bottomed.

You do just make this shit up as you go along, right?

Anonymous said...

Anonymous said...

Went from Goldman to Merril? Boy you must have messed up big time going from Tiffany to Walmart! What now selling real estate or stocks at a strip mall?


Another case of the socialist walmart disease. Kind of like turrets syndrome except instead of swearing the sufferers blurt out walmart. Dude, give it a rest already, your obsession with a retailer is just creepy, like I'm waiting any day to read about you going postal inside one.

Please get help.

Anonymous said...

Anonymous said...

jambu--"17 years later DOW is 400% higher, NASDAQ is 425% higher median home price is 300% higher. I'd say we recovered more than OK wouldn't you?

Give all that, someone please tell me why THIS TIME IT'S DIFFERENT. Why will the next 17 years be any different."

Incomes 400% higher? No? Unsustainable.

---------------------

China and India are growing at 10% a year. That means a hell of a lot more than what the median income in the US is doing for the stock price of a conglomerate in the DOW.

Between 1970 and 1990 the median price of a home went from $23K to $122K. That's 500%. Median income didn't increase anywhere close to that. Then following a 2 year, 10% downturn, prices increased another 300% during the next 15 years. Sustainable? Yeah if the previous 40 years is any indication, I'd say so.

Oh but I know, I know, this time it's different. Hmm where have I head that before?

Face it socialists,no matter how hard you try, you can't stop it. Wealth will always be created. Some will benefit, some won't. Those that are left behind will cry fowl and blame others (Bush, NAR, Greenspan, illegals, Walmart) for their misfortunes but never aknowledge their own shortcomings and mistakes. This blog is Exhibits A though ZZZ of that.

Anonymous said...

BUY GOLD AND SILVER

Anonymous said...

Silver Miner Hecla (HL) up 6% today

Go silver Go

Socialism = Equal Opportunity Poverty said...

anonymous said.

Oh but I know, I know, this time it's different. Hmm where have I head that before?
.................................
17 years ago we had 8 trillion in debt too
(oh, wait a minute, it wasn't that much)

17 years ago we had 78 million citizens getting ready to retire in a few years

(oh, wait a minute, that didn't happen either)

17 years ago China held one trillion dollars in US dollars/Treasuries
(darn, that didn't happen back then either)

17 years ago the dollar was the currency of choice

(ok, one for one, of course the Euro didn't physically exist back then, though the German Mark had fans around the globe.

Yes, this time it is different, this time it is our turn to tell the next generation how bad things were during our lifetimes.

Few living in South America thought their currencies and economies could go bust, a "It can't happen here" mentality was the norm, until hyper inflation set in.

Socialism = Equal Opportunity Poverty

Anonymous said...

Investing is all about risk/returns. With the market at multi-year highs and debt spiraling out of control, margin buying at the highest levels since the Great Depression, home prices having gained 300% the past few years, millions being loaned to illegal aliens and prison inmates, what is the reasonable thing to do now? At the beginning of a downturn, even gold and silver will be hit as people unwinds all positions to pay the piper. How much gold has been bought on margin? How about stocks and RE? One event could cause a massive stampede and worldwide margin call. Do you trust the government not to confiscate gold again like FDR did back in 1933? If you really are that worried, stock up on guns and bullets instead.

For me, I shorted the market last week and will stay short until there is at least a 10% correction. The rest of my money is in fixed funds.