"Cash is king"
Seemed like three silly words to so many before the crash hit. But now with global central banks rushing hundreds of billions of dollars worth of desperately needed cash to failing banks who were holding US mortgage cancer while lending to imploding hedge funds, "Cash is king" isn't a theory - it's reality.
What are you doing out there during the meltdown? Did you prepare, or did you get whacked? And do you think the Fed's panicked discount rate cut this morning will stop the bleeding? Or is it a sign of FedPANIC?
WASHINGTON (AP) -- The Federal Reserve approved a half-percentage point cut in its discount rate on loans to banks Friday, a dramatic move designed to stabilize financial markets roiled by a widening credit crisis.
106 comments:
Who is that shaven head guy in the picture talking on his cell phone? Isn't that guy on America's Most Wanted? Is he talking about the stock market, the housing crash, or how he's going to beat the rap on his latest drive-by?
Just saw this on Interest Rate Roundup:
Fed cuts discount rate ...
Breaking news: The Federal Reserve just cut the discount rate to 5.75% from 6.25%. It also left the federal funds rate unchanged, but released a statement about how downside risks to the economy have increased and how the Fed may act to support growth if necessary. Full text of Fed announcements below ...
ON THE ECONOMY:
Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.
Voting in favor of the policy announcement were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Richard W. Fisher; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; Eric Rosengren; and Kevin M. Warsh
ON THE DISCOUNT RATE:
To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.
EARLY MARKET REACTION:
Dollar Index: down 51 ticks to 81.22
Long Bonds: down 27/32
10-year yields: Up 2.5 basis points
S&P futures: Up about 28 points
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BWA HA HA HA HA
some crash boyz
Ben Bernake is messing up all y'alls tinfoil hat dreams.
Dow 15K by next week
Oh and have you seen the 10 year lately? Mortgage rates below 6% coming soon to a theater near you.
Hey have fun with those 5% CDs
Holy Shit! The Fed has opened "the discount window" just like Cramer was screaming at them to do - 0.5% discount for banks.
http://biz.yahoo.com/ap/070817/fed_interest_rates.html?.v=22
The markets are totally rigged. Good luck on getting the average investor to take part in these markets. How does this change the underlying fundamentals? We still have mark to model. We still have much tighter lending standards. We still have houses worth less today than a year ago. We have the EU investigating the Rating Agencies.
This is more a publicity stunt than a fix for any of the strucural problems we face as a country. I'm suprised at their pandering to the markets. Maybe it is to be Weimar Germany. I thought they were smarter than that but that's what I get for thinking they actually wanted to fix the problems at this point. At some point this will now assuredly blow up.
http://www.cnbc.com/id/20303266
It all started when the Merrill Lynch analyst, Kenneth Bruce said bankruptcy for Countrywide was possible. Then another analyst at Friedman, Billings, Ramsey asked, "Can Countrywide survive?"
This all had me talking on the phone with Guy Cecala, editor of Inside Mortgage Finance, who lives and breathes this stuff even more pathetically than I do. He said in no uncertain terms, "Countrywide is too large to fail."
The company does have 1/5 of the nation's mortgages and accounts for ¼ of Fannie's outstanding business and 1/3 of its new business, he said. He also says Countrywide is no worse off than the mortgage industry overall (which I'd have to add is pretty bad), and that its trouble has nothing to do with the performance of its loans, but on the capital markets.
"80% of Countrywide's subprimes are aaa rated, nobody's lost a dime," he says. It's all about panic in the market, he says. Investors are terrified of anything that says mortgage, and companies are being penalized because they can't sell the loans.
I don't know if I buy it all, because panic is a very powerful thing. Ok, so maybe Countrywide is being penalized by Wall Street, which fuelled this whole housing boom in the first place, and is now dumping mortgage lenders like my high school boyfriend dumped me as soon as he realized I wouldn't put out.
Panic over credit is a dangerous thing. Just think back exactly a hundred years ago, when panic in the credit markets caused a run on banks and in turn created the FDIC.
today will be a wild ride up at open then crash at close
Moved everything in the 401K into stable/balanced funds yesterday. Should've done it a month ago.
Time will tell whether this was a smart move or not.
Mammoth said...
Moved everything in the 401K into stable/balanced funds yesterday. Should've done it a month ago.
Time will tell whether this was a smart move or not.
***************************************************************
When do you need your money?? If it's 8+ years, then it was a silly move.
Jim Cramer's dreams come true.
Well HPers, who's got the pimp hand? Who? That's right Mo-fos, Hank an' the PPT got da hand, and they just bitch slapped y'all for bein' stupid an' thinkin' they wasn't payin' attention. Now get yo' slack asses back to work!
Don't fight the Fed!
WTF IS THE FED CRAZY?!
I should have bought that house on lake minnetonka and mailed in the keys!
MFERS!!!!!!!!!!!
No wonder Countrywide was able to "borrow" monies yesterday. And now the Fed reduces rates...
The game is rigged. I have relatives that have pulled out of the stock market least week because they felt something's wrong with the drastic swings.
Feels like a crash to them.
After this mornings move by the Feds, proves we are in deeper trouble than imagined. Best to sit out on the sidelines because this rate cut wont fix anything. It verifys the Feds are scared sh*tless and dont know what else to do at this point.
Bombs away...
This whole thing with Countrywide reminds me of when President Regan bailed out Chrysler Corp back in the 1980's.
History repeating itself.
I thought I was prepared, but with a run on the banks at CFC, I'm worried about my accounts at various banks.
Need to track down all the risk factors, but I do have a sizable HSBC account, and apparently they're up to their eyeballs in derivatives obligations related to subprime.
General questions: How safe do people feel that HSBC, ING, EmigrantDirect, BoA, etc. accounts are, individually?
When's the last time anyone tested that $100K FDIC insurance policy? If there is a meltdown, it would be easy to see the Fed "paying" it off by deflating the dollar down to nothing.
Pass me that crack (fed rate cut) pipe. I need a huge toke that will last me thru the weekend.
I don't know if I buy it all, because panic is a very powerful thing. Ok, so maybe Countrywide is
Panic over credit is a dangerous thing. Just think back exactly a hundred years ago, when panic in the credit markets caused a run on banks and in turn created the FDIC.
I agree, panic seems to be a major concern for the Feds.
Also, they are aware people are moving their monies to safer havens-this combined with the mortgage industry meltdown is contributing to the wide fluxuations in the stock market and scaring the sh*t out of the Feds. They had to cut the rate or else today would have been really bad for stocks.
With the Feds actions this morning...will banks in turn go back to stupid lending?? I hope not.
Good God, Americans are so in debt that they can not afford for the nation to get back to normal interest rates, which is around 8%. The interest rates were lowered to the Eisenhowner era for debtors to go on a borrowing party to forget 911 and stimulate the economy. (Seems we may be following the path of Japan, 17 years of real estate declines in a nation where there is no more land.) The present American economy is not stable and looks more like a crack addict having withdraw symptoms, from easily borrowed money.
I feel like a genius today, I really do.
Sold my house last year - well that was really not genius but still I am
Bought stocks like crazy late last year and through May. Sold everything in late May and early June and bought some puts on home builders.
Sold those on Wednesday when CFC's issues really popped up.
Then yesterday I moved 80% of my cash into EFTs yesterday whe everyone was about to start jumping off buildings. I have made about a 6% reurn in less than 24 hrs.
I was really surprised by that rate cut. Just yesterday Fed governor William Poole said that there would be no need for a rate cut before the Sep FOMC meeting except in the case of a "calamity". And yet here we are.. so I counted the number voting in favor of this cut and the number voting in favor of holding rates steady at the beginning of this month. 10 each, but wait. William Poole isn't there, and we have a new voter named: Richard W. Fisher. So who is Fisher? He is an Alternate member of the FOMC.
Meanwhile Poole is off giving a speech in Arkansas!
http://www.canada.com/nationalpost/financialpost/story.html?id=c75f7cab-a904-4f18-9a0c-bf3c80c9f97c&k=11617
Did he just dodge the committee, or did they pull an end run on him?
1st rule of investing:
NEVER FIGHT THE FED
2nd rule of investing
NEVER FIGHT THE FED
Hey, responsible U.S. savers not taking on credit in an overheated market:
Dollar Falls Versus Euro After Unexpected Fed Discount Rate Cut
Fück you.
Ben
Needed that little spike on options expiration. Wonder if the banks were writing too many puts?
What I am thinking is that somebody is out to kill the capitalist financial structure. Something is waiting on the sidelines to replace it.
There is no doubt that we are headed to a total economic collapse and when this happens...war, GLOBAL war, is not far behind.
Folks...this is very serious.
Keep in mind the Fed cut the DISCOUNT RATE, not the big one - the Fed Funds Rate of 5.25%
BIG difference.
And the market is now thinking to itself - hmmmm... I guess we are really f*cked.
I shorted CFC and RKH a bit ago on the spike.
FLASH:
I just heard on CNBC a guest actually said - and was agreed upon by the host Mark Haines - that the appreciation in home prices over the past few years was based on nothing but cheap mortgages. Now that the cheap 0% down loans are gone, all that appreciation will go away. What a change in sentiment over the past few months when they were talking about 5% price drops.
I have never heard anyone in the MSM put is so bluntly before. Sure you hear someone talk about "slowdowns" and "slow housing". But I cannot recall anyone actually coming out and saying what HP has been saying for years.
Market up initially, now coming down again, if it ends up at close flat or lower on the day then they will have to do the same thing Monday, of course if it keeps having to do the same thing day in day out the dollar will become worthless, in the immortal words of Dark Angel "Now, America's just another broke ex-superpower looking for a handout and wondering why."
DOW down 200 since the open! Can you say head fake?
were any of you really surprised? come on folks, a rate cut was more or less a done deal....why the shock?
"if it keeps having to do the same thing day in day out the dollar will become worthless"
Imagine, walking into good ole Wal-Mart with a pocketfull of cash, AND YOU CAN"T AFFORD A DAMN THING!
Is it just me or do people just not realize that it's not just housing and credit? Cramer says that the Fed has no idea what it's like out there but he's talking about what it's like for the wrong people. If cash is king I'm in okay shape - I've always been a saver, I have no debt and have never lived above my means. But I think out here in the real world where hundreds of millions of us live - other things besides housing are at issue here. The point is the economy is terrible - it was terrible before this mess started to unravel and they can pander to the top 10% all they want. For the other 90% of us - in the last 5 years, wages have stagnated, taxes in many areas have doubled, gas has gone up at least 1/3 and healthcare and other insurance has skyrocketed - lets not even talk about the cost of a higher education. I know more people working a 2nd job than I ever did before. Everyone I know that works in Corporate America is always on edge because instead of just letting a large number of people go at one time - now companies just let people go in a trickle - so you never know when it could happen but the possibility is always there. I just don't buy that there is anything they can do to prevent this ball from gathering momentum.
Did Ben accidently drop his brain out when he dropped the money? Although this isn't the big rate, he better be careful about his next move. China's may start dumping the exccess toilet paper.
People THIS IS A FAKE - don't take the bait!
Seems to me like the fed is planning to rip off savers in good and bad times again and prop up the housing prices and the Wall St. markets and throw money at supporting the hundred million dolllar salaries of corporate CEO"S and directors against shareholders thus driving housing higher and higher again by the devaluation of the dollar
Hey roundeye, I wipe with you paper muney. Nobody here in China care about second rate US paper. New president will dump you dollar.
Proably took kickbacks skimjobbings, rakeoffs, bribes, from chinindia to continue the buying of the bordetr crossing junk..and screw the savers....
Can anyone recommend a good stock that deals in Grease & Lubricants..with the Printing press running full steam ahead I figure there might be a run on such a product.
Also this is the discount loan to banks..IE: Bail Out say it with me..all together now...BAIL OUT!!
This will buy a few weeks of time before the Big ARM reset takes place next month on going to April.
It still is a complete mess..so those of you cheering like its 1999 and the good times are back again..wake up and put down the crack..it ain't going to do one bit of good...
Dow 15K by next week
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So......tell us.....what are you buying, then?
What a tool.
were any of you really surprised? come on folks, a rate cut was more or less a done deal....why the shock?
______
This isn't the rate cut people have been referring to. This is the DISCOUNT rate.
Okay?
Nobody here has mentioned the yens recent rise...
The carry trade may be going bye bye. japan may be as responsible as Greenspan for starting this credit mess anyway.
Of course all the Central banks are one big cartel so there's plenty of blame for all.
Do they still hang terrorist treasoneers?
Imagine, walking into good ole Wal-Mart with a pocketfull of cash, AND YOU CAN"T AFFORD A DAMN THING!
______
Many of those who became realt-whores in 2005 don't have to imagine.
Ok, so maybe Countrywide is being penalized by Wall Street, which fuelled this whole housing boom in the first place, and is now dumping mortgage lenders like my high school boyfriend dumped me as soon as he realized I wouldn't put out.
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Uhhhhhhh...that's too much info.
I have 40K+ in a savings account at Washington Mutual. How safe do you guys think this is? Is it any safer to move it to Bank Of America?
borkafatty said...
Can anyone recommend a good stock that deals in Grease & Lubricants..
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Lubricants? Hmmm... hope you're on the right side of that transaction! hehe...
This move makes for predictable, and rather fugly window-dressing.
The fundamental sewage still remains stinking up the background.
Once the Fed lowers the Fed funds rate later this fall, inflation will rage, and the market will turn from the dollar with revulsion.
This isn't like watching a car crash, where everyone can't quite look away.
It's a tractor pull at the county fair, and you know how this one is going to end. A bogged down economy, a muddy road, and a lot of smoke.
Tighter lending standards, huge inventory and growing, massive credit problems, foreclosures up adding to inventory, standards tightening........yada yada!
this country is now addicted to cheap money
What I found additionally disturbing today, (pardon my naivete), is that the credit bureaus are part of the problem of subprime lending implosion. LowerMyBills.com is owned by none other than, Experian (f.k.a. TRW).
What a bunch of shit. Now we have credit bureaus offering subprime loans thru the following advertisement at LowerMyBills.com:
$430,000 Mortgage for Under $1299/Month!*
I see the Fed deflated our currency again this morning.
Maybe I should invest in Pesos from Slim.
Oh, and for the anonymous TMI poster above me...your high school boyfriend dumped you because you were ugly and wouldn't put out.
LOLOLOLOL
-JM
Ok, so maybe Countrywide is being penalized by Wall Street, which fuelled this whole housing boom in the first place, and is now dumping mortgage lenders like my high school boyfriend dumped me as soon as he realized I wouldn't put out.
There are plenty of securities with "nice personalities", but funny enough investors want the ones that put out.
Meanwhile, the taxpayer (and the US dollar) are gonna get killed - the Fed is taking toxic loan CDOs as collateral
F*cking idiots.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=worldwide
The Fed Board highlighted in its statement that it will ``continue to accept a broad range of collateral'' for discount- window loans, including ``home mortgages and related assets.''
For real every time i open my mail box I have some sort of Credit offering toilet paper add...so it is the consumers fault that they took the credit..or that the credit was pushed on to them on a daily basis...hmm...sure no one twisted their arm to take the offer...but it was so insisted upon...as noted the whole game is rigged...some fell for it some knew better...I new better..now i just hope when it all collapses and it will, this country as well as the fools in it can survive.
have 40K+ in a savings account at Washington Mutual. How safe do you guys think this is? Is it any safer to move it to Bank Of America?
August 17, 2007 5:09 PM
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BofA hides over $20 trillion in off balance sheet derivative obligations.
That's right $20 trillion.
Here come the "Spirit Bunnies..."
http://www.youtube.com/watch?v=rrMUJ-47iFc
Subprime lender NovaStar firing 37% of staff
http://tinyurl.com/3bptxz
Where is my money safe??? BoA, Wells Fargo... what about the brokers ML, Smith Barney, Ameritrade?
He said in no uncertain terms, "Countrywide is too large to fail."
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I disagree.
If CFC is fall resistant, then why is Angelo dumping all of his own stock? He knows the gig is up and I'm sure a lot of his windfall profits will be spread around to those who helped him get there.
I have 40K+ in a savings account at Washington Mutual. How safe do you guys think this is? Is it any safer to move it to Bank Of America?
It's tough choice between the two, BoA is the bank that had a huge "No SSN Required!" program. WaMu has a bunch of option ARMs. I spread myself out between eight institutions (none are "top" 5) as well as physical metal.
Sometimes I just want to switch to a Jason Bourne bag with a ton of different currencies in hand.
Bank run on cfc. Lines in LA to pull out cash.
http://www.latimes.com/business/la-fi-countrywide17aug17,0,1835165.story
Got a feeling ETrade is going to be next.
Please please please let a huge meteor take out Washington and New York.
This would eliminate most of the fat white maggots that are a completely self-serving lot who will stop at nothing to save their fellow maggot....at the expense of all of us.
With the Feds actions this morning...will banks in turn go back to stupid lending?? I hope not.
August 17, 2007 3:27 PM
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No they won't.
I liked Rick Santelli's match with Krazy Kudlow yesterday. R.S. was claiming that this won't help the economy. K.K. was disagreeing, in that it *will* help Goldman Sachs. They are both correct.
Fed is taking care of its members and widening their spreads to help them cover their Hedges, LBOs, and MBS. But the banks won't lower their rates. They can't. They need to be profitable. The big boys know that all the foreclosures are coming down the pipe and have to prepare.
R.S. is correct that Harry Potter can't magically put the pieces back together. Houses will sell for MUCH less in the coming years. They already are. People over bought. Those of us left at the curb are not going to chase the car anymore. Sorry.
But these foreclosures are still a problem. The auctions will pass with NO takers. The banks will sit on them for as long as possible eating at their cash reserves, until one day they all agree to kill the Comps and dump them, MARKING THEM TO THE MARKET!
R.S. v. K.K.
Anonymous said...
Do they still hang terrorist treasoneers?
August 17, 2007 4:38 PM
No. Libby got a communted sentence.
Anonymous said...
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BWA HA HA HA HA
some crash boyz
Ben Bernake is messing up all y'alls tinfoil hat dreams.
Dow 15K by next week
Oh and have you seen the 10 year lately? Mortgage rates below 6% coming soon to a theater near you.
Hey have fun with those 5% CDs
August 17, 2007 2:11 PM
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Talk that trash to all the folks at Novastar who just got laid off and I'm sure you will not live a moment after you've completed the first part of your statement!!
I'm more prepared after today. Loaded up on junk silver [90%] as a hedge against the monetization of the debt that the FED is now excepting. Weimar Germany seems to be the way-Heli-Ben wants to play the game.
May add more Gold and Silver as warranted on FED actions. Heli-Ben was supposed to be a student of history on the Depression. Based upon the action today, they are following the same path as Weimar Germany. Good luck holding on to Greenbacks.
One other thing folks. The INDU may well run to 14,500 or even 15,000, but if the Dollar falls 25% from here, net you are a big loser. Good luck to all HPers!!
keith said...
Meanwhile, the taxpayer (and the US dollar) are gonna get killed - the Fed is taking toxic loan CDOs as collateral
F*cking idiots.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=worldwide
The Fed Board highlighted in its statement that it will ``continue to accept a broad range of collateral'' for discount- window loans, including ``home mortgages and related assets.''
August 17, 2007 6:00 PM
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Keith,
Wonderful system, eh?
The Fed (a private institution) is using public funds (not just ours, but China, Japan and Russia's too!) to bail out other private institutions!
It's their world, we just live in it. Ignorance is bliss. Remember, all of you stuck your own head in the rabbit hole. You only have yourself to blaime for what you see.
Mammoth said...
Moved everything in the 401K into stable/balanced funds yesterday. Should've done it a month ago.
Time will tell whether this was a smart move or not.
IMHO you did well. Risk is something I can calculate, while uncertainty is another ball game entirely. Sometimes absolute returns are what count. It's better to be up 4% to 5% than down 20% or more when this blows. Besides how do you play any of this while the FED does the market's bidding both up and down to help the insiders?
Anonymous said...
Mammoth said...
Moved everything in the 401K into stable/balanced funds yesterday. Should've done it a month ago.
Time will tell whether this was a smart move or not.
***************************************************************
When do you need your money?? If it's 8+ years, then it was a silly move.
August 17, 2007 2:44 PM
COMPLETE BS! It's taken 7 years for the Dow to reach it's old high while at the same time the dollar is down one third. I have heard of putting lipstick on a pig, but you are even stretching that.
alan's butt boy said...
Well HPers, who's got the pimp hand? Who? That's right Mo-fos, Hank an' the PPT got da hand, and they just bitch slapped y'all for bein' stupid an' thinkin' they wasn't payin' attention. Now get yo' slack asses back to work!
Don't fight the Fed!
They have won a single battle, but the war is more certain now for the Bears. Shit is shit even when the FED says it's not. Watch the dollar tank.
Distributed cash heavy checking/saving accts at one bank into two other different banks.
Don't ask...
Spreading the risk is what I am doing I hope.
What are the odds of the three banks I use failing? :)
Enough cash under mattress for three months bills (maybe boost to six months).
I am retired (age 50) thinking about working PT just to keep socking cash away.
Start memorizing movie quotes like:
"Hey, maybe you haven't been keeping up on current events, but we just got our asses kicked, pal!"
Anonymous said...
1st rule of investing:
NEVER FIGHT THE FED
2nd rule of investing
NEVER FIGHT THE FED
August 17, 2007 3:33 PM
First rule of investing, use your God given reasoning power to see where this is all headed. The Dow may run, but net you will get ass kicked on the exchange rate.
For shits and giggles anyone here bored at work go to
www.zillow.com
look up a bubble neighborhood and start picking recently sold homes (on the map they have little yellow flags)
Some houses sold for 20% less than the 'zestimate' value...
rcochran said...
were any of you really surprised? come on folks, a rate cut was more or less a done deal....why the shock?
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This isn't the rate cut people have been referring to. This is the DISCOUNT rate.
Okay?
August 17, 2007 4:33 PM
I'm positioned extremely well. I worry about our kids and grandchildren. Any student of history already knows how this turns out. Buy your wheel barrels while they are still cheap folks.
Distributed cash heavy checking/saving accts at one bank into two other different banks.
Don't ask...
Spreading the risk is what I am doing I hope.
What are the odds of the three banks I use failing? :)
Enough cash under mattress for three months bills (maybe boost to six months).
I am retired (age 50) thinking about working PT just to keep socking cash away.
Start memorizing movie quotes like:
"Hey, maybe you haven't been keeping up on current events, but we just got our asses kicked, pal!"
It's a tractor pull at the county fair, and you know how this one is going to end. A bogged down economy, a muddy road, and a lot of smoke.
Brilliant analogy!
"have 40K+ in a savings account at Washington Mutual. How safe do you guys think this is? Is it any safer to move it to Bank Of America?"
My Scottrade account gives me both a check card and a check book.
I think a brokerage account is a safe place to leave your cash in, even if you don't invest it. They just wont pay interest if they think you are not using the money for investment. Thatz fine by me.
CHEAP MONEY IS KING!!!
HOUSING BUBBLE IS KING AND HERE TO STAY!!!
Go Benny!!! We knew you come through with the rate cut and more to follow. HP'ers prepare for true inflation and the growth between the rich and the poor. DOPES.
YEEEEEEEHAWWWWWWWWWWWWW!
DOPES!!!
"Helicopters can go down as well as up"
The crisis is over! Fed cut the discount rate! Market is up over 200 points!!!
The sun is shining again, the birds are singing and the daisies are swaying gently in the breeze.
I'm gonna celebrate this weekend by getting a 300% LTV Heloc!!!!
Wooohooooo!!!!
Bank of America gives loans to illegal aliens. My mattress is safer.
Really... a FedPanic is right.
I never thought that would happen.
Not according to the biggest investor in the world, and one 3rd richest:
"Marking to myth
Warren Buffett
Chairman and CEO, Berkshire Hathaway
Many institutions that publicly report precise market values for their holdings or CDOs and CMOs are in truth reporting fiction. They are marking to model rather than marking to market. The recent meltdown in much of the debt market, moreover, has transformed this process into marking to myth.
Because many of these institutions are highly leveraged, the difference between "model" and "market" could deliver a huge whack to shareholders' equity. Indeed, for a few institutions, the difference in valuations is the difference between what purports to be robust health and insolvency. For these institutions, pinning down market values would not be difficult: They should simply sell 5% of all the large positions they hold. That kind of sale would establish a true value, though one still higher, no doubt, than would be realized for 100% of an oversized and illiquid holding.
In one way, I'm sympathetic to the institutional reluctance to face the music. I'd give a lot to mark my weight to "model" rather than to "market.""
CNN article asking the best & brightest about what is happening. As usual the Oracle of Omaha says it best.
The problem is every one said the were "Marking to Market" illiquid assets using a computer model. So they were really "Marking to Model" and now we understand that their models were flawed and that they were really "Marking to Myth"
MARKING TO MYTH - Warren Buffett 2007 'nuff said!!!
The message by the Fed today is that you can do any financial con game you like, without incurring any risks. Risk is not a component of calculating rates any longer, since the Fed will always be there to bail the crooks out.
Another thing, the GOP wants to keep the Smoke & Mirrors until election to fool the sheeple that everything is ok.
Oh boy, this country is going down so fast!
Hey HPers, time to get into the con game to make money because today the Fed send a message that it's ok to be a criminal.
Let's all become Casey Serin, since the FBI is telling whistle blowers that they are not interested in our findings of scumbags making millions with real estate fraud.
Don't believe it? Check our friend OC at his blog
Bubble Markets Inventory Tracking
It pays to be a criminal in America; thats the message from the Fed, from the White House, from the FBI, from Wall Street, from MSM, etc.
Let it go, folks, inflation disappeared in 10 days through Ben's magic wand. Poof! Wow, this country is going down so fast that you sheeple and Karl Rove corrupt cheerleaders won't even know what hit you:
"(Bloomberg) As recently as the Aug. 7 meeting, the FOMC said inflation was still the biggest danger to the economy. Today's statement, approved unanimously by 10 Fed governors and presidents, didn't mention inflation."
Another example of how the Fed sells the idea that it pays to be a criminal in America, through the wise words of one of the best businessman in the world:
"The most dangerous words on Wall Street
Wilbur Ross
Chairman and CEO, WL Ross & Co
I recently overheard two men arguing about who was better off. One boasted about his new car, the other about a plasma TV and so on, until one proclaimed, "I am better off because I owe more than you are worth." The second man conceded defeat. This anecdote summarizes the mortgage bubble. Americans spent more than they earned in 2005 and 2006 and borrowed the difference. The federal government did the same.
Everyone secretly feared this was unsound but wanted immediate gratification, so there was applause for talking heads who said global liquidity would make these borrowings safe. Alan Greenspan went so far as to suggest that people take out adjustable-rate mortgages.
Liquidity, however, is not about physical cash; it is mainly a psychological state. Subprime problems have consumed only trivial amounts of global cash but already have burst bubbles by shocking lenders. Clever financial engineering effectively had convinced lenders to ignore risk, and not just in subprime. A major hedge fund participated in a loan to one of our companies, but sent no one to a due diligence meeting. So I called the senior partner to thank him and tell him about the non-attendance. He responded, "I know. For a $10 million commitment, it wasn't worth going to a meeting.""
Meanwhile, the taxpayer (and the US dollar) are gonna get killed - the Fed is taking toxic loan CDOs as collateral
Now keith this is going too far.
1) The Fed does have standards (you know regulations on all that) what it will take and more importantly collateralization levels.
If you put down treasuries you can borrow 99% of market value or something. If you put down less secure things, you can borrow significantly less, and more importantly the Fed will take the whole amount if you default. So the Fed has a safety cushion.
And even if the banks default and the Fed is left with the stuff it doesn't want, the taxpayer isn't losing. Thanks to the magic of fractional reserve centrla banking the money was created out of thin air when the Fed made the original loan. Usually since securities go in (and out of circulation) it's roughly 'money supply neutral'.
Remember that deleveraging even by private banks (which is what they're all doing) is destroying money. I used to be more worried about this until I read more.
The Fed will be creating new money of course, but it will be to offset the money being destroyed in the deleveraging and defaults.
As far as the dollar, Voldemort (central bank of China) decides what the dollar does, not the Fed.
Stocks way up today on the Fed cutting rates. Lots of hookers and blow out on the Street to celebrate. The Hamptons will be packed and a good time will be had by all.
I'm predicting nausea and headaches come Monday morning when reality sets in again.
I didn't realize it was the Fed's job to prop up markets. I should have paid closer attention in Economics class.
If you don't put out, I wouldn't even talk to you.
Anonymous said...
have 40K+ in a savings account at Washington Mutual. How safe do you guys think this is? Is it any safer to move it to Bank Of America?
August 17, 2007 5:09 PM
You probably safe, fdic insured to 100K
"What I am thinking is that somebody is out to kill the capitalist financial structure. Something is waiting on the sidelines to replace it.
There is no doubt that we are headed to a total economic collapse and when this happens...war, GLOBAL war, is not far behind"
Give us cheap cars, oil and, and um stuff or we'll nuke you.
Don't worry HP'ers. The FED can NOT discount it's way out of this mess. Few billion here ... few billion there. There's TRILLIONS that are going to evaporate. Just like Japan ... dropping the discount rate (or the funds rate) to F*cking zero percent won't float this boat. Get your waders on. It's gonna get deep.
well i'm pretty much out of the market right now but i was feeling somewhat smarter when i saw that u.s. reits have averaged a 17% drop in 3 months because i sold my reit mutual fund in feb. i plowed it into metals/mining so still have to wait and see what the final verdict is .
MCC
Just a wild guess.
Did Fed knew something which we don't... Redemption requests surpassed their expectation?
I pity you people. You rent while everyone is making 50% a year in r/e.
You invest in money markets when the dow is gaining 20% a year.
And now you get all set for the crash and Bernake steps in to say not on my watch you don't.
Gor rate cut?
The cocky man only appears to win in this game of musical investments.
A long time ago, the Fed was responsible for keeping inflation in check. Then they decided they were also responsible for preventing recessions at all cost. Now they think they're responsible for making sure stocks and real estate only go up and never down, and that lenders and investors should never lose money no matter how stupid they are. God help us.
I pity you people. You rent while everyone is making 50% a year in r/e.
You invest in money markets when the dow is gaining 20% a year.
And now you get all set for the crash and Bernake steps in to say not on my watch you don't.
So why are you here? Something bothering you? Something doesn't feel right about the Prosperity?
If you say it's for entertainment I don't buy that. For example, I find UFO conspiracists curious and even enthusiastic about their cause, but get bored really fast around them. They do their thing. I do my thing. I don't go and seek them out and badger them.
If you thought we were completely wrong wouldn't you write us off like The Flat Earth Society? So why are you here?
These latest trolls are very different. Look closely at their statements. Not like DOPES!, or the other regulars. Possibly we have an intervention.
Question regarding banks' safety:
Here is a list of resources online regarding banks and exposure to subprime/derivatives:
Credit Unions - creditunionrate.com (Gives list of top 50 credit unions in the nation. However, does not provide information on the extent of their exposure to subprime/derivatives. Still looking for info on that).
European banks -(i.e. ING - has 3.2 billion eurodollars in subprime according to article)
http://www.ihta.com/articles/2007/08/10/business/10banklist.php.
If link does not work: International Herald Tribune. Business Section 8/10/07. Reuters.
Top 10 Banks Exposure to Subprime Lending, etc. - provides data on a quarterly basis amount of sales volume as well as year over year comparison:
National Mortgage News Online
Top 5 Banks with most derivatives exposure: JPMorgan, Bank of America, Citibank, Wachovia, HSBC. Wells Fargo is number 7. This is based on the Fourth Quarter, 2006 report by the Comptroller of the Currency Administrator of National Banks - OCC. Go to Daily Reckoning, patrick.net or Piggington as these blogs also have threads on bank solvency, etc. In one of the Daily Reckoning threads, there is a link to the 2007 First Quarter report on derivatives by OCC.
Bankrate.com - rates the banks but do not know how accurate it is as far as evaluating banks risk to subprime/derivatives, etc.
Washington Mutual - articles posted by the other blogs that discuss its financial status or "liquidity." Forgot where exactly I read them.
Btw, just checked my 401k Stable Income Fund: Some of it is invested in the mortgage backed securities as well as asset back securities. Vanguard rep could not tell me what percentage was invested.
Warren Buffet increased his shares of Wells Fargo and Bank of America. This is according to CNBC.
Lilli98--
Thanks for the info. on which banks have the most subprime exposure--with the recent run on Countrywide Bank, this could be a major topic of concern to consumers and it already is for me!!
Not long ago, I transferred some savings to ING, and I am somewhat scared to hear they have 3.2 billion euros in Subprime mortgages! (.25 of assets).
What to DO??? Which US bank is safest?? Does anyone know??
Anonymous said...
I pity you people. You rent while everyone is making 50% a year in r/e.
You invest in money markets when the dow is gaining 20% a year.
And now you get all set for the crash and Bernake steps in to say not on my watch you don't.
Gor rate cut?
August 17, 2007 11:54 PM
You understand little concerning housing, and even less about finance and the markets. Go do your weekend homework for your classes.
Anonymous said...
CHEAP MONEY IS KING!!!
HOUSING BUBBLE IS KING AND HERE TO STAY!!!
Go Benny!!! We knew you come through with the rate cut and more to follow. HP'ers prepare for true inflation and the growth between the rich and the poor. DOPES.
YEEEEEEEHAWWWWWWWWWWWWW!
DOPES!!!
August 17, 2007 8:40 PM
Let us know which soup line you will frequent, and we can supplant your vittles with Raman Noodles.
Anonymous said...
Just a wild guess.
Did Fed knew something which we don't... Redemption requests surpassed their expectation?
August 17, 2007 11:49 PM
Or a Big Bank in New York or the West Coast teetering on insolvency.
Anonymous:
You might want to look at your local credit union. Ask for their financial statement. I would have cash on hand put away as many of the posters suggested here and on other blogs. But, most posters say pretty much the same thing on all the blogs I have read: If the bank is FDIC insured then your deposit is secure up to 100,000. There have been other posters who have experienced the S&L crisis first hand and have stated that every depositor had their money returned to them when the S&Ls went bankrupt in the late 80s.
My major concern is this: America has trillions/billions in deficit...how long can the Fed or Treasury continue to print money...the derivatives are in the trillions!! The resets on the ARMs are expected until 2009! Already everything is tanking!
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