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  1. #21
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    There seems to be a bit of a recovery due to Bernake basically sayign "They're too big to fail so we'll open the discount window a bit wider".
    Disclaimer: Do not take my posts seriously. They are only opinions.

    AMR has sold all shares and is pursuing property.

  2. #22
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    The volatility this morning is pretty spectacular! Any bets on the close? I'll call 11147.

  3. #23
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    European markets look like they took another hammering last night - much more than the DOW. As M says, cash is king in such times. Note gold and oil both up sharply.

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    STOP PRESS.......IndyMac fails....taken over by the FDIC.

    http://www.bloomberg.com/apps/news?p...T7U&refer=home

    IndyMac Seized by U.S. Regulators Amid Cash Crunch (Update2)

    By Ari Levy and David Mildenberg

    July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.

    The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mail today. Customers will have access to funds this weekend via automated teller machines.

    The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.

    ``Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,'' Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines.

    IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC.

    The lender racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

    Needed `Common Sense'

    Had IndyMac ``applied some common sense and changed their approach to underwriting as the housing market peaked, they might have lived to see the next cycle,'' Horey said.

    After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time today.

    IndyMac came under fire last month from U.S. Senator Charles Schumer, who said lax lending standards and deposits purchased from third parties left it on the brink of failure. In the 11 business days after Schumer explained his concerns in a June 26 letter, depositors withdrew more than $1.3 billion, the OTS said.

    ``This institution failed due to a liquidity crisis,'' OTS Director John Reich said in the statement. ``Although this institution was already in distress, I am troubled by any interference in the regulatory process.''

    IndyMac announced on July 7 that it was firing half its employees. The lender agreed to sell most of its retail mortgage branches to Prospect Mortgage, giving the Northbrook, Illinois based-company more than 60 branch offices with 750 employees. IndyMac also has a retail bank network with 33 branches and $18 billion in deposits, mostly insured by the FDIC.
    The trend is your friend.

  5. #25
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    http://www.telegraph.co.uk/money/mai...2/cndow112.xml

    ....The fears of a banking crisis gripped Wall Street, Lehman Brothers shares fell 22pc. Investors have been spooked by a filing this week showing that the bank still has $41bn of mortgage debt and other "toxic" Level III assets.

    Lehman now risks the same spiralling loss of confidence that engulfed Bear Stearns, though the Federal Reserve's emergency lending window for broker-dealers offers a lifeline.

    The credit default swaps on Lehman debt leapt 55 basis points to 380, flashing an extreme stress signal.

    The implosion of Fannie and Freddie is disturbing. Neither has exposure to sub-prime loans.

    "The situation is far more serious than Bear Stearns," said Bill King, chief strategist at Ramsey King Securities.

    Under the US stimulus plan the pair have been deployed as lenders of last resort to the housing market, carrying out a quasi-official rescue mission on behalf of Congress since March. Now the rescuers themselves need rescuing.

    Charles Schumer, chair of the Senate banking committee, said: "Fannie Mae and Freddie Mac are too important to go under. If they need additional support, Congress will act quickly."

    If Washington does take on the liabilities of the two, this would double the US Treasury's outstanding debt load at a stroke and raise serious concerns about the triple-A sovereign rating of the US itself.

    There may be no choice. Bill Gross, head of the bond giant Pimco, said a default by the two agencies would set off a "firestorm of intolerable proportions".

    Standard and Poor's said in a recent report that Fannie and Freddie posed "a large contingent fiscal risk: if the risks were to translate into increased government debt, they could hurt US credit standing".

    The markets have already begun to sense danger. The cost of insuring against default on 10-year US Treasury bonds surged from 8 basis points to 15 at one stage yesterday.

    "America's 'AAA' rating has become a joke," said Peter Schiff, head of EuroPacific Capital.

    "I believe the losses from Fannie and Freddie alone could reach $500bn to $1 trillion dollars.

    '' The US government will not be able to meet repayments on its debt once interest rates rise," he said.


    Mr Schiff said a big chunk of the agency debt is held by foreigners. A collapse of confidence could set off a dollar exodus.

    It is unclear if Mr Paulson can delay a state bail-out for long. "There is concern that Fannie, Freddie, and Lehman will not be around on Monday," said one analyst.

    Ironically, Fannie and Freddie shares, having halved in value at one stage, recovered slightly after Mr Paulson's comments. Investors were relieved the agencies might yet be spared a state seizure aimed at limiting "moral hazard".

    This is what occurred in the Nordic financial rescues of the early 1990s, which left shareholders with nothing.
    The trend is your friend.

  6. #26
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    Fannie and Freddie make up somewhere around 70% (give or take a bit) of US residential mortgage secondary market.

    Something like $5-7 TRILLION dollars US.

  7. #27
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    The Fed are insisting that if any bailout happens it should not benefit shareholders. Pity the only ones holding are the buy-and-hold types, the management probably cashed out their options long ago.
    Disclaimer: Do not take my posts seriously. They are only opinions.

    AMR has sold all shares and is pursuing property.

  8. #28
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    No worries. The US government is going to print some more US$$$ to bailout Fannie Mae and Freddie Mac. Essentially nationalizing the mortgage companies here. They are getting desperate it seems they have to cobble together another bailout package every other weekend now. remember BSC last March.

    http://www.bloomberg.com/apps/news?p...Y9I&refer=home

    Paulson Seeks Authority to Shore Up Fannie, Freddie (Update2)

    By Brendan Murray and Dawn Kopecki
    Enlarge Image/Details

    July 13 (Bloomberg) -- Treasury Secretary Henry Paulson swung the weight of the federal government behind Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages.

    Paulson, speaking on the steps of the Treasury facing the White House, asked Congress for authority to buy unlimited stakes in and lend to the companies, aiming to stem a collapse in confidence. The Federal Reserve separately authorized the firms to borrow directly from the central bank.

    The announcement followed crisis talks between the firms, government officials, lawmakers and regulators, after Fannie Mae and Freddie Mac lost about half their value last week. Paulson and Fed Chairman Ben S. Bernanke are trying to prevent a collapse in the companies that would exacerbate the worst housing recession in 25 years and deepen the economic slowdown.

    Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt. The two shareholder-owned companies are government-sponsored enterprises, giving investors the indication of an implicit federal backing.

    Making `Explicit'

    ``It is time to recognize that the GSEs were always dependent upon government support and now we must make the implicit explicit,'' said Christopher Whalen, co-founder of independent research firm Institutional Risk Analytics in Torrance, California.

    Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity ``if needed'' in the firms, and to increase their lines of credit with the department from $2.25 billion each. The temporary authority may be for 18 months, a Treasury official told reporters on a conference call on condition of anonymity.

    As lenders retreated from the housing market, Washington- based Fannie Mae and McLean, Virginia-based Freddie Mac have grown to account for more than 80 percent of the home loans packaged into securities.

    Freddie Mac is scheduled to sell $3 billion in short-term notes tomorrow, and Paulson's comments indicate a concern about a collapse in private investors' willingness to fund the firms. The companies issue debt to raise money for their purchases of mortgage securities.

    Bond Sale

    ``This will shore up that debt offering,'' said Paul Miller, an equity analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. ``They need to make sure that that debt offering goes well and goes very well and they couldn't risk waking up tomorrow and having that offering go poorly.''

    The dollar pared losses after Paulson's statement. The dollar traded at $1.5925 per euro at 7:19 a.m. in Tokyo from a low of $1.5971 and from $1.5938 in late New York on July 11. It bought 106.30 yen, little changed from 106.28 yen at the end of last week.

    Preferred securities tumbled in Asian trading as investors questioned if Freddie and Fannie will be able to continue to pay dividends. Freddie Mac's 5.57 percent preferred lost 39 percent this year and Fannie Mae's 5.5 percent preferred dropped 31 percent.

    President George W. Bush, in a statement, said ``it is crucial that Congress quickly works to enact this legislation.''

    Democratic Lawmaker

    Senator Charles Schumer, a Democrat from New York who chairs the Joint Economic Committee of Congress, praised Paulson's plan, saying it ``is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers.''

    The plan would give Paulson power to buy an unspecified amount of stock in Fannie Mae and Freddie Mac, the official said. He also said he didn't recall any time in the past when the government has taken an equity stake in either company.

    ``We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital market,'' Fannie Mae Chief Executive Officer Daniel Mudd said in a statement today. ``Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market.''

    Paulson also proposed that the Fed get a ``consultative role'' overseeing the companies' capital requirements. The Fed said in a separate statement that the New York Fed was approved to make direct loans to Fannie Mae and Freddie Mac at the discount rate, currently 2.25 percent, charged to commercial banks.

    Echoes of Rubin

    The last Treasury secretary to make a statement from the steps of the department was Robert Rubin, who sought to calm investors after the Dow Jones Industrial Average fell 554 points on Oct. 27, 1997.

    Debt sold by Fannie Mae and Freddie Mac ``is held by financial institutions around the world,'' Paulson said today. ``Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets.''

    Paulson sought to ease concerns that taxpayers would foot the bill for a bailout. ``Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer,'' he said.

    Freddie Mac shares tumbled 47 percent in New York Stock Exchange composite trading last week and Washington-based Fannie Mae lost 45 percent of its value, forcing Paulson two days ago to issue a statement of support for the companies in their ``current form.''

    Capital Raised

    The companies have already raised $20 billion to cover losses amid the highest delinquency rates in at least 29 years. Freddie Mac said earlier this month it planned to sell $5.5 billion of equity after it reports earnings next month.

    The cost to protect against a default on the companies' subordinated debt jumped last week. Credit-default swaps linked to Freddie's bonds rose to 251 basis points last week, while contracts on Fannie's increased to 246 basis points, according to CMA Datavision. On July 4, both were at 177 basis point and they started the year at 77. A basis point is 0.01 percentage point.

    Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

    Credit Ratings

    Senior debt of both companies trades as if they were rated A3 instead of Aaa by Moody's Investors Service, according to data from the rankings firm's credit strategy group.

    Five years ago, Fannie Mae and Freddie Mac paid about 45 basis points more than yields on 10-year Treasuries to borrow, while other corporations paid an average of 119 basis points, the Merrill Lynch & Co. U.S. Corporate Master index shows. Last week, the yield on Freddie Mac's $1 billion of 4.5 percent notes maturing in 2013 rose as high as 102 basis points more than Treasuries, according to data compiled by Bloomberg.
    Last edited by trendy; 14-07-2008 at 01:20 PM.
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  9. #29
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    I agree trendy
    Ben is bringing out the helicopter with Paulson flying shotgun. The end of the USD is just beginning.
    For clarity, nothing I say is advice....

  10. #30
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    I agree, the DOW seems to be finding a little support around the 11000 mark but with a lot of earnings reports this week that will probably be not that flash, I think it will fall further.
    I just don't think anybody has got any good news left out there to bolster confidence in the market.
    Bit of a quagmire the US finds itself in, print more money to prop everything up, which lowers it's value even further, and so the oil producers need more worthless US dollars for their black gold.
    I was fairly sceptical about the oil price, however if there is no good news out of the US I think we will see $150 oil by the end of the week... Gold will continue its rapid climb...

  11. #31
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    ...at this point in time it's prudent to be out of the market unless you feel the need for some cardiac work-out; in that case a bit of day-trading will do...the easier way of course is to be invested precious...

    ...in case the Fedheads will come up with more fairy tale stuff about their ability to control/solve the crisis, look for a spike down in US markets on fairy tale announcements -the down spike in the US markets commonly in tune with the VIX spiking up to 40+- before going into the market intermediate

    ...medium to long, it's a complete "on the brink" situation with huge up-or down side...and before the direction becomes clear (no hurry in the meantime), it's just plain suicidal to think one way or the other as a given; however,

    !!!!BE WARNED!!!! THE ODDS (GENERAL EXPECTATIONS) ARE CRASH and a fairly good indication of it happening for sure, is the NASDAQ100 falling through 1724 confirmed (oil, oil, oil)

    Kind Regards

  12. #32
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    We have a full fledged panic starting here. They are going to ban naked short-selling, which by the way is already illegal but never enforced.....due to the fox guading the hen house...GS..

    http://www.bloomberg.com/apps/news?p...m2E&refer=home

    They are also going to print a few more hundred billions dollars and give those to use again for more stimulas.

    http://www.bloomberg.com/apps/news?p...QA0&refer=home

    Are Weighing More Tax Rebates, Pelosi Says (Update1)

    By Laura Litvan

    July 15 (Bloomberg) -- House Democrats are weighing plans for another round of tax rebates as part of a legislative package to boost the economy this fall, House Speaker Nancy Pelosi said.

    ``We will be proceeding with another stimulus package, and we once again hope we will work in a bipartisan way,'' she said after House Democratic leaders met with a group of economists to discuss the spreading housing crisis and rising energy prices.

    Pelosi and other House Democrats said a second stimulus package would probably include more spending for roads and other infrastructure, expanded unemployment benefits, home-heating assistance for low-income families and some aid for states struggling with budget deficits.

    Plans for the stimulus legislation are taking shape as Democrats are also racing to approve the Bush administration's proposed rescue plan for Fannie Mae and Freddie Mac by early next week.

    ``This is a serious situation,'' said former Treasury Secretary Larry Summers, who attended the meeting with Democrats. ``We are in much more danger of responding inefficiently than in responding excessively.''

    In February, Congress sent Bush a $168 billion economic stimulus measure that included tax rebates to 111 million households beginning in May. Rebate checks in the legislation were as high as $600 for individuals.

    Pelosi said Democrats will need to work with President George W. Bush to determine the timing of a second stimulus package. Bush said today he would prefer to wait to see how the earlier rebates affect the economy.

    `Rolling Financial Crises'

    ``We're always open minded to things, but we'll see how this one works,'' he said.

    Alan Blinder, a former vice chairman of the Federal Reserve and a Princeton University economist, said the U.S. is experiencing a series of ``rolling financial crises'' and that the impact of the earlier round of tax rebates has been ``swallowed up'' by rising energy prices.

    ``The U.S. economy is in a recession that is probably getting worse,'' said Alan Sinai, chief global economist at Decision Economics Inc., who, like Blinder, attended the meeting with Democrats.
    Last edited by trendy; 16-07-2008 at 08:31 AM.
    The trend is your friend.

  13. #33
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    I've been clearly in the "doom and gloom" camp for approximately a year now based on my post history, and while I prefer to NOT fan the flames further, and continue to hope the bottom isn't as far down as I think it may wind up, there are a few things to consider going forward:

    *Off Balance sheet antics have NOT yet been fully disclosed by many of the remaining big players...HOW can anyone make an investment based on such stupidity? "Here's our assets, here's our liabilities, and we have a big, big secret behind door number 3......how many shares do you want?"

    *Pension Funds with hundreds of billions of risky market exposure, chasing the extra return like NZ Mom & Dad going after the extra 0.5% with failed finance company debentures, with expectations of far above average returns going forward to pay for excessive pension entitlements, are at risk of detonating like the death star and taking many, many American retirees with them.....it could make the 24 finance companies in 24 months(approximate) here in NZ looks like sunshine and rainbows.

    *Derivatives........their growth seems almost parabolic.......I understand basic derivatives and their very useful hedging roles in insurance and business......but complex derivatives? I have absolutely no idea.....and I doubt more than a few do......Warren Buffett called them Weapons of Mass Destruction for a reason....it reminds me of those conversations everyone has in life where a complex topic is being covered that is FAR over the heads of the audience, but everyone is too afraid to say, "I don't understand because I'm afraid I'll look stupid." I'm stupid and many derivatives scare me enough to want to buy a bunker and some guns.

    I think of them as Neutron Derivatives........they will kill off everything....but leave a lot of empty building ni their wake.

  14. #34
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    Quote Originally Posted by malcolm View Post
    looking at many major company results in dow and s@p500 has been surprising -positive including some banks- worst to come from the SKELETON CUPBOARD-- or all over????
    Starting to look like a bounce eh?

    Im holding my breath but not all that confident

    Phaedrus, would love some thoughts from you.

    The next week will be interesting eh fellas?



    and ladies ( sorry Liz :o)
    Last edited by STRAT; 22-07-2008 at 10:22 AM. Reason: sexist post

  15. #35
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    Yeah I was eyeing up that up movement and asking myself are we seeing an early conception of the next bear market rally...

    ...you know the old saying the early bird catches the worm....and all that

    However after watcing CNBC this morning I will reserve my judgement...

    ....WOW ...it has turned totally ulgy in the NASDAQ after hours trading currently down 2.46% Apple down 11% on a not that bad profit report. Texas instruments taking a hiding as well (-11%). Elsewhere away from the NASDAQ, The after hours in the financials American Express is being whipped (-11%).Freddie Mac (-3.6%)
    Can view the list here

    Odds on, tommorrow may not be a good day for Uncle Sam.

  16. #36
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    I reckon the Dow still has quite a lot more to lose. At a general level, another 12 months of down and another 3000 points knocked off seems quite conceivable.

  17. #37
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    FTSE down also 1.41% in early trading. Time for the next round with that big Bear?

  18. #38
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    Dow saved by oil. Gold down a little too. It will be interesting to see how the ASX fairs today then.

  19. #39
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    Ouch, gold and oil hits again - wall street balances out, flat. Sucker punch coming for DOW? DOW now at 11,600; more than a 600 pt rise from recent low...

  20. #40
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    hitting a key level on dow me thinks time for a down day or two before rally resumes

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