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TranceAddict Investors Club @ Marketocracy (pg. 118)
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| Trancer-X |
| quote: | Originally posted by Funkesthesiac69
Can anyone say ETFs LIKE FXF (betting that the partially gold backed swiss franc currency will appreciate with respect to the dollar)?
GLD perhaps? |
I researched this a little bit this past weekend and found that through an amendment to their constitution, the Swiss dropped their partial gold backing in May of 2000. :( |
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| mndeg |
| quote: |
Listen up folks.
Greenspan said today in his testimony that ALT-A MBS "appetite" (that is, marketability) will likely never return.
This means that any of these "assets" that the TARP (you, the Taxpayer) "buy" will never be resold to anyone. You will eat them, and Hank Paulson's claim that these "assets" will return a "profit" to the taxpayer is false.
Second, if home prices are doubling but incomes are not increasing, what part of that did you willfully ignore Mr. Greenspan?
The job of regulation is to prevent people, who are naturally greedy and will press whatever advantage they can manage to acquire, from doing so in a fashion that develops into systemic risk, and guaranteeing that the risk they pile on inures only to them when their bets turn out badly.
In this regard both Greenspan and Bernanke have been utter failures, and both had the ability to put a cork in this crap by cutting off dealers who violated prudent standards for lending and risk management from Fed facilities.
Neither did so.
Congress held plenty of hearings, but in point of fact what Congress has not done is exercise its prudent and proper role as an overseer of those who are supposed to regulate our financial markets, immediately removing from office those who refuse to discharge their duties properly and replacing them with someone who will, indicting the malfeasors when appropriate.
And before someone says "they didn't know", that's a bald-faced lie.
Both Congress and Alan Greenspan were explicitly warned that this would be the result.
On July 7th I wrote on this matter, and those who have forgotten need to go read that Ticker again, along with the written testimony given to Congress in 1991.
Specifically:
""If Congress again opens up banking to Wall Street speculation, as it opened up S&Ls and banks to real estate speculation, regulators will quickly lose control over the complex series of events that a pervasive marketplace will immediately set in motion. Insider abuse, self-dealing, and back scratching relationships between institutions will run rampant"
All "unexpected" eh Al? Eh Congress?
No.
Not unexpected.
In fact, you were explicitly warned what would happen.
You did Wall Street's bidding, and exactly what was predicted happened.
Wall Street took the money, speculated with it, and blew serial bubble after bubble, with the explicit permission of both Congress and Federal Reserve, and the consequence has been the destruction of our economy.
Take responsibility Congress, repeal your erroneous laws, including the EESA/TARP and put Glass-Steagall back in place.
Appoint a special prosecutor - in fact, dozens of them - to investigate everyone involved, including Henry Paulson, and indict each and every one of them who committed an act of inside dealing or selling products with knowing or negligently inflated valuations.
Oh, and stop lying to America.
The record is what it is and we the people are tired of the lies and bailouts you expect us to pay for, when you were explicitly warned that what your cronies on Wall Street wanted would lead to precisely this result.
Now our 401ks are 201ks and the responsibility for what has happened, along with what is to come, squarely rests on Hank Paulson, Ben Bernanke, and Congress itself.
Grow a pair and stand up for America and Americans, not your corporate sponsors.
The election is in less than three weeks.
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| Groundhog Boy |
| quote: | Originally posted by mndeg
Listen up folks.
Greenspan said today in his testimony that ALT-A MBS "appetite" (that is, marketability) will likely never return.
This means that any of these "assets" that the TARP (you, the Taxpayer) "buy" will never be resold to anyone. You will eat them, and Hank Paulson's claim that these "assets" will return a "profit" to the taxpayer is false. |
Aren't these MBS's like bonds, with maturity dates/dividends, paid by the mortgage companies that sold these loans? Even if people don't buy them, if people make their mortgage payments, they still make money. Of course some will foreclose, which is why they haven't been sold to the government, as prices haven't been determined. |
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| mndeg |
Yeah they still have value unless everyone defaults, but the concept of selling them at a profit to some mysterious bagholder in the future so citizens "profit" is silly.
I heard that prime loan default rates are higher than subprime loan default rates now. hah |
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| occrider |
| quote: | Originally posted by Shakka
Hey Occ--
Is there a direct link for that ABA chart on mortgage resets? |
No sorry. It came from a private conference call I was on. However, I did double click the graph and it was cut and pasted in so I can access the data. Silly people ... learn to paste special images .... pm me your email addy if you want me to send you over the underlying data. |
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| jerZ07002 |
| quote: | Originally posted by mndeg
Yeah they still have value unless everyone defaults, but the concept of selling them at a profit to some mysterious bagholder in the future so citizens "profit" is silly. |
wait - didn't the bailout plan change? i thought the government scrapped the plan to purchase a ton of CDOs. instead, i thought the government was buying 250 B in preferred stock interest in banks, corporate commercial papers, and other commercial mortgage backed securities. i thought the treasury didn't want to get its hands too dirty with these CDOs because it was difficult to tell the good from the bad. i thought the plan was for minimal purchases of CDOs backed by subprime and alt-a mortgages. i could be wrong as i haven't been following it recently.
nevertheless, greenspan has a major credibility problem considering he is a major contributor to current situation. |
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| jerZ07002 |
| quote: | Originally posted by Shakka
Wachovia holds a ton of them from their Golden West acquisition in 2005. But to answer your question, I'm not sure who is holding how much of the bag of . Either way, there is still a ton of toxic out there that hasn't yet hit the proverbial fan. |
im actually pissed about the wachovia deal. i had a pretty good banking relationship with the company. |
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| jerZ07002 |
| quote: |
Greenspan Concedes Error on Regulation
By EDMUND L. ANDREWS
WASHINGTON — For years, a Congressional hearing with Alan Greenspan was a marquee event. Lawmakers doted on him as an economic sage. Markets jumped up or down depending on what he said. Politicians in both parties wanted the maestro on their side.
But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.
Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.
He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.
But on Thursday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.
“This modern risk-management paradigm held sway for decades,” he said. “The whole intellectual edifice, however, collapsed in the summer of last year.”
Mr. Waxman noted that the Fed chairman had been one of the nation’s leading voices for deregulation, displaying past statements in which Mr. Greenspan had argued that government regulators were no better than markets at imposing discipline.
“Were you wrong?” Mr. Waxman asked.
“Partially,” the former Fed chairman reluctantly answered, before trying to parse his concession as thinly as possible.
Mr. Greenspan, celebrated as the “Maestro” in a book about him by Bob Woodward, presided over the Fed for 18 years before he stepped down in January 2006. He steered the economy through one of the longest booms in history, while also presiding over a period of declining inflation.
But as the Fed slashed interest rates to nearly record lows from 2001 until mid-2004, housing prices climbed far faster than inflation or household income year after year. By 2004, a growing number of economists were warning that a speculative bubble in home prices and home construction was under way, which posed the risk of a housing bust.
Mr. Greenspan brushed aside worries about a potential bubble, arguing that housing prices had never endured a nationwide decline and that a bust was highly unlikely.
Mr. Greenspan, along with most other banking regulators in Washington, also resisted calls for tighter regulation of subprime mortgages and other high-risk exotic mortgages that allowed people to borrow far more than they could afford.
The Federal Reserve had broad authority to prohibit deceptive lending practices under a 1994 law called the Home Owner Equity Protection Act . But it took little action during the long housing boom, and fewer than 1 percent of all mortgages were subjected to restrictions under that law.
This year, the Fed greatly tightened its restrictions. But by that time, the subprime market as well as the market for other kinds of exotic mortgages had already been wiped out.
Mr. Greenspan said that he had publicly warned about the “underpricing of risk” in 2005 but that he had never expected the crisis that began to sweep the entire financial system in 2007.
“This crisis,” he told lawmakers, “has turned out to be much broader than anything I could have imagined. It has morphed from one gripped by liquidity restraints to one in which fears of insolvency are now paramount.”
Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.
But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”
“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said.
Despite his chagrin over the mortgage mess, the former Fed chairman proposed only one specific regulation: that companies selling mortgage-backed securities be required to hold a significant number themselves.
“Whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said. “Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.” |
http://www.nytimes.com/2008/10/24/b...int&oref=slogin |
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| Groundhog Boy |
| quote: | Originally posted by jerZ07002
wait - didn't the bailout plan change? i thought the government scrapped the plan to purchase a ton of CDOs. instead, i thought the government was buying 250 B in preferred stock interest in banks, corporate commercial papers, and other commercial mortgage backed securities. i thought the treasury didn't want to get its hands too dirty with these CDOs because it was difficult to tell the good from the bad. i thought the plan was for minimal purchases of CDOs backed by subprime and alt-a mortgages. i could be wrong as i haven't been following it recently.
nevertheless, greenspan has a major credibility problem considering he is a major contributor to current situation. |
They're still buying CDOs, just not $700 B worth. |
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| occrider |
| quote: | Originally posted by jerZ07002
im actually pissed about the wachovia deal. i had a pretty good banking relationship with the company. |
What are you pissed about? Them not completely failing sans deal? Them getting a better deal via Wells? |
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| jerZ07002 |
| quote: | Originally posted by occrider
What are you pissed about? Them not completely failing sans deal? Them getting a better deal via Wells? |
of course i prefer not to deal with FDIC insurance and would rather wells take over the bank than for it to fail. however, i had a pretty extensive unsecured credit line with the company; i'm not sure if that's staying open. also, considering the current liquidity situation, banking relationships are going to become more important. when credit was loose, you could move and banks could give a . in tight credit markets its going to be all about relationships, fico, and income. i don't really know how the takeover will impact the relationship aspect. however, i'm rather conservative in many things (in an economic sense - that's why i became a lawyer) and i like consistency. |
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| occrider |
| quote: | Originally posted by jerZ07002
of course i prefer not to deal with FDIC insurance and would rather wells take over the bank than to fail. however, i had a pretty extensive unsecured credit line with the company; i'm not sure if that's staying open. also, considering the current liquidity situation, banking relationships are going to become more important. when credit was loose, you could move and banks could give a . in tight credit markets its going to be all about relationships, fico, and income. i don't really know how the takeover will impact the relationship aspect. however, i'm rather conservative in many things (in an economic sense - that's why i became a lawyer) and i like consistency. |
Ah. Well considering the size of these institutions my guess is that Wells (and Wachovia if they could have stay solvent) are drafting revised credit models that would determine your credit worthiness ... I dunno if relationships factor in to discussions these days. |
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