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HelicopterOff Topics › What do you guys think of this banking disaster.
11-30-2007 10:00 PM  9 years agoPost 1
tarro

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http://articles.moneycentral.msn.co...BearMarket.aspx
This is looking scarier by the day.

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11-30-2007 10:17 PM  9 years agoPost 2
LouInSD

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San Diego CA USA

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As far as the real estate market goes, we won't see the light at the end of the tunnel until maybe 2010...

Remember, whenever there is a bust in the market, someone is making money. A few people will get bloody rich off of all this while the regular joes pay for it.

That's Bushonomics my friend..."trickle down" really means trickled on...massive amounts of wealth are going from the masses to the few at the top...

It happened with the Silverado S&L scandal when Neil Bush and his buddies stole millions and left taxpayers with the bill.

The Bush's are great at making money from failure...

There's an old saying in Texas...

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11-30-2007 11:53 PM  9 years agoPost 3
RonHill

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FLL, FL

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I think we are clearly headed into a bear market. The market adjusts; it is a cycle. You could blame this on a few things....One is the "predatory lending". Another is the get rich quick attitudes of some of the people using paper money.

But lets face it, people didn't HAVE to take out more loan than they could afford, but they did. Blaming the banks is like blaming the car salesman for not selling you the econo box instead of the Caddy.

People borrowed more money that they could afford. People went and bought houses trying to flip them. Other people in banking let it happen.

If more people "Acted their wage" as Dame Ramsey says...then this would not have happened. I just bought a new house...I bought a house that was WAY less than I could afford. I will have it paid off in less than 10 years if I keep at the pace I am.

If more people exercised some personal fiscal responsibility this would not have happened.

Another cause is the Fed kept dropping rates....This encouraged people to borrow more since it was less expensive to do it. But they went for ARM's....ARM's are almost never a good deal. You can always refinance to a lower rate if you are fixed, I get offers everyday. Once the rates start to shoot up, then its much harder.

Now, the Fed is not going to do everything possible to save this issue. The Fed has very few options...One is to lower rates. The other is a bailout. The Fed has done this before if anyone remembers the savings and loan issues of the 90's. The Mexican peso issue of the 80's. Another was the 1989 issue of Bradey Bonds to save some Latin American governments. It seems about once every 10 years the Fed has to bail someone out. It is *almost* a shame since the idiots that created the situation often don't get what they deserve.

However, for the good of the group as a whole it is a good idea.

What am I going to do? Invest like crazy starting now slowly and growing more over the next six mths to a year. The time to buy into a market is when it is dropping. Believe it or not, banking will be a good investment.

The Gov is not going to let giants like Citi fall.

Of course, this is all just my opinion....So take it for what its worth, some guy typing on the internet.

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12-01-2007 01:24 AM  9 years agoPost 4
LouInSD

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Booms and busts are created by design...they set the trap and then skin us like cats...

"Defaulting middle-class U.S. homeowners are blamed, but they are merely a pawn in the game," he says. "Those loans were invented so that hedge funds would have high-yield debt to buy."

http://articles.moneycentral.msn.co...BearMarket.aspx

There are a few people who bet on bad news and actually help to create the situation so they can in turn profit off of it...

Welcome to unfettered jungle capitalism, my friend...

http://articles.moneycentral.msn.co...Few.aspx?page=2

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12-01-2007 02:25 AM  9 years agoPost 5
tarro

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You hit the nail on the head LouinSD. The MSM will tell you it's the dead beat home owners but it's really the Hedge funds, investment bankers and speculators that have sent these loses in to the stratosphere.

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12-01-2007 02:35 AM  9 years agoPost 6
LouInSD

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That's because the MSM (the so-called liberal media) is owned by the corporations...

http://www.corporations.org/media/

how convenient, eh?

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12-01-2007 03:22 AM  9 years agoPost 7
spaceman spiff

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Tucson

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Ummm... So the investment bankers, and hedge fund guys WANTED to loose their shirts and jobs, so they conspired with the media to somehow cause loan defaults?

You guys are so lame. Here's the scoop:

The secret government found out that the Martian Warlords (looking over soulder, OK its safe...shhhh...) have been getting their funding for a world take over from real estate investments. The secret government told everyone thru psychotropic waves that housing values had topped out in an attempt to cause the Martians to loose all their money, and then invade mars to expand the secret empire. But the Martians were too smart, they monitored the psychotropic waves and sold all their properties early, taking only modest losses, and reinvested it all in tin foil. Now we are doomed to be burned up by the giant martian frap-ray, and it will be mostly funded by folks who have been duped into wearing these:

Clever Bastards!

hope your brother in NY gets the help he needs.

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12-01-2007 03:41 AM  9 years agoPost 8
LouInSD

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Wow, someone needs to go to college...

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12-01-2007 03:51 AM  9 years agoPost 9
spaceman spiff

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Tucson

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I don't think that would help you, but i admire that spirit!

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12-01-2007 03:53 AM  9 years agoPost 10
MasterCrasher

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Ron Hill's post is right on the money. I was going to post the same thing but he beat me to it.

If you want to blame someone then blame the people that had to have a bigger house, boat, 2 SUV's, and a bunch of other toys they couldn't afford.

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12-01-2007 04:02 AM  9 years agoPost 11
LouInSD

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Well, its a little more complicated than that smart guy, in reality when a President gets into office who is pro-deregulation, the bad guys know they can get away with murder. In the case of the Silverado scandal it was actually George Bush's brother doing the bank robbery.

In the current case it is hedge funds and people involved with CDS's.

Read the article where they talk to an expert on derivatives, its a good place to start Einstein...

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12-01-2007 04:21 AM  9 years agoPost 12
spaceman spiff

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So the hedge funds wanted to destroy themselves. How? Why?

I'll go make up a special hat, and be back for your illuminating explanation.

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12-01-2007 04:27 AM  9 years agoPost 13
LouInSD

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San Diego CA USA

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Oh geez I give up...does someone else want to explain it to Mr. 15 watt bulb here?

I'm losing patience

I have to try to remember that there are middle school kids that fly helis too...

READ THE ARTICLE! Or have someone explain it to you...

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12-01-2007 04:41 AM  9 years agoPost 14
spaceman spiff

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Tucson

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Beer in hand. Hat is on. Not as nice as the picture, looks pretty silly actually, but it is 5 layers, shinny side out. I'm ready.

Seems like it should be simple cause-effect-motive scenario, which you should be able to explain precisely. If you don't think i am up to understanding it, fine, explain for other folks benefit.

Save the world great and wise conspiracy guru.

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12-01-2007 04:45 AM  9 years agoPost 15
LouInSD

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quote from the article...Follow closely...

Now here is where the villains come in. All of these instruments rely on confidence for their very existence. Commercial paper could exist only if brokers believed SIVs were valued properly, and SIVs could exist only if their managers believed their underlying CDOs were valued right, and CDOs could exist only if their managers believed the underlying loans were properly valued, and so on.

Confidence is the heart and soul of credit markets, as unlike stocks, no promises of future growth will suffice -- only streams of cold, hard cash will do.

Now it turns out that slowly emerging at this time were a group of hedge-fund managers running their money in a style known as credit arbitrage who came to believe that these towers of debt were houses of cards just waiting to be pushed over. But how? There are no straightforward ways to short-sell these kinds of instruments.

Following so far?

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12-01-2007 04:47 AM  9 years agoPost 16
LouInSD

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The method that they hit upon: Destroy confidence, which was already beginning to ebb due to the rising rate of defaults far downstream in the underlying loans. According to Brian Reynolds, chief strategist at boutique brokerage M.S. Howells, the credit-arbitrage fund managers figured they could shake confidence, and make boatloads of money, by playing in the $70 trillion market for "credit-default swaps," or CDSs -- a set of securities that are issued by financial institutions as a kind of insurance policy on debt.

The CDS market thus became a key battleground between the arbitrage fund hit squads and the bankers. The arbitrage funds bought the credit-default swaps on the investment banks that issued the CDOs and shorted investment banks' stocks, two actions that created the impression of vulnerability among other market players. It's a bit like taking out a life insurance policy and buying a headstone for a sick relative. Someone might get the impression that your uncle's prospects aren't good.

Stay with me...

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12-01-2007 04:49 AM  9 years agoPost 17
LouInSD

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You might wonder how there could be $70 trillion in CDS money out there, and the reason is pretty interesting. Imagine that you are at a horse race at which the winner can earn a $10 billion prize, which in this case would be the amount a CDS would pay off in the event of a bank default. In the stands, however, are bettors with access to huge lines of credit that are betting up to $1 trillion among themselves on the outcome of the race. It doesn't matter that the most a CDS holder could ever win is $10 billion, because the betting -- or trading of the derivatives -- is a completely separate game.

Reynolds explains that the hedge funds successfully rattled the CDS market in the summer, but then lost momentum when Fed Chief Ben Bernanke intervened with a surprise cut of the discount window rate in mid-August and then cut rates again in September. Reynolds told clients that the debt bears would attack again last week immediately after a paltry 0.25 percentage point rate cut on Oct. 31. And so they did, sparking downgrades in CDO values, a loss of faith in their investment banks' corporate management and, in turn, a rabbit punch to investment banks' equities -- all yielding big profits to the raiders.

The crisis of confidence reached a fever pitch early this week when it was reported that three major brokerages, including Legg Mason, announced they would shore up their supposedly safe money-market funds with extra capital.

Did I lose you?

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12-01-2007 04:54 AM  9 years agoPost 18
spaceman spiff

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Tucson

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To sumarize first post: Some recognized the bubble that was about to burst, so they started placing reverse-bets (sell now, buy later)on financial stocks.

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12-01-2007 04:58 AM  9 years agoPost 19
LouInSD

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Well, thats a very simplified way of explaining it and not totally accurate...

They're raiders who make money from failure. So they manipulated the market by betting 70 trillion against it and caused everything to come crashing down...simple enough for ya?

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12-01-2007 05:03 AM  9 years agoPost 20
spaceman spiff

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Tucson

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Second post boils down to: when the fed lowers prime, CD's tend to go down, folks start to look elsewhere... bank profits drop, bank stocks drop... some can reverse bet that as well if they have the courage to do so.

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