The Thailand expat forum for Travel, Lifestyle and Fun.

Butterfly

^ these are small bad news among the storm, nothing major like I said

next,

bkkandrew

bkkandrew

B&B, GM, GMAC - small news? Perhaps a poll is in order...

Butterfly

^ a few bad companies going bad after a few bad deals, big fucking deal

You can start pushing and panicking when the US treasury start defaulting on their interest payments,

party is over, if you have a giant that fall, maybe it will come back

GMAC collateral damage,

bkkandrew

^You don't do cause and effect well, do you...

GMAC would 'have' to be bailed out. Too many mortgages, auto loans etc., etc., FED burns more cash, leading to....................

Try and think forward, rather than being reactive to news.

bkkandrew

Goodwin, Analyst, Says Bradford & Bingley May Collapse: Video
July 7, 2008 06:36 EDT -- Leigh Goodwin, an analyst at Fox-Pitt, Kelton Ltd., and Roger Lawson, director of the U.K. Shareholders' Association, talk with Bloomberg's Rishaad Salamat in London about the bailout of Bradford & Bingley Plc after TPG Inc. abandoned plans to buy a 23 percent stake last week. Six banks including Banco Santander SA agreed to guarantee as much as 220 million pounds ($436 million) of the 400 million pounds being raised by Bradford & Bingley Plc after TPG Inc. abandoned plans

From:

Bloomberg.com: Investment Tools

__________________
Another escapee from the mad muppets of TV...



To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

Butterfly

I am not reacting to news, you are obviously by just posting those links. I think we need to wait for the wave of really bad news, for now it's just limited noise.

bkkandrew

^Noise? Yes, down another 20% today to 32p.

Will the bailout happen today?

bkkandrew

WASHINGTON, July 11 (Reuters) - Mortgage lender IndyMac Bancorp Inc (IMB.N: Quote, Profile, Research, Stock Buzz) was taken over by the Federal Deposit Insurance Corp on Friday, the second largest financial institution to close in U.S. history.

The FDIC said the estimated cost of the California-based bank's failure to its insurance fund is between $4 billion and $8 billion. The regulator said it will operate IndyMac to maximize the value of the firm for future sale.

IndyMac's primary regulator, the Office of Thrift Supervision, blamed a senior lawmaker's comments for causing a run on the deposits at the largest independent publicly traded U.S. mortgage lender.

bkkandrew

1. Paulson appears on Face The Nation and says "Our banking system is a safe and a sound one." If the banking system was safe and sound, everyone would know it (or at least think it). There would be no need to say it.

2. Paulson says the list of troubled banks "is a very manageable situation". The reality is there are 90 banks on the list of problem banks. Indymac was not one of them until a month before it collapsed. How many other banks will magically appear on the list a month before they collapse?

3. In a Northern Rock moment, depositors at Indymac pull out their cash. Police had to be called in to ensure order.

4. Washington Mutual (WM), another troubled bank, refused to honor Indymac cashier's checks. The irony is it makes no sense for customers to pull insured deposits out of Indymac after it went into receivership. The second irony is the last place one would want to put those funds would be Washington Mutual. Eventually Washington Mutual decided it would take those checks but with an 8 week hold. Will Washington Mutual even be around 8 weeks from now?

5. Paulson asked for "Congressional authority to buy unlimited stakes in and lend to Fannie Mae (FNM) and Freddie Mac (FRE)" just days after he said "Financial Institutions Must Be Allowed To Fail". Obviously Paulson is reporting from the 5th dimension. In some alternate universe, his statements just might make sense.

6. Former Fed Governor William Poole says "Fannie Mae, Freddie Losses Makes Them Insolvent".

7. Paulson says Fannie Mae and Freddie Mac are "essential" because they represent the only "functioning" part of the home loan market. The firms own or guarantee about half of the $12 trillion in U.S. mortgages. Is it possible to have a sound banking system when the only "functioning" part of the mortgage market is insolvent?

8. Bernanke testified before Congress on monetary policy but did not comment on either money supply or interest rates. The word "money" did not appear at all in his testimony. The only time "interest rate" appeared in his testimony was in relation to consumer credit card rates. How can you have any reasonable economic policy when the Fed chairman is scared half to death to discuss interest rates and money supply?

9. The SEC issued a protective order to protect those most responsible for naked short selling. As long as the investment banks and brokers were making money engaging in naked shorting of stocks, there was no problem. However, when the bears began using the tactic against the big financials, it became time to selectively enforce the existing regulation.

10. The Fed takes emergency actions twice during options expirations week in regards to the discount window and rate cuts.

11. The SEC takes emergency action during options expirations week regarding short sales.

12. The Fed has implemented an alphabet soup of pawn shop lending facilities whereby the Fed accepts garbage as collateral in exchange for treasuries. Those new Fed lending facilities are called the Term Auction Facility (TAF), the Term Security Lending Facility (TSLF), and the Primary Dealer Credit Facility (PDCF).

13. Citigroup (C), Lehman (LEH), Morgan Stanley(MS), Goldman Sachs (GS) and Merrill Lynch (MER) all have a huge percentage of level 3 assets. Level 3 assets are commonly known as "marked to fantasy" assets. In other words, the value of those assets is significantly if not ridiculously overvalued in comparison to what those assets would fetch on the open market. It is debatable if any of the above firms survive in their present form. Some may not survive in any form.

14. Bernanke openly solicits private equity firms to invest in banks. Is this even close to a remotely normal action for Fed chairman to take?

15. Bear Stearns was taken over by JPMorgan (JPM) days after insuring investors it had plenty of capital. Fears are high that Lehman will suffer the same fate. Worse yet, the Fed had to guarantee the shotgun marriage between Bear Stearns and JP Morgan by providing as much as $30 billion in capital. JPMorgan is responsible for only the first 1/2 billion. Taxpayers are on the hook for all the rest. Was this a legal action for the Fed to take? Does the Fed care?

16. Citigroup needed a cash injection from Abu Dhabi and a second one elsewhere. Then after announcing it would not need more capital is raising still more. The latest news is Citigroup will sell $500 billion in assets. To who? At what price?

17. Merrill Lynch raised $6.6 billion in capital from Kuwait Mizuho, announced it did not need to raise more capital, then raised more capital a few week later.

18. Morgan Stanley sold a 9.9% equity stake to China International Corp. CEO John Mack compensated by not taking his bonus. How generous. Morgan Stanley fell from $72 to $37. Did CEO John Mack deserve a paycheck at all?

19. Bank of America (BAC) agreed to take over Countywide Financial (CFC) and twice announced Countrywide will add profits to B of A. Inquiring minds were asking "How the hell can Countrywide add to Bank of America earnings?" Here's how. Bank of America just announced it will not guarantee $38.1 billion in Countrywide debt. Questions over "Fraudulent Conveyance" are now surfacing.

20. Washington Mutual agreed to a death spiral cash infusion of $7 billion accepting an offer at $8.75 when the stock was over $13 at the time. Washington Mutual has since fallen in waterfall fashion from $40 and is now trading near $5.00 after a huge rally.

21. Shares of Ambac (ABK) fell from $90 to $2.50. Shares of MBIA (MBI) fell from $70 to $5. Sadly, the top three rating agencies kept their rating on the pair at AAA nearly all the way down. No one can believe anything the government sponsored rating agencies say.

22. In a panic set of moves, the Fed slashed interest rates from 5.25% to 2%. This was the fastest, steepest drop on record. Ironically, the Fed chairman spoke of inflation concerns the entire drop down. Bernanke clearly cannot tell the truth. He does not have to. Actions speak louder than words.

23. FDIC Chairman Sheila Bair said the FDIC is looking for ways to shore up its depleted deposit fund, including charging higher premiums on riskier brokered deposits.

24. There is roughly $6.84 Trillion in bank deposits. $2.60 Trillion of that is uninsured. There is only $53 billion in FDIC insurance to cover $6.84 Trillion in bank deposits. Indymac will eat up roughly $8 billion of that.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.

From:

Evidence of the US Banking System Teetering on the Brink of Collapse :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Bad, bad, bad.

Spin

From memory, I think this is not accurate. The fed tossed up 28.5 and JPM stood for 1.5. Of that 1.5, 1.2 has gone so another 300million means the government money is being burned

I have most of my life savings in US dollars at the moment. I keep short positions in the financials as an insurance policy. I dont do it because I take any pleasure in seeing the whole sector going down the pan. Thats no good for any of us in the long run.

bkkandrew

^13, 21 and 24 are probably the most scary. But then you get to 25 and you realise that the game is over.

Going to bed, so no time to post further links to the FED/JPMC arrangements. Up early (yes - Sunday) to deal with another round of crises that are nothing to do with me. Its wonderful how some people create shit and others have to clear it up. The creators always seem to go 'missing'. I wonder why that is?

bkkandrew

Since the credit crisis erupted a year ago, the Bush administration has presided over one of the broadest expansions of the government into private lending in U.S. history, risking public money to prop up financial firms both large and small.

The administration has transformed federal agencies into dominant players in such diverse realms as student lending and mortgage finance while exposing itself to trillions of dollars in loans.

The scope of these commitments demonstrates the unprecedented nature of the challenge facing the nation. Not since the Great Depression have so many debt markets been in turmoil at the same time, financial historians say. During the savings and loan crisis of the late 1980s and early 1990s, for example, the financial upheaval was largely contained to banks and thrifts, though the real estate market also felt the impact.

Now, the contagion has rapidly spread from mortgages to bonds and exotic securities, student and corporate lending, credit cards and home equity loans, and residential and commercial real estate. The disruption has buffeted investment and commercial banks, mortgage finance agencies, and insurance firms of different stripes.

"We have a banking crisis and an agency crisis and a mortgage crisis and a coming credit card crisis. We've never seen anything like that before. And it all seems to be coming home to roost at the same time. That's never happened either," said Charles Geisst, professor of finance at Manhattan College. He said the Great Depression was the last time financial markets were hammered by such a variety of factors. "But we did not even have credit cards in the 1930s; there were no such thing as student loans," he added.

The breadth and speed of events have sent federal officials scrambling to plug leaks in the financial system. In the process, the government has bound taxpayers to the fate of a wide variety of banks and borrowers and could ultimately be responsible for losses in the tens of billions of dollars or more, according to estimates by congressional reports and interviews with regulators.

But the government may also end up paying nothing at all, largely because it received collateral in return for backing much of these debts and could recoup some money if borrowers stop making their interest payments. No one knows for sure because much of the government's response involved novel programs designed to contain an unpredictable crisis.

As the credit crisis worsened, Treasury Secretary Henry M. Paulson Jr., a strong proponent of free markets and the architect of much of the administration's response, began to push initiatives that enlarged the government's involvement on Wall Street and in the housing industry.

"What I've said is that I'm playing the hand that was dealt and that my responsibility is to protect the U.S. economy and the American people," Paulson said in an interview.

My bold.

From:

washingtonpost.com

bkkandrew

Wachovia starts abandoning its previously prized assets:

Aug. 14 (Bloomberg) -- Wachovia Corp.'s BluePoint Re Ltd. unit, which insures structured finance and municipal transactions, filed for bankruptcy protection, citing defaults on securitized mortgages.

BluePoint filed a petition in Manhattan yesterday, saying it has more than $100 million in debt. The insurer also filed a petition to liquidate in Bermuda, where it is based, on Aug. 7. BluePoint asked the New York court to recognize the Bermuda proceeding and protect it from claims in the U.S., invoking provisions of Chapter 15 of the federal bankruptcy code.

Wachovia, the fourth-biggest U.S. bank, reported a $330 million charge in the second half of 2007 related to BluePoint's losses on credit default swaps on collateralized debt obligations, or CDOs. BluePoint decided to liquidate after failing to negotiate a restructuring with banks including UBS AG that were counterparties to its swaps, according to court papers.

``Against a background of further deterioration in the credit markets, the plan could not be implemented before a further downgrade by the rating agencies,'' John C. McKenna, who was named provisional liquidator of BluePoint by a Bermuda court, said in a statement filed with the New York bankruptcy court.

BluePoint Re, the smallest reinsurer in the bond-insurance industry according to Moody's Investors Service, had its credit rating cut 14 levels to Ca from A2 by the agency yesterday. Moody's had lowered its rating two notches from Aa3 on July 11.

No Bailout

``Disruption in the financial guaranty markets and deterioration in the credit profile of BluePoint Re resulted in negligible new production volume for BluePoint Re'' this year, Moody's said in a statement yesterday.

Last month, Wachovia told BluePoint that it wouldn't provide the money it needed to fund a restructuring and continue in business, according to court papers. Royal Bank of Scotland Group PLC, Deutsche Bank AG and Societe Generale were also counterparties to credit default swaps issued by BluePoint and part of the restructuring attempt, according to court filings.

BluePoint recorded no further losses this year and Wachovia has no obligation to provide money for the unit, the Charlotte, North Carolina-based bank said in an Aug. 11 regulatory filing.

Wachovia will make no additional investment in BluePoint, spokeswoman Christy Phillips Brown said today. ``This action is consistent with our focus on our core businesses and the prudent use of Wachovia's capital.''

Wachovia gained $1.31, or 8.9 percent, to $16.12 at 12:47 p.m. in New York Stock Exchange trading. The shares had declined 61 percent this year through yesterday.

The case is: In re Petition of John C. McKenna, as Provisional Liquidator of BluePoint Re Ltd., 08-13169, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

From:

Bloomberg.com: Worldwide

Texpat

Surge for the dollar as global fears rise

Financial Times
August 15

The dollar surged to a two-year high against the pound and a six-month peak against the euro on Friday, as fears about spreading economic gloom triggered a sell-off in commodities.

Against sterling, the US currency notched up its 11th consecutive day of gains – its longest uninterrupted rise in more than 35 years – as markets became increasingly convinced that the US was best-placed to weather the global downturn.

The strong dollar rebound undermined sentiment in the gold market, where prices fell below $800 for the first time this year to $774.90 a troy ounce, almost a quarter lower than early March’s record $1,030.80.

Prices for crude oil, platinum, copper, aluminium, corn and soyabeans have also retreated from records hit this year, prompting speculation that commodity prices have reached a turning point.

“The golden age when commodity prices could only go up is gone,” said Marco Annunziata, chief economist at Unicredit.

Military tensions between Russia and Georgia have offered little support to the price of gold, while oil prices have continued to fall in spite of interruptions to two key pipelines carrying crude from the Caspian sea to Turkey.

The long-running surge in commodities and resulting inflationary pressures had been a main factor in slowing global economic activity – playing a bigger role than global financial turmoil, for instance, in the eurozone. The eurozone economy shrank in the second quarter for the first time since the launch of the euro in 1999, while Japan’s economy contracted 0.6 per cent, its worst performance for seven years.

The US staged at least a modest recovery in the same period.

The latest commodity price falls are unlikely to prompt any early reaction from central banks, market observers said. The European Central Bank remains concerned that high inflation rates will become entrenched and US inflation data this week showed consumer prices rising at the fastest rate since January 1991.

Analysts were divided on the outlook for commodities. Lehman Brothers believed oil prices had peaked, while Goldman Sachs repeated its forecast that they would hit $149 by the end of the year.

The Reuters-Jefferies CRB index, a benchmark for commodities, fell more than 2.5 per cent to its lowest level since late March. The index has fallen almost 20 per cent since an all-time high in July, but is still 22 per cent higher than a year ago.

FT.com / Markets - Surge for the dollar as global fears rise

***

Oh dear, 13 pages of fire and brimstone ... and now a ray of hope. What to do? What to do?

The dollar is soaring, oil is plunging, children are singing, and the streets are indeed lined with gold.

What else can we whinge about?

Milkman

How is the rising dollar a ray of hope? Whinging? Who is? I don't see anyone whinging on this thread.

bkkandrew

^Don't think Tex even read the title of the article he posted. It ends 'as global fears rise'