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Spin

Theres reportedly a trillion dollars of mortgage loans out there that stand a good chance of defaulting, this guy knew the risks of making loans that were based on market appreciation rather than peoples ability to pay.
I watched this guy, with his swanky suit and golden suntan appear in front of congress recently, he was questioned about why he cashed in tens of millions of dollars of Countrywide stock options just before all this blew up. His answers were cute but not very convincing.

more

Panda

Yes, as they say.-- "TO THE VICTOR, -- THE SPOILS".

Unfortunately, in a country as far to the right of the capitalist system as USA is, that means a huge gap in wealth between the haves and have nots. Probably explains a lot about their massive problem with crime too. A recipe for economic success and social misery.

It actually hurts me to see people like Texpat gloating over his success in such an unjust system. But I guess that was his intent, and after all its their country.
They did vote Bush in TWICE, so I suppose we shouldn't feel too much compassion for them.

Panda

But he didn't break any laws. So the swindle is perfectly legal. Its the American way!

Panda

^ So sad to see people who are morally bankrupt get ahead at the expense of the average working man who has to pick up the tab.

It seems the wealthy in the USA are doing to their own people the same as they are doing to other countries.

It really makes me mad when these PARASITES quote technical points of law to justify acts they must know are immoral and unethical. Once again, its the American way, I am afraid. Sad, just plain sad that technical points of law have over ridden a moral code of conduct in the most powerful nation on earth. We will all be the losers at the hands of these lawyers who legitimize these immoral and unethical acts. Technically legal or not.

People are not stupid. They know when they are being had.
Bottom line is that the American people are being told they will take a 10 to 25% cut in purchasing power to finance the excesses of these mega wealthy crooks.

Ultra bottom line is that the $US decline will ultimately drag us all down as the world economy slows, but those pieces of parasitic slime will still be drinking Champagne on their $100 million yachts which are now worth only $80 million.

So big deal. Who gets hurt? Only the common working class man who is struggling to pay his mortgage. Families out on the street and bankrupt while these parasites enjoy the good life. Yea, I know. Its the American way.

raycarey

we shall see.

bkkandrew

An interesting article from one of the few commentators to predict the US sub-prime crisis in 2006...:

"The Subprime Crisis Is Just Starting" by Daniel R. Amerman, FSU Editorial 03/20/2008

The Subprime Crisis is Just Starting

by Daniel R. Amerman, CFA | March 20, 2008

Print
Overview

As the author of three books on mortgage finance and related derivative securities, and speaking as someone who first turned mortgages into rated securities in 1983, I’m going to let you in on an unfortunate little secret – the real subprime mortgage securitization crisis may not have even started yet. But, there is a good chance the real crisis will arrive soon.

Cont... Lengthy, but well worth it!

bkkandrew

Trouble ahead:

Iceland contagion may spread far and wide - Telegraph

As Iceland goes, so go the Baltics, the Balkans, Hungary, Turkey, and perhaps South Africa. All are living far beyond their means, plugging the gaping holes in their accounts with fickle flows of foreign finance. All have let credit grow far above the safe "speed limit", some exceeding 50pc a year.

Iceland's precarious economy is a warning to other deficit nations about breaking the safe credit 'speed limit'

For Iceland, the high-wire act of the last five years may have finally reached its limits. The central bank was forced to raise interest rates to 15pc this week in an emergency move to halt the collapse of krona, which has fallen 18pc since mid-March.

The country's all-conquering banks - led by Kaupthing, Glitnir, and Landsbanki - have pushed the asset base of the Icelandic banking system to a world record of eight times GDP, tapping the global capital markets to launch Viking raids across Britain, Scandinavia and beyond.

This spigot of easy credit has now been turned off. The spreads on Icelandic bank debt have risen above 800 basis points, near levels seen in Bear Stearns' debt before the Federal Reserve's rescue. Which raises a thorny question: Is the Icelandic government - which presides over an economy the size of Bristol - big enough to underpin its encephalitic banks if push ever comes to shove?

"There are clearly limits to what the government can do," said Paul Rawkins, an Iceland expert at Fitch Ratings. "If the government tried to raise billions in the markets it would damage its own credit worthiness. In any case, these debts are in foreign currencies. The central bank has just $2bn (£1bn) in reserves," he said.

The banks insist they are well capitalised, with enough liquidity to tide them through to 2009. If the credit crunch subsides, the issue will never be put the test.

But Iceland is more than just a Nordic hedge fund masquerading as a country. It is also the first of the deficit states to succumb to investor flight, sending an early warning signal of potential troubles across a great swathe of Eastern Europe and the Mediterranean.

Turkey is first in line for any stress test, said Neil Schering, an East Europe expert at Capital Economics.

"I wouldn't want to keep any money in the Turkish lira: the puzzle is how it has stayed so high for so long. There are huge imbalances in the economy. The current account deficit is nearly 8pc of GDP, and the chief prosecutor is trying to shut down the government," he said, referring to last week's court move to ban the ruling Islamic AKP party, as well as the president and prime minister, for alleged breach of the country's secular laws.

Turkey has a foreign debt of $276bn. The Istanbul bank YapiKredi says Turkish companies may have great difficulty raising some $48bn of fresh loans needed this year to stay afloat.

Until now the country has been the darling of the yen 'carry trade', offering irresistible yields to Japan's army of investors. But the yen's surge in recent weeks has played havoc with these flows. The unwinding of yen positions has undoubtedly been key factor in the sudden capital flight from Iceland this month.

Fitch said countries that run current account deficits above 10pc of GDP for any length time almost always come to grief. East Asia's debt crisis in 1997 erupted before any state reached double digits. Iceland's deficit is now 16pc of GDP. Latvia is at 25pc, Bulgaria 19pc, Georgia 18pc, Estonia 16pc, Lithuania 14pc, Romania 14pc and Serbia 13pc. The region will need $337bn in foreign loans this year.

Borrowing in foreign currencies was all the rage in the heady days of the credit bubble. Most mortgages in Hungary over the last two years have been in Swiss francs, with the Balkans and Poland not far behind. This is now turning into slow torture. The franc has risen 5pc against the euro since October. The real level of the debt is ratcheting up.

The foreign debts have reached 122pc of GDP in Latvia, 101pc in Estonia and 73pc in Lithuania, mostly in euros. For now the debtors are shielded by fixed exchange rates in Europe's ERM system, but this could make the shock even worse should the currency pegs start to snap.

"It's all looks like a pretty ugly cocktail," said Mr Schering. "The good side is that the Baltic banks are not exposed to toxic mortgage securities, and a lot of them are owned by foreign banks, so they are protected."

Ed Parker, head of Fitch for Eastern Europe, said the agency had already downgraded Latvia to BBB+ and issued a further alert in January. Turkey is even lower at BB-.

"There's now a risk of psychological contagion from Iceland. People are starting to look more closely at all these countries. The deficits were easy to fund in times of abundant liquidity, but we think the global credit crunch is going to make it a lot harder," he said. "The history of financial crises suggests that it can be dangerous to think 'it's different this time'."

Icelandic stakes in UK Plc:

Baugur (investment company)

Mosaic Fashions, Coast, Karen Millen, Oasis, Odille, Principles, Shoe Studio Group, Warehouse, Whistles, Jane Norman, MK One, All Saints, House of Fraser, Booker, Iceland, Woodward Foodservice, Julian Graves and Whittard of Chelsea, Hamleys, Aurum, Goldsmiths, Mappin & Webb, Wyevale Garden Centres, Watches of Switzerland, Debenhams, Woolworths, French Connection, Moss Bros

Arev (investment company)

Aspinal of London, Blooming Marvellous, Cruise, Duchamp, Hardy Amies, GHOST, Jones Bootmaker, Limeys, Linens 'n Things, Mountain Warehouse, Unisport

Kaupthing (investment bank)

Singer & Friedlander, Somerfield

FL Group (investment company)

Inspired Gaming Group, House of Fraser

Landsbanki (investment bank)

Icesave

Bjorgolfur Gudmundsson (Icelandic billionaire)

West Ham Football Club Box Label DT

Jet Gorgon

Then what are you Bfly, a welfare case, expecting the likes of Tex, myself and others to pay for your free ride? 555

Texpat

^Seems I missed that little gem of Sputterfly's.

Why the angst Sputter? I don't hate you. Does it irritate you that I'm optimistic? Does it confound your fragile reasoning skills that I believe the world will go on and this is merely a blip on the big picture? Why must you, and your buddy RC, continually harp on my honorable service to my country which was awarded by a lifetime pension adjusted annually for inflation? Does that get under your skin for some reason? Why do you insist I quit Iraq? I've never been there and never wish to go. I didn't quit anything. I retired. If the services refused retirements to all eligibles for the past seven years, while the war was going on, the armed forces would be double the size they are now -- further exacerbating the financial dilemma.

My successes (modest though they are) have come from hard work and intelligent investing. And never getting too emotional or excited about the Chicken Little scenarios we are witnessing here. Brokers love those that buy or sell at the whisper of a crisis. They send their children to Yale and Princeton on the commissions these alarmists pay them. Don't be foolish Sputter, look on the bright side of life. Maybe you just have to try harder.

People find their lot in life largely based on the decisions they make. If you're not happy with your lot in life -- make better decisions.

Panda

^ Spoken like a true merican. Humble and caring.

Jet Gorgon

^^ You did a great service to your country TexP, and they should be thanking you for that. (I do.) I don't know what these folks are on about.

Texpat

^^Where I come from personal responsibility is a virtue. Take care of yourself. If everyone did that, our governments wouldn't have to tax the sweet bejeezus out of us to take care of those that haven't.

Butterfly

Don't take it personally Texpat, I was just trying to illustrate the like of you, their false dreams and the myths they live on. You are alright most of the time, even though some off your comments are out of line sometimes, but hey, nobody is perfect.

I think you are overly naive, and a bit ignorant. Doesn't make you a bad person, just a bit annoying when you claim to know more than others or be on the right side. You aren't, it's that simple, my problem is with you not realizing it.

I have no problem with your comfortable pension, what would you think that ? btw, isn't that some kind of "social welfare" at the end ? I do hope you support all kind of "social welfare programs" since you are the first one to benefit from it, why not the others ? I support social welfare programs, so your fat pension is definitely not a problem for me, good for you.

You seem to think it's a righteous conflict and that America is on her high horse to save the day, or worse you agree with the initial plan to loot the country of its oil reserves for the benefit of America. Either way, it's a black and white issue for you, and I find it funny that you don't see the irony of you quitting the army when they needed you the most.

Texpat

Here we go again. Let's not make this about me or RC will be in like a schoolmarm chastising me for braggadocio and lack of decorum.

Just a few, then I'll move on...

False dreams: I have none. I also understand there may be a point in the future when I'll go back to work. Good thing I'm highly educated and have two decades of solid experience. Working, meh! Yeah, I'm getting bored collecting all these US government entitlements that have been subsidized for years by greedy European banks hither and yon. When I hear the term Northern Rock I think they're saying Open cock-- beer's flowing. I really do appreciate your contribution to my lifestyle... honest. If I ever get the chance to meet you, I'll buy you half a beer.

Naive nor ignorant: I've never claimed to know more than others. I merely state my opinions and then watch the fireworks. Thanks for worrying about me though ... Good to know somebody has my back.

Livlihood: You claim my pension is comfortable. Not sure I've ever characterized it as such. Maybe. Certainly never thought of it as fat, like you claim. I pay full taxes every year and will be a social security recip when my time comes, if there's any left. But I'm not bitter. It's a tough situation, much like many other nations are facing aroung the globe. But I'll survive.

My service: I've never spent 5 minutes in the Army. Thanks for trying though.

bkkandrew

Meanwhile, back on topic:

BBC NEWS | Business | $100bn Fed move over credit fears


$100bn Fed move over credit fears


There Fed has upped the amount of cash available at auction.


The US Federal Reserve will make a further $100bn (£50bn) available to major banks in April, trying to ease concerns about a global credit crunch. The sum, offered across two auctions, is in addition to $260bn provided in short-term loans to the end of March. Other unorthodox steps include the Fed allowing investment banks to borrow from it directly - previously only possible for commercial banks.


A $100 billion here, a $100 billion there, hardly makes the news any more...

bkkandrew

More trouble ahead:

Bloomberg.com: Worldwide

March 25 (Bloomberg) -- Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc. Profits will continue to wane, other analysts said.
``There is light at the end of the tunnel, but it is still rather dim,'' Goldman analysts including New York-based Andrew Tilton said in a note to investors today. They estimated that residential mortgage losses will account for half the total, and commercial mortgages as much as 20 percent.

Earnings and share prices at U.S. financial institutions tumbled in the past year as fallout from the mortgage crisis spread to other markets. Demand for mortgage-backed securities evaporated, leading to the collapse of Bear Stearns Cos., once that market's largest underwriter, and a Federal Reserve-led bailout by JPMorgan Chase & Co. earlier this month.

Goldman's own share-price estimate was cut 3.7 percent to $210 at Fox-Pitt Kelton Cochran Caronia Waller. The research firm also reduced its profit estimates for the world's biggest securities firm for the rest of this year and all of 2009.

Merrill Lynch & Co. had its 2008 profit estimates cut by 45 percent at JPMorgan on concern the third-largest U.S. securities firm by market value may disclose further writedowns on subprime mortgages. Merrill may report a total of $5 billion in additional losses on collateralized debt obligations, so-called Alt-A mortgages and commercial mortgages, New York-based analyst Kenneth Worthington said.

Bank of America

Bank of America Corp., the second-biggest U.S. bank by assets, was downgraded to ``sell'' from ``neutral'' at Merrill Lynch. The company, based in Charlotte, North Carolina, also had its earnings-per-share estimate lowered to $3.30 from $3.50 in 2008 and to $4.00 from $4.40 in 2009, analysts including New York-based Edward Najarian wrote in a note to clients today.

Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, had its share-price forecast cut 16 percent to $70 at Fox-Pitt. The brokerage's 2008 and 2009 profit estimates were also reduced.

Goldman said the $460 billion in credit losses it foresees may ``result in a substantial tightening in credit conditions as these institutions pull back on lending to preserve their reduced capital and to maintain statutory capital adequacy ratios.''

Credit-card loans, auto loans, commercial and industrial lending and non-financial corporate bonds make up the rest of the $460 billion in credit losses.
Goldman, which has lost 16 percent this year on the New York Stock Exchange, rose 75 cents to $179.63 in composite trading at 4:07 p.m. Merrill fell 53 cents to $47.85, Lehman declined $1.43 to $45.21 and Bank of America dropped $1.48 to $40.97.

To contact the reporter on this story: Zhao Yidi in New York at at yzhao7[at]bloomberg.net.
Last Updated: March 25, 2008 16:10 EDT

Milkman

So, there are likely more losses in addition to this, like there already has been.

Therefore.....I think....it may....get worse.

Butterfly

and it keeps getting better and better, you wonder how those banks can run a business with so many security holes

BBC NEWS | Business | Lehman to sue over Japan 'fraud'

bkkandrew

First Direct (Part of HSBC) suspend offering mortgages:

http://www.firstdirect.com/mortgages/rates.shtml

Translation:

We haven't got any more dosh to lend out...

bkkandrew

^Also the Co-Op Bank joined the bandwagon and pulled its mortgages. I hear that the Mighty Halifax (HBOS) are close to doing likewise...