Full Version: Fed Drain Causes Market Pain
Stool Pigeons Wire Message Board > Stock Market Message Board > Mark To Market - Stock Market Message Board
I will be posting a Fed report in the Wall Street Examiner Professional Edition momentarily, addressing this.
Also discussed in a new podcast at http://radiofreewallstreet.fm
Visa's (V) true face shall be revealed.
the XAX and various commodity stocks forming, what seems to be, the beginning of an intermediate top here does not help the bull case at all
QUOTE(Jetlag @ Mar 19 2008, 12:05 PM)
Visa's (V) true face shall be revealed.
"what's in your (lizard skin) wallet?"QUOTE(tdultima @ Mar 19 2008, 03:07 PM)
the XAX and various commodity stocks forming, what seems to be, the beginning of an intermediate top here does not help the bull case at all
"Nay, Madam, I know not seems."
Fed cutting rates while draining the system has some psychedelic effects on the liquidity driven commods. Your grandpa's "fed cuts shit floats" market is no more.
Is this the main difference between Japan's cut&flood to prevent deflation and USA's cut&soak policy?
Is this the main difference between Japan's cut&flood to prevent deflation and USA's cut&soak policy?
short term indicators are close to turning down again
most noticeably on the NYA
no cigar yet though
most noticeably on the NYA
no cigar yet though
Looking at the charts with the benefit of hindsight, it's safe to say that there is a covert "strong stockmarket" policy in place for sometime now.
QUOTE(tdultima @ Mar 19 2008, 03:17 PM)
short term indicators are close to turning down again
most noticeably on the NYA
no cigar yet though
most noticeably on the NYA
no cigar yet though
Maybe we'll quadruple bottom tomorrow?
QUOTE(tdultima @ Mar 19 2008, 03:17 PM)
short term indicators are close to turning down again
most noticeably on the NYA
no cigar yet though
most noticeably on the NYA
no cigar yet though
Monica says yes....
[attachmentid=96856]
Marie talking to the CEOs of Fannie and Freddie, They are ready to put 200 bil in liquidity to stabilize the home market. 
QUOTE(cwd @ Mar 19 2008, 03:23 PM)
Marie talking to the CEOs of Fannie and Freddie, They are ready to put 200 bil in liquidity to stabilize the home market.
Except no prospective homebuyer has the 20% down to qualify.
That's just more hot air. They never had any liquidity problems because the FCBs have been backstopping them all the way, buying huge chunks of their debt week in and week out.
QUOTE(cwd @ Mar 19 2008, 03:23 PM)
Marie talking to the CEOs of Fannie and Freddie, They are ready to put 200 bil in liquidity to stabilize the home market.
That ought to knock another $50 or so off of Gold....
If we don't bounce tomorrow are we setting up for.......
[attachmentid=96857]
[attachmentid=96857]
Remember what a big deal the Blackstone IPO was? It's had a 50% crash since the IPO.
Judas Priest...Crapvision just showed a quick clip of Paulson and he looks ready to cry.
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
The Feds finally sent someone to jail over options backdating. An HR director of all people.
SAN FRANCISCO (AP) - The former human resources chief of Brocade Communications Systems Inc. (NASDAQ:BRCD) was sentenced on Wednesday to 4 months in prison and ordered to pay a $1.25 million fine for her role in a stock options backdating scheme.
Stephanie Jensen was convicted in December of conspiracy and falsifying corporate records at the networking equipment maker.
She faced as many as 12 months in prison.
'I am so sad today,' Jensen told U.S. District Court Judge Charles Breyer in a wavering voice and choking back tears before he handed down the sentence. 'I would do anything to be able to go back in time and make different choices and spare others from the impact of all this. I stand before you today with sadness and humility and regret. I accept responsibility for my actions.'
Jensen and her former boss, former Brocade chief executive Gregory Reyes, were the first two executives to go on trial over backdating when their cases went before separate juries in U.S. District Court for the Northern District of California last year.
source
SAN FRANCISCO (AP) - The former human resources chief of Brocade Communications Systems Inc. (NASDAQ:BRCD) was sentenced on Wednesday to 4 months in prison and ordered to pay a $1.25 million fine for her role in a stock options backdating scheme.
Stephanie Jensen was convicted in December of conspiracy and falsifying corporate records at the networking equipment maker.
She faced as many as 12 months in prison.
'I am so sad today,' Jensen told U.S. District Court Judge Charles Breyer in a wavering voice and choking back tears before he handed down the sentence. 'I would do anything to be able to go back in time and make different choices and spare others from the impact of all this. I stand before you today with sadness and humility and regret. I accept responsibility for my actions.'
Jensen and her former boss, former Brocade chief executive Gregory Reyes, were the first two executives to go on trial over backdating when their cases went before separate juries in U.S. District Court for the Northern District of California last year.
source
QUOTE(Mies van der Rump @ Mar 19 2008, 03:43 PM)
Judas Priest...Crapvision just showed a quick clip of Paulson and he looks ready to cry.
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
Well, at least Carl is back to sanity and good predictions...
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
Looking at the 900 Daily simple MA (k-wave's 200 weeks approximation on the daily, that has shown some "statistical significance" in the past) on the Spooz:
1987 crash: bounced twice on the 900 (intraday it pinched under it on the day following the crash), never closed under.
1990: closed just under the 900 for three different times, spending a total of 7 days under it.
Feb 2001: It spent 12 trading days dating with the 900 before taking a dive. Came back almost two months later to date the 900 and even pulled through to bang it's head on the 1315 level. Spooz went under before breaking the down sloping 900 on the first try in Jan 5th 2004.
In 2004 the 900 served as support for three times.
Last March 6th was the first time it closed under the 900 since breaking above it in Jan 2004.
1987 crash: bounced twice on the 900 (intraday it pinched under it on the day following the crash), never closed under.
1990: closed just under the 900 for three different times, spending a total of 7 days under it.
Feb 2001: It spent 12 trading days dating with the 900 before taking a dive. Came back almost two months later to date the 900 and even pulled through to bang it's head on the 1315 level. Spooz went under before breaking the down sloping 900 on the first try in Jan 5th 2004.
In 2004 the 900 served as support for three times.
Last March 6th was the first time it closed under the 900 since breaking above it in Jan 2004.
QUOTE(Bungster @ Mar 19 2008, 03:52 PM)
Well, at least Carl is back to sanity and good predictions...
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
I stopped reading his site a few weeks back.
It was funny for a while, but it's getting to be plain "STUPID" now. To top it off, the guy praise himself in the comment section using a different alias.
Who in the right mind would praise him for being wrong 99% of the time.
DJ Militant Web Site: Osama Bin Laden To Issue New Message Soon
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
QUOTE(joe3pack @ Mar 19 2008, 03:09 PM)
"what's in your (lizard skin) wallet?"
I'm not playing this reptile or any specific shortable story. I'm sticking to my broad (short) guns: SRS, SDS, FXP (yes I've lost my lunch plenty of times during the roller coaster ride) and last but not the least Eurostoxx50 leveraged short from Societe General (gulp! hope the ECB can act as lender of last resort just in case we get more Kerviel from this bankster's menu).
Do you guys know any double short ETF for eurostoxx or other euro zone indexes ? The ones I know are not truly double short, they "manage" the leverage every quarter (it's at 180% short now), needless to say they do it poorly.
Btw new closing high on the FXP... Beijing 2008 or bust !
QUOTE(I_Am_Madness @ Mar 19 2008, 04:10 PM)
I stopped reading his site a few weeks back.
It was funny for a while, but it's getting to be plain "STUPID" now. To top it off, the guy praise himself in the comment section using a different alias.
Who in the right mind would praise him for being wrong 99% of the time.
It was funny for a while, but it's getting to be plain "STUPID" now. To top it off, the guy praise himself in the comment section using a different alias.
Who in the right mind would praise him for being wrong 99% of the time.
Fade Carl = $$$
QUOTE(Bungster @ Mar 19 2008, 03:52 PM)
Well, at least Carl is back to sanity and good predictions...
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
Is he reduced to just making comments about the market? If he had been trading real money he would have broke a long time ago.
QUOTE(potatohead @ Mar 19 2008, 04:11 PM)
DJ Militant Web Site: Osama Bin Laden To Issue New Message Soon
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
Will Dubya pull Osama's body from the freezer before leaving office or will McCain get the honors ?
Haipu for Drano:
The Fed will save us
Rate cuts always do the trick
Cramer told me so
The Fed will save us
Rate cuts always do the trick
Cramer told me so
QUOTE(potatohead @ Mar 19 2008, 08:11 PM)
DJ Militant Web Site: Osama Bin Laden To Issue New Message Soon
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
What's shorting?
[quote=kiwibear,Mar 18 2008, 06:18 PM]
We did get a follow-up Sigma-4 today. Technically, I was looking for 3.52% day and we got 3.51%. But, it should be good enough nonetheless. Is this it for the bear, very likely, however it is also possible to go through this bottoming process once again---but again, that type of action is usually required in longer term Bear Markets such as 2000-2002 and 1973-1974.
[/quote]
My take is that it took all of 1 week to take back everything the last "biggest rally in 5 years" rose by, and that this will be little different. The problems in both the financial and the real economy are too huge, and will not come right until the excess shit has been wrung out. Many, many months away IMO.
For starters, the size of the financial wizardry workforce (GS,LEH,Morgan Stanley, multiple other banks, and thousands of hedge funds employing untold thousands of people worldwide in completely value-free "jobs") will end up being slashed to a fraction of its original size to reflect the worth of these jobs to the economy and world.
Too much forced (and necessary) deleveraging underway is now an unstoppable force IMO - next 2 weeks/months/quarters etc will uncover many more "surprise" blowups among the playas, and downward momentum will rapidly re-exert itself. The euphoria in bulls/ despondency in bears just a week ago was the same as today.
[/quote]
Well that's 2/3 of the wonder rally given back already.
I bet the super-leveraged hedgies who have been hanging on by the skin of their nutsacks thanks to commodities will be slightly concerned by the wee downtick in gold and commodities generally today.
The Margin Man is getting to be a pain in the A$$
We did get a follow-up Sigma-4 today. Technically, I was looking for 3.52% day and we got 3.51%. But, it should be good enough nonetheless. Is this it for the bear, very likely, however it is also possible to go through this bottoming process once again---but again, that type of action is usually required in longer term Bear Markets such as 2000-2002 and 1973-1974.
[/quote]
My take is that it took all of 1 week to take back everything the last "biggest rally in 5 years" rose by, and that this will be little different. The problems in both the financial and the real economy are too huge, and will not come right until the excess shit has been wrung out. Many, many months away IMO.
For starters, the size of the financial wizardry workforce (GS,LEH,Morgan Stanley, multiple other banks, and thousands of hedge funds employing untold thousands of people worldwide in completely value-free "jobs") will end up being slashed to a fraction of its original size to reflect the worth of these jobs to the economy and world.
Too much forced (and necessary) deleveraging underway is now an unstoppable force IMO - next 2 weeks/months/quarters etc will uncover many more "surprise" blowups among the playas, and downward momentum will rapidly re-exert itself. The euphoria in bulls/ despondency in bears just a week ago was the same as today.
[/quote]
Well that's 2/3 of the wonder rally given back already.
I bet the super-leveraged hedgies who have been hanging on by the skin of their nutsacks thanks to commodities will be slightly concerned by the wee downtick in gold and commodities generally today.
The Margin Man is getting to be a pain in the A$$
I wonder what Jim Rogers thinks of the commodity whackamole we're witnessing.
Does he really think Burnanke is flooding the market with doolahs?
Does he really think Burnanke is flooding the market with doolahs?
If he does, he is in for a rude awakening.
QUOTE(cwd @ Mar 19 2008, 01:23 PM)
Marie talking to the CEOs of Fannie and Freddie, They are ready to put 200 bil in liquidity to stabilize the home market.
I love it when they use the word stabilize.
Stabilize it for who?
When they say stabilize, what they really mean to say is to keep it artificially elevated.
Real markets stabilize themselves.
QUOTE(Benny Hoo Hoo @ Mar 19 2008, 02:54 PM)
I love it when they use the word stabilize.
Stabilize it for who?
When they say stabilize, what they really mean to say is to keep it artificially elevated.
Real markets stabilize themselves.
Stabilize it for who?
When they say stabilize, what they really mean to say is to keep it artificially elevated.
Real markets stabilize themselves.
It's the relitters favorite word here in Kaliphonia. Prices all over the state are stabilizing -- into a nice, smooth freefall.
QUOTE(4shzl @ Mar 19 2008, 05:14 PM)
It's the relitters favorite word here in Kaliphonia. Prices all over the state are stabilizing -- into a nice, smooth freefall.
Hey, everyone knows there's no such thing as a bottomless pit.
right on Jimi with this comment.
Except no prospective homebuyer has the 20% down to qualify.
Even towards the end of the housing boom, people were really struggling to come up with any size deposit,let alone 5,10 or especially 20%.
The house prices were so ridiculously high that people needed deposits that not so long ago could have bought the whole house.
The only way the real estate market can make a comeback is if we have the same conditions we had during the boom.
Those conditions were a once in a lifetime phenomenon.
Here on the Sunny Coast where I live,we are having a very bitter argument in the local newspaper about property prices.
All the usual suspects trying in vain to talk up the market.
Lots of very worried people who are trapped like rats.
There will be blood.
Except no prospective homebuyer has the 20% down to qualify.
Even towards the end of the housing boom, people were really struggling to come up with any size deposit,let alone 5,10 or especially 20%.
The house prices were so ridiculously high that people needed deposits that not so long ago could have bought the whole house.
The only way the real estate market can make a comeback is if we have the same conditions we had during the boom.
Those conditions were a once in a lifetime phenomenon.
Here on the Sunny Coast where I live,we are having a very bitter argument in the local newspaper about property prices.
All the usual suspects trying in vain to talk up the market.
Lots of very worried people who are trapped like rats.
There will be blood.
Good news ! ! ! ! Only 563 hedge funds went under last year. More than 700 went under the year before.
from Nitely Bidness Report.
from Nitely Bidness Report.
QUOTE(Mies van der Rump @ Mar 19 2008, 01:43 PM)
Judas Priest...Crapvision just showed a quick clip of Paulson and he looks ready to cry.
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
I can't believe Fred and Fannie are going to be able to leverage themselves another 2 Trillion. Both CEO's claiming it is "fear over common sense". LOL, "peak to trough price drops of 15% and now we are only at about 5%". Are these guys for real?????
So we have a market and an economy that makes even a hard-nosed snake-loving Goldman Sachs exec type of person cry. Heaven help us.
This is where they separate the little cub bears from big bad growling bears.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
QUOTE(Jetlag @ Mar 19 2008, 05:58 PM)
This is where they separate the little cub bears from big bad growling bears.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
but I was told the Chinese govt won't let the markets fall before the Olympics.. 
Everyone was supposed to go tits short the day after...
Everyone was supposed to go tits short the day after...
The way I've been flipping long and short lately I'm starting to feel bipolar...
[attachmentid=96862]
[attachmentid=96862]
QUOTE(Bungster @ Mar 19 2008, 03:52 PM)
Well, at least Carl is back to sanity and good predictions...
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
http://carlfutia.blogspot.com/
Guesstimates on March 19, 8:00 am ET
Spiders - June S&P E-mini Futures: Yesterday’s big rally gives us a chance to see if the technical condition of the market is improving. Until now every time the Fed has done something to ease credit conditions the market tanked after a brief rally. If the E-minis can hold 1306 support today, or even better, close above the 1350 level, we shall have strong evidence that Monday’s low will hold. In any case I think the next significant move will be upward into the 1430-50 range.
It would be interesting to see how much money one might make by taking the opposite sides of every stated trade.
He reminds me of a story a professor once told me, that I cannot verify. He claims that an investment house once hired the members of the economics department at Columbia university to provide it forecasting. After some period of time, there was a meeting, and the investment house decided that the department as a whole did not provide it any forecasting edge, so they did not renew the contract... except to retain one professor.
The reason they retained that one professor? Because he was reliably wrong.....
Frugality is 'IN'.
God help the frivolous shops and services...
http://globaleconomicanalysis.blogspot.com/
God help the frivolous shops and services...
http://globaleconomicanalysis.blogspot.com/
QUOTE(Jetlag @ Mar 19 2008, 03:58 PM)
This is where they separate the little cub bears from big bad growling bears.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
[attachmentid=96860]
Chinese A-Shares, Pai Gowers 'R Us.
This is where the cub bear gets slapped around until he lifts his right shoulder. Never short into the hole.
I can't decide whether the 'long' train keeps backing up for me to get on or we are about to witness the greatest crash in history.
I watched a sitcom called King of Queens.
Doug and Carrie invest Dougs christmas bonus in the sharemarket.
It must be circa 1999.
They ride a brumby tech stock up and down.
Man its a funny program.
Reminds me of todays near impossible trading environment.
I watched a sitcom called King of Queens.
Doug and Carrie invest Dougs christmas bonus in the sharemarket.
It must be circa 1999.
They ride a brumby tech stock up and down.
Man its a funny program.
Reminds me of todays near impossible trading environment.
QUOTE(Brisbane Bear @ Mar 19 2008, 06:14 PM)
Frugality is 'IN'.
God help the frivolous shops and services...
http://globaleconomicanalysis.blogspot.com/
God help the frivolous shops and services...
http://globaleconomicanalysis.blogspot.com/
"I'd like to know when can I expect to start charging interest from my lender"
John Reamtor, CA
QUOTE
Readers of the Wall Street Journal may have noticed a full-page ad on Tuesday imploring Ben Bernanke, Chairman of the U.S. Federal Reserve not to "put garbage in the Federal Reserve." The ad ran on A5 of the edition we get here in Canada.
The ad was apparently placed by a private individual named Andy Beal from Dallas, Texas. Written as an open letter to Mr. Bernanke, the ad warns the Fed doing anything that might involving the propping up of AAA mortgage bonds or first mortgage syndicated bank loans. "Garbage is garbage, even in a fancy wrapper that the rating agencies love."
The ad was apparently placed by a private individual named Andy Beal from Dallas, Texas. Written as an open letter to Mr. Bernanke, the ad warns the Fed doing anything that might involving the propping up of AAA mortgage bonds or first mortgage syndicated bank loans. "Garbage is garbage, even in a fancy wrapper that the rating agencies love."
National Postal
Doc, I am going to now post the presumed content of the letter as I found it, purloined from elsewhere. I don't have a link - because it was a purchased ad, not an article. But because it was a purchased ad, I assume it's fair use to reproduce, since Mr. Beal's apparent intent was to spread widely his point of view. It's like reproducing corporate news releases - they're designed to disseminate. If you don't agree, please delete the post - no harm's intended, obviously.
QUOTE
To: Mr. Ben Bernanke
Please DON"T PUT GARBAGE in the FEDERAL RESERVE
Dear Mr. Bernanke:
I was afraid that if simply wrote you this letter you might never see it. I thought this message was important and worthy of effort to attract your attention.
I am sure that you are hearing from the Wall Street crowd about how stupid the marketplace is because the market won't buy all the great loans that Wall Street has produced and how stupid or illiquid the market is because AAA RMBS are being offered at 60 cents on the dollar with no takers. First mortgage syndicated bank loans are offered for 70 cents on the dollar and Wall Street simply cannot believe buyers aren't standing in line to buy.
Consider for a moment that many corporate bonds are trading at premiums above par value. How can this be? If the market is so stupid and there is no liquidity, who is buying those good corporate bonds at 105 cents on the dollar??
Many AAA mortgage bonds are actually extremely high risk because of little-considered nuances in the hundreds of pages of trust indentures and servicing agreements. In addition to widely understood mortgage default and other concerns, these contracts permit the loan servicers to advance payments on behalf of defaulted homeowners for years and years and years at interest rates of 12% and more. These "servicer advancements" put funds back into the trust to be paid out to junior security holders. The "servicer advances" are subsequently repaid FIRST from foreclosed home sales. Therefore, foreclosed home sales may result in little or no proceeds, or even a liability, to the AAAs. This mechanism effectively transfers funds that really should belong to the AAA securities to junior securities. Servicers that own junior securities are incredibly motivated to drag their feet resolving defaulted loans, which results in great loss to the AAA holders. This is not a misprint: Defaulted first mortgage home loans may become a net liability, not an asset, to some of the AAAs. This is still not widely understood.
Similarly, "first mortgage syndicated bank loans" issued since about 2004 are routinely garbage and not traditional first mortgages on anything determinable at all. Many, if not most, of these loans permit the borrowers to sell the collateral, keep the money, and reinvest in almost anything they want to, including stock, junk bonds, defaulted loans, or perhaps ice cream cones. MAny, if not most, of these syndicated bank loans also permit UNLIMITED amounts of additional swap debt that is either senior to or of equal priority with the syndicated loan. These provisions are also no widely understood and are sometimes even disguised in the loan documents.
Falling prices for these type assets reflect people finally reading the hundreds of pages of fine print, not a problem with the marketplace. Prices should continue to fall as people wake up to the true nature of these assets. Mant "last out" AAA RMBS are still overvalued at 60% of par. Many first mortgage syndicated bank loans are overvalued at 70% of par. Smart buyers won't touch any of this garbage at any price remotely close to what it originally sold for.
The Fed may be walking on very slippery ground. My fear is that the Fed has little more understanding of the stench of the garbage than many of the current owners who bought all these debt instruments issued about 2004.
Is the US Government taking some of this garbage on its balance sheet as collateral for Federal Reserve loans? The AAA rating means absolutely nothing. Garbage is garbage even in a fancy wrapper that the ratings agencies love.
I do not pretend to know how the Fed is collateralizing loans. Perhaps I am naive in underestimating the insightfulness of the Feb, but many intelligent people were caught up in complacent decisions involving these assets. I know nothing more than what I read in the media about collateral for these Fed loans, but it sure sounds troubling.
Sincerely,
Andy Beal
6000 Legacy Drive
Dallas, Texas 75024
Please DON"T PUT GARBAGE in the FEDERAL RESERVE
Dear Mr. Bernanke:
I was afraid that if simply wrote you this letter you might never see it. I thought this message was important and worthy of effort to attract your attention.
I am sure that you are hearing from the Wall Street crowd about how stupid the marketplace is because the market won't buy all the great loans that Wall Street has produced and how stupid or illiquid the market is because AAA RMBS are being offered at 60 cents on the dollar with no takers. First mortgage syndicated bank loans are offered for 70 cents on the dollar and Wall Street simply cannot believe buyers aren't standing in line to buy.
Consider for a moment that many corporate bonds are trading at premiums above par value. How can this be? If the market is so stupid and there is no liquidity, who is buying those good corporate bonds at 105 cents on the dollar??
Many AAA mortgage bonds are actually extremely high risk because of little-considered nuances in the hundreds of pages of trust indentures and servicing agreements. In addition to widely understood mortgage default and other concerns, these contracts permit the loan servicers to advance payments on behalf of defaulted homeowners for years and years and years at interest rates of 12% and more. These "servicer advancements" put funds back into the trust to be paid out to junior security holders. The "servicer advances" are subsequently repaid FIRST from foreclosed home sales. Therefore, foreclosed home sales may result in little or no proceeds, or even a liability, to the AAAs. This mechanism effectively transfers funds that really should belong to the AAA securities to junior securities. Servicers that own junior securities are incredibly motivated to drag their feet resolving defaulted loans, which results in great loss to the AAA holders. This is not a misprint: Defaulted first mortgage home loans may become a net liability, not an asset, to some of the AAAs. This is still not widely understood.
Similarly, "first mortgage syndicated bank loans" issued since about 2004 are routinely garbage and not traditional first mortgages on anything determinable at all. Many, if not most, of these loans permit the borrowers to sell the collateral, keep the money, and reinvest in almost anything they want to, including stock, junk bonds, defaulted loans, or perhaps ice cream cones. MAny, if not most, of these syndicated bank loans also permit UNLIMITED amounts of additional swap debt that is either senior to or of equal priority with the syndicated loan. These provisions are also no widely understood and are sometimes even disguised in the loan documents.
Falling prices for these type assets reflect people finally reading the hundreds of pages of fine print, not a problem with the marketplace. Prices should continue to fall as people wake up to the true nature of these assets. Mant "last out" AAA RMBS are still overvalued at 60% of par. Many first mortgage syndicated bank loans are overvalued at 70% of par. Smart buyers won't touch any of this garbage at any price remotely close to what it originally sold for.
The Fed may be walking on very slippery ground. My fear is that the Fed has little more understanding of the stench of the garbage than many of the current owners who bought all these debt instruments issued about 2004.
Is the US Government taking some of this garbage on its balance sheet as collateral for Federal Reserve loans? The AAA rating means absolutely nothing. Garbage is garbage even in a fancy wrapper that the ratings agencies love.
I do not pretend to know how the Fed is collateralizing loans. Perhaps I am naive in underestimating the insightfulness of the Feb, but many intelligent people were caught up in complacent decisions involving these assets. I know nothing more than what I read in the media about collateral for these Fed loans, but it sure sounds troubling.
Sincerely,
Andy Beal
6000 Legacy Drive
Dallas, Texas 75024
QUOTE(potatohead @ Mar 19 2008, 04:11 PM)
DJ Militant Web Site: Osama Bin Laden To Issue New Message Soon
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
CAIRO (AP)--Al-Qaida leader Osama bin Laden will be issuing a new message
right around the fifth anniversary of the U.S.-led invasion of Iraq, announced
a militant Web site with close connections to the group Wednesday.
"Urgent, very soon by the will of God," read the announcement of the new
message "the response is what you see and not what you hear, by the warrior
sheik, Osama bin Laden."
seems about time for a false flag attack to give an excuse for the markets weakness.( I refuse to use the C word)
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