Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sat Jul 12, 2008 3:13 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
hope_full wrote:
So, who is next? WaMu or Bank of America?
And what are y'all doing with your dollars these days?
As shortonoil stated in a post about a week ago, there is an enormous amount of unrealized and pending mortgage related losses in the banking/finance industry.
Due to the fact that off-balance sheet derivative positions are usually not marked to market realities, WaMu or B of A can actually be insolvent but no one will know.
Here's a good example. IndyMac had about $32 billion in assets and $1 billion in capital on March 31. Yet on July 11, we are told by the FDIC that IndyMac may have negative capital of $8 billion. That's a drop of $9 billion or 30% in the value of their assets.
If other major banks have to reduce their assets values by 30%, we will witness the worst banking collapse in history. That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers. _________________ It's already over, now it's just a matter of adjusting.
Posted: Sat Jul 12, 2008 4:04 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Converted to hard assets. Leaving them in the bank appears to be either inviting dissaster, or losing access to them while the FDIC sorts out the messes of failed banks. Stuffing them in the mattress isn't much better since they'll just lose their value to inflation as they print FNM and FDM out of failure.
A credit union might be a marginal compromise, but you had better be damn sure you know exactly where their money is invested.
hope_full wrote:
So, who is next? WaMu or Bank of America?
And what are y'all doing with your dollars these days?
Posted: Sat Jul 12, 2008 4:35 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Ludi wrote:
nobodypanic wrote:
what things have been produced by 'communism'? fire, the wheel, the bow... who knows how many crucial key inventions communal societies have given us from the past.
Which definition of "communism" are you all talking about? You seem to be talking about very different things.
A totalitarian system of government is very different from an egalitarian community.
yes indeed i was talking about two different things. i addressed the second example, i.e., ussr, because i was sure that's what he had in mind when he made his original objection and would insist that my first point was, therefore, irrelevant.
however, i think that i made a reasonable case that under either, non-market system, contributions to the progress of man were made.
further, i wanted to imply that i don't really accept the modern communist state as the definitive example of communism. in fact, i am sure one could argue that, for instance, the soviet union was about as communist as the democratic republic of north korea is democratic.
Joined: Dec 27, 2004 Posts: 13124 Location: naive idiot fantasy world
Posted: Sat Jul 12, 2008 4:44 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
nobodypanic wrote:
further, i wanted to imply that i don't really accept the modern communist state as the definitive example of communism. in fact, i am sure one could argue that, for instance, the soviet union was about as communist as the democratic republic of north korea is democratic.
I agree, it's just confusing for many people when you use the less common meaning of a word. _________________ "...powerdown so soft and fluffy you'll think you're living in a pillow." - jboogy
Posted: Sat Jul 12, 2008 4:46 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak wrote:
hope_full wrote:
So, who is next? WaMu or Bank of America?
And what are y'all doing with your dollars these days?
As shortonoil stated in a post about a week ago, there is an enormous amount of unrealized and pending mortgage related losses in the banking/finance industry.
Due to the fact that off-balance sheet derivative positions are usually not marked to market realities, WaMu or B of A can actually be insolvent but no one will know.
Here's a good example. IndyMac had about $32 billion in assets and $1 billion in capital on March 31. Yet on July 11, we are told by the FDIC that IndyMac may have negative capital of $8 billion. That's a drop of $9 billion or 30% in the value of their assets.
If other major banks have to reduce their assets values by 30%, we will witness the worst banking collapse in history. That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers.
but how long do you think they can do that? and isn't it the case that every time they do save a bank, they devalue the currency in the process? at what point do we become like weimar germany over here?
Joined: Aug 03, 2007 Posts: 4518 Location: Boston Suburbs
Posted: Sat Jul 12, 2008 4:49 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
nobodypanic wrote:
further, i wanted to imply that i don't really accept the modern communist state as the definitive example of communism. in fact, i am sure one could argue that, for instance, the soviet union was about as communist as the democratic republic of north korea is democratic.
I know a lot of people like to talk about how unsustainable capitalism is, but at least it HAS a boom cycle. Communism in its ideal form hasn't really ever caught on. _________________ As long as I am around, there are no worries we have reached "Peak Words"
Posted: Sat Jul 12, 2008 4:49 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak said:
Quote:
That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers.
We are hearing a litany of dialogue, substantiated by government figures, concerning the integrity of Fannie and Freddie’s book. Some simple calculations easily show that the asset base that backs their bonds and mortgages is depreciating by over a trillion $ a year.
Everything possible is being done to cover up this mess, and in the process they are destroying the confidence in the system’s integrity that is necessary to maintain it. Like the MBS and ARB bond market, once that confidence is lost, it will probably never again be regained. This destruction of the economic/financial system, for the benefit of a short term gain for a select few, must be the most myopic behavior that has ever occurred in the history of finance.
They have pulled the plug on the jinn’s bottle, and like most mythologies instruct, nothing but decimation will ever come of it.
Joined: Dec 27, 2004 Posts: 13124 Location: naive idiot fantasy world
Posted: Sat Jul 12, 2008 4:53 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
mos6507 wrote:
Communism in its ideal form hasn't really ever caught on.
It may be a system which doesn't work in groups over about 150 individuals, which means it may simply not work in civilized cultures. These large groups of people seem to inevitably form hierarchies, and there goes your "communal" living.... _________________ "...powerdown so soft and fluffy you'll think you're living in a pillow." - jboogy
Posted: Sat Jul 12, 2008 5:05 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak wrote:
As shortonoil stated in a post about a week ago, there is an enormous amount of unrealized and pending mortgage related losses in the banking/finance industry.
Due to the fact that off-balance sheet derivative positions are usually not marked to market realities, WaMu or B of A can actually be insolvent but no one will know.
That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers.
Cash flow is the dynamite in the water. Northern Rock imploded not so much because of asset valuations, but because it was close to the point at which its liquid cash was insufficient to meet business needs. Models will not help zombie banks meet payroll. That end game can only be delayed. _________________ Volatility. When life isn't exciting enough.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sat Jul 12, 2008 5:08 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
nobodypanic wrote:
DantesPeak wrote:
hope_full wrote:
So, who is next? WaMu or Bank of America?
And what are y'all doing with your dollars these days?
As shortonoil stated in a post about a week ago, there is an enormous amount of unrealized and pending mortgage related losses in the banking/finance industry.
Due to the fact that off-balance sheet derivative positions are usually not marked to market realities, WaMu or B of A can actually be insolvent but no one will know.
Here's a good example. IndyMac had about $32 billion in assets and $1 billion in capital on March 31. Yet on July 11, we are told by the FDIC that IndyMac may have negative capital of $8 billion. That's a drop of $9 billion or 30% in the value of their assets.
If other major banks have to reduce their assets values by 30%, we will witness the worst banking collapse in history. That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers.
but how long do you think they can do that? and isn't it the case that every time they do save a bank, they devalue the currency in the process? at what point do we become like weimar germany over here?
They have postponed the collapse so far, at this point maybe even three years. My first post here on how bad things will get in the mortgage industry was made three and a half years ago.
Remember that Fannie Mae didn't even issue financial reports for a while, and then we were told it was ok after literally thousands of auditors tried to make sense of its books. Anyone who didn't sell Fannie stock after that - when it had no financial reports - gets no sympathy from me as the stock crashes to zero.
But yes, we probably do become like weimar germany - except you won't need those bulky wheelbarrels, just a bank account.
Frankly that day might come soon, or it could be postponed up to two years. My best guess is that the inflationary cycle spins out of control at new year's, being by then we will be six months into an ever worsening economic downturn.
Quote:
Fair Game
The Fannie and Freddie Fallout
By GRETCHEN MORGENSON
Published: July 13, 2008
IT’S dispiriting indeed to watch the United States financial system, supposedly the envy of the world, being taken to its knees. But that’s the show we’re watching, brought to you by somnambulant regulators, greedy bank executives and incompetent corporate directors.
“The real outrage is that none of this had to happen,” said William A. Fleckenstein, co-author of “Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve” and president of Fleckenstein Capital in Issaquah, Wash. “We did not have to ruin the financial system and ruin the financial lives of a huge chunk of the middle class in the United States.”
“It is crystal clear that the Fed not only made mistakes, they had the pompoms out, cheering for deregulation,” he adds. “Until people recognize why we are in this mess, I don’t see how we get out of this thing.”
A week ago, Bridgewater Associates, a research firm, estimated that losses from the credit crisis we’re now mired in might amount to $1.6 trillion when all is said and done.
We’ll have to wait years to see if this is accurate. But whatever the number is, it will also represent, in stunning red ink, the cost to society of financiers who are shortsighted and greedy and regulators who don’t regulate.
NY Times _________________ It's already over, now it's just a matter of adjusting.
Last edited by DantesPeak on Sat Jul 12, 2008 5:18 pm; edited 2 times in total
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sat Jul 12, 2008 5:12 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
Twilight wrote:
DantesPeak wrote:
As shortonoil stated in a post about a week ago, there is an enormous amount of unrealized and pending mortgage related losses in the banking/finance industry.
Due to the fact that off-balance sheet derivative positions are usually not marked to market realities, WaMu or B of A can actually be insolvent but no one will know.
That's why they will do everything to cover up this mess as long as possible - probably with more government assisted takeovers.
Cash flow is the dynamite in the water. Northern Rock imploded not so much because of asset valuations, but because it was close to the point at which its liquid cash was insufficient to meet business needs. Models will not help zombie banks meet payroll. That end game can only be delayed.
Apparently the end for IndyMac was reached not when borrowers withdrew money, but they no longer had any assets to serve as collateral. They didn't borrow from the Fed because they had nothing to pledge for a loan.
So yes, if you can't meet your payroll you are sunk. But until they collapse the Fed/Government can issue new money laons and/or assume their liabilities and add to the federal debt. Then after a government takeover, the government can just run the printing presses even more to meet payroll. That's why I see the trend for the next two years towrads runaway inflation. _________________ It's already over, now it's just a matter of adjusting.
Posted: Sat Jul 12, 2008 7:17 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak said:
Quote:
That's why I see the trend for the next two years towrads runaway inflation.
Two years is possible, if near acrobatic agility can be performed by the FED, but not likely. To accomplish this it would require a near doubling of the already crushing $9 trillion federal deficit, and with a crumbled and dying credit market a truly helicopter approach would be needed to re-liquefy the financial industry.
With close to $1000 trillion in derivatives, $580 trillion of them being interest securitization instruments, a skyrocketing federal deficit would produce skyrocketing interest rates. The cascading defaults originating from the already zombie like monolines, which hold much of the $580 trillion in interest guarantees, could be catastrophic in days, if not hours.
I truly hope we have two years, but the failure of two or three more major banks, which is quite likely in the next few months, will undoubtedly produce a crisis that will bring this upside-down pyramid crashing down!
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These large groups of people seem to inevitably form hierarchies, and there goes your "communal" living....
