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.
Posted: Fri Jul 25, 2008 2:32 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
shady28 wrote:
This is the beginning of a deflationary spiral. Yes, we've had high inflation, but back away and see what is happening :
Captial, cash, has suddenly become precious. Difficult to find, and those with it demand a high return. Money is a commodity, and like all commodities is subject to supply and demand forces...
The Fed only pumps money out by making loans. In order to make a loan, you have to have someone who is willing to pay it back. It's called pushing on a string.
Need to back away a bit more. 50% of the US housing market is less than 24hrs away from being nationalized.
Fed can only pump out money by making loans. Well with National Banks, Investment Banks, Hedge funds, and now GSE's able to withdraw from the Fed Window there's a growing line of pigs bellying up to the trough. Pretty soon you will be able to join them
Just take the stimulus check as an example (a gift from the tax payer, to the tax payer, to pay off the banks). Instead of a public outcry at such a ludicrous idea, the only debate was that it should be more.
My premise is very simple:
"The worlds largest Debtor nation in control of the world's reserve currency will never allow deflation".
but if that is not enough to convince you.
"A morally and financially bankrupt populace will not do the necessary sacrifices to allow deflation"
or
"A corrupt and self-serving government will not have the restraint to allow deflation"
The list goes on. The US of 2008 is not the Japan of 1992
Posted: Fri Jul 25, 2008 2:52 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak wrote:
I believe the CDS are necessary because WaMu has a lot of unsecured debt, which I mentioned previously would not be covered by a FDIC takeover - or possibly even by a takeover by a larger bank.
I, for the life of me, can't figure out a scenario where someone would say, "Well the US Treasury just defaulted on all it's securities, but lucky me I'm protected by a credit default swap." If the Treasury is defaulting on it's securities, the rule book just went out the window right? _________________ "We were standing on the edges
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS
Posted: Fri Jul 25, 2008 3:04 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
FoxV wrote:
Need to back away a bit more. 50% of the US housing market is less than 24hrs away from being nationalized.
Fed can only pump out money by making loans. Well with National Banks, Investment Banks, Hedge funds, and now GSE's able to withdraw from the Fed Window there's a growing line of pigs bellying up to the trough. Pretty soon you will be able to join them
Just take the stimulus check as an example (a gift from the tax payer, to the tax payer, to pay off the banks). Instead of a public outcry at such a ludicrous idea, the only debate was that it should be more.
Everything you list are loans - and the Fed Window is a 90 day loan. These things all come to roost rather quickly, and the amounts that the fed is pumping right now are a pittance compared to the interest on what is already out there (Because what is out there in loans is in the tens of trillions). Net negative money flow.
It's possible, even likely, the Fed will actually start 'printing money' and doing the 'Helicopter Ben' trick. So far they have not done that. It's likely that when they do, it will be mandated by the Congress at the behest of the public. It will be the next phase, not the current one.
ie, a knee jerk reaction that hasn't happened yet.
Between now and then, you get deflation. It's not really a theory at the moment, look here, deflation rapid and sudden reflected in the truest benchmark of the value of the dollar, commodities. Everyone is so worked up about inflation, they have failed to see an in progress collapse in commodities :
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Jul 25, 2008 3:12 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
smallpoxgirl wrote:
DantesPeak wrote:
I believe the CDS are necessary because WaMu has a lot of unsecured debt, which I mentioned previously would not be covered by a FDIC takeover - or possibly even by a takeover by a larger bank.
I, for the life of me, can't figure out a scenario where someone would say, "Well the US Treasury just defaulted on all it's securities, but lucky me I'm protected by a credit default swap." If the Treasury is defaulting on it's securities, the rule book just went out the window right?
If the US defaulted, it's not clear exactly how you would get paid off on your CDS.
Perhaps more interesting is that F & F wrote many CDS on themselves. Exactly how would you collect on that if they defaulted, since the US government probably wouldn't?
I think the question is not whether they pay off, but whether the integrity of the CDS contacts is maintained. In other words, the US can not let F & F - or itself - default. Otherwise a derivative nuclear chain reaction would start, causing a worldwide financial meltdown. _________________ It's already over, now it's just a matter of adjusting.
Posted: Fri Jul 25, 2008 4:04 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
smallpoxgirl wrote:
I, for the life of me, can't figure out a scenario where someone would say, "Well the US Treasury just defaulted on all it's securities, but lucky me I'm protected by a credit default swap."
Thankfully my drink was on the table when I read that. I would have needed a new keyboard.
FoxV wrote:
Well with National Banks, Investment Banks, Hedge funds, and now GSE's able to withdraw from the Fed Window there's a growing line of pigs bellying up to the trough. Pretty soon you will be able to join them
That is the $6.4 trillion question, isn't it? Because new money supply does no-one any good when it is as shady points out, potentially insufficient to cover existing carnage, and sterilised by the banks' refusal to extend it to borrowers. To extend an analogy, maybe the central banks are not pushing on a string, but on a rod with a shock absorber in the middle. We would have to see state-issued consumer lines of credit not offset against future taxes issued en masse to settle that argument. Either that or the banks start lending again, but I see little evidence of it, the trend is in the opposite direction. _________________ Volatility. When life isn't exciting enough.
Joined: Dec 07, 2005 Posts: 2025 Location: Australia
Posted: Fri Jul 25, 2008 5:38 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
[quote="shady28
Everything you list are loans - and the Fed Window is a 90 day loan. These things all come to roost rather quickly, and the amounts that the fed is pumping right now are a pittance compared to the interest on what is already out there (Because what is out there in loans is in the tens of trillions). Net negative money flow.
[/quote]
Just want to add the comment that the 90day loans are likely to be rolled over indefinetly. There is no point in demanding repayment when this just would result in default. _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Posted: Fri Jul 25, 2008 6:09 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
DantesPeak wrote:
If the US defaulted, it's not clear exactly how you would get paid off on your CDS.
Isn't that the point of the CDS? I have shady bonds in WaMu. So I go buy CDS on those bonds from Chase bank. So I rest easy knowing that if WaMu defaults, Chase will cover my bond.
I'm just trying to figure out who is buying CDS on T-Bills and why? I can't imagine who you would trust to pay off in that scenario.
Quote:
Perhaps more interesting is that F & F wrote many CDS on themselves.
How do you write a CDS on yourself? _________________ "We were standing on the edges
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS
Posted: Fri Jul 25, 2008 6:23 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
smallpoxgirl wrote:
I'm just trying to figure out who is buying CDS on T-Bills and why? I can't imagine who you would trust to pay off in that scenario.
Someone (some pension funds?) might be required to have insurance on all bonds they hold, due to an operating charter or something, and where there is a market, there is a price. These are nominal of course. I would guess it is a limited market and the issuers probably regard the premiums as free money.
smallpoxgirl wrote:
How do you write a CDS on yourself?
Being facetious here, but maybe they sell you a bond, and for a little extra they will put you at the head of the queue if they default.
I would like to know the justification myself. _________________ Volatility. When life isn't exciting enough.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Jul 25, 2008 9:39 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
WaMu appears to have been bailed out by the Fed, so far at least.
This may be a departure from previous policies of only lending on good and sufficient collateral to banks that are likely to pay back the loan in a relatively short time.
Quote:
WaMu reveals $10bn capital buffer
By Francesco Guerrera and Nicole Bullock in New York
Published: July 26 2008 00:14 | Last updated: July 26 2008 00:14
Washington Mutual, the troubled US regional lender, on Friday revealed it had raised an extra $10bn in fresh capital since the end of June in an effort to quell continued speculation over its financial health.
WaMu told the Financial Times the extra capital would bring the total amount of cash and liquid securities on its balance sheet to more than $50bn. The funds were borrowed from the Federal Reserve’s discount window, the Federal Home Loan Banking system – a network of local lenders – and open market operations.
BTW - no pushing on a string here. I see deflation as almost impossible with our present monetary system. _________________ It's already over, now it's just a matter of adjusting.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Fri Jul 25, 2008 9:51 pm Post subject: Re: Housing & Economic Collapse - In Progress - #2
smallpoxgirl wrote:
How do you write a CDS on yourself?
Apparently for Fannie, it's easy, and I suppose profitable, but that $2 trillion potential liability may give the Fed and Treasury headaches at night.
Quote:
Fannie Mae MBS Transactions and Other Financial Guarantees
As described in our 2007 Form 10-K, our maximum potential exposure to credit losses relating to our outstanding and unconsolidated Fannie Mae MBS held by third parties and our other financial guarantees is significantly higher than the carrying amount of the guaranty obligations and reserve for guaranty losses that are reflected in the consolidated balance sheets. In the case of outstanding and unconsolidated Fannie Mae MBS held by third parties, our maximum potential exposure arising from these guaranty obligations is primarily represented by the unpaid principal balance of the mortgage loans underlying these Fannie Mae MBS, which was $2.2 trillion and $2.1 trillion as of March 31, 2008 and December 31, 2007, respectively. In the case of the other financial guarantees that we provide, our maximum potential exposure arising from these guarantees is primarily represented by the unpaid principal balance of the underlying bonds and loans, which totaled $40.8 billion and $41.6 billion as of March 31, 2008 and December 31, 2007, respectively.
SEC Filing - Fannie Mae _________________ It's already over, now it's just a matter of adjusting.
Joined: Dec 07, 2005 Posts: 2025 Location: Australia
Posted: Sat Jul 26, 2008 1:22 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
In the housing bill (600 pages) they apparently sneaked in a rise of the debt ceiling again. This time another 800Billion.
It had other funny things as well like finger printing of all mortgage brokers.
Ron Paul has commented on this bill on youtube _________________ It's not a bailout, it's a buy-in" - Nancy Pelosi
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sat Jul 26, 2008 6:28 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Micki wrote:
In the housing bill (600 pages) they apparently sneaked in a rise of the debt ceiling again. This time another 800Billion.
It had other funny things as well like finger printing of all mortgage brokers.
The actual amount of federal debt for the 2007-2008 fiscal year (including real Social Security debt) will be above $500 billion, which I believe is the highest ever. The $800 billion is to just finance the deficit for the year beginning on October 1, 2008. _________________ It's already over, now it's just a matter of adjusting.
Joined: Apr 27, 2007 Posts: 4351 Location: The Great Sonoran Desert
Posted: Sat Jul 26, 2008 8:06 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Again Nouriel Roubini and I agree...
Quote:
"Tenth and final point, so what is left as the only solution is the outright formal or informal nationalization of the U.S. financial system. That effective and creeping nationalization is already underway with the variety of actions that the Fed and the U.S. Treasury have taken and that we described above. So this is the paradox of this U.S. administration: it was so rabidly and ideologically free-markets oriented and averse to any sensible regulation and supervision of the financial system that its policies of being asleep at the wheel caused the biggest asset bubble and credit bubble (not just in mortgages) in U.S. history. And now the unavoidable bust of this bubble is going to force an effective nationalization of a good chunk of the U.S. financial system as no one else but the government can do the job.
This is what the free-market ideologues at the Fed, Treasury and White House have now become – especially after the bailout of Fannie and Freddie’s shareholders, management and bondholders – Comrade Paulson, Comrade Bernanke and the Bolshevik Great Leader Bush. But then their whole approach and ideology has always been not one of free market capitalism but rather one of privatizing gains and socializing the losses; or socialism for Wall Street, the rich and the well connected. So they will now get what they deserve and worked so hard to achieve: a nationalization and bailout of the U.S. financial system."
Comrade Paulson....would actually be funny if not so true...
Hey Jack - you around bro?
I think your clan is getting scared...really scared. _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Joined: Apr 27, 2007 Posts: 4351 Location: The Great Sonoran Desert
Posted: Sat Jul 26, 2008 8:28 am Post subject: Re: Housing & Economic Collapse - In Progress - #2
Saturday Senate session - currently discussing energy...
Guess a link would be a good thing...
CSpan _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
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