Global Correction

[lannarebirth]

The good news is, I'm sure their working on a plan to make shorting the $USD illegal too.

The forbidding of SHORTING is proof that investing is not 'free and democratic' anymore. It's regulated in times of emergency an it's absurd they are telling investors WHAT to do and what NOT to do....but LONG is not forbidden.....absurd.

Also absurd is that -in the end- the taxpayer has to pay for the GIGANTIC mistakes and IDIOTIC products the financial whizzkids and criminals created.

The constant bashing to other countries, by the US, that those countries were supporting their own industries is also no longer funded. The USA are now THE example how to save and support their own -financial- industry with hundreds of Billions of $'s...

They are in fact REWARDING the criminals with tax payer's money

What a world.

LaoPo

It's just plain dumb. Short side players are by far the most knowledgable of market traders. If they're wrong they stand to have untold losses. Consequently, they do a heck of a lot more research on the targets of their short campaigns. Long only players should get on their knees and thank them for bringing to light the cancerous elements in the market. Instead they just pray someone will make their stocks go back up. "War, suspension of liberties, whatever, just please make my stocks go back up".

Ah, well...I remember an interview with the CEO of Sony Corp.

He despised stock traders, shorters and longers because that was not REAL WORK in his eyes, meaning not constructive, creating products or services.

In a way he's right because without the companies on the stockmarkets and entrepreneurs, creating new ideas and thus companies you wouldn't have a living and you would have to work in the rice paddies........

Get yourself a JOB man !

LaoPo

If I invested in companies or had other people do my work for me than I would defiitely agree with him. I only invest in what I can do. I assume all risks for my decisions. I wonder if the CEO can claim the same.

[LaoPo]

I only invest in what I can do.

..so, you never learned a job ?

I hope you still have some humor....?

LaoPo

[lordofdelusion]

The US is working on a MEGA PLAN to restore confidence and turn around the financial crisis and it seems it will work. Will cost hundreds of Billions of $'s but if not, it will cost a lot more.

Oh great. The Democrats, the party of no ideas, and the Republicans, the party of bad ideas, are working together. The only thing worse than either of them, is when these a$$8oles work together. I predict the end of the world by next Friday.

[LaoPo]

The US is working on a MEGA PLAN to restore confidence and turn around the financial crisis and it seems it will work. Will cost hundreds of Billions of $'s but if not, it will cost a lot more.

Oh great. The Democrats, the party of no ideas, and the Republicans, the party of bad ideas, are working together. The only thing worse than either of them, is when these a$$8oles work together. I predict the end of the world by next Friday.

Good to know we still have the Lord of Disillusion to save us all.......

LaoPo

[LaoPo]

As Warren Buffett predicted:

Buffett's "time bomb" goes off on Wall Street

Thu Sep 18, 2008 1:42pm EDT

By James B. Kelleher - Analysis

CHICAGO (Reuters) - On Main Street, insurance protects people from the effects of catastrophes.

But on Wall Street, specialized insurance known as a credit default swaps are turning a bad situation into a catastrophe.

When historians write about the current crisis, much of the blame will go to the slump in the housing and mortgage markets, which triggered the losses, layoffs and liquidations sweeping the financial industry.

But credit default swaps -- complex derivatives originally designed to protect banks from deadbeat borrowers -- are adding to the turmoil.

"This was supposedly a way to hedge risk," says Ellen Brown, the author of the book "Web of Debt."

"I'm sure their predictive models were right as far as the risk of the things they were insuring against. But what they didn't factor in was the risk that the sellers of this protection wouldn't pay ... That's what we're seeing now."

Brown is hardly alone in her criticism of the derivatives. Five years ago, billionaire investor Warren Buffett called them a "time bomb" and "financial weapons of mass destruction" and directed the insurance arm of his Berkshire Hathaway Inc to exit the business.

LINKED TO MORTGAGES

Recent events suggest Buffett was right. The collapse of Bear Stearns. The fire sale of Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz). The meltdown at American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz). In each case, credit default swaps played a role in the fall of these financial giants.

The latest victim is insurer AIG, which received an emergency $85 billion loan from the U.S. Federal Reserve late on Tuesday to stave off a bankruptcy.

Over the last three quarters, AIG suffered $18 billion of losses tied to guarantees it wrote on mortgage-linked derivatives.

Its struggles intensified in recent weeks as losses in its own investments led to cuts in its credit ratings. Those cuts triggered clauses in the policies AIG had written that forced it to put up billions of dollars in extra collateral -- billions it did not have and could not raise.

EASY MONEY

When the credit default market began back in the mid-1990s, the transactions were simpler, more transparent affairs. Not all the sellers were insurance companies like AIG -- most were not. But the protection buyer usually knew the protection seller.

As it grew -- according to the industry's trade group, the credit default market grew to $46 trillion by the first half of 2007 from $631 billion in 2000 -- all that changed.

An over-the-counter market grew up and some of the most active players became asset managers, including hedge fund managers, who bought and sold the policies like any other investment.

And in those deals, they sold protection as often as they bought it -- although they rarely set aside the reserves they would need if the obligation ever had to be paid.

In one notorious case, a small hedge fund agreed to insure UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz), the Swiss banking giant, from losses related to defaults on $1.3 billion of subprime mortgages for an annual premium of about $2 million.

The trouble was, the hedge fund set up a subsidiary to stand behind the guarantee -- and capitalized it with just $4.6 million. As long as the loans performed, the fund made a killing, raking in an annualized return of nearly 44 percent.

But in the summer of 2007, as home owners began to default, things got ugly. UBS demanded the hedge fund put up additional collateral. The fund balked. UBS sued....***

The dispute is hardly unique. Both Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) and Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) are involved in similar litigation with firms that promised to step up and act like insurers -- but were not actually insurers.

"Insurance companies have armies of actuaries and deep pools of policyholders and the financial wherewithal to pay claims," says Mike Barry, a spokesman at the Insurance Information Institute.

"SLOPPY"

Another problem: As hedge funds and others bought and sold these protection policies, they did not always get prior written consent from the people they were supposed to be insuring. Patrick Parkinson, the deputy director of the Fed's research and statistic arm, calls the practice "sloppy."

As a result, some protection buyers had trouble figuring out who was standing behind the insurance they bought. And it put investors into webs of relationships they did not understand.

"This is the derivative nightmare that everyone has been warning about," says Peter Schiff, the president of Euro Pacific Capital at the author of "Crash Proof: How to Profit From the Coming Economic Collapse."

"They booked all these derivatives assuming bad things would never happen. It was like writing fire insurance, assuming no one is ever going to have a fire, only now they're turning around and watching as the whole town burns down."

---Reuters

Note: *** Although UBS was probably correct in suing the hedge fund, I don't understand how such a Giant boarded such a small -hedge fund- sailing ship....does that mean they fell for the ''small annual premium of just 2 Million $, against a risk of 1,3 BILLION''...........? It looks like it....

LaoPo

[LaoPo]

Is it still imaginable for normal people like 'you' and me ..I mean: $ 1 Trillion = One-thousand-BILLION-Dollars...***

Breaking: Paulson plan could cost $1 trillion

By MIKE ALLEN | 9/19/08 8:47 AM EDT

Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.

Paulson plans to announce his “comprehensive” plan at 10 a.m. Eastern at the Treasury building, next door to the White House.

Treasury Secretary Henry Paulson talks with reporters after meeting with Congressional leaders on the current economic crisis Thursday, Sept. 18, 2008 on Capitol Hill. Photo: AP

Stock markets soared around the world in anticipation of the rescue, with British and Chinese indexes recording their biggest gains ever.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) said on ABC’s “Good Morning America” said lawmakers were told last night “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications, here at home and globally.”

“What you heard last evening is one of those rare moments — certainly rare in my experience here — was that Democrats and Republicans decided we needed to work together, quickly,” Dodd said.

The solution being proposed by the Bush administration is the most expensive bailout in the nation’s history, sharply curtailing the ability of the next president to push for tax cuts or new spending.

Congressional leaders tell Politico that to expedite the rescue, Treasury plans to seek additional authority rather than creating a new entity. The plan involves buying up hundreds of billions of dollars in bad mortgages to take them off the books of financial institutions that otherwise might fail.

Sen. Richard Shelby of Alabama, the ranking Republican on the Banking Committee, told “Good Morning America”: “I figure it will be at least half a trillion. But if you look at what the Fed has already done [by rescuing insurance giant AIG], and the extension of power to Treasury to deal with Fannie Mae and Freddie Mac, I believe we're talking about a trillion dollars.”

Some Republicans are expressing concerns about writing essentially a blank check to the Bush administration.

“They're lurching from one crisis to another,” Shelby said. “They don't seem to have a superplan to deal with this. ... We want to see the plan. This is not a done deal yet. But we know there's crisis, there's stress, in the financial markets that we haven't seen in, say, 70 years.”

Some conservatives are balking even more bluntly.

Sen. Jim DeMint (R-S.C.), a member of the Joint Economic Committee, told the Los Angeles Times: “What is missing from it and from the recent string of bailouts is a commitment to return to a free enterprise economy. ... What we need now is not what could be nearly a trillion dollars in new taxpayer bailouts but pro-growth policies that allow our markets to correct and start growing again.”

---Politico.com

*** 2 comments to the article above:

1. "Let's see. The Federal Government has an annual budget of $3 Trillion and now want to put another $1 Trillion of taxpayers at risk.

Perhaps it's time to rethink if we need a Federal Government. Seriously."

2. "Now we will have to raise taxes and my stretched budget will no longer work. Looks like I am next for bankruptcy. Is this really fair to those of us who make good decisions about our finances? Are we really the ones who should bailout the ones who made poor - even fraudulent decisions?"

What a world....

LaoPo

[lordofdelusion]

What you heard last evening is one of those rare moments — certainly rare in my experience here — was that Democrats and Republicans decided we needed to work together, quickly,” Dodd said

solution being proposed by the Bush administration is the most expensive bailout in the nation’s history, sharply curtailing the ability of the next president to push for tax cuts or new spending

AAAAAAAAAAAHHHHHHHHHHHHHHH!!!!!!!!!

I'm telling you, next Friday the world ends.

With this combo how can they fail?

I'm really laughing on the inside. This is just too good. Lao. your killing me with these posts, really.

[lannarebirth]

It's hard to imagine, but I think something even worse is coming, soon.

[basjke]

It's hard to imagine, but I think something even worse is coming, soon.

In my opinion you can stow dead body's into a closet until it breaks,but I assure you that it gives a horrible smell at that point.

Paulson is the hero at the moment as he knows his job is finished in a few months,but I feel really sorry for the Democrats which have impossible job to clean up the mess(read goverment deficit) which means they will be in for only 1 term.

[ace]

It's hard to imagine, but I think something even worse is coming, soon.

Yeh, WHS. Your line about banning shorting the $ - many a true word said in jest.

[flying]

I agree that it is wrong to rule out short sided investing. Investing by definition is

to commit (money) in order to earn a financial return

So it should be allowed but.....................

At the same time I understand those that see it as wrong way betting or betting on the failure.

I also see how in a frenzy it can & crush an otherwise legit company.

But ultimately all book makers need 2 pages to make a book.

So they are wrong to pull it.

[flying]

Is it still imaginable for normal people like 'you' and me ..I mean: $ 1 Trillion = One-thousand-BILLION-Dollars...***

Breaking: Paulson plan could cost $1 trillion

Boy I wish I had parents that could bail me out of any dumb move I made

Then again these same parents have wasted that much almost on another dumb move.

872 billion here

[LaoPo]

It's hard to imagine, but I think something even worse is coming, soon.

What are you hinting at LR ? Iran....or worse ?

I mean the whole rescue operation is an artificial one; everybody knows that, but will it be enough ? Who's hiding still WHAT and HOW MUCH ?

The era of greed of astonishing proportions has to come to an end and the market has proved that it cannot regulate itself.

Some speak that all banks will have to be nationalized....and a poll in London showed that 110,000 financial brainers will lose their jobs within a year.

What a world...

LaoPo

[lannarebirth]

I agree that it is wrong to rule out short sided investing. Investing by definition is

to commit (money) in order to earn a financial return

I agree

So it should be allowed but.....................

At the same time I understand those that see it as wrong way betting or betting on the failure.

This I just can't see. Those who think that way are just ignorant of ow markets operate.

I also see how in a frenzy it can & crush an otherwise legit company.

I'm not sure that's true. But I do agree they should enforce the naked short selling rule and reinstitute the uptick rule.

But ultimately all book makers need 2 pages to make a book.

So they are wrong to pull it.

Agree. Someones got to buy the bottom and it's always the shorts who provide that braking mechanism. Ironically, looking a block sales, it's these large institutions, so much in the news that are the greatest practitioners of shorting.

[lannarebirth]

Securitized Housing Investment Trust (SHIT)

Yeah, I like the sound of that.

[bingobongo]

So the DOW rallies some 700+ points in the last two days.........hmmm.......3 things stand out:

1) announcement by Paulson was made the day before triple witching, coincindence? hardly (3rd Friday of the last options expiration for the quarter) on options expiration, which allows institutional investors to recoup losses on derivative positions that would have otherwise expired worthless or with heavy losses

2) Congress adjourns prior to the Nov 4 election thereby not allowing anytime (say 4 weeks at most) for this proposed new bailout organization to be voted and set in place prior to the new administration in January 2009 (whereby Paulson will no longer be around)

Note Senator Dodd statement "There is not enough time left in the congressional session for U.S. lawmakers to consider setting up a Resolution Trust Corp-type fund to buy up toxic mortgage assets."

3) Majority of buying in the last 2 days was the result of short covering and not infusion of new capital by the average Joe into the stock market

Conclusion: this rally will run out of steam, the down trend is still in tact........get ready

Edited September 19, 2008 by bingobongo

[jumnien]

So the DOW rallies some 700+ points in the last two days.........hmmm.......3 things stand out:

1) announcement by Paulson was made the day before triple witching, coincindence? hardly (3rd Friday of the last options expiration for the quarter) on options expiration, which allows institutional investors to recoup losses on derivative positions that would have otherwise expired worthless or with heavy losses

2) Congress adjourns prior to the Nov 4 election thereby not allowing anytime (say 4 weeks at most) for this proposed new bailout organization to be voted and set in place prior to the new administration in January 2009 (whereby Paulson will no longer be around)

Note Senator Dodd statement "There is not enough time left in the congressional session for U.S. lawmakers to consider setting up a Resolution Trust Corp-type fund to buy up toxic mortgage assets."

3) Majority of buying in the last 2 days was the result of short covering and not infusion of new capital by the average Joe into the stock market

Conclusion: this rally will run out of steam, the down trend is still in tact........get ready

Let's hope you are correct on this one, it would be fantastic!

[flying]

Can one of you who understand this rescue better explain if this is correct?

The way I am hearing it is this....................

The US Fed is coming in to buy up all the bad (mostly mortgage) debt. They then will later disburse at a discounted rate?

Is this back through the banks that created it in the first place? Allowing them to take more profit?

Secondly is it true it will be sold back at approx .65 cents on the dollar? Allowing them to sell the walked away from homes etc from the bad mortgages at that much less than what is owed on them?

I ask because I am wondering how it affects the future housing market.

Thanks for any info

[Plutarch]

Uncle Sam just socialised the debt.

Borrow too much and the bank forecloses but the security yields only 30%. Sam picks up the tab and keeps the asset until such time the deficit is covered. In the meantime cheap housing for the poor folks maybe at artificially low rates?

Socialism and its centralised economy should be an interesting experiment but perhaps Paulson should be speaking to the good ole boys of the USSR for a few tips?

Glad I'm not involved.

[LaoPo]

So the DOW rallies some 700+ points in the last two days.........hmmm.......3 things stand out:

1) announcement by Paulson was made the day before triple witching, coincindence? hardly (3rd Friday of the last options expiration for the quarter) on options expiration, which allows institutional investors to recoup losses on derivative positions that would have otherwise expired worthless or with heavy losses

2) Congress adjourns prior to the Nov 4 election thereby not allowing anytime (say 4 weeks at most) for this proposed new bailout organization to be voted and set in place prior to the new administration in January 2009 (whereby Paulson will no longer be around)

Note Senator Dodd statement "There is not enough time left in the congressional session for U.S. lawmakers to consider setting up a Resolution Trust Corp-type fund to buy up toxic mortgage assets."

3) Majority of buying in the last 2 days was the result of short covering and not infusion of new capital by the average Joe into the stock market

Conclusion: this rally will run out of steam, the down trend is still in tact........get ready

Good points.

In the meantime THE GREAT PAYBACK*** has started:

US 30-yr fixed mortgage rate up on government plan

Fri Sep 19, 2008 3:40pm EDT

NEW YORK, Sept 19 (Reuters) - Interest rates on 30-year fixed-rate mortgages climbed on Friday as a result of news of a sweeping U.S. government plan to contain the credit crisis.

The 30-year fixed-rate mortgage rose to near 6.25 percent on Friday versus 6.16 percent on Thursday and 5.875 percent on Tuesday when the global credit crises was in full swing, according to Greg McBride, senior financial analyst at Bankrate, Inc, in North Palm Beach, Florida.

"The revelation that the Treasury plans to take certain debt off the books of financial institutions helped push mortgage rates higher," he said. "Mortgage rates, however, are still low enough and are not a barrier to affordability."

Global stocks soared and bonds fell as news of a U.S. plan to buy illiquid bank assets and guarantee money market funds, combined with a U.K. and U.S. ban on short-selling financial stocks, raised hopes for an end to the year-long global credit crunch.

U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke intend to work through the weekend on a plan to deal with mortgage-related assets that are choking the financial system.

Treasury yields, which move inversely to price, are linked to mortgage rates. Treasury yields surged higher on the government's plan.

"Mortgage rates are not the issue, so if you are in the market to buy a house it may be a good time," said McBride.

(Reporting by Julie Haviv; Editing by Dan Grebler)

--Reuters

*** The 1 Trillion has to be paid back by someone....doesn't it ? The bill, to be presented to the good old American taxpayer and (future)-homeowner comes sooner then expected...

Note to flying: I suppose your questions are more or less answered ?; in the end it's about rescuing the banks who sold too much and too many bad products to too many bad clients (subprime mortgage <deleted>) and now the Government (read: American taxpayer) save the banks because otherwise the cardhouses would fall into pieces.....sooner, because it might/could still happen.

And, of course, like Bingo already said, it's election time in about 6+ weeks from now....there was no time to lose and a few people in Washington DC HAD TO SAVE FACE...and ''invented'' the Titanic rescue operation..........as long as it lasts......

The craziness and greed hasn't stopped yet; Lehman Brothers who went bankrupt earlier this week, GAINED +313% (from $ 0,05 cents to 0,215 cents)....

Freddie & Fannie +60% and + 40% respectively; BoA/BAC +17%; Merrill Lynch +33% and AIG (-94% in the past weeks) gained +56%; Citigroup +22% whilst Morgan Stanley and Goldman Sachs both gained +20%

It has nothing to do anymore with reality, just emotions and absurdity.

A few more interesting raisers:

Russia's stock market, the Micex index increased 29 percent ...whilst: Sberbank, Russia's biggest lender, soared 57 percent in Moscow before trading was suspended. VTB Group, the country's second biggest bank, jumped a record 60 percent. Surgutneftgaz, Russia's third- largest independent crude producer, rose 58 percent. Rosneft, Russia's largest oil company, surged 58 percent.

More here:

http://www.bloomberg.com/apps/news?pid=206...&refer=news

LaoPo: What a world...

Edited September 19, 2008 by LaoPo

[flying]

Note to flying: I suppose your questions are more or less answered ?; in the end it's about rescuing the banks who sold too much and too many bad products to too many bad clients (subprime mortgage <deleted>) and now the Government (read: American taxpayer) save the banks because otherwise the cardhouses would fall into pieces.....sooner, because it might/could still happen.

Well in a sense what Plutarch said is what I was thinking..............

In the meantime cheap housing for the poor folks maybe at artificially low rates?

This is what concerned me as I am a building contractor.

I sell homes at fair prices. Even though I am no financial expert...

I knew a year or two ago we were headed for problems.

I saw others charging very high prices for homes. Yet I was surprised as they were selling.........The reason...Banks ninja loans to unqualified buyers.

I knew someday when they reset the unqualified would just walk. What choice would they have? Then the banks would have homes they loaned too much for that they cannot sell.

So now I am a bit bummed that I will probably not be able to compete with these cheap homes that will flood the market.

Not the end of the world as I have jobs building for others who have land & want homes. But still.............If a non expert like me saw it coming why in the world was it allowed.

Ah well

[LaoPo]

Note to flying: I suppose your questions are more or less answered ?; in the end it's about rescuing the banks who sold too much and too many bad products to too many bad clients (subprime mortgage <deleted>) and now the Government (read: American taxpayer) save the banks because otherwise the cardhouses would fall into pieces.....sooner, because it might/could still happen.

Well in a sense what Plutarch said is what I was thinking..............

In the meantime cheap housing for the poor folks maybe at artificially low rates?

This is what concerned me as I am a building contractor.

I sell homes at fair prices. Even though I am no financial expert...

I knew a year or two ago we were headed for problems.

I saw others charging very high prices for homes. Yet I was surprised as they were selling.........The reason...Banks ninja loans to unqualified buyers.

I knew someday when they reset the unqualified would just walk. What choice would they have? Then the banks would have homes they loaned too much for that they cannot sell.

So now I am a bit bummed that I will probably not be able to compete with these cheap homes that will flood the market.

Not the end of the world as I have jobs building for others who have land & want homes. But still.............If a non expert like me saw it coming why in the world was it allowed.

Ah well

You're totally correct apart from the fact that house prices were rising like crazy and totally unrealistic, not just in the US but also in Europe (and Thailand.....)***

in Bold Because the Bush administration/FED/Wall Street allowed and promoted it and in the end the system failed....and thus DC/FED created NOW the largest financial rescue operation in the history of mankind.....BECAUSE elections are up and there would be NO WAY the Republicans would have a chance to win.

They -still- might have one now....

*** The prices of villas in Thailand are also absurd. Why does a nice villa upnorth in the Chiang Mai/Rai area (or other rural areas) cost a fraction of what the same house cost near the coast ? Oh yes, I hear the comments coming: """land prices Sir""...but that's only a PART of the difference.

The bulk of the villas aren't worth their prices and prices will drop, no doubt about it. Just wait and see.

I couldn't believe my eyes when I was looking at the NUMBER of villas FOR SALE in the Pattaya/Jomtien area; hundreds and hundreds and still for too high prices...these houses will fall into disrepair very soon in this climate....

The drama will unfold in the next year or two; one just has to sit and wait.

LaoPo:...what a world

Edited September 19, 2008 by LaoPo

[flying]

The bulk of the villas aren't worth their prices and prices will drop, no doubt about it. Just wait and see.

I couldn't believe my eyes when I was looking at the NUMBER of villas FOR SALE in the Pattaya/Jomtien area; hundreds and hundreds and still for too high prices...these houses will fall into disrepair very soon in this climate....

The drama will unfold in the next year or two; one just has to sit and wait.

LaoPo:...what a world

Yes I agree 100%

Same here too. There is still far too much new inventory that is starting to fall into

disrepair & we have similar climate as Thailand. These are homes greedy contractors & speculators built with no buyers.

So now they try to rent them with not much luck.

Add to that the high inventory all the bank repossesions or walk aways I should say. Since the banks are slow to repo these days in the hopes the buyer will recover. There you have it

Ahhhhhhhhhhhhhhhhh

[LaoPo]

Companies try to scramble aboard SEC lifeboat

GE, CIT ask to be on list of stocks that can't be shorted, Amex may ask too

By Alistair Barr, MarketWatch

Last update: 5:18 p.m. EDT Sept. 19, 2008

SAN FRANCISCO (MarketWatch) - Several companies tried to climb aboard the Securities and Exchange Commission's short selling lifeboat on Friday. Some of them may succeed.

Under pressure from Wall Street executives, the SEC temporarily banned short selling of roughly 800 financial-services stocks on Friday to try to halt a market meltdown.

http://www.marketwatch.com/news/story/comp...printMidSection

LaoPo

[LaoPo]

BUT:

Role reversal

Commentary: By curbing all shorts, the U.S. is manipulating the market

By MarketWatch

Last update: 9:32 a.m. EDT Sept. 19, 2008

NEW YORK (MarketWatch) -- When Russia shut down its stock markets to avoid the global collapse sweeping the markets earlier this week, most of Wall Street shook its head.

http://www.marketwatch.com/news/story/bann...dist=TNMostRead

LaoPo

[VegasVic]

Note to flying: I suppose your questions are more or less answered ?; in the end it's about rescuing the banks who sold too much and too many bad products to too many bad clients (subprime mortgage <deleted>) and now the Government (read: American taxpayer) save the banks because otherwise the cardhouses would fall into pieces.....sooner, because it might/could still happen.

Well in a sense what Plutarch said is what I was thinking..............

In the meantime cheap housing for the poor folks maybe at artificially low rates?

This is what concerned me as I am a building contractor.

I sell homes at fair prices. Even though I am no financial expert...

I knew a year or two ago we were headed for problems.

I saw others charging very high prices for homes. Yet I was surprised as they were selling.........The reason...Banks ninja loans to unqualified buyers.

I knew someday when they reset the unqualified would just walk. What choice would they have? Then the banks would have homes they loaned too much for that they cannot sell.

So now I am a bit bummed that I will probably not be able to compete with these cheap homes that will flood the market.

Not the end of the world as I have jobs building for others who have land & want homes. But still.............If a non expert like me saw it coming why in the world was it allowed.

Ah well

You're totally correct apart from the fact that house prices were rising like crazy and totally unrealistic, not just in the US but also in Europe (and Thailand.....)***

in Bold Because the Bush administration/FED/Wall Street allowed and promoted it and in the end the system failed....and thus DC/FED created NOW the largest financial rescue operation in the history of mankind.....BECAUSE elections are up and there would be NO WAY the Republicans would have a chance to win.

They -still- might have one now....

*** The prices of villas in Thailand are also absurd. Why does a nice villa upnorth in the Chiang Mai/Rai area (or other rural areas) cost a fraction of what the same house cost near the coast ? Oh yes, I hear the comments coming: """land prices Sir""...but that's only a PART of the difference.

The bulk of the villas aren't worth their prices and prices will drop, no doubt about it. Just wait and see.

I couldn't believe my eyes when I was looking at the NUMBER of villas FOR SALE in the Pattaya/Jomtien area; hundreds and hundreds and still for too high prices...these houses will fall into disrepair very soon in this climate....

The drama will unfold in the next year or two; one just has to sit and wait.

LaoPo:...what a world

Lao, Your unbiased view of anything to do with U.S. is only rivaled by your expert knowledge of U.S. politics I wish I had the time to get in depth about what is actually occuring, but that will have to wait until later. For now I will just say that it was legislation pushed by Clinton and enacted during his tenure that pushed for low income-high risk loans to be underwritten and forced on Fannie and Freddie, and it was cheap money out of Asia(mostly Japan) in the latter part of the 90's and throughout this decade, and compounded when Mr. Greenspan further aggrivated this by creating cheap money in the U.S. and that coupled with no transparency and oversight of the investment banks and hedge fund industry (thanks to Mr. Clinton and Sen. Dodd, both democrats) that created the environment for this debacle to occur. The situation that Mr. Bernanke and Sec. Paulson along with the lawmakers are currently working on, was necessitated by the negative territory that money market funds sunk into on Wednesday, it has nothing to do with the upcoming election. Just for the record it is the Democrats that are more than happy to create what will likely become a massive government program, the Republicans had to be dragged in kicking and screaming and in many Republican quaters this is highly unpopular. By all means feel free to make some smartass reply to this post and further show your ignorance about U.S. politics!

[lannarebirth]

The bulk of the villas aren't worth their prices and prices will drop, no doubt about it. Just wait and see.

I couldn't believe my eyes when I was looking at the NUMBER of villas FOR SALE in the Pattaya/Jomtien area; hundreds and hundreds and still for too high prices...these houses will fall into disrepair very soon in this climate....

The drama will unfold in the next year or two; one just has to sit and wait.

LaoPo:...what a world

Yes I agree 100%

Same here too. There is still far too much new inventory that is starting to fall into

disrepair & we have similar climate as Thailand. These are homes greedy contractors & speculators built with no buyers.

So now they try to rent them with not much luck.

Add to that the high inventory all the bank repossesions or walk aways I should say. Since the banks are slow to repo these days in the hopes the buyer will recover. There you have it

Ahhhhhhhhhhhhhhhhh

To be honest, I've never seen a cheap house in Thailand that was built by someone other than the owner,

anywhere. It's the land here that's cheap, and although it's come up in price, most areas remain cheap.

Edited September 20, 2008 by lannarebirth

[LaoPo]

Lao, Your unbiased view of anything to do with U.S. is only rivaled by your expert knowledge of U.S. politics I wish I had the time to get in depth about what is actually occuring, but that will have to wait until later. For now I will just say that it was legislation pushed by Clinton and enacted during his tenure that pushed for low income-high risk loans to be underwritten and forced on Fannie and Freddie, and it was cheap money out of Asia(mostly Japan) in the latter part of the 90's and throughout this decade, and compounded when Mr. Greenspan further aggrivated this by creating cheap money in the U.S. and that coupled with no transparency and oversight of the investment banks and hedge fund industry (thanks to Mr. Clinton and Sen. Dodd, both democrats) that created the environment for this debacle to occur. The situation that Mr. Bernanke and Sec. Paulson along with the lawmakers are currently working on, was necessitated by the negative territory that money market funds sunk into on Wednesday, it has nothing to do with the upcoming election. Just for the record it is the Democrats that are more than happy to create what will likely become a massive government program, the Republicans had to be dragged in kicking and screaming and in many Republican quaters this is highly unpopular. By all means feel free to make some smartass reply to this post and further show your ignorance about U.S. politics!

Stop writing Viccy...I dont read your unreadable 'non-sense posts anyway. Saves you time

LaoPo

[Plutarch]

It was interesting to see Greenspan opining upon the gravity of the situation which he likened to an event occurring perhaps once a century. Perhaps he was also alluding to his tenure in office which probably did more to allow this disaster than any other other single factor. The charlatan pronounced the death of monetarism while extolling the virtues of the free market but the hapless old codger was in reality reading the last rites for capitalism as we knew it.

[AlexLah]

I made a prediction a while back that something big was about to happen after sept 10 in one of the other threads.

And indeed it did.

I will now tell you that the next event will happen around the first or second week of Oct.

We are just at the very start of a total meltdown of the current financial system.

It will.

Alex