Will The Dollar Rebound In 2008

[LaoPo]

some people are reading too much into it.

just because some say there are problems does not mean they are anti-american. I love many things about the US. I have a lot of family there, many personal interests, as well as many friends. I would be there now if I did not think the problems were getting worse. I just happen to see things for what they really are and am not trying to defend something based on personal or nationalistic reasons.

the US has been played and raped and unfortunately the majority of hard working souls will have to suffer. If I am angry at anyone - it would be the people in charge of the gov't, the institutions, corporations, etc. - and perhaps to a lesser degree to the majority for letting this happen under their noses.

i just read a canandian news story about the problems at the border - there is a large and growing refugee population that they say is alarming. imagine that - american economic refugees going north. There is a growing tent city. You won't read abou this in the mainstream news as it is being suppressed.

I agree with your view.

About the 'Tent' City..I didn't know or hear about this problem yet until I heard from you, so I researched; unfortunately it's not just on the Canadian border:

Tent city highlights US homes crisis

The meltdown in the US mortgage market has led to record foreclosures and forced thousands from their homes. In few places is it worse than southern California, where the BBC's Rajesh Mirchandani reports on an extreme consequence of the downturn, but one that some observers fear could grow.

with photos:

http://news.bbc.co.uk/2/hi/americas/7297093.stm

The problem (for Canada) is:

"But the average processing time for a refugee claim in Canada is currently 14.2 months, said Hawkins, a period during which the applicant is eligible for financial and other support. A failed claimant then also has the right to seek leave to appeal his or her rejection to federal court.

http://www.canada.com/windsorstar/story.ht...d18&k=57287

LaoPo

[NovaBlue05]

some people are reading too much into it.

lol....After reading these last two posts...I agree

[VegasVic]

It will probably bounce back just like it has time and time again. The dollar has weathered tougher times than these. When the doom and gloom reaches this level, sane investors make money while the herd jumps in too late.

The historical facts are there for those willing to do the research. The dollar had an incredible run against most currencies last decade and into the early parts of this decade. It was overdue for a correction.

I checked dollar exchange rates since 1980 between Canada, UK, Germany, HK, and Australia. The dollar gained substantially against most these currencies last decade and now is close to the average value since 1980. All good things usually come to an end and it has for the dollar the last 5 years.

I doubt a stupid war and poor economic performance of late is a sign of a US crash, but it would sure be satisfying for some.

"but it would sure be satisfying for some" You don't mean any posters here on thaivisa do you? My goodness there certainly are not any anti American posters here . All in all a very astute post siamamerican

It's tough being an American, but sure better than a number of alternatives. Someone in an earlier post accused me of being you and will now probably chime in that I'm replying to myself.

The American bashers reek of jealousy and rarely post anything of substance. Some of their conclusions about recent events are juvenile to say the least. As a whole Americans aren't perfect, but aren't really that different than other TV members.

Most the posts on this topic have been interesting and even the American bashers posts have been entertaining.

As for the dollar, it will rebound. I could make a lot of money if I knew when. Five short years ago it was near an all time high and had really no where to go but down. The real estate bubble and the war haven't helped, but the war will end and real estate values will recover.

Its not tough being an American its a privilage, however I do agree that its tough being an American here on thaivisa I saw the post that you are refering to yesterday and replied, saying that paranoia must have hit an all time high here on thaivisa

[LaoPo]

Its not tough being an American its a privilage, however I do agree that its tough being an American here on thaivisa I saw the post that you are refering to yesterday and replied, saying that paranoia must have hit an all time high here on thaivisa

OK, I'll bite.

I think I can speak for many TV members when I say that we are NOT anti-America or anti-Americans.

What a lot of posters have difficulty with is the attitude, the lying and police behavior of the US, present- and previous administrations, in/to the rest of the world.

If you say 'America bashers' is not meant upon 'the' American or 'America' itself, it's bashing and being angry with and upon the administration.

Don't forget that Billions of people in the world are sick and tired of being 'policed' by GWB and his predecessors; are sick and tired of the lies presented on a silver plate by 'Washington', making way for an unnecessary war in Iraq and dragging other nations, including my own, into that same war. The same for Afghanistan.

What's the next war ? God forbid

Next to that it's no secret that the US financial institutions like -Mortgage- Banks, Insurance companies, Hedge Funds, Credit Card companies etc. created a mess, urging people to spend, spend, spend and spend....NOT save !

Millions and Millions of Americans have 3, 4 or 5 credit cards and spend, spend, spend, until they're in deep <deleted>. And the administration does/did nothing and let it happen.

Now the FED and government are trying to step in and cure the sick baby but the baby can't be cured with aspirins (supplying $ Billions) because it will not take away the causes of the disease.

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore; you think that we find that funny ?

No VV, it's not funny. It's dramatic, but it is a sign that there is something fundamentally and structural wrong in the system.

You might want to deny and tell us ALL is well, but it's not since we, outside the US, do read newspapers and watch television and see what's happening in the world.

Yesterday I learned that 1,5% of my own country population in the EU has NO health insurance since they cannot afford it and that's a shame; those people are on the edge of poverty if not already IN poverty.

But when I read that almost 50 Million Americans have no health insurance I calculate that that is more than 15% of your USA population of some 300 million people. Even in the case it would be -just- 30 million, it's still a staggering 10%.

So, where did it go wrong ?

If you have read my posts you could have read that I have quite a few American friends, built my own business (not working for someone else) in San Francisco in the eighties and have many very good memories to your country.

If you feel 'America' bashing it's not upon you personally, it's upon your administration and some sick items in the system.

Just my view.

LaoPo

[KhunG]

I think I can speak for many TV members when I say that we are NOT anti-America or anti-Americans.

LaoPo

The reason that your posts are seen as anti-American is partly due to your willful distortion and/or exaggeration of facts to make anti-American points. Examples:

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore

From the article: "But word spread and now some 300 people live here"

i just read a canandian news story about the problems at the border - there is a large and growing refugee population that they say is alarming. imagine that - american economic refugees going north

A quote you apparently agreed with, yet from the article: "With the bulk of the latest arrivals being long-time Mexican illegals dislodged from their homes and workplaces" If an Algerian illegally in Spain is kicked out of Spain and goes to France is he a Spanish economic refugee?

I get that you don't like American politics, but the contortions you have to go through to see gloom and doom in the nation I live in every day is mind boggling.

My company can't fill it's open positions because there is a labor shortage, the only people not working are the people who won't or can't work. I refinanced my home a few weeks ago to get a better rate. It was a snap. Among the people who don't have health insurance are a large number who can afford it but refuse to buy it, some for frivolous reasons - like the family Hillary cited who turned out to have used the money to by a brand new SUV and an expensive home, or some because they can afford to self insure, or many because they are in the country illegally. In any case, under US law, no one will be denied health care because of an inability to pay.

If you only read hyperbolic "America is doomed" articles, and even then leave out the inconvenient facts like 300 does not equal thousands, and illegal aliens from Mexico do not equal American economic refugees, it's no wonder you think like you do.

Edited March 27, 2008 by KhunG

[LaoPo]

I think I can speak for many TV members when I say that we are NOT anti-America or anti-Americans.

LaoPo

The reason that your posts are seen as anti-American is partly due to your willful distortion and/or exaggeration of facts to make anti-American points. Examples:

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore

From the article: "But word spread and now some 300 people live here"

i just read a canandian news story about the problems at the border - there is a large and growing refugee population that they say is alarming. imagine that - american economic refugees going north

A quote you apparently agreed with, yet from the article: "With the bulk of the latest arrivals being long-time Mexican illegals dislodged from their homes and workplaces" If an Algerian illegally in Spain is kicked out of Spain and goes to France is he a Spanish economic refugee?

I get that you don't like American politics, but the contortions you have to go through to see gloom and doom in the nation I live in every day is mind boggling.

My company can't fill it's open positions because there is a labor shortage, the only people not working are the people who won't or can't work. I refinanced my home a few weeks ago to get a better rate. It was a snap. Among the people who don't have health insurance are a large number who can afford it but refuse to buy it, some for frivolous reasons - like the family Hillary cited who turned out to have used the money to by a brand new SUV and an expensive home, or some because they can afford to self insure, or many because they are in the country illegally. In any case, under US law, no one will be denied health care because of an inability to pay.

If you only read hyperbolic "America is doomed" articles, and even then leave out the inconvenient facts like 300 does not equal thousands, and illegal aliens from Mexico do not equal American economic refugees, it's no wonder you think like you do.

* I am sorry if my posts, with quotes from English language sources, are seen as anti American. I am not. The point is that some Americans here think there are anti American bashers here. I can't help that. It's in the eyes of the beholder.

* The 300 people number is in one location -LA- only. But if there aren't anymore people living in tents, than that's good and I'm reading wrong.

* It's not so that I don't like US politics in general; it's the administrations who cause(d) problems and wars and let the (financial) system fail; but I agree if the news is mind boggling but that's not just with you, I assure you.

* I am not able to judge if there is a "large" number of people (of the 50 Million health-uninsured) refusing to have health insurance. 'Normal' people would want I suppose. And, if there are so many illegal, how many illegals do you have in the US ? I don't know. BTW, the 50M number is from your own official sources and I suppose they didn't include the illegals, but I could be wrong here.

* I do read, and post, what I think and feel is important to the world economy and financial markets, and, as the US is the most important economy, still, it's obvious the US related news is proportionately large. Apart from that, the sub prime crisis, housing crisis and banking crisis started in the US.

But if you follow my posts you will notice that I also post about other countries and their economies than the US since there is a world outside the US....The point is that I follow and read in a few languages but only post (allowed) in English here.

But I realize that it is harsh sometimes for Americans to have their system 'attacked' (wrong word, but couldn't find a better one, sorry) but in Europe we are used to the critics from other countries; maybe that's the difference ?

Wait until you see the enormous critics and bashing upon small countries like Denmark and The Netherlands from the Islam(ic) countries; but that's another cookie to be swallowed and (better not) discussed.

LaoPo

[NovaBlue05]

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore

From the article: "But word spread and now some 300 people live here"

And many...many more than that homeless and living on the streets of every major city in the world ..........without tents.

Most people that cant handle a mortgage simply go back to renting. Foreclosure does not mean homeless. It means you're not a homeowner.

The foreclosure rate here runs less than 1/2 of 1%. That % includes those who would have been subject to foreclosure even without the subprime mess. The unemployment rate is 3.5%.

The worse rates in the country are in Michigan and Florida with 2 out of every 100 mortgages in foreclosure. More than half of those were destined for foreclosure without the subprime debacle.

Statistics are a bitch. The media hypes up headlines saying that "foreclosures are up 80% over last year...". They dont tell you that 99% of mortgages nationwide are not in forclosure.

[LaoPo]

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore

From the article: "But word spread and now some 300 people live here"

And many...many more than that homeless and living on the streets of every major city in the world ..........without tents.

Most people that cant handle a mortgage simply go back to renting. Foreclosure does not mean homeless. It means you're not a homeowner.

The foreclosure rate here runs less than 1/2 of 1%. That % includes those who would have been subject to foreclosure even without the subprime mess. The unemployment rate is 3.5%.

The worse rates in the country are in Michigan and Florida with 2 out of every 100 mortgages in foreclosure. More than half of those were destined for foreclosure without the subprime debacle.

Statistics are a bitch. The media hypes up headlines saying that "foreclosures are up 80% over last year...". They dont tell you that 99% of mortgages nationwide are not in forclosure.

".....99% of mortgages nationwide are not in forclosure."

Really ?

I hope you're right but maybe you can explain why Mortgage-Giants like Countrywide, Freddie Mac and Fannie Mae are in deep trouble ? Is that because just 1% of the mortgage payers are in trouble ?

* CFC/Countrywide lost 85% of it's value and would have been bankrupt if BAC wouldn't have stepped in

* FRE/Freddie Mac lost 60% of its value

* FNM/Fannie Mae lost some 55% of its value

How come a Giant like Citigroup tumbles 60% ?

How come the FED, Government, Bernanke, Paulson, GWB are supplying Billions and Billions to try and save the country from further decline ?

I mean, I hope you're right because it will benefit the whole world, but don't deny that there aren't any huge problems to be solved and don't say "statistics are a bitch" because it's statistics that tell the truth.

You know what strikes me most....... ?

....that it has become almost impossible to discuss economics/financials without stepping on some toes here, most of them American toes and I wonder why.

If I quote bad economic news (from the US, mind you, published in the US and written by US journalists) I get a shower of remarks like "america-bashing" "doom and gloom poster" etc.

I really don't understand because I'm just a simple messenger.

Some of these same posters find it quite normal to bash upon other foreign countries (non-US) and find that absolutely normal, but, HOLY MOLY, if someone says something about US economics/financials we are suddenly america-bashers....what a nonsense.

But IMHO it says something about you chaps too: you're not used to critics because you are raised in the most powerful nation on earth and that nation can't do wrong.

But if something goes wrong, you're acting so sensitive, almost like little children who didn't get their candy...

But..understandable. Nobody likes it when someone says something sensitive about their country. The point is can you accept that it is possible that things are wrong in your country ?

I do, within my own country; there are so many things wrong and I would be delighted to discuss it with anybody !

Can you ?

LaoPo

[BEENTHEREDONETHAT]

Statistics are a bitch. The media hypes up headlines saying that "foreclosures are up 80% over last year...". They dont tell you that 99% of mortgages nationwide are not in forclosure.

If only 1% failed why the subprime mess and credit crunch? Don't banks have to have a reserve anymore? Can that many billion $ be lost from a 1% failure?

[NovaBlue05]

hel_l, Im no financial genius and don't pretend to to understand the detailed mechanics involved with the woes that these large corporations are experiencing. Neither do I care whether anyone "bashes America" or not although I do prefer objective reasoning and rationale over wishful thinking though. I was merely commenting on the silly tent city story which...frankly...comes across as more bizarre than anything else.

But hey, maybe my % is incorrect. I dont think so, but please feel free to cut and paste something to the contrary.

[LaoPo]

* CFC/Countrywide lost 85% of it's value and would have been bankrupt if BAC wouldn't have stepped in

LaoPo

Fed sets public hearings on BofA-Countrywide deal

Thu Mar 27, 2008 4:27pm EDT

WASHINGTON (Reuters) - The Federal Reserve Board on Thursday took the unusual step of scheduling public hearings in Chicago and Los Angeles next month to get comments on the pros and cons of Bank of America Corp's (BAC.N: Quote, Profile, Research) planned $4 billion acquisition of mortgage giant Countrywide Financial Corp. (CFC.N: Quote, Profile, Research)

The announcement comes amid high public sensitivities surrounding housing and mortgage markets and the effect that the merger might have on mortgage modifications, particularly in high-priced California. It also comes the day after Senator Christopher Dodd, the chairman of the Senate Banking Committee, invited regulators, including Federal Reserve Chairman Ben Bernanke, as well as the CEOs of JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) and Bear Stearns Cos. (BSC.N: Quote, Profile, Research) to testify at a hearing on April 3 about JPMorgan's bid to buy Bear Stearns, which kept the investment bank from entering bankruptcy.

The Fed said it would extend a 90-day public comment period on the proposed BofA-Countrywide deal by nearly a month, until the close of business on April 29.

A public hearing is scheduled on April 22 at the Federal Reserve Bank of Chicago's headquarters, with hearings on April 28 and 29 at the Los Angeles Branch of the Federal Reserve Bank of San Francisco, the central bank said in a news release.

The Fed rarely holds public hearings on merger decisions, but it said the public hearings are intended to collect information relating to the factors the board is required to consider to determine whether the merger is acceptable under the Bank Holding Company Act.

"These factors are whether the acquiring bank holding company's performance of the activities can reasonably be expected to produce benefits to the public (such as greater convenience, increased competition and gains in efficiency that outweigh possible adverse effects (such as undue concentration of resources, decreased or unfair competition, conflicts of interests and unsound banking practices)," the Fed said.

Some consumer advocacy groups have criticized Bank of America's response to the housing crisis, saying its balance sheet allowed it to do more to help troubled borrowers.

The deal would hand Bank of America a bigger segment of the U.S. market, creating a lender making one in four U.S. home loans and collecting payments on more than $1.9 trillion of mortgages.

http://www.reuters.com/article/ousiv/idUSN2737990120080327

Note:

Maybe it's me, but just 1 Bank, controlling 25% of the total mortgage market in the US....

Scary !

It started some 7 months ago...Bank of America and Countrywide:

http://www.thaivisa.com/forum/index.php?sh...t&p=1495163

And...Mr. Angelo Mozilo, CEO and co-founder of Countrywide was heavily selling stocks and options already and never stopped....selling.

LaoPo

Edited March 28, 2008 by LaoPo

[stumonster]

is Lehman Brothers next cab off the rank , or will goldman sachs jump the queue ?

1/2 of 1%.

is that 0.5% ?

[VegasVic]

I think I can speak for many TV members when I say that we are NOT anti-America or anti-Americans.

LaoPo

The reason that your posts are seen as anti-American is partly due to your willful distortion and/or exaggeration of facts to make anti-American points. Examples:

You think it's funny to read that thousands of Americans have to live in tents now because they were not able to pay for their homes anymore

From the article: "But word spread and now some 300 people live here"

i just read a canandian news story about the problems at the border - there is a large and growing refugee population that they say is alarming. imagine that - american economic refugees going north

A quote you apparently agreed with, yet from the article: "With the bulk of the latest arrivals being long-time Mexican illegals dislodged from their homes and workplaces" If an Algerian illegally in Spain is kicked out of Spain and goes to France is he a Spanish economic refugee?

I get that you don't like American politics, but the contortions you have to go through to see gloom and doom in the nation I live in every day is mind boggling.

My company can't fill it's open positions because there is a labor shortage, the only people not working are the people who won't or can't work. I refinanced my home a few weeks ago to get a better rate. It was a snap. Among the people who don't have health insurance are a large number who can afford it but refuse to buy it, some for frivolous reasons - like the family Hillary cited who turned out to have used the money to by a brand new SUV and an expensive home, or some because they can afford to self insure, or many because they are in the country illegally. In any case, under US law, no one will be denied health care because of an inability to pay.

If you only read hyperbolic "America is doomed" articles, and even then leave out the inconvenient facts like 300 does not equal thousands, and illegal aliens from Mexico do not equal American economic refugees, it's no wonder you think like you do.

KhunG, It appears that you have a good handle on the situation with our lao! Lao po is a serial poster here on thaivisa and an America hater from way back (just check out his posting history here ), he seems to have some very serious issues with the U.S.A., most of which likely resonate out of jealosy. Lao really has no clue as to what life is like in the states, and you can throw facts and logic at him all day but in the end he will do just what he has always done, taking quotes out of context, exagerating and magnifying situations out of all proportion (like the tent city stuff, the "American refugees in Canada, and the scope of the subprime mess, rampant inflation in the U.S. ect. ect. ad nauseum) and posting passages from obscure and or biased sources. I have given up replying to his nonsense, its just a waste of time. He is best left to his own little world, most of which seems to revolve around this form sadly enough

[VegasVic]

Statistics are a bitch. The media hypes up headlines saying that "foreclosures are up 80% over last year...". They dont tell you that 99% of mortgages nationwide are not in forclosure.

If only 1% failed why the subprime mess and credit crunch? Don't banks have to have a reserve anymore? Can that many billion $ be lost from a 1% failur

If the 1% failure rate was in the Netherlands (by the way I have nothing against the dutch) then probably not, but when the 1% failure is in the country with the worlds largest economy then its another matter altogether. Then when you couple reckless and irresponsible loan products by CFC and others, and the fact that those creative loan products got sold off to some large money center banks (lets say Goldman Sachs!) and then those financial institutions bundled these toxic products under the attractive brand name of CDO's (collateralized debt obligations) and sold them off to an array of hedge funds and large banks worldwide, then those hedge funds and banks did what any responsible financial entity would do in the times we live in THEY LEVERAGED THOSE CDO's Now when you have a leveraged investment (at 10:1 in some cases) and the underlying collateral no longer has a market for it, or a market like 20 cents on the dollar then we have a problem folks! By the way if you look back at some of my posts from a year ago I was the voice in the wilderness warning of the evil unregulated hedge fund industry and their highly leveraged investments in the derivative markets ( I'll post more on that when the Shanghai stock exchange crashes later this year). To put things in perspective the vast majority of U.S. banks are not affected by this garbage, they adhered to their inhouse underwriting standards and kept their loans on their books and they continue to underwrite loans at record levels, and when you consider that nearly 99% of real estate loans are not in foreclosure or in any danger of foreclosure then you can see how a few very greedy people and institutions were allowed to screw up the economy of the the U.S. and before its over Europe and a good portion of Asia will feel the effects to a lessor or greater degree. Greed is the one major flaw of capitalisim, and contrary to what gordon gecko said in the movie Wall Street, greed is not good, as a mater of fact the last time I looked greed was still one of the seven deadly sins. This is a very simplified version of what occured and I hope you were able to follow my run on sentences, the nuances and back door deals that went on during this time are still coming to light so we all have more to learn about what actually occured.

[shochu]

the original news story was a canadian news story - I can no longer find it. and a friend who read the same story also says he can no longer find it. the site that comes up now when you do a search is a blog - not the original story i read.

khun,

you can't be serious with your narration of the medical situation in the US - just go for a walk in any large american city and you will rethink your statements. also your analysis of the US financial situation is based on your lone companies situation - brilliant!

[lordofdelusion]

Statistics are a bitch. The media hypes up headlines saying that "foreclosures are up 80% over last year...". They dont tell you that 99% of mortgages nationwide are not in forclosure.

If only 1% failed why the subprime mess and credit crunch? Don't banks have to have a reserve anymore? Can that many billion $ be lost from a 1% failur

If the 1% failure rate was in the Netherlands (by the way I have nothing against the dutch) then probably not, but when the 1% failure is in the country with the worlds largest economy then its another matter altogether. Then when you couple reckless and irresponsible loan products by CFC and others, and the fact that those creative loan products got sold off to some large money center banks (lets say Goldman Sachs!) and then those financial institutions bundled these toxic products under the attractive brand name of CDO's (collateralized debt obligations) and sold them off to an array of hedge funds and large banks worldwide, then those hedge funds and banks did what any responsible financial entity would do in the times we live in THEY LEVERAGED THOSE CDO's Now when you have a leveraged investment (at 10:1 in some cases) and the underlying collateral no longer has a market for it, or a market like 20 cents on the dollar then we have a problem folks! By the way if you look back at some of my posts from a year ago I was the voice in the wilderness warning of the evil unregulated hedge fund industry and their highly leveraged investments in the derivative markets ( I'll post more on that when the Shanghai stock exchange crashes later this year). To put things in perspective the vast majority of U.S. banks are not affected by this garbage, they adhered to their inhouse underwriting standards and kept their loans on their books and they continue to underwrite loans at record levels, and when you consider that nearly 99% of real estate loans are not in foreclosure or in any danger of foreclosure then you can see how a few very greedy people and institutions were allowed to screw up the economy of the the U.S. and before its over Europe and a good portion of Asia will feel the effects to a lessor or greater degree. Greed is the one major flaw of capitalisim, and contrary to what gordon gecko said in the movie Wall Street, greed is not good, as a mater of fact the last time I looked greed was still one of the seven deadly sins. This is a very simplified version of what occured and I hope you were able to follow my run on sentences, the nuances and back door deals that went on during this time are still coming to light so we all have more to learn about what actually occured.

Thank you for explaining this. I had read an article from an Indian economist some time ago that stated with the leveraging, $1 dollar of hard assets was backing $30 . As you point out, when the hard assets drop in value, it is a first class bitch. That's why a small percentage of foreclosures can cause havoc.

There is no doubt that if the US has a serious recession or depression, the rest of the world will feel it. Decoupling my bum. If the US consumer stops spending look out.

BTW Just food for thought. According to the Bangkok post this week, the public debt in Thailand as a ratio to GDP was 36% approximately. According to the CIA factbook, the figure for the US in 2007 was about the same. It has it's problems but the US economy will probably keep ticking despite the doomsday chatter. I'm cheering for the US consumer to get out and spend that tax refund and the rebate ASAP! Go countrymen!!!!!!

[siamamerican]

If only 1% failed why the subprime mess and credit crunch? Don't banks have to have a reserve anymore? Can that many billion $ be lost from a 1% failure?

The answer to your question is YES. The companies listed in the earlier posts are the ones that had lax lending policies. The foreclosure rate of Countrywide, Citi... are much higher than 1%. They lent money to borrowers that had a history of not making payments and many had went through a recent BK. This formula works when home prices are rising, but unravels when prices drop.

Also, the subprime mess was caused in large part by the credit crunch. Many of the banks that went under looked financially sound almost right up to the point they went under. There model relied on short term borrowing to finance long term assets (mortgages). When institutions stopped lending to these banks, they were stuck with the long term assets. Margin calls follwed and that was the beginning of the end. It was a house of cards that came tumbling down.

The subprime mess has also hurt lenders with solid lending practices. The company I work for puts 98% borrowers into 30 year fixed products and sells the loans to the secondary markets. In many cases many investors offer less than the par value of a loan. Not a substainable model.

[sonicdragon]

Ahoy ! I'm back in the LOS for a few days tying up loose ends.

This subforum is as lively as ever :-)

I had a few comments on things I read in various threads here, in no particular order.....

Foreclosures grab the headlines, for obvious reasons, but they have had farily small impact on things so far (in part, of course, because the foreclosure rate is low overall). The more important factor is delinquencies, which are running at a rate close to 6%, which is substantial. Many asset backed securities are pass-through, so they are directly affected when people can't (or won't) pay. On average sub-prime borrowers tend to default, or be late, before prime borrowers. Also, many sub-prime loans were made with teaser rates that are now resetting. This is all old news really, but that's why sub-prime was the first domino to fall. Another quite worrying factor is that when looking at the whole housing market, total equity is less than 50% which is staggering when you consider that there are many homeowners with no mortgage at all, or just a very small one. With more and more forecasts of further falls in home prices with no recovery in sight to two years, it looks quite grim. by the way I would recommend reading this latest letter from Howard Marks to Oaktree investors:

http://s.wsj.net/public/resources/document...reememo0803.pdf

These two sections are a very good summary of the current situation:

• Equity capital was provided to would-be leveraged entities.

• Debt was readily available for them to use in expanding their total capital and thus their ability to pursue profit.

• This combined capital was used to purchase assets, forcing prices higher.

• Price appreciation caused the entities' equity to expand at a faster rate thanks to their financial leverage.

• The increases in equity were matched by further increases in borrowings.

• In fact, the good performance convinced lenders to increase the amount of leverage they would supply per dollar of equity. This meant the entities could grow their portfolios even faster than the rates at which equity capital flowed in and assets appreciated.

• Further, because of the seeming impregnability of the leveraged entities' profitability, risk aversion shrank and the risk premiums and returns demanded by lenders declined. Leverage became cheaper and thus even more attractive.

• As is typical of virtuous circles, everything ran smoothly . . . for a while: additional equity flowed in; it was leveraged up increasingly; buying caused assets to appreciate further; and the upward spiral continued.

and then:

• Something causes asset prices to weaken.

• Now the leverage works in reverse, causing the entities' equity to shrink faster than the rate of decline in asset prices, and their ratios of borrowings to assets to rise.

• Lenders, worried about declining asset prices, either call in their loans or refuse to roll over debt when it matures. In some cases, the entities' now-shrunken collateral fails a market value test and triggers a margin call, which can be met only through the posting of additional collateral (which usually isn't available) or sales of assets

(which add to market weakness).

• Further, with the world suddenly feeling much riskier, lenders demand increased risk premiums, raising the cost of borrowed funds and further impairing borrowers' economics.

• Equity investors – panicked by the combination of asset price declines, leveraged equity losses and margin calls – withdraw equity capital to the extent they can. The sight of investors lining up at the withdrawal window, and often being told they can't have their money, adds to the negative climate.

• The need to raise cash with which to satisfy the demands of lenders and equity investors places further downward pressure on asset prices, reinforcing what is suddenly a vicious circle. Fire sales of collateral add to this pressure.

• In particular, think what happens to banks. In this negative environment, it's hard to imagine these highly leveraged entities extending credit, given that ( a ) banks' equity is shrinking, ( b ) they feel they may need the money themselves, and ( c ) they fear further losses on loans and assets.

One thing I can agree with Vic about is that hedge funds have a lot to answer for. Regulation is called for. Further regulation of broker-dealers is also called for too IMHO, which is great for me, coz that's the business I'm in now, kind-of.....internal audit / risk management.

People should be careful what they wish for. Right now the best thing that could happen to the US economy is for the dollar to gradually weaken further (not dramatically), and inflation to creep up to the 5-7% range. This would help to solve a lot of problems. If gold, oil and other commodities collapse it is a very ominous sign that we could be heading for a deflationary spiral - the credit crisis is a massive deflationary force. Gold in the 800-1000 range and oil in the 80-100 range is a good sign, not a bad one.

Another thing I can agree with Vic on is that the UK is in possibly worse shape that the US. But I'd have to disagree about Euro-land as a whole - there are a few basket cases (Spain for example), but in general it looks in much better shape than the US and UK.

SD

Edited March 28, 2008 by sonicdragon

[LaoPo]

KhunG, It appears that you have a good handle on the situation with our lao! Lao po is a serial poster here on thaivisa and an America hater from way back (just check out his posting history here ), he seems to have some very serious issues with the U.S.A., most of which likely resonate out of jealosy. Lao really has no clue as to what life is like in the states, and you can throw facts and logic at him all day but in the end he will do just what he has always done, taking quotes out of context, exagerating and magnifying situations out of all proportion (like the tent city stuff, the "American refugees in Canada, and the scope of the subprime mess, rampant inflation in the U.S. ect. ect. ad nauseum) and posting passages from obscure and or biased sources. I have given up replying to his nonsense, its just a waste of time. He is best left to his own little world, most of which seems to revolve around this form sadly enough

How sad to read how deep you have sunken VegasVic. Shame on you by calling me an "America hater"

I explained in posts #184 and 188 how I feel about America and the Americans, but I suppose "I'm sorry" doesn't exist in your vocabulary.

Sad, disgusting and pathetic attitude.

LaoPo

[KhunG]

You think it's funny to read that But I realize that it is harsh sometimes for Americans to have their system 'attacked' (wrong word, but couldn't find a better one, sorry) but in Europe we are used to the critics from other countries; maybe that's the difference ?

LaoPo

"Attacked" is the right word.

Americans don't have a problem with criticism of our system. We're champs at it. I could probably write a book criticizing various things in the US. Criticism is useful, as it triggers analysis and results in improvements. Lies and distortions are not criticism. They trigger a defensive response, rather than analysis and improvements. As previously demonstrated, you engage in lies and distortions in your America-bashing. Probably due to a deep seated and well earned inferiority complex. The previous sentance was also an "attack," should you need additional examples of the term.

[LaoPo]

You think it's funny to read that But I realize that it is harsh sometimes for Americans to have their system 'attacked' (wrong word, but couldn't find a better one, sorry) but in Europe we are used to the critics from other countries; maybe that's the difference ?

LaoPo

"Attacked" is the right word.

Americans don't have a problem with criticism of our system. We're champs at it. I could probably write a book criticizing various things in the US. Criticism is useful, as it triggers analysis and results in improvements. Lies and distortions are not criticism. They trigger a defensive response, rather than analysis and improvements. As previously demonstrated, you engage in lies and distortions in your America-bashing. Probably due to a deep seated and well earned inferiority complex. The previous sentance was also an "attack," should you need additional examples of the term.

Another example of someone who writes something about me without knowing me or my real feelings for America and Americans. I suggest you read my posts #184 and 188.

It seems my quote was right in the middle of the target when I wrote, yesterday:

....that it has become almost impossible to discuss economics/financials without stepping on some toes here, most of them American toes and I wonder why.

If I quote bad economic news (from the US, mind you, published in the US and written by US journalists) I get a shower of remarks like "america-bashing" "doom and gloom poster" etc.

I really don't understand because I'm just a simple messenger.

Some of these same posters find it quite normal to bash upon other foreign countries (non-US) and find that absolutely normal, but, HOLY MOLY, if someone says something about US economics/financials we are suddenly america-bashers....what a nonsense.

But IMHO it says something about you chaps too: you're not used to critics because you are raised in the most powerful nation on earth and that nation can't do wrong.

But if something goes wrong, you're acting so sensitive, almost like little children who didn't get their candy..."

From: http://www.thaivisa.com/forum/index.php?sh...t&p=1895397

Why oh why is it so difficult for some people to read...

I kindly request you to have a look at my signature, below:

LaoPo

[NovaBlue05]

Thanks to VV, SD & Siam for their explanations. It's difficult for the average person to understand this situation but I certainly find your posts more useful than reading a cut & paste posted without context and summed up gleefully with a message that the collapse of the USA is imminent

[LaoPo]

Thanks to VV, SD & Siam for their explanations. It's difficult for the average person to understand this situation but I certainly find your posts more useful than reading a cut & paste posted without context and summed up gleefully with a message that the collapse of the USA is imminent

"No one loves the messenger who brings bad news" - Sophocles - But everybody loves a messenger with good news - LaoPo -"

For some, bad news is hard to swallow...

LaoPo

[LaoPo]

"Will The Dollar Rebound In 2008"

1 Euro = USD 1.583

1 GBP = USD 0.500

1 CAD = USD 0.984

1 CHF = USD 1.006

1 AUD = USD 0.922

1 JPY = USD 0.010

As of this moment.

LaoPo

[ray23]

Cnn News tonight Paulson said that 92% of mortgages are current, 6 % are behind on payments 2% are currenly in foreclosure .

Of course he also says he supports a strong dollar.

Should be interesting to see if the G-7 step into this mess next month

[Naam]

I kindly request you to have a look at my signature, below:

LaoPo

google result "lao+po":

1. Po Parole Officer (PO)

2. lao A native inhabitant of the country Laos (Located by the Mekong river)

http://www.urbandictionary.com/define.php?term=lao+po

[Naam]

kindly request you to have a look at my signature, below:

LaoPo

another google result "lao+po":

"Big wife and little husband"

http://wiki.d-addicts.com/Da_Lao_Po_Xiao_Lao_Gong

[Naam]

kindly request you to have a look at my signature, below:

LaoPo

another google result "lao+po":

"Big wife and little husband"

http://wiki.d-addicts.com/Da_Lao_Po_Xiao_Lao_Gong

wife biscuit :D

A chinese pastry with shrimp filling. Usually consumed in Asian countries.

http://www.thedailyplate.com/nutrition-cal...uit-lao-po-bing

[Naam]

"Lao Po Bing" Filling Recipe? (Dong gwa yung)

Chinese name spelled in English: Lao Po Bing (sometimes Lao Po Beng) Common English names: "Concubine's Cakes" or "Wife's Cakes"

http://forums.egullet.org/index.php?showtopic=71419

[LaoPo]

Jay Leno has more humor than some posters here:

Jay Leno: "``Interesting fact came out today on the new $5 bill,'' Jay Leno, the host of NBC's ``Tonight Show,'' said the other day. ``It turns out it used to be the old $10 bill.''

Comedians Diss Dollar as It Weakens

http://www.bloomberg.com/apps/news?pid=new...id=aGuZZwxdLXxg

Keep smiling guys and don't be angry with me; I am just the messenger boy

If you wish to be angry, call Jay !

LaoPo