Financial Crisis

[midas]

Never understood your perspective on America economically. You are still calling for a collapse which could happen but don't you see other outcomes with higher probabilities?

Unlike myself you are still working and luck would have it, in arguably the worst occupation possible.

Bankers and builders overstepping common sense played major roles getting us into this mess and are now suffering the consequences of their actions.

I don't think most Americans are entitled to welfare and need to find the best job available..

Also builders did not loan the funds or build on credit. Neither did they then bundle those promises up & re-sell them.

Now if you want to blame banker I agree 101% as they loaned money where they knew it was not repayable. I will even throw the appraiser in there as they appraised property that they knew was in no way worth that price. Lastly lets throw in the AIG types as they rated all those bundled up over priced now called toxic assets.

appraisers seem to be the only ones where there is an opportunity to try to recover at

least some compensation i.e. by suing them for professional negligence.

Did this happen ?

[flying]

appraisers seem to be the only ones where there is an opportunity to try to recover at

least some compensation i.e. by suing them for professional negligence.

Did this happen ?

Nah....In fact here at least you have to use the lending banks appraiser or one off their short list ....no surprise there eh?

Also the appraiser will just claim they used comps or comparable sales.... But they also use a cost to replace figure & that is what should have set off the alarms IMO

[midas]

appraisers seem to be the only ones where there is an opportunity to try to recover at

least some compensation i.e. by suing them for professional negligence.

Did this happen ?

Nah....In fact here at least you have to use the lending banks appraiser or one off their short list ....no surprise there eh?

Also the appraiser will just claim they used comps or comparable sales.... But they also use a cost to replace figure & that is what should have set off the alarms IMO

I think there is big difference in the law on this issue between USA compared to

UK and Australia. In these two countries it doesn't matter WHO picks up and

relies on the appraisal report at any time (before it gets out of date )

- if they subsequently rely on it and then lose money - it can be any third party by the way-

they can still sue the appraiser. Why because the appraiser has a duty of care to

everyone by the fact he or she purports to be an expert. I know one instance

for sure in USA where until very recently this wasnt the case ( i.e. Arizona )

and that really surprised me. No wonder these people in USA didn't care about over valuing .

[siamamerican]

Flying,

Now I have a much better understanding from your perspective. Still don't agree with many of your views but nonetheless understand where you are coming from.

As for builders not asking, is perfectly sensible. I didn't start out as a VP but moved up in the industry and during that process interacted with many builders. I never met a major or minor builder that thought the mortgage industry lending guidelines were loose. They constantly complained of the conservative nature of banks and wanted more flexible lending standards to the point many of the large lenders directly got involved with the lending process. Some even basically had in-house mortgage companies.

I get your point though. You were building houses and not concerned about the borrowers finances. My hands got a little dirtier and at the time it wasn't something I was really aware. Just like you, in a VERY round about way, I was just going about my job making sure the lending process was efficient and fair in regards to our customers. In my opinion, our rates were the lowest in the industry for mid range FICO borrowers which was my domain. I met the guidelines provided by Freddie and Fannie and didn't fudge the numbers. The loans we sold in bulk all met with the requirements provided, except the rare loan that slipped through the cracks. Hard to catch all employee errors or borrower fraud.

Our loan portfolios made money before the bubble burst and were breaking even, more or less after it burst. Unfortunately the company was very heavy into 2nd mortgages and those faired much worse. We had a plethora of other issues that brought us down but that is another story. I worked with great people that truly thought they were doing nothing wrong.

My point is that it is easy to point fingers. Bankers (me) weren't all monsters and my co-workers for the most part didn't see the error in their ways until it was too late. Where my hands got dirty was the the last year. I knew it wasn't going to end well for the industry and when asked by friends about investment real estate, my answer was sell!!! If I was more ethical, I would have walked away from the high paying job, and done something that added value to society. I didn't for many reasons. Firstly, I wasn't sure of the consequences of the bubble bursting and I was far from alone.

That's my 2 cents.

Edited October 14, 2010 by siamamerican

[travelmann]

So in the UK, unemployment is falling - nowhere close to the 3.25/2.50 million predicted by some.

Inflation is a little over 5% - OK it starts with a 6 and above BoE targets- but it is NOT anywhere near double digits seen in the past.

Oh!, and interest rates? - negligible in some cases, economically affordable in ALL cases.

These 3 key dynamics seem to OK, in absolute terms, and generally moving in the right direction.

Or, have I got it wrong ?

I Live in the UK whats happening from what |i can see is this, in many households only 1 half of the couple are working especially with the self employed like myself in the building trades work is almost zero, we are managing on half an income. I dont think unemployment is falling despite the manipulated figures and I dont think the sh1t is going to hit the fan until next year and then I think we will be in serious "depression" not recession or downturn.

Cant back it up with anything except people I know in the same trade who havent worked for quite soemtime ie 12 months.

[Abrak]

I am beginning to think that Bernanke might not QE....sat 50/50...

And these are the reasons

1. Bernanke is all about managing expectations and he talks about the'credible threat' of QE being sufficient to boost inflation expectations. And look what has happened, dollar tanked, gold risen, Tips yield turns negative, rates stable and the stockmarket bombing along nicely. So the credible threat seems to be working partly because people think QE is a pretty bad idea.

2. The problem with economic policies and economists that they don't do much good. Several economists say it won't work and is a waste of time. It would rather disappointing if he actually embarked on QE and nothing much happened. I don't think we know what happened last time but it just sort of turned out ok. And it is about his last tool so why waste it.

3. Now given that credible threat seems to work out well and implement ion might be bit of let down markets won't really give a jot. h

He will talk about the dollar weakness, of some rise inflation and wishing to see the economic consequences whilst being fully prepared to take aggressive action if necessary. For markets you could argue that it is a bit of one way bet. If they fall he will step in and if they rise he won't raise rates.

I remember when this whole QE started. A few people predicted hyperinflation and others claimed he could not avoid deflation. Nothing much happened at all. He seems to have got people where he wants them so it would seem pretty risky to actual implement a policy. The really clever part is that he says he is worried about deflation when there isn't much evidence of it, while people with a few concerns on inflation now think he will create a lot more.

[flying]

Flying,

Now I have a much better understanding from your perspective. Still don't agree with many of your views but nonetheless understand where you are coming from.

As for builders not asking, is perfectly sensible.

I get your point though. You were building houses and not concerned about the borrowers finances.

My point is that it is easy to point fingers. Bankers (me) weren't all monsters and my co-workers for the most part didn't see the error in their ways until it was too late.

Well actually like I said I was not building during the bubble I was stuck in a job I didn't want but that is a long story in itself. But I did watch & wish I was building because I knew I was missing out on a lot of work that I liked better than office work.

My reasoning for the builders not being responsible is not even that they were not concerned but that they would/should never be. Same for any other seller. The lumber companies did not know/think about it same as the many retailers that enjoyed increased sales as folks treated even their existing homes as ATM's due to easy money.

Even today it is not a retailer's job to ascertain if the customer is worthy of the purchase because they are using a credit card. It is the job of the one who issues the credit card to ascertain the borrowers credit worthiness.

But I did watch & wonder. I specifically remember a conversation with a friend & telling him these prices are insane. Some folks were selling homes that in no way were worth the price yet folks bought. Many were folks who normally would never get a loan & I knew they would never be able to honor the loan. Because even with the easy qualifying they still had to pay for it. Yet the payment was 50-75% or more of their total monthly income. None seemed to care.

I remember telling my friend ....In the end the banks are going to eat it because, these folks cannot make these payments for long. First hardship they have will put them behind.

I also said these inflated prices are an aberration & when they go back to normal & the folks have failed what will the banks do with the assets that will be worth so much less?

I never in my wildest dreams thought the government would hand them billions of dollars.

But the bankers?? Yes as you say I am sure there are low level workers who wondered the same

but, the loan makers? What were they thinking? Did they know they would be bailed? Because if not I have to wonder what their thinking was for acting so irresponsibly. Was it just because they were all in on the fact that they would pass it off anyway? They would just make the irresponsible loan & quickly sell it? Wrap it up with a chop suey mix of others & get a good rating on it? I tend to think so.......

The folks who had the power to set this all up are not worried about later seeing the error of their ways. They are sipping drinks on some beach smiling at having gotten away with it.

When it all became know I think the government should have just ruled against them & said no........You made loans knowing dam_n well these folks could not carry it now you wait for them to find a way to pay.

And in the meantime take only a payment based on intelligent percentage computation of their income like you should have in the first place. If that ends up being the life of the loan or customer than so be it.

Lastly the buyers are not 100% innocent either as I am sure most knew they would not be able to hold the payments. But on the other hand if you put food/American dream in front of hungry folks & say here eat you can figure out payment later they will probably eat.

[midas]

I am beginning to think that Bernanke might not QE....sat 50/50...

And these are the reasons

As well as the fact that there doesn't seem to be an overall consensus

St. Louis Fed Says QE2 Would Be Useless, And May Be Damaging

http://www.zerohedge.com/article/st-louis-fed-says-qe2-would-be-useless-and-may-be-damaging

[siamamerican]

But the bankers?? Yes as you say I am sure there are low level workers who wondered the same

but, the loan makers? What were they thinking? Did they know they would be bailed? Because if not I have to wonder what their thinking was for acting so irresponsibly. Was it just because they were all in on the fact that they would pass it off anyway? They would just make the irresponsible loan & quickly sell it? Wrap it up with a chop suey mix of others & get a good rating on it? I tend to think so.......

The folks who had the power to set this all up are not worried about later seeing the error of their ways. They are sipping drinks on some beach smiling at having gotten away with it.

I agree with 99% of what you stated but take a little exception to the above. Take it with a grain of salt - I and other executives were the loan makers you are referring to above. We thought we knew what we were doing and in the end made mostly sound decisions regarding our loan portfolio. Our second mortgage portfolio took a beating but that wasn't my domain. I was in exec meetings where we discussed the risk and in the end we kept originating 2nd mortgages well into 2008 even when there were no buyers in the secondary market. Why? A million reasons were given: the market will level off, our portfolios were still performing and we were actually making interest income, we've reached a bottom and we can grab market share while others sit on the sidelines,...

Also, this statement below would be hard for the government to implement considering they were the biggest players in the mortgage industry.

When it all became know I think the government should have just ruled against them & said no........You made loans knowing dam_n well these folks could not carry it now you wait for them to find a way to pay.

Government agencies (HUD) and Quasi government agencies Fannie, Freddie, and FHA loans were possibly the cause, in my opinion, of the meltdown. even today they make up 95% of total mortgage originations in the USA. They supplied lenders with the guidelines and we know how terrible those guidelines ended. The case could be even strengthened because they not only created the guidelines but then packaged 70% of their loans for the secondary market. Silly, you have an organizations with their mission statements revolving around increasing home ownership, creating home ownership guidelines. It was a win, win situation.

Now I'm pointing fingers but I think you get the point. Agree with your post for the most part.

[flying]

I agree with 99% of what you stated but take a little exception to the above. Take it with a grain of salt - I and other executives were the loan makers you are referring to above.

Government agencies (HUD) and Quasi government agencies Fannie, Freddie, and FHA loans were possibly the cause, in my opinion, of the meltdown. even today they make up 95% of total mortgage originations in the USA. They supplied lenders with the guidelines and we know how terrible those guidelines ended.

Not really referring to you...

Actually when I say banks I don't actually mean most of the workers because I kind of doubt they actually set the policy guidelines or lack there of at branch levels. I would think those came from the corporate levels & above.

As for FHA/FMHA etc

Perhaps things have changed a lot but back when i knew some folks who had FMHA loans their mortgages were tied to their incomes. Very nicely I might add to the point where if their incomes dropped so did the payment.

Of course there were rules with that...Like it had to be your residence you had to live there not rent it etc.

Now if your saying that the Fannie Freddie, FHA/FMHA set the policies/guidelines that banks like BOA, Chase Manhattan,Citi, etc. followed when making the NINJA loans

I would be surprised. Also to properly look at Fannie & Freddie we would need to go back to Clinton's time when they are being pushed into lending in areas with more risk.

Same goes for the predators like Countrywide lending & Ameriquest

But yet at the end of the day...........Look now the banks sit FAT with TARP & zip interest rates from the FED. Yet they do not make loans even to many who do deserve/qualify

What are they doing instead with that $$$ ?

Does make me wonder who is running what.

Edited October 15, 2010 by flying

[midas]

I have been saying from the start of this alleged crisis that we were not being told the truth about what really was the problem.

This whole title issue will be the start of the final meltdown of the US economy unless OB will sign some kind of rule that will help the bankers to avoid court cases in whatever way.

Take care!

Alex

.

Well Alex if you haven't already seen this, i suggest you listen to this video clip of the Dylan Ratigan show and you get a real sense as just to how the banks are trying to pull a swiftie.

It also reveals a quite bizzare trend developing .....banks ( or their hired thugs ) breaking into people's properties even while they are living in their house to change the locks and then people breaking back into their former empty properties, and changing the locks again and then their lawyers saying they don't owe anything to anyone

But the real bombshell is by one the attorneys on this video clip when he says something which I must admit

as an observer sitting outside USA I have been wondering about myself because it seems such a mess and that is

".... regarding residential and commercial property and i can say with a high degree of confidence, no one in this country for sure can know who owns any real estate unless it was before the days of securitisation " i.e early 1980's

http://www.zerohedge.com/article/meet-danielle-and-jim-plus-9-part-2-time-squatting-ratigan-show

Edited October 15, 2010 by midas

[siamamerican]

As for FHA/FMHA etc

Perhaps things have changed a lot but back when i knew some folks who had FMHA loans their mortgages were tied to their incomes. Very nicely I might add to the point where if their incomes dropped so did the payment.

Of course there were rules with that...Like it had to be your residence you had to live there not rent it etc.

They did change A LOT. All three institutions guidelines became very subprime. A large percentage of B of A, Countrywde and other large lenders originations were FHA, Fannie, and Freddie. These were a large percentage of the Ninja loans you are refering to above. The gudelines were supplied to us by these agencies which were provided to them by government agencies (HUD).

A little data from the Financial Crisis Inquiry Commission:

The GSEs’ interest-only loans jumped from 2 percent pre-2004 to 15 percent in 2007.

Loans with a less than 10 percent down payment soared from 7 percent to 19 percent in the same time frame.

Exploding ARM (adjustable rate mortgage) loans increased from 8 percent in 2004 to 17 percent in 2005.

That is just the tip of the iceberg. Loans you couldn't get through subprime products (less than 520 FICO's and high loan to values) in "MANY" cases would pass through the GSE guidelines.

These organizations were created to promote home ownership. Banks were just following their direction in many cases. Stupid is stupid does and in hind sight we were stupid at times.

Not the warm and fuzzy government sponsored organizations of yesterday. They became money making machines until it all came to an end. Well, in their case it will never end because the government sponsors them and now in some ironic twisted rational government plan, they are supposed to be part of the solution. Not in the industry anymore so I don't know how the GSE's are helping the homeowners currently but I do know their financials are a mess.

Edited October 15, 2010 by siamamerican

[flying]

A little data from the Financial Crisis Inquiry Commission:

The GSEs’ interest-only loans jumped from 2 percent pre-2004 to 15 percent in 2007.

Loans with a less than 10 percent down payment soared from 7 percent to 19 percent in the same time frame.

Exploding ARM (adjustable rate mortgage) loans increased from 8 percent in 2004 to 17 percent in 2005.

Thanks that is interesting. But, I must admit I did not know/remember what GSA's stood for so had to google it.

What came up was the article you quoted I think. Saying GSE's were Government Sponsored Enterprises.

But then the very next paragraph in that article kind of said the very same thing I did.

Fannie and Freddie made a bad situation worse, but greedy lenders, greedy investment banks, greedy (and incompetent) rating agencies and greedy (and shortsighted) insurance companies caused the subprime crisis. Federal regulators allowed it to happen.

Also they tended to blame Hank Paulson rescue for Fannie & Freddie losses after 2005

* In September 2008, Henry Paulson’s Treasury Department took over Fannie and Freddie because Treasury knew the private market would collapse soon and that the government would need to step in and rescue the nation’s private mortgage finance system.

* It is that rescue that drives the current Fannie and Freddie’s losses, as well as risky loans made by the GSEs (government-sponsored enterprises) after 2005 that had nothing to do with their affordable housing goals.

Also....

Lost in the conversation about what to do about Fannie and Freddie is the fact that they were highly profitable and successful enterprises for most of their history. Shareholder value and profitability were the norm for most of the GSEs' history.

Had they not followed Wall Street and the private banking sector into the subprime abyss, they would, in my humble opinion, not be currently under the management of the federal government.

Interesting

Article

[midas]

I don't think we know what happened last time but it just sort of turned out ok. And it is about his last tool so why waste it.

3. Now given that credible threat seems to work out well

" Ben Bernanke and the Federal Reserve are conducting an experiment on the American people. What they are doing today has never been attempted in human history. It boils down to whether the authorities can cure a disease brought on by too much debt by doubling and tripling the dosage of debt. If this experiment fails, the dollar collapse and possible hyperinflation would lead to anarchy. Ben is confident it might work. Are you? "

http://theburningplatform.com/blog/2010/10/15/is-america-on-a-burning-platform-featured-article/

[Englander]

I am beginning to think that Bernanke might not QE....sat 50/50...

And these are the reasons

It 100/0 for QE2

And the reasons are he's an arrogant prick.

Fed chief Ben Bernanke signals more easing to counter high unemployment, low inflation

Ben Bernanke, the chairman of the US Federal Reserve, said with unemployment too high and inflation too low there was a case for further action to stimulate the world's biggest economy. continued .....

http://www.telegraph.co.uk/finance/currency/8066740/Fed-chief-Ben-Bernanke-signals-more-easing-to-counter-high-unemployment-low-inflation.html

http://www.federalreserve.gov/newsevents/speech/bernanke20101015a.htm

[BlackJack]

one picture

1000 words

[BlackJack]

Lord Patten said the fact remained that half of the world's growth over most of the decade had come from the American deficit and Chinese exports.

"America's terrible indebtedness is going to take a lot of imaginative leadership on both sides," he said, citing figures that showed the US had a $14 trillion debt and the average household had 13 credit cards.

som nom na

[Abrak]

I am beginning to think that Bernanke might not QE....sat 50/50...

And these are the reasons

It 100/0 for QE2

And the reasons are he's an arrogant prick.

Well he certainly is an arrogant prick.

As 50/50 is not a prediction at all, I will leave you with yours. To be honest he is incredibly unpredictable and highly manipulative. He wants high 'inflation expectations' but not 'inflation' and 'low interest rates' without 'rising interest rate expectations'.

Where I agree he is incredibly arrogant is in his statement that since May 2003 the Fed has considered disinflation as a threat as much as inflation. There is a degree of 'consensus in hindsight' by economists that the Fed partially caused the bubble by keeping rates too low for too long. They did this because unemployment was too high and inflation too low after the last recession. The Fed never addresses its dual role in monetary policy where the US$ is the central reserve currency as well as the domestic one. Globalisation within a dollar block clearly imports deflation (or understates inflation) and exports jobs to lower cost countries.

Anyway his policy objectives are stable prices and maximum sustainable economic growth. Inflation expectations determine peoples actions. If you believe the price of a car will go up next year you buy a car if you do not and it actually goes up you dont. If there is actual inflation then 'expectations of interest rates will rise'. Simply he is trying to achieve this. High 'inflation expectations' and 'low nominal rates' lead to increased spending and investment which leads to a rise in GDP rather than inflation because there is slack in the economy.

[siamamerican]

Interesting

Article

Interesting read and agree that if the GSE's wouldn't followed wall street they would have been fine. Problem is they did in the same manner many industries and the general population chased the quick buck. Everybody lost sight of risk until it was to late. Nothing new and it will happen again in real estate or another area. Gold???? Who really knows.

[flying]

Interesting

Article

Interesting read and agree that if the GSE's wouldn't followed wall street they would have been fine. Problem is they did in the same manner many industries and the general population chased the quick buck. Everybody lost sight of risk until it was to late. Nothing new and it will happen again in real estate or another area. Gold???? Who really knows.

True & it is why I tend to complain when the world blames one country over this. I think if others didnt take part in the tainted meat they would not also be sick.

As for gold....Could be but I think most have run to it having realized the mess.... Yes the paper gold & silver could be just as tainted as any other

Edited October 16, 2010 by flying

[BlackJack]

Interesting

Article

Interesting read and agree that if the GSE's wouldn't followed wall street they would have been fine. Problem is they did in the same manner many industries and the general population chased the quick buck. Everybody lost sight of risk until it was to late. Nothing new and it will happen again in real estate or another area. Gold???? Who really knows.

paper gold yes a looming derivatives problem

thats why people should buy real gold or gold mines

[siamamerican]

As for gold....Could be but I think most have run to it having realized the mess.... Yes the paper gold & silver could be just as tainted as any other

That is why, in my opinion, it is a scary investment for a conservative investor. Everybody is running to it and up it goes. What happens if the world recovers and investors jump back into stocks and real estate. It could get ugly real fast. Maybe this time around gold will never plummet like it has in past but I'm not going to bet on it.

I would opt for real estate, if I had your builders knowledge and contacts. Just my humble opinion but if you have some cash and understand the market in your area, there are lots of opportunities. I know people cleaning up right now in the states buying distressed properties in good neighborhoods. In many cases they just level the house and build a new home. I actually did it last year as an investor and did very well. Problem now is that the builder I worked with has made so much money he doesn't need my cash.

We have opposite opinions about the recovery. I've positioned myself to profit from the anticipated global rebound. You're positioning yourself to weather a financial collapse or long downturn.

[cloudhopper]

paper gold yes a looming derivatives problem

thats why people should buy real gold or gold mines

Real gold yes.

Mines, I don't know. They are very vulnerable to input costs which will go way up in a hyperinflation, energy costs which will go up in real terms regardless of what happens to any currency, capital gains taxes and probable new excise/windfall profits tax if there is a currency crisis.

On that latter note IMO all PM privately held should be purchased anonymously for cash so you are totally off any government radar screens for capital gains and whatever other taxes and restrictions they might impose.

IMO the US will have no compunctions about allowing the dollar to be radically devalued especially as long as the Chinese are stupid enough to continue pegging their currency to it. And they know if it ends in a global currency crisis they have way more gold than any other country and can still produce more than their share of it too.

[Naam]

Interesting

Article

Interesting read and agree that if the GSE's wouldn't followed wall street they would have been fine. Problem is they did in the same manner many industries and the general population chased the quick buck. Everybody lost sight of risk until it was to late. Nothing new and it will happen again in real estate or another area. Gold???? Who really knows.

paper gold yes a looming derivatives problem

thats why people should buy real gold or gold mines

my view is that in real crisis times (looming financial freeze like october 2008, currency restrictions, civil wars, riots and uproars, wars per se, etc.) owning shares of a gold mine is nothing but paper. nobody will trade a ham and a sack of potatoes for some transfer of shares.

[Englander]

Anyway his policy objectives are stable prices and maximum sustainable economic growth. Inflation expectations determine peoples actions. If you believe the price of a car will go up next year you buy a car if you do not and it actually goes up you dont. If there is actual inflation then 'expectations of interest rates will rise'. Simply he is trying to achieve this. High 'inflation expectations' and 'low nominal rates' lead to increased spending and investment which leads to a rise in GDP rather than inflation because there is slack in the economy.

We'll see shortly if QE2 happens, i'll take my hat off to you if youre correct though.

As for the above statements, im a firm believer in letting the market correct itself which would have happened far quicker if non very intelligent corrupt governments hadnt intervened on behalf of the bankers and reckless, his actions are purely aimed at the short term and are causing huge commodity bubbles elsewhere in the economy.

http://www.telegraph.co.uk/finance/comment/liamhalligan/8068335/Chinas-not-the-villain-if-the-West-tries-to-debase-its-debt-through-QE.html

I'm waiting for equalling of trade tariffs with Asian nations to enable the west to pick itself up, until then i cant see how it will get any better without borrowing more and more money.

[Abrak]

my view is that in real crisis times (looming financial freeze like october 2008, currency restrictions, civil wars, riots and uproars, wars per se, etc.) owning shares of a gold mine is nothing but paper. nobody will trade a ham and a sack of potatoes for some transfer of shares.

However at what point do you get concerned that gold is being debased through paper?

By that I mean a gold backed paper currency is a scam. And the scam is at the beginning when you persuade people that the currency is backed by gold. Because it will not be in the future. If someone offered me a piece of paper claiming it was backed by gold I would tell him to give me the gold or go away. I am happy to take something we both know is backed entirely by Bernanke's irresponsibility. But gold backed paper is a con that will always end with no gold or lots of paper. So really allowing ETF's to issue paper, any old person really, against gold possibly maybe is a very dangerous game. Paper holders trade them as paper and it is eventually going to end in tears.

People hold gold as a saving because it is not paper. The paper investors are playing gold backed paper for the ride. It maybe spectacular. But at some point the ETF's will be large and someone like Soros will turn around and say that while the Central Banks are debasing their paper, gold is being debased by paper and it shouldnt be allowed because it is held because it is not paper.

My point is you are well aware of your paper goldmine, and futures holders are well aware of what they are holding. But ETF's vaguely pretend to be something they are not. And when you look at the way they trade, they trade as paper. And I bet these guys havent read the prospectus, gold may get lost, no insurance, no exposure to counter party risk.

And I dont mean now I mean conceptually. That paper gold will ruin your willingness through say price and existence that you will sell your physical well before financial Armageddon.

Edited October 17, 2010 by Abrak

[AlexLah]

Hi Abrak,

Just a question.

If you invest in stocks do you actually receive the stock certificates with your name on them as being the owner?

I believe you get some kind of "Statement" is it?

Who is the actual (legal) owner of the stocks you purchased?

[Abrak]

Hi Abrak,

Just a question.

If you invest in stocks do you actually receive the stock certificates with your name on them as being the owner?

I believe you get some kind of "Statement" is it?

Who is the actual (legal) owner of the stocks you purchased?

I do not have a certificate but do register in my own name for various reasons even if it means I do not have voting rights.

Whether this might actually mean much in financial Armaggedon is highly debatable. However, I hold a decent percentage of my wealth in a few companies that I know well long term. As a general rule business only turns out well with people who trust each other. So I would like to believe that whatever my rights will be recognised.

If anyone wants to screw anyone it isnt difficult in the end but it doesnt really make money. I often think what will happen in a total financial meltdown because I am absolutely certain in my mind it will be the greatest opportunity in my life and there would be so much opportunity out there.

[AlexLah]

So do I understand that correctly that any stocks you think you own are based on trust and not actually on wet ink signature legal contracts?

Again I am asking, who really owns the stocks you believe you purchased and you think you own?

[Abrak]

So do I understand that correctly that any stocks you think you own are based on trust and not actually on wet ink signature legal contracts?

Again I am asking, who really owns the stocks you believe you purchased and you think you own?

No there is a very clear registration process in Thailand which is fairly typical over stockmarkets. In fact shareholders can be checked unless they wish to be under a nominee. You can sell automatically in the market electronically at anytime. You have no wet ink signature of shareholding structures because it is 2010. I was merely looking at things from an extreme pessimistic view whereby legal ownership of a minority interest and financial ownership are not worth anything unless respected by the owners. All shareholder transactions must be dealt with through the stockmarket for tax reasons. But Alexjah if you need to hide a shareholding, it is easy to arrange.

Basically I trust, trust more than any wet ink signature legal contract or the registration of my name as a minority shareholder. In fact the registration is virtually worthless as majority shareholders can screw minorities any time they like. I will do a deal on the shake of a hand. This doesnt mean I havent been screwed before but at least you get screwed early. In Thailand the legal system is inherently destructive, unhelpful and rather depressing.