Financial Crisis

[midas]

Buffets making money already

http://www.smartcompany.com.au/financial-services-and-insurance/20110826-warren-buffett-takes-us5-billion-punt-on-bank-of-america.html?utm_source=SmartCompany&utm_campaign=ef35aee2de-Friday_26_August_20118_19_2011&utm_medium=email

Buffett may be but let's see how much money the average Joe investor makes on BAC?

maybe Buffett's investment will be no more than in and out

Market crash 'could hit within weeks', warn bankers

http://www.telegraph.co.uk/finance/financialcrisis/8721151/Market-crash-could-hit-within-weeks-warn-bankers.html

[lovetotravel]

Buffets making money already

http://www.smartcomp...tm_medium=email

Buffett may be but let's see how much money the average Joe investor makes on BAC?

What I read is he got preferred stock, paying 6% interest. Something the average investor can not get. Figures.

[12DrinkMore]

Buffets making money already

http://www.smartcomp...tm_medium=email

Buffett may be but let's see how much money the average Joe investor makes on BAC?

maybe Buffett's investment will be no more than in and out

Market crash 'could hit within weeks', warn bankers

http://www.telegraph...rn-bankers.html

I don't understand why the executive wanke_r is saying

"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.

I thought there was enough liquidity around to refloat the Titannic.

The current issue is solvency.

[Naam]

"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.

I thought there was enough liquidity around to refloat the Titannic.

The current issue is solvency.

both opinions are incorrect. interbank lending is indeed considerably lower than a few months ago. but not to the extent of 2008 when banks paid interest for cash far above fictive published interbank rates. most big banks are managing nicely because investors hold cash and pay zilch for cash held in major currencies such as USD, EUR, GBP and JPY because they can refinance at extremely low rates via their central banks. that proves that presently they have neither a liquidity nor a solvency problem.

[12DrinkMore]

"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.

I thought there was enough liquidity around to refloat the Titannic.

The current issue is solvency.

both opinions are incorrect. interbank lending is indeed considerably lower than a few months ago. but not to the extent of 2008 when banks paid interest for cash far above fictive published interbank rates. most big banks are managing nicely because investors hold cash and pay zilch for cash held in major currencies such as USD, EUR, GBP and JPY because they can refinance at extremely low rates via their central banks. that proves that presently they have neither a liquidity nor a solvency problem.

Oh!

I didn't realise that the solvency issues surrounding the PIGIS and the "Mark to Fantasy" bookkeeping standards the banks are currently employing had been solved.

The 70 odd FDIC failed banks this year mark an end to this episode?

http://www.fdic.gov/...d/banklist.html

And the wider ranging solvency issues of governments and their promises and obligations are no longer looming over us?

Aaaah!

Dawn is breaking over the horizon onto the green shoots, I must sell my Au and Ag, normal services are being resumed......

Hmm, maybe not.

I'll stick with current low risk preservation strategy.

I'm with Faber, "I don't trust anyone".

Edited August 26, 2011 by 12DrinkMore

[Naam]

I didn't realise that the solvency issues surrounding the PIGIS and the "Mark to Fantasy" bookkeeping standards the banks are currently employing had been solved.

The 70 odd FDIC failed banks this year mark an end to this episode?

we were discussing what the "senior bankster" in London said. there was no mentioning about sovereign PIGS or other sovereigns nor any shitty bank in the Greatest Nation on Earth™. if you want to bitch academically about off topic problems which are obvious but which we can't change you have my permission to do that with Midas.

my time is too valuable to waste, notwithstanding the fact that dinner will be served in 4 minutes.

:jap:

[12DrinkMore]

we were discussing what the "senior bankster" in London said. there was no mentioning about sovereign PIGS or other sovereigns nor any shitty bank in the Greatest Nation on Earth™. if you want to bitch academically about off topic problems which are obvious but which we can't change you have my permission to do that with Midas.

my time is too valuable to waste, notwithstanding the fact that dinner will be served in 4 minutes.

:jap:

We were both agreed that he was wrong on the liquidity front.

The insolvency bit came from me, which you initially disagreed with, but now seem to agree that it is the issue?

I wunsch Di aber trotzdem no' en Guete!

Edited August 26, 2011 by 12DrinkMore

[12DrinkMore]

Well, what is this?

Incredible. There is now too much cash floating around in the system with nowhere to go except into the banks and the banks don't want anymore.

Looks like Ben has been overly generous to his friends, unlimited free money from the Bernank is cheaper than accepting deposits from real customers. Oh dear, oh dear.

Ben is trashing that cash.

http://www.bloomberg.com/news/2011-08-26/u-s-banks-said-to-seek-relief-from-regulators-as-deposits-swell.html

U.S. regulators have asked some banks to take more deposits from large investors even if it's unprofitable, and lenders in return are seeking relief on insurance premiums and leverage ratios, according to six people with knowledge of the talks.Deposits are flooding into the biggest U.S. banks as customers seek shelter from Europe's debt crisis and falling stock prices. That forces lenders to raise capital for a growing balance sheet and saddles them with the higher deposit insurance payments. With short-term interest rates so low, it's hard for financial firms to reinvest the new money profitably

There is surely something seriously broken..

Ben needs to start mopping up all this mess he has created before another humongous bubble starts.

Money fer nuffin, wonder if he gets his chicks fer free?

Edited August 26, 2011 by 12DrinkMore

[ronz28]

If you were to mark the banks long term holdings of loans, mortgages, etc to market when there is a thin market with unrealistic prices due to market liquidity issues and then recognize an unrealized loss would you also allow the borrower to mark the the loan, mortgage, etc.to a fantasy market price and report a reduced liability and an unrealized gain?

Expected cash flows discounted where appropriate on specific loans that are impaired until an actual transaction occurs finally indicating a real gain or loss to be recognized is no fantasy. However mark to markets that are temporarily liquidity impaired, etc. produces unrealistic financial reporting that leads to death spirals in markets as temporary liquidity issues affect market prices for loans etc. and if that is allowed to become a part of a feedback loop in financial reporting by asset holders they would quickly become insolvent due to the death spiral in market prices... no one would ever make loans as hedge funds could attack any bank, etc. driving them into insolvency.

Most loans are repaid to banks, etc, or else collateral is taken and sold to repay most of the loan. The loans need not be sold prior to maturity unless the holder chooses to do so, therefore any temporary decline in market value of the loan should not be considered a solvency matter. To me, specific loans that are not being repaid are impaired and should be discounted, but the entire portfolio shouldn't be discounted for such conditions to fire sale prices because they are just temporary low market prices caused by overall market liquidity issues etc. and no loss or gain should is realized until a real transaction occurs disposing of the asset and actual prices are determined.

[12DrinkMore]

If you were to mark the banks long term holdings of loans, mortgages, etc to market when there is a thin market with unrealistic prices due to market liquidity issues and then recognize an unrealized loss would you also allow the borrower to mark the the loan, mortgage, etc.to a fantasy market price and report a reduced liability and an unrealized gain?

Naturally not, the debt taken out is fixed for the debtor.

The price of the underlying asset is subject to market prices. That is normally the risk that both the debtor and creditor take on, and should be priced into the interest payments and equity held by the debtor.

The "packaged price" of the debt if securitised and flogged on to some other sucker is also subject to market valuations.

So at what point, now several years down the line, will these assets finally be marked to the actual market value? There is no liquidity issue here, the banks are flooded with more free money than ever before. There is a solvency issue and an economic depression issue.

The assets were sold at an unrealistic level to unrealistic debtors.

However mark to markets that are temporarily liquidity impaired, etc. produces unrealistic financial reporting that leads to death spirals in markets as temporary liquidity issues affect market prices for loans etc.

I claim that the markets are not temporarily impaired, they are in for a long sideways movement at best. This should be reflected in the banks balance sheets, they were all very quick to take bonuses based on mark to market when the market was in a bubble. Now the bubble has burst and we are down to realistic levels.

and if that is allowed to become a part of a feedback loop in financial reporting by asset holders they would quickly become insolvent due to the death spiral in market prices... no one would ever make loans as hedge funds could attack any bank, etc. driving them into insolvency.

If the loans were made on a prudent basis there would be absolutely no issue. Imprudent loan sharks should be punished and put out of business, not propped up by the Bernank.

Most loans are repaid to banks, etc, or else collateral is taken and sold to repay most of the loan. The loans need not be sold prior to maturity unless the holder chooses to do so, therefore any temporary decline in market value of the loan should not be considered a solvency matter. To me, specific loans that are not being repaid are impaired and should be discounted, but the entire portfolio shouldn't be discounted for such conditions to fire sale prices because they are just temporary low market prices caused by overall market liquidity issues etc. and no loss or gain should is realized until a real transaction occurs disposing of the asset and actual prices are determined.

I think we are seeing the real transactions taking place as properties are being demolished in the States as the cost of maintaining them is higher than the cost of destroying them.

For me there is no excuse for the rampant predatory lending that has taken place over the last decade to send the populations of the western world into penury, allowing the banks to claim vastly overstated profits and dishing out massive bonuses to themselves. The bastards knew exactly what they were doing and carried on relentlessly.

The TBTF lot should be allowed to fail. The salaries and bonuses should be claimed back and the negligent put behind bars.

The world would be a better place and a big lesson handed out to the arrogant bankers for their excesses.

And I don't believe the economy would have ground to a halt. Humans are very resourceful and there would have been a solution, but not the current prolonged and never ending mess that has been inflicted on us by the BIG politicians and BIG wanke_rs.

[Jingthing]

Ben Bernanke -- SPOT ON!

Rick Perry, tea party flavor of the month, accusing Bernanke of treason, a dangerous demagogue.

Tea party no compromise, no tax nihilists -- take note, you have been spanked (if you possess basic read between the lines ability)!

http://www.washingtonpost.com/business/economy/bernanke-scolds-congress-over-budget-debate/2011/08/26/gIQAcxKFgJ_story.html

“The negotiations that took place over the summer disrupted financial markets and probably the economy, as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses.”

...

He also gave Congress and the Obama administration some specific advice on reining in debt: Cutting the deficit over the long run and continuing tax and spending policies that help the economy in the short run are not inconsistent

. Edited August 26, 2011 by Jingthing

[flying]

Ben Bernanke -- SPOT ON!

Puleeze

Take the spam & make a sandwich.

Dont fall off the soapbox on your way out

[gregb]

because they are just temporary low market prices caused by overall market liquidity issues

This is the problem right here with the belief system you have outlined above. This is what most of the financial world wants to believe, but I don't believe this represents reality, and many, many others share my opinion. For the financial community and various governments to simply ignore the large percentage of the population that finds this position ridiculous is the height of arrogance.

The man on the street doesn't have to be a financial genius to know the prevailing sentiment is that any recovery is a long, long way off, if it is even possible for it to ever return to previous levels. It is time to stop lying and admit that these properties are worth substantially less than they are recorded as being worth on the books. That is the only way this mess is ever going to start getting any better.

[Naam]

I wunsch Di aber trotzdem no' en Guete!

d'röschti ham nüt gschmeckt. too soft and soaked with fat

[BlackJack]

German Labor Minister says EU countries that want bailouts should collateralized their loans with gold. This was inspired by the example of Finland that insisted that Greece use gold as collateral. [This trend toward recognition of gold as the only reliable standard for measuring wealth will be fiercely resisted by advocates of fiat money, but the trend is gaining momentum.] Resource Investor 2011 Aug 24 (Cached)

[flying]

This trend toward recognition of gold as the only reliable standard for measuring wealth will be fiercely resisted by advocates of fiat money, but the trend is gaining momentum.

[12DrinkMore]

error

Edited August 27, 2011 by 12DrinkMore

[12DrinkMore]

More cash "Not Wanted Here",

http://online.wsj.com/article/SB10001424053111904787404576532404279110870.html

The resulting swelling of liquidity has effectively sent short-term interest rates into negative territory in the interbank market. For banks, this means holding Swiss franc cash deposits for other banks isn't worth their while.

UBS has in turn been flooded with Swiss-franc deposits from other banks that yield close to zero. When the cost of managing these accounts is taken into consideration, these deposits could be loss-making for UBS.

Edited August 27, 2011 by 12DrinkMore

[manarak]

I wunsch Di aber trotzdem no' en Guete!

d'röschti ham nüt gschmeckt. too soft and soaked with fat

you're not even Swiss, Naam!

[midas]

Ben Bernanke -- SPOT ON!

Rick Perry, tea party flavor of the month, accusing Bernanke of treason, a dangerous demagogue.

Tea party no compromise, no tax nihilists -- take note, you have been spanked (if you possess basic read between the lines ability)!

well he may have a point and he's not the only one who probably thinks that

Edited August 27, 2011 by midas

[Jingthing]

I meant that Perry is the dangerous demagogue.

[Naam]

I wunsch Di aber trotzdem no' en Guete!

d'röschti ham nüt gschmeckt. too soft and soaked with fat

you're not even Swiss, Naam!

wrong assumption! i have Swiss and German citizenship.

[manarak]

I wunsch Di aber trotzdem no' en Guete!

d'röschti ham nüt gschmeckt. too soft and soaked with fat

you're not even Swiss, Naam!

wrong assumption! i have Swiss and German citizenship.

do muess i mi abä entschuuldige!

[midas]

clearly in Ireland they haven't heard of this webpage :- http://www.youwalkaway.com/

Families in modern Ireland skip food to pay the mortgage

" The arrival of the second wave of the economic crisis, giving rise for the first time in many decades to the spectre of hunger, has caused shock across the country.The letter writer, who has chosen to use his dole payment to meet a €780 monthly repayment, told of how he had nothing to feed his children except bread and cereal."

http://www.independent.ie/national-news/families-in-modern-ireland-skip-food-to-pay-the-mortgage-2859883.html

[Naam]

clearly (to the best of my knowledge) you don't just walk away from your mortgage debt anywhere in Europe.

[manarak]

clearly (to the best of my knowledge) you don't just walk away from your mortgage debt anywhere in Europe.

You can apply for personal bankrupcy

[midas]

clearly (to the best of my knowledge) you don't just walk away from your mortgage debt anywhere in Europe.

You can apply for personal bankrupcy

hey you are correct manarak and there was a benefit to Ireland being a member of the EU after all

Ireland turns to bankruptcy tourism

Bankruptcy in Britain offers a way out for Irish entrepreneurs crushed by debt from heady property boom

" The fantasy of becoming a property millionaire did not last long and now the farm manager is in negative equity to the tune of €250,000 and with a glut of empty properties on the market, he has no hope of meeting monthly repayments from rent.Declaring himself bankrupt in Ireland is not a realistic option: bankrupts must wait 12 years before they are discharged from their debts. But under European Union law he can file for bankruptcy anywhere in Europe. If he relocates to London or Manchester he can be free of his debts within 12 months, courtesy of the "progressive" UK law."

http://www.guardian.co.uk/business/2011/feb/18/ireland-property-crash-bankruptcy-tourism

Edited August 28, 2011 by midas

[Naam]

personal bankruptcy did not exist in Germany until some years ago and in most countries of continental Europe it does not exist at all, e.g. in Switzerland bankruptcy is only possible for corporations.

moreoever, the conditions are quite stringent (i refer to Germany where your finances and commitments to pay your creditors partially are SEVEN YEARS under the jurisdiction of a bankruptcy judge). id est in no way comparable to those conditions of the Greatest Nation on Earth™ where you can walk away from a mortgage or declare selective bankruptcy on your Visa Card but keep your Master Card without being harrassed.

[12DrinkMore]

hey you are correct manarak and there was a benefit to Ireland being a member of the EU after all

Ireland turns to bankruptcy tourism

Bankruptcy in Britain offers a way out for Irish entrepreneurs crushed by debt from heady property boom

" The fantasy of becoming a property millionaire did not last long and now the farm manager is in negative equity to the tune of €250,000 and with a glut of empty properties on the market, he has no hope of meeting monthly repayments from rent.Declaring himself bankrupt in Ireland is not a realistic option: bankrupts must wait 12 years before they are discharged from their debts. But under European Union law he can file for bankruptcy anywhere in Europe. If he relocates to London or Manchester he can be free of his debts within 12 months, courtesy of the "progressive" UK law."

http://www.guardian....kruptcy-tourism

You missed the best bit.

He bought three houses as a buy-to-let sideline between 2004 and 2006. Although he earned a modest salary of €25,000 a year (less than £17,000 then), the banks gave him two mortgages of more than €300,000 and another one for more than €200,000 – a loan-book worth 32 times his salary.

No wonder Ireland's fuc_ked. "A buy-to-let SIDELINE"

And then later the guy muses,

my life will be a misery. Why should I do that for the banks, which to be honest, shouldn't have given me the mortgages in the first place – I only earn €25,000."

Well, yep, hindsight is really good, innit?

[midas]

hey you are correct manarak and there was a benefit to Ireland being a member of the EU after all

Ireland turns to bankruptcy tourism

Bankruptcy in Britain offers a way out for Irish entrepreneurs crushed by debt from heady property boom

" The fantasy of becoming a property millionaire did not last long and now the farm manager is in negative equity to the tune of €250,000 and with a glut of empty properties on the market, he has no hope of meeting monthly repayments from rent.Declaring himself bankrupt in Ireland is not a realistic option: bankrupts must wait 12 years before they are discharged from their debts. But under European Union law he can file for bankruptcy anywhere in Europe. If he relocates to London or Manchester he can be free of his debts within 12 months, courtesy of the "progressive" UK law."

http://www.guardian....kruptcy-tourism

You missed the best bit.

He bought three houses as a buy-to-let sideline between 2004 and 2006. Although he earned a modest salary of €25,000 a year (less than £17,000 then), the banks gave him two mortgages of more than €300,000 and another one for more than €200,000 – a loan-book worth 32 times his salary.

No wonder Ireland's fuc_ked. "A buy-to-let SIDELINE"

And then later the guy muses,

my life will be a misery. Why should I do that for the banks, which to be honest, shouldn't have given me the mortgages in the first place – I only earn €25,000."

Well, yep, hindsight is really good, innit?

did you know that Ireland still has debtors prisons? I was just trying to imagine a hypothetical scenario if it came down to

12D needing to choose between buying his favourite beer or paying the mortgage like a good Citizen Kane