The Greenspan Depression?

nns1400

How serious it is depends on who you are and who you work for!

Overall, it is a totally expected "correction." My sister works for a big mortgage company that did not go bananas and give loans away; they will be affected but not seriously. She has told plenty of customers over the past decade that they could NOT afford the house they were trying to buy, and they would tell her fine, they would find someone else. And they did, they defaulted, and the companies left holding the bag have no one to blame but themselves. Greenspan did not force companies to abandon all previous credit standards. What one man spills another man gathers.

__________________
This stuff is just crap...Hitchy

Holocaust

Not even close to true. Everyone on the planet earth is effected by credit.

Countrywide Financial will be banckrupt by Thanksgiving. On Thursday they borrowed $11 BILLION at 11% annual interest. Chairman Angelo lied often and earnestly--just like Floyd Landis, Tyler, Jan Ulrich and Lance.

They have no way to make money from operations and their loan portfolio has lost BILLIONS. Put a fork in them.

More firms will layoff employees in mass. Just watch.

The global central bankers will keep lowering rates for the next year as they deal with the top and very secretive hedge funds along with their partners in crime; Citi, GE-Capital, BOA, JPM, CSFB, Barclays, Goldman, Merrill, HSBC to agree on a price the overdosed steroid loan hybrid products---like 30-35% of par. Unwinding the 4-1 leveraged junk paper will be one historic mess.

Like Lance cold turkey or Frank Vandenbrouke in rehab..

Only then will the credit market commence to function.

Until then, expect your sister to be sacked by Christmas. She has no mortgage business to process now--there is no mortgage credit market.

As Lance said; 'No gfts'.

Hein-Verbruggen

The US stock markets are presently being kept alive via trauma drugs (Fed repos, injections of free money) THe US Fed has dumped $120 BILLION in the past week alone. More coming along with rate cuts.

Look for the US dollar to depreciate unless a global truce (share the pain) can be brokered soon.

Overdosing on synthetic financial products always ends badly.

limerickman

Bernie - son of Greenspam - dropped what we refer to here in Europe as the interbank interest rate - in order to fund US financial institutions last Friday.

One would have to question the wisdom of the Fed providing funds - as it was the over provision of funds (through extremely low interest rates) which was the root cause of this crisis in the first place.
Bernie says he isn't Greenspam - but last Fridays lowering of the interbank rate is Greenspamism by any other description.

Bernie should take his lead from the men in Threadneddle Street.
The BoE said that they would extend funds to the institutions to tide them over their liquidity crisis - but because the institutions caused this problem in the first place - any funds given by BoE will be a penal interest rates.
As it should be.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

limerickman

FTSE trend :

http://www.ftse.com/Indices/FTSE_Al...ce_Analysis.jsp

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

Bernie cannot put Humpty Dumpty back together again, and he has only two tools in his financial box, money supply & trash talk.

Politics and lobbying for Big Banks, Big Brokers, their dirty Hedge Fund partners and 7 MIILION defaulting home loans will cause new steroids and welfare for Wall Street/Main Street.

Bernie will CUT the fed funds rate and he will lower the discount rate to equal the fed funds rate in order to free up massive new liquidity. This will not solve the permanent losses with CDO & CLO paper (aka: structured finance) but it will allow for Wall Street to do some LBO deals and get paid again.

The guilty will NOT be punished too much as Wall Street is far too clever for that. The problem is too spread out and legally disconnected from the source. A deal will be brokered, but Wall Street will keep most of its profit.

btw: Interest rate cuts DID not create CDO fraud, it only added velocity to the fraudulent sales volume. A wholesale lack of underwriting rules/standards, guidelines and ZERO regulation compliance permitted anyone with a pluse to receive a 'liar loan', refi or new home purchase. Wall Street jumped at this NEW EXPANDED markerplace and did what it always does, originated, repackaged, leveraged 4:1 and then resold to pension plans or investor w/o mark-to-market accounting rules and made BILLIONS in fees.

No market value, no problem until the payment resets upward. Mark to model.

During the next 12 months $1.2 TRILLION loan balances, USA mortgage payments will be resest up unless Bernie can fix them with super low rates (1-2%).

Dick Pound to the rescue.

limerickman

Hein - the freeing up of credit through the Fed's policy of very low interest rates in the past five years was the catalyst for the CDO debacle.
That was the catalyst.

Banks will always come up with new fangled ways of packaging their transations, in order to generate more business.
If Bernie and Greenspam had their act together - cheap credit would never have been a reality.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

Untrue Lim:

The catalyst was the creation of 'structure finance in MBA schools' and the wholesale abandonment of mortgage underwriting rules. (No Doc loans = liar loans) Interest rates were not key to allowing anyone with a pulse to be granted a refi or new home loan. Wall Street jumped on this new grander action via CDOs to transfer the risk to others, whilst collect fat fees.

The Big Banks got greedy, as usual, and lent money to their hedge fund partners to lever such insanity by 4:1 or more. Now we must unwind that financial doping.

w/o steroid-based structured products and waived off underwriting, credit, bu itself could NOT blow up a marketplace as Frank Vandenbouck did to his marriage.

In any case, easy money velocity (credit) is coming back very soon as we have $1.2 TRILLION in loans scheduled for resets from October thru next year.

Steroids work--that's why they are ubiquitous as are such panics.

limerickman

Untrue Hein mate.

The abandonment of mortgage rules is the result of the creation of cheap credit.
Not the other way around.

The creation of cheap credit made the market for mortgages more competitive and that's when the banks started to give mortgages to people who's ability (inability) to repay was manifest.
The policy of cheap credit (by the Fed) was the catalyst : Bernie and Greenspam create the environment and the banks adapted to that environment.
Sure the banks are culpable and sure the poor bastards who purchased over valued real estate are culpable too.
But a credit bubble only existed because the rate of interest set was so low
in the first place.

I don't think this crisis is over by a longshot.
Sure there was smidgen of good news which lifted equities on Friday : but the banks haven't told us the whole story.
I reckon that the full extent of this debacle won't unravel for some time.
In the meantime, the banks ain't telling us how much their losses are on these
financial instruments.
Those losses are unquantifiable as of now.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

Sorry Lim: (Which came first, the chicken or the egg?)

Underwriting rules (judgment) are paramount, not the market cost-of-capital.

If interest rates for mortgage loans were pegged at 25% per year--and underwriting rules suspended, (permitting 'No Documents' liar loans) then we would still be in the same place, albeit on a lower unit volume.

After the feds lower rates, yet again, refi's wll again be possible as well as home transactions (buy/sell) for those who have adequate income flows.

The folks who lied to get credit (rates were NOT relevant) will still NOT get credit in the lower interest rate environment. (rates can't fix all lies)

If banks colect origination fees based upon permitted lies, low rates do not matter--only ticket volume.

The losses are in the multiple TRILLIONS and will take 20 years to amortize.

Glad to be of service to you. This was how Lance & Jan became heroes--via mythology, not facts.

limerickman

Hein : this ain't a chicken/egg scenario.

There is no ambiguity.

If cheap credit wasn't the order of the day, we wouldn't have mortgages being issued to people who couldn't repay.





Hein - you wouldn't be in the same place.
If interest rates were maintained at realistic levels - and not deliberately slashed by the Fed - you'd have fewer people applying for/receiving capital from the lending institutions.
If interest rates were maintained at realistic levels - you wouldn't have financial institutions "securitising" loans using instruments like CDO's at the level that they were (when the rates were slashed).
If interest rates were maintained at realistic levels - you wouldn't have other institutions purchasing those instruments in the hope of recouping their face value, + a %.

House of cards, Hein.




Bernie/Greenspam is playing roulette : he's cutting rates to bail out US banks.

He should follow what the wisemen of Threadneddle Street are doing : give the banks their funds at 1-2% about the interbank rate.
The wisemen are making the banks pay for their mistakes.
They're letting the banks take the pain for their greed.
Bernie should do the same.





The rates were the relevant issue.
And they were the catalyst.
With rates plummeting, banks were fighting for market share.
In a market awash with liquidity, banks have to flog loans, to earn income, to get a return on their cash.

If the rates were higher, liquidity would be less, credit less free.
This elementary, grade school stuff.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

Lim:

No wonder you have such a tough time with Jan Ulrich or T-Mobile, preferring instead to scapegoat an elusive phantom. (evil global interest rates) A child could see that too.

Before Greenspan RAISED rates---CDOs were NOT a big problem. Actually, there was a terrific marketplace for trading them. Later--after the stock market bubble popping, Greenspan lowered rates---but it was the NO-DOC lending practices combined with Wall Street CDOs risk shifting that created long-term trouble in real estate land.

Sorry---it was the waiver of underwriting rules and the clever repackaging of junk loans into CDOs (collaterized debt obligations) which was, and still is, the root cause of tody's financial meltdown. Much of these dishonest products were doomed to fail at some point even if rates had remained low. A liar borrower is still a fraud, just as a TDF Champion running a Political Cancer fund is. Media cover up retards the disclosures, but eventually the truth comes out.

Interest rates INCREASE or DECREASE velocity. Exactly as cow blood and blood transfusions make Tour de France winners.

Low interest rates can speed up commerce like EPO, RSR-13 and blood packs, and high rates can set-off a Pantani-like stroke.

But those illegal doping methods are NOT the root cause---rather it is human greed and wholesale abandonment of traditional rules and ethics.

Keep you eyes on the ball--else you will be surprised every week.

Global rates will be cut. Should come as no surprise. There will be far fewer banks left in the global game (Barclay's already is gone) so competition is NOT a factor, if it ever was.

limerickman

Hein mate - stay on topic.
And speaking of being childish - you're one to talk.
You can't grasp even basic economics.




Finally - you acknowledge that it was low rates that was the catalyst.
I told you this earlier.




The root cause was the slashing of interest rates by the Fed in the early to mid part of this decade, to historically low levels.

Cheap money, led to loans being given to all and sundry.

In a competitive market, this led to credit being practically given away.
Banks had to fight for market share and in doing so, securitised those loans using various financial instruments such as CDO's.

CDO's are all very well if the CDO value is premised upon an asset which maintains it's value or is increasing in value (bubble).
But when the asset that the CDO is premised upon starts to fall (default/foreclosure), then the CDO losses it's value.

When people started to default on loans - because of the increase in interest rates in the US - the CDO's value started to erode.
Problem is no one can quantify how many CDO's are being held throughout the financial system.
Which means, Heuston, we have a problem.

Bernie's trying to bail out the lenders : the same lenders who caused the problem in the first place.





Interest rates were only increased by the Fed over the past 17 months, Hein.
Only when the interest rates increased - and people started to default and banks started to foreclose - did the CDO's begin to lose their value.

If proper stewardship of interest rate policy had been exercised by the Fed : there would be fewer dodgy loans, fewer defaults, few foreclosures and fewer CDO's backing depreciating assets.

Bernie's been left to try to cleanup after Mr.Greenspam.





The ECB (European Central Bank) have stated that they intend to maintain or increase interest rates at their next meeting in September.
Your own media reported this as well
http://edition.cnn.com/2007/BUSINES...dition_business

Suggest that you keep your eye on the ball.

__________________
.."But finally the last thing I’ll say to the people who don’t believe in cycling, the cynics and the sceptics. I'm sorry for you. I’m sorry that you can’t dream big. [I]I'm sorry you don't believe in miracles. You should believe in these athletes, and you should believe in these people. I'll be a fan of the Tour de France for as long as I live. And there are no secrets" - this is a hard sporting event and hard work wins it - Armstrong 2005 TDF
morelike hypocrisy.

Hein-Verbruggen

Lim:



financial fraud, cover stories, structured finance-CDO packaging, hedge funds/Big Bank partnering, central bank scapegoating, media myths, --all on topic here.

We're moving you closer to the light.

1) A corrupt chicken came first (underwiting rules were suspended). Interest rates were NOT connected to lying, liar lending, liar borrowing, waived off underwrting, risk dumping onto thrid parties, up-front fees booked as profit, loss loss accounting banking rules dodged.

2) Then the egg followed. Lower interest rates increased velocity of sales.

The problem was with issuing the junk paper in the first place, not the charging rent. (interest = rent)

Please stay on target.

This CDO fraud was NOT invented by Greenspan or his Federal reserves, rather the fraud invented in business schools and effected by Wall Street (the great used car sales broker/dealer network) But, mortgage regulators were corrupt too. There was no compliance on any level.

Slapping lipstick on a pig and selling it as a thoroughbred race horse. Wall Street will always steal as much money as possible at all times.

This deceptional sale remains a fraud at one Euro or 100,000 Euro. The level is irrelevent, the fraud is still at the core.