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BurnBanke to the rescue???
just listened to Bernanke...
one of his plans is for BANKS to WRITEDOWN mortgage loans so the MORTGAGE BORROWER HAS "SOME EQUITY STAKE" IN HIS HOUSE...idea is so he won't BE SO QUICK TO DEFAULT...but Bernanke is suggesting that the BANKS "eat the loss" on the writedowns to achieve this ...
NOW THAT'S A PLAN THE BANKS (and other lenders) are just gonna love...
like my take on all this is:
THE BANKS ABSORB THE LOSSES for the real estate downturn...an added plus for the banks (and other lenders) they get to reduce the "interest rate" for the next few years... DON'T THINK THAT WILL HELP TOO MUCH WITH BANK EARNING GOING FORWARD...
guess that's why the DOW has gone negative...
course there is THE USUAL TRY TO "OBFUSCATE" THIS NEGATIVE IMPLICATION...IN A LOT OF "FED-SPEAK."
YEAH, I THINK THE "FINANCIAL SECTOR WILL BE HEADING LOWER SHORTLY!
ANYWAY, ALL OF THE ABOVE IS MY TAKE....
BUY BUY BANKS...if your still in denial...
flashrob
XLF
BAD NEWS FOR MANY WEAK BANKS including large investment banks...WHY...
1. BANKS make money by lending. Even with Fed support they refuse to lend except to the "most credit worthy." And those folks DON'T NEED THE MONEY.
2. BANKS are refusing to make MANY LOANS because THEY don't believe in a "quick recovery"...and don't wish TO WEAKEN THEIR BALANCE SHEETS with MORE LOANS...WHICH WILL GO SOUR IN THE "CONTINUING ECONOMIC DOWNTURN...
3. THE FED is starting to bypass banks BY MAKING CREDIT AVAILABLE like for student loans or private finance companies BYPASSING THE DEBT LADEN BANKS.
4. THIS MEANS NO INCOME FOR BANKS (IF THEY WON'T LEND, EVEN WITH FED BACKUP LOANS...THEY DON'T WANT TO INCUR MORE DEBT...)
CONCLUSION: MANY BANKS ARE TOAST as well as most of the "existing conventional FINANCE SECTOR...
THE STRONGEST (with the best balance sheets will gobble up the weak)...
THE DOLLAR WILL ALSO SLIDE AGAINST THE YEN (IN PARTICULAR...SAFE HAVEN CURRENCY OF CHOICE)...
because FED FINANCING of everything else and shouldering the "bailout" load without the cooperation of LARGE BANKS AND MOST OF THE FINANCIAL SECTOR...MEANS "PRINTING MONEY"...
THE FINANCIAL SECTOR WILL LARGELY TANK...
FLASHROB
Subprime, Alt-A Mortgage Performance Continues To Decline [Housing Tracker]
I have noticed that "much of the problem" for the financial institutions is:
1. Real-Estate writedowns sometimes as much as .10 cents on the dollar. This is in turn lowers the bank reserve rates ... resulting in severe financial distress for the institution.
2. This is all based on the "so-called marketable value" of the underlying "assets" (mortgage, etc.)
3. ...and WHO IS WILLING TO PAY "WHAT" ON THE WORLDWIDE MKTS.
4. Now, in our present circumstances THIS LINE OF THINKING IS CLEARLY WRONG!!!
5. My Solution: Screw the "so-called mkt value" of mortgages, cdo's, etc.
I don't know of ANY REAL ESTATE THAT HAS DROPPED MORE THAN 50% during the last few years ... SO WHY ARE BANKS BEING FORCED TO VALUE THEM in some cases at .10 cents on the dollar ... only because their are no BUYERS ON THE OPEN MKTS???
This is STUPID ... if I have a million dollar house (estimate 5 years ago) and IT'S NOW WORTH 500k ... and I could get 500k ...why then is the bank or banks that have traded the "my original mortgage rights" being forced to "asset value it" at 100k ... because NO ONE IN THE WORLD FINANCIAL PAPER MKTS WANTS TO BUY IT ...
SCREW 'EM ... THE VALUE SHOULD BE MAINTAINED ON THE BANK'S BOOKS AT 500K (it's actual marketable resale value) AND NOT 100K because EVERYBODY IN THE "PHONY FINANCIAL PAPER MKT" in a "ILL-LIQUIDITY FEAR PANIC!"
... just because "the only prospective buyers of my house in a given week" only OFFER ME 100K ...
screw 'em ... I'll just wait TO GET MY 500K PRICE ...
and since IT REALLY IS WORTH 500K ... I'LL GET IT ...maybe I just have to wait a few weeks ... TIL "SERIOUS BUYERS" COME IN...
bottom line: ALL BANK REAL-ESTATE MORTAGES SHOULD BE BASED AS ASSET VALUES more in line with their true worth ... like say 50% ... look at the mkt prices on housing that is being sold ... it's even "better than that in most cases!"
Screw the "panicky financial paper SHUFFLERS!"
WHAT ARE THESE "REAL ESTATE MORTGAGE ASSETS REALLY WORTH???
FLASHROB
Unemployment Rates: Understanding the Big Picture
the REALITY is these "unemployment statistics" are virtually MEANINGLESS...
example: you lose 100 "high-paid" brokerage jobs at 100k each...you gain 200 "low-paid" Walmart clerk jobs (20k jobs salaries)...AND THE STATISTICS INDICATE A 100% IMPROVEMENT in "gov employment statistics."
So, the bullspinners ARE TELLING YOU HOW EMPLOYMENT IS IMPROVING...
only in "numbers" NOT IN "AGGREGATE CONSUMER SPENDING"...
do the arithmetic and YOU WILL SEE that using the example above THAT EVEN IF JOB NUMBERS IMPROVE DRAMATICALLY...there would
STILL BE A "NET AGGREGATE "REDUCTION" IN POTENTIAL CONSUMER PURCHASING DOLLARS OF "6 million dollars." Millions less, that the consumer will be SPENDING AT MACY'S, TARGET, and on IPODS...
So, don't BE FOOLED BY NOW MEANINGLESS ECONOMIC STATS ON "EMPLOYMENT" and other BULLSPINNER DEVICES!
other ways the "gov statistics are MISLEADING" are indicated in the article below:
www.nytimes.com/2008/0...
flashrob
Housing and Financials: The Worst May Soon Be Over
Sears Faces Risk If Economy Doesn't Improve
IF THE CONSUMER goes down...who is GONNA SHOP AT SEARS or most retailers for that matter...
www.abiworld.org/AM/Te...
flashrob
Implications of the Slowing Global Economy
all those U.S. EXPORTS...that have been keeping U.S. domestic producers "weathering" the worldwide economic downturn...ARE ABOUT TO START SHRINKING...like real good for the U.S. stocks/producers - THE ONE BRIGHT SPOT in all the economic stuff is about to DIM...
and even "falling oil" ...not likely below 100...WON'T SAVE US!
so for U.S. stocks...FURTHER "DOWN" WE GO....
like how many more "cost-cutting&quo... measures like LAYOFFS have they got left ...to try to improve their balance sheets...
doesn't look good EVEN FOR THE NASDAQ TECH SECTOR...
and the WORST...the "FINANCIAL SECTOR" ...
well the only thing they got...is a LOT MORE WRITEDOWNS...
as Real Estate continues to slide...AND THE PROBLEM IS...with ALL THOSE DOMESTIC LAYOFFS in "high paying jobs"...there is LIMITED POTENTIAL for a Real Estate Recovery...like who IS GONNA BUY ALL THOSE HOUSES...
too many, good payin' jobs are being lost ...to sustain balance sheet cost cutting job layoffs...
THERE IS NOTHING BUT "MORE PAIN ON THE WAY!"
do to the greed of these idiots (big financials, etc.)
flashrob
XLF
TWO TYPES OF catastrophic LITIGATION ahead for many Banks/Financials...by MANY STATES and TWO TYPES (one for the losses suffered by INVESTORS...the second for losses suffered by Mortgage borrowers...)
well, CHEER FOR CITIBANK ...they're gonna GIVE BACK A LOT OF MONEY...
bringing OF COURSE PRESSURE on the ENTIRE REST OF THE BANKING SECTOR ...to follow suit...
how does that LOOK FOR FINANCIAL SECTOR...look "good" to you longs...DON'T LOOK GOOD TO ME...unless your OUT or SHORT...
WAIT 'TIL ALL THESE BANKS GET "SUED" BY STATE GOVERNMENTS ...even with Citi's planned "out of court settlement"...the state of their BALANCE SHEET is PILING UP LOSSES...yeah, the Fed will lend them money (with Interest)...but the DEBTS with interest...
just keep GETTING DEEPER! BE A "LONG" TIME BEFORE they PAY OFF THESE DEBTS...and MORE TO COME (as Real Estate continues DECLINE)...
so go long...OUR CULTURE IS FULL OF IDIOTS...most of them long the financials, seems to me...but go ahead buy longs...the "flush" is coming...
biz.yahoo.com/ap/08080......
flashrob
XLF
IS GOOD FOR THE OVERALL MKTS/SECTORS AND STOCKS...
with the EXCEPTION OF THE "FINANCIAL SECTOR"...
reason: LITIGATION BASED WRITEDOWNS like CITI's today ARE THE FUTURE OF MANY FINANCIALS...now that writedown was based on investors...
Connecticut is suing "Countrywide"... and planning to make them GIVE BACK to MORTGAGE HOLDERS...so there's TWO LITIGATION moves against MANY BANKS/FINANCIALS...
as I said...drop in oil is GOOD FOR MOST MKTS but NOT FINANCIALS...
also you might want to read my posts on POTENTIAL HEDGE FUND LONG POSITIONS that I suspect many financials EITHER FINANCED or SPECULATED IN...
meaning as the PRICE OF OIL and other commodities FALLS...(which is good for many other sectors/stocks/consume...
IT WILL NOT BE GOOD FOR FINANCIALS...as LONG HEDGE FUNDS TANK on COMMODITIES/OIL drops...
flashrob
Oil Approaching Bear Market Territory
I think there will be a "2nd wave" of losses due to
Hedge Fund Long related activity by many investment banks...either owning the positions or financing them...
current evaluations of banks and current estimates don't take into consideration the negative impact of the "rapid decline in oil/commodities (that I believe most financial entities were probably LONG in) and won't show up in financial's earnings 'til 3rd/4th qtrs...
I think you might want to cover this issue which could add further insight into the "true state of financials!"
I think lower oil/commodity prices help MOST stocks/consumers...but I think the LOWER oil goes the more the financials will go down due to hedge fund related activity...not to mention continuing declines in Real Estate.
bob g. (flashrob@dimestop.com...
Probe of Citigroup et al Could Hit Financial ETFs
Everyone probably has a "vested interest" in promoting their take on the outlook for mkts, sectors, or stocks.
However, because they may/may not have a VESTED INTEREST...DOES "NOT NEGATE" their REASONING!
in reality...being short or long on something...indicates.... PUT YOUR MONEY WHERE YOUR MOUTH IS.
My take...
how, can you be LONG the "financials" when the FUNDAMENTALS keep getting worse "day-by-day" ...week-by-week" etc.
SHORTS have BACKUP OF FUNDAMENTAL DATA...
...and their "short" because that's the PROBABILITY OF MAKING A RETURN ON YOUR INVESTMENT.
I LISTEN TO "all news, etc." AND TAKE A POSITION ...BASED ON "PROBABILITIES&qu... of a sector, stock, etc.
whether, someone has or doesn't have a "so-called vested interest" GOES WITH THE news, analysis, etc.
Who, convinces me...is the WAY...and WHAT SIDE I INVEST ON!
short financials: all the fundamentals, news, statistics...STRONG CASE...
long financials: CHEERLEADING MOSTLY...no facts or logic to support their position...
suspect many LONGS are "shills" for "big boy investors" who like Lewis in the case of Bear Sterns...AFTER THEY TOOK A TERRIBLE LOSS as Bear Sterns kept declining over time...tried desperately to STAVE OFF "FURTHER LOSSES as Bear Sterns went down to like $2.
Looks, to me like "evidence" is for WORSE NEWS for "many large financials" and they will GO THE WAY OF BEAR STERNS...
screwing their investors...despite last minute help from the Gov to prop their prices, and rally the financials...but based on what...
the gov will let you survive...even the Gov will stop support when IT REALIZES THIS price prop spin WILL FAIL...
AND THE GOV WILL "TAKE OVER" MANY FINANCIALS or engineer Bear Sterns type buyouts...
geez, the Treasury is putting itself in position to "buy your stock!"
Hooray! ...you say...until you realize... they are not doing that to Prop your stock, or drive it up in an "unjustified by the fundamentals" rally...
...they know in the end, that when prop fails...THEY WILL BE BUYING YOU particulary FNM, FRE...FOR "PENNIES ON THE DOLLAR!"
think about it...if your a "weak" big financial YOU'LL GO THE "BEAR STERNS "precedent!"
FNN, FRE...another gov bureaucracy...
but...you the "common shareholder" in these entities...
ARE AT THE "BOTTOM OF THE TOTEM POLE" for "pennies on the dollar" (if that)...bondholders, preferred securities...
get paid out of "what's left over" in liquidation...the future for many of you...
Financials have not reached "bottom" ...the Gov just keeps lowering it...that's all.
Most Financials are like the "former great city of New Orleans!"
...was always REBUILT "bigger and better" after each calamity...in the twentieth century...BUT NOT THIS TIME!
just "small portions" mostly Gov related...
so you still have a GS financial...small portion probable survivor...but MANY...will like
New Orleans..."NEVER RECOVER!"
your money longs... gonna go down with a "Lewis" ala "Bear Sterns" or put your money in something more LIKELY to Recover....
flashrob
On a Disastrous Jobs Number, Recession is Obvious
www.nytimes.com/2008/0...
FLASHROB
U.S. Bank Franchises Could Be Damaged
biz.yahoo.com/ap/08073...
flashrob
On a Disastrous Jobs Number, Recession is Obvious
Now here's my BEEF!
During stable economic periods, job statistics from private or government sources have, in my opinion some validity. However, with high-paying job losses going overseas due to WTO/Nafta - e.g. lots of IT to India - and domestic massive job layoffs in the brokerage sector, etc...
Kind of see my point. We no longer have a "stable economic period." So, it is my contention that most "unemployment/job... number statistics ARE VERY, AND PURPOSEFULLY MISLEADING. Consider the following example:
Citibank lays off 100 brokers at 100k each annual salary...net loss 10,000,000 dollars in Consumer Purchasing Power at Target, etc...
Walmart/McDonalds HIRES 200 clerks at 20k each annual salary...net gain 4,000,000 dollars in Consumer Purchasing Power at Target, etc...
The spin: jobs WENT UP 100%
The reality: "Real Aggregate Consumer Purchasing Power" went down OVER 50%! (6,000,000 dollars)
So you see that's how "bull-spin-doctor... make IT LOOK GOOD ...when in Reality...ITS GETTING WORSE!
Government UNEMPLOYMENT numbers are virtually worthless...JOB SALARY (X) EMPLOYEES (gain/loss) = Real gain/loss in Comsumer Purchasing Power...THIS IS "what they should be telling us".
so this is WHAT WE NEED FROM THE GOV... numbers THAT ACCURATELY REFLECT THE "REAL SITUATION!"
I mean, how is one expected to evaluate mkt data for investing, if you, or other investors are getting MISLEADING NUMBERS, and making "investment decisions" based on THAT MISLEADING DATA!
Given the current shaky climate, isn't it time to demand the gov's numbers really indicate something!!!
flashrob
Housing: No Bottom Yet in Sight
the Reality Estate cycle! 10 minutes ago
past Real Estate Cycles up/down/up/down current...had a "stable and growing high-paying job-base to support a recovery and return to an UP cycle.
what's different "this time," is that due to WTO/Nafta agreements, it is now difficult to maintain that high-paying job base here.
we were promised that "mainly mfr" jobs would go to places like China...however, in reality WE ARE ALSO LOSING HIGH-PAYING JOBS to, for example in the case of IT, to a "3rd world country" like India. You don't have to live in the U.S. to program over the "Inter-Network!&q...
the other large sector of our recovery could be based on "illegals" ...but unless Real Estate tanks another 50% or so...they can't afford to buy either...WHO IS GONNA BUY THE RECOVERY?
there's more...but have to keep short or server won't let post thru...
flashrob