What the !@#$ Just Happened Here?

[Magox]

Nancy Pelosi and Harry Reid?

way before those two bafoons, Jimmy Carter and Bill Clinton. Remember the Community Reinvestment Act?

[Adam]

I'm glad you found the sense in what he was saying, which was essentially: if you provide assistance to people who really don't want it, they'll get back on their feet in no time and make themselves self-sustainable, but when you provide assistance to the people who are clueless, you'll find out quickly how little they care about being self-sufficient when the government has a bunch of cash to give them with no accountability.

 

By God, I think you're becoming a conservative.

There is a little bit of conservative and a little bit of liberal in all of us- it just depends on each person, which issues push their buttons. Both sides have valid points and need to be more willing to debate......it is the extreme right and left wingers- mostly on talk radio and the talking heads on tv that drive me up a wall.

 

What do you think about the topic I brought up yesterday (I assume people thought I was being sarcastic and ignored it). What do you think would be the positives and negatives about moving the military from government control to the private sector? Is it feasible? Is it nonsense?

[Kelly the Dog]

Uh...yeah. Low-income home ownership, maybe? Who do you think created the market that allowed so many people to finance houses?

We have been through this before here, and I am one who blames everyone equally, the public and the government and wall street and mortgage companies, the democrats and republicans, the congress and senate, recent and older administrations, the poor and the middle class and the rich. One could make arguments for all of them being the worst of the lot. I place equal blame on everyone.

 

But, I don't think that putting people in houses they can not afford, passing the buck onto other people and companies and businesses and countries because you knew you wouldnt hold the loan long, putting through loans without doing any background checks, etc, giving everyone outlandish credit and then charging outlandish rates and trying as many ways as possible to trick people is helping people. No. That's how they got into the mess, in my opinion.

[GG]

But, I don't think that putting people in houses they can not afford, passing the buck onto other people and companies and businesses and countries because you knew you wouldnt hold the loan long, putting through loans without doing any background checks, etc, giving everyone outlandish credit and then charging outlandish rates and trying as many ways as possible to trick people is helping people. No. That's how they got into the mess, in my opinion.

 

Nope. That's just a part of the house of cards. Everyone had a stake for the game to continue. It was the proverbial free lunch for every single participant. Wall Street did what it does best, make money. But it wouldn't have gone nearly as far if it didn't have eager accomplices and cheerleaders all over the world.

[GG]

I remember clearly that many consumers and institutional money market investors began moving funds out of regular money market funds into Treasuries. There was a tremendous fear that there was going to be runs on all sorts of major banks at that time.

 

The TARP funds for the banking industry more than anything was for two major reasons, one so that they could absorb major losses of the assets that they had on their balance sheet, and two, so that they would have more capital, which in turn would give them added confidence to lend more.

 

All though you make a good argument, I don't believe it was TARP that was the major stabilizing force, I believe it was more attributed to the expansion of the Federal reserve's balance sheet, who at the end of the day was the buyer and lender of last resort.

 

So, I don't buy into the fear that was sold to us by the Bush and Obama administration that we had to do this or else the world would of fell apart...

 

How quickly people forget the end of times. Basically if Fed & Treasury didn't step in aggressively, more financials would have been toast as many wouldn't be able to meet near term debt maturities and markets would have collapsed. Fed providing liquidity to the CP market was a help, but that was secondary to ensure that there were still banks that could issue CP.

[Dwight Drane]

When the government can launder $2 trillion through AIG counterparty OCDs, the select few that own 70% of them tend to get better in a hurry.

 

Besides the dollar getting diced, be prepared for round 2 or the real estate crash over the next 6-9 months. The housing numbers have been inflated through foreclosure blocks getting swapped, and a disproportionate amount of sales are to $8,000 tax credit users. Commercial is about to get jacked in certain areas. If you are sitting on a few spare dollars and want to own a strip mall, nursing home, or office building...keep your eyes open.

 

Also, let me explain mark to market.........mark to market was the torch the government always used as a standard to chase the boogey-men broker-dealers around. In order to "protect" the common investor from bad securities, and prevent institutions from becoming overleveraged, they force you to value the asset at "prevailing" market prices. Now the government would make cutsie little rules like....if a security didn't trade for a certain period of time, it was worthless. Or if a security traded at par but was rated below investment grade, it was worthless. This meant that the value of holding these securities was transfered as a liability to the institution.

 

My personal favorite.....and why I am no longer part of the "system", is a time where we purchased a block of bonds for say $10,000. They were paying interest well and above market rate and were not rated. We sold the bonds to clients for $13,000. The bonds eventually paid out at $20,000 and clients earned above market interest the whole time.

 

Sounds good to me...right? Buy a bond...hold it a few years with a great rate and then cash in for twice you cash? Well, the government didn't think it was great. We knew these bonds were fine but since they were nonrated they were worth crap in the government's eyes. This cost us to hold the bonds. We sold them to select clients as a treat. Problem is.....we were only allowed to make 5% commission. Now that might make sense when you are trading treasuries or operating a mutual fund...but not when you take the risk of buying something for 50% market value. Long story short......we go private to get the government off our back. Not for losing anyone any money, but for doubling their investment.

 

NOW!!!.......since the shoe is on the other foot and all the pretty places that the government needs to support are holding REAL trash.....they lift mark to market. What people need to understand is that it is just a game. All this does is allow Goldman and JP Morgan to run up oil again and for these same places to chase the prices of banks up high enough to issue huge secondary offerings. This is all smoke and mirrors. It is almost over with though. You are seeing a revolution slowly taking place. In the marketplace through interest rate dislocation....and VERY soon in the metals pits. Not to mention a few million patriots waiting on the sidelines if the bad guys manage to somehow squeak control of the country.

 

Enjoy.

 

PS.....anyone have a 1985 Bronco I can give you $1500 for so I can trade it in and pocket $4500??? Another government masterpiece. Wait until crime rates in the inner cities fly because their cars suddenly have value and get stolen left and right.

[Kelly the Dog]

Nope. That's just a part of the house of cards. Everyone had a stake for the game to continue. It was the proverbial free lunch for every single participant. Wall Street did what it does best, make money. But it wouldn't have gone nearly as far if it didn't have eager accomplices and cheerleaders all over the world.

Which is why I put as much blame on the public and the poor and the middle class and politicians as I do big business and said so explicitly.

[bills_fan]

Ummm, MS does the oil. GS and JPM try, but tend to get schooled by MS.

[DC Tom]

When the government can launder $2 trillion through AIG counterparty OCDs, the select few that own 70% of them tend to get better in a hurry.

 

Besides the dollar getting diced, be prepared for round 2 or the real estate crash over the next 6-9 months. The housing numbers have been inflated through foreclosure blocks getting swapped, and a disproportionate amount of sales are to $8,000 tax credit users. Commercial is about to get jacked in certain areas. If you are sitting on a few spare dollars and want to own a strip mall, nursing home, or office building...keep your eyes open.

 

Also, let me explain mark to market.........mark to market was the torch the government always used as a standard to chase the boogey-men broker-dealers around. In order to "protect" the common investor from bad securities, and prevent institutions from becoming overleveraged, they force you to value the asset at "prevailing" market prices. Now the government would make cutsie little rules like....if a security didn't trade for a certain period of time, it was worthless. Or if a security traded at par but was rated below investment grade, it was worthless. This meant that the value of holding these securities was transfered as a liability to the institution.

 

My personal favorite.....and why I am no longer part of the "system", is a time where we purchased a block of bonds for say $10,000. They were paying interest well and above market rate and were not rated. We sold the bonds to clients for $13,000. The bonds eventually paid out at $20,000 and clients earned above market interest the whole time.

 

Sounds good to me...right? Buy a bond...hold it a few years with a great rate and then cash in for twice you cash? Well, the government didn't think it was great. We knew these bonds were fine but since they were nonrated they were worth crap in the government's eyes. This cost us to hold the bonds. We sold them to select clients as a treat. Problem is.....we were only allowed to make 5% commission. Now that might make sense when you are trading treasuries or operating a mutual fund...but not when you take the risk of buying something for 50% market value. Long story short......we go private to get the government off our back. Not for losing anyone any money, but for doubling their investment.

 

NOW!!!.......since the shoe is on the other foot and all the pretty places that the government needs to support are holding REAL trash.....they lift mark to market. What people need to understand is that it is just a game. All this does is allow Goldman and JP Morgan to run up oil again and for these same places to chase the prices of banks up high enough to issue huge secondary offerings. This is all smoke and mirrors. It is almost over with though. You are seeing a revolution slowly taking place. In the marketplace through interest rate dislocation....and VERY soon in the metals pits. Not to mention a few million patriots waiting on the sidelines if the bad guys manage to somehow squeak control of the country.

 

Enjoy.

 

PS.....anyone have a 1985 Bronco I can give you $1500 for so I can trade it in and pocket $4500??? Another government masterpiece. Wait until crime rates in the inner cities fly because their cars suddenly have value and get stolen left and right.

 

Thanks for letting us know commercial real estate is on the verge of collapse...three months late. And that mark-to-market explanation - we've all heard the term over the past several years, but never knew what it meant until you enlightened us.

 

You are the most amazing combination of totally clueless and friggin' master of the obvious.

[Chef Jim]

Citibank and BofA and Lehman Bros, etc, got into this mess by helping us too much?

 

I said I knew it was tough. But really, you're not trying.

[Dwight Drane]

Thanks for letting us know commercial real estate is on the verge of collapse...three months late. And that mark-to-market explanation - we've all heard the term over the past several years, but never knew what it meant until you enlightened us.

 

You are the most amazing combination of totally clueless and friggin' master of the obvious.

 

Tommy can you hear me?

[Dwight Drane]

Ummm, MS does the oil. GS and JPM try, but tend to get schooled by MS.

 

But they all piled in to keep things solvent, and the money from the feds came through the first two. There was plenty of TARP before TARP.

[GG]

Thanks for letting us know commercial real estate is on the verge of collapse...three months late. And that mark-to-market explanation - we've all heard the term over the past several years, but never knew what it meant until you enlightened us.

 

You are the most amazing combination of totally clueless and friggin' master of the obvious.

 

Three months late?

 

Never mind that he was defending mark to market in one of the many prognostications as the true measure of a security's worth.

[blzrul]

Well we're getting $1.9b interest back in addition to the principal. Not great but...better than pissing it down a black hole like, ahem, a phony war.

[DC Tom]

Three months late?

 

As in "three months after it's already started"? Could be more; three months is just roughly when I remember GGP starting to talk bankruptcy.

 

Never mind that he was defending mark to market in one of the many prognostications as the true measure of a security's worth.

 

It's the trick to being a prophet. Most people weight correct predictions about ten times more than they do incorrect ones...so if you take both sides of a prediction, you'll look credible.

[GG]

Which is why I put as much blame on the public and the poor and the middle class and politicians as I do big business and said so explicitly.

 

Then why the paragraph on how the evil bankers are the ones who got the people in the mess? Plus, much of the list of your described evils wasn't conducted by the big banks, but by the guys in the neighborhoods and the local community organizers.

[Max Fischer]

What the !@#$??

 

Ok, we give them money because if we don't the economy is going in the shiitter. Then six months later they give it back. Ok did they need it or not and how much money did we make on the transaction and when can I expect my check.

 

Oh My God. You mean the plan is actually working? We can't have that. Bring back government that doesn't work.

[Dwight Drane]

Three months late?

 

Never mind that he was defending mark to market in one of the many prognostications as the true measure of a security's worth.

 

There is a difference in marking a security THAT TRADES AT PAR to ZERO over marking a mortgage that was made for $500,000 on a property that is now selling (if you are lucky to find a buyer) for $150,000.

 

There are buyers at par in the first case.

 

In the second case there are buyers at 30% of securitization.

 

 

Although I guess that point was obvious to Tom.

[Dwight Drane]

As in "three months after it's already started"? Could be more; three months is just roughly when I remember GGP starting to talk bankruptcy.

 

 

 

It's the trick to being a prophet. Most people weight correct predictions about ten times more than they do incorrect ones...so if you take both sides of a prediction, you'll look credible.

 

 

The only person calling me a prophet is yourself and Adams.

 

You should have sold those puts....you'd be up 60%.

[GG]

There is a difference in marking a security THAT TRADES AT PAR to ZERO over marking a mortgage that was made for $500,000 on a property that is now selling (if you are lucky to find a buyer) for $150,000.

 

There are buyers at par in the first case.

 

In the second case there are buyers at 30% of securitization.

 

Thanks for reaffirming that you haven't a clue on anything other that what you've been taught to rotely trade. Maybe someday someone will explain to you how bank capital works.