ECB added another $83 Billion in liquidity.

Japan and Australian Central banks adding $ for increased liquidity.

Merrill Lynch "Betting" on an emergency Fed cut in interest rates.

Countrywide and Washington Mutual talking mess.

SEC FINALLY checking the books of these bank to check for sub-prime mortgage exposure. (I think Bear Stearns is LYING through their teeth.)

Today is gonna be a fun day.

Well, you know I feel.

The Fed put in 28 billion yesterday and another 19 billion today - I think - so you know I'm just seething. If I could reach Bernanke right now I would slap him silly. But, its not an interest rate cut but repos that brought rates down temporarily. Hopefully, this BS ends soon and the stock market moves back to 12,500 where its supposed to be. These idiot traders that claim that the DJIA is only 15 or 16 times earnings probably need to pay more attention to earnings. The earnings aren't there, so the prices are wrong.

The ECB, Japan and Australia can afford to provide more liquidity, they aren't as highly leveraged as the US is - plus the euro and yen are trading better than the dollar - they can afford some deflation.

The SEC should've been doing this a long time ago. But american regulators are punks. They don't have the outlet that wall street and corporations have so they can't combat the propaganda that these groups spread. When regulators where pushing for more oversight on hedge funds - everyone screamed bloody murder. But now that these hedge funds screwed up they want to come back to the regulators and beg for assistance.

Are you saying you think Bear Stearns has more sub-prime based assets on its books??

.....
Are you saying you think Bear Stearns has more sub-prime based assets on its books??


Yes. I think they are in sub-prime up to their eyeballs. Their wholly owned subsidiaries were buying up sub-prime loans on the secondary market for 3 years. Then they started originating the same kind of loans.

Maybe they are telling the truth. But with the CEO headed of to China hat in hand- if they aren't sinking to announce that move is plan stupid in this environment.

I'm still trying to figure out how this got screwed up so bad. I mean the point of CDOs/MBSs is to mitigate prepayment risk. Which means you're bundling good loans. My thing is, if investment managers started bundling bad loans to generate fees to take advantage of an arbitrage transaction then they should face the music. Or if banks sold off bad loans to help reduce their capital requirements, then they should face the music. This is crap expecting the Fed to provide liquidity just to make sure millionaires keep taking risks on poor people just so they get richer and the poor people end up in greater debt.

Yes. I think they are in sub-prime up to their eyeballs. Their wholly owned subsidiaries were buying up sub-prime loans on the secondary market for 3 years. Then they started originating the same kind of loans.
Maybe they are telling the truth. But with the CEO headed of to China hat in hand- if they aren't sinking to announce that move is plan stupid in this environment.


*shrugs*

I dunno what Bear Stearns has on its books. But if they're lying then I'm sure everybody else is lying too. And I agree, running off to China to find a prospective joint-venture is definitely a bad thing in this environment and sends all of the wrong signals. But, Congress and Regulators are going to rip this apart - they were starving for this day and christmas came early.

I'm still trying to figure out how this got screwed up so bad. I mean the point of CDOs/MBSs is to mitigate prepayment risk. Which means you're bundling good loans. My thing is, if investment managers started bundling bad loans to generate fees to take advantage of an arbitrage transaction then they should face the music. Or if banks sold off bad loans to help reduce their capital requirements, then they should face the music. This is crap expecting the Fed to provide liquidity just to make sure millionaires keep taking risks on poor people just so they get richer and the poor people end up in greater debt.


It seems as though folks did not what watch what they were buying and started snapping up bonds to get in. I'm not savvy on this so excuse my ignorance.

The Fed just dropped in a second amount today -$16B.

It seems as though folks did not what watch what they were buying and started snapping up bonds to get in. I'm not savvy on this so excuse my ignorance.
The Fed just dropped in a second amount today -$16B.



I'm not either. At least not on the securities side or trading side. I'd say I have limited knowledge and I'm positive most traders would strongly disagree with me. Which may mainly be because they're trying to make money.

I would trace the problem back to George Bush's tax cuts. Which sparked this whole foolishness of flipping houses. Before if you flipped a house and made a substantial profit you would have to pay a huge capital gains tax. But, to encourage home ownership - because after Enron and WorldCom and 9/11, people were afraid of the stock market because the only asset people had faith in was their home - they (George Bush) lowered the capital gains tax. That's when people got into the real estate business like crazy. If you could borrow 1 million dollars and buy a house then sell that house for 2 million dollars - you became a millionaire overnight. It was fast and easy money. The problem was, the house isn't worth 2 million dollars. But somebody took out a loan for 2 million dollars to buy a house that was only worth 1 million dollars. This foolishness kept going and kept going. Then wall street picked up on this and started bundling a bunch of these inflated mortgages.

But then the tide came in. In the middle of flipping houses, interest rates rose because all of this flipping was causing inflation. And when interest rates rise, it becomes harder to borrow money, so you have a harder time trying to sell the house. Instead you have to hold the house until somebody can get enough credit to buy that house. Either that, you have to drop the price of the house. If you don't then you have to pay the mortgage when it comes due. Since you couldn't afford the house to begin with, when the mortgage came due - you defaulted. Which made the loan bad. Which also made the securities that were based on these loans bad. So now the only way to correct everything is to go back and figure out exactly how much those homes are really worth which is much less than the mortgage is. Which means that the banks paid 2 million dollars for something only worth 1 million dollars - in other words, they are 1 million dollars in the hole. That 1 million dollars they could've used to make good loans, but instead they made stupid loans based on inflated home prices.

Which is why buying a home during that period was/is a bad idea. The lowered capital gains tax also had ramifications for the stock and bond markets. They are doing the same thing, driving up prices for assets that aren't really worth the price. I'll say it all day long, the DJIA is not worth 13,000 or 14,000 - that is crazy. Just like a 3 bedroom 2 bath house in Los Angeles is not worth 1 million dollars. But because of the tax cuts people are earning a profit just by buying and selling, and of course the only way to do that is to keep the markets liquid. Which means dumping more money into the economy, which only drives prices up higher. Which is what traders and investment managers want. As long as the markets are liquid, they'll make money. And we'll suffer the consequences of inflated prices.

Please tell me Bahamians are paying attention to this credit crunch. It will definitely impact a nation that lives on debt. I think it will impact the Bahamas in a big way. But nobody's paying attention.