Banks Face "Systemic Margin Call," $325 Billion Hit: JPM

[Purveyor]

Source: Reuters

NEW YORK (Reuters) - Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), said in a report late on Friday.

JPMorgan, which sent a default notice to Thornburg Mortgage Inc. (TMA.N: Quote, Profile, Research) after the lender missed a $28 million margin call, said more default notices and margin calls were likely. The Carlyle Group's mortgage fund also failed to meet $37 million in margin calls this week.

"A systemic credit crunch is underway, driven primarily by bank writedowns for subprime mortgages," according to the report co-authored by analyst Christopher Flanagan. "We would characterize this situation as a systemic margin call."

The credit crisis that began about a year ago will likely intensify after Friday's weak February U.S. employment report "that most definitely signals recession," JPMorgan said.

--
The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since mid-2006, JPMorgan said.



Read more: http://www.reuters.com/article/bondsNews/idUSN0832645120080308

[hatrack]

1. Whoops!

I guess it really is different this time.

:eyes:

[LeftHander]

59. But we still got torture!!

Cha cha!

[Vincardog]

2. So the house of cards built upon the GOP's ponzi scheme is unraveling on their watch? HA HA

[Cassandra]

3. And all that fabulous growth in the...

supply-side economy was just a credit-fueled illusion.

[Warpy]

6. People bought it, too

Hey, there they sit in their big houses the bank owns 90% of, watching sports on the plasma TV they charged and haven't begun to pay off, 2 new SUVs in the driveway owned by another finance company, relaxing on down time at a job that requires an education they're still paying off, contemplating a dinner out or order in that they'll charge.

These people are DESTITUTE but while the house of cards is still standing they can kid themselves that they're middle class.

[Ghost Dog]

12. Nicely put there, Warpy.

There's going to be one hell of a (for real, this time) domino effect affecting lots of otherwise financially sound individuals and institutions as well, I fear.

:-(

[Karenina]

18. What about that 405T "notational value"

of the "derivatives" market? People were cheering Carlyle's "default" but they did that for a REASON. 150 mil is CHUMP CHANGE.
They started off with 22 which got leveraged to 300? Why throw good money afetr bad? We already KNOW who will take the hit.

[2Design]

31. unfortunately when it unfolds it will be on a democratic watch - just like carter

after reagan's policies bankrupt the country

[FarCenter]

39. Actually Carter followed Johnson, Nixon, and Ford

And was followed by Reagan.

But it was the same deal -- they thought that they could afford "guns and butter" back then too.

[Warpy]

42. Carter was stuck with the fallout after Nixon and Ford both

failed to deal with OPEC in order to protect oil's windfall profits.

Carter started the Strategic Oil Reserve and broke OPEC, got their prices down for the next two decades.

He's never given credit for that.

Then Reagan came in and fucked everything up.

[ooglymoogly]

76. And had to deal with 22% interest rates left by the pugs which nearly killed his support.

and effectiveness. Then along came posture perfect and pulled the same scam and called it trickldown and the people bought it, even though it was just warmed over shit from previous ruthless pugs.

[Generic Brad]

87. The Republicans had a different name for those 22% interest rates

They called them Carter's "malaise". Even when I was a kid I knew he had inherited a mess.

[wordpix]

129. well at least we have the net to remind everyone where tall this mess came from

[PassingFair]

75. I'm beginning to worry that they will be propped up...

and that people like us will be paying for it.

[Viva_La_Revolution]

78. And I just painted their whole interior...

She's trained as a decorator (and her home showed it, absolutely beautiful) but was working for a luxury home builder who laid her off in January due to decreased sales. He's getting transfered to Texas (don't know what he does, but he slipped me $100 bill when we finished the job.) They are in Texas now for the weekend (house shopping) and we were repainting a neutral shade so the 'old' place would sell faster.

They are completely clueless to what is coming down the pipe. I almost feel bad... I kinda liked her. :(

[CoffeeCat]

90. Good job of laying it all out Warpy...

I live in the suburbs, and I can't even imagine the number of people around me who
are in this situation. The numbers must be staggering.

Many of these middle- and upper-income people will lose their homes and be living in their parent's
basement or in apartments, and starting their lives over. These people surely wont' be propping up
our economy by buying vacations, granite counter tops, riding lawn mowers, furniture, etc. It's going
to be bare-bones living for these people--who used to spend like drunken sailors.

The ones who don't lose their homes are maxed out on those credit cards. They won't be spending either.
They can't get home-equity loans either because of the credit crunch. A recent article announced that
one in ten homeowners has ZERO equity.

The spending will stop, because, as you said, it was propped up on plastic.

We're all ready in a recession and our economy hasn't even felt 10 percent of the home-mortgage pain.
What's coming down the pike is unknown, but it's not good and I see us close to Depression-like circumstances.

[melody]

97. Who are "these people"? My house is paid for, I have one hybrid that's also paid for

My education is paid for, I work for myself, and I don't charge anything. I don't have a "plasma" anything.
My 32" TV is paid for (and so is the green plug system it's plugged into).

Who are all these mythical Americans I keep reading about in the international press? I don't know any of
them. Everyone I know is struggling.

[kineneb]

113. already happened to tech industry workers 2000-2003

Many never recovered from the DotCom bust, and their jobs have since been outsourced.

For us, one name:WorldCom

...had to sell house, move, (spend down all cash assets to get medical care), declare bankruptcy... and learn to live on about $15K/year.

At least the house is paid off; our only debt is for the one-time equity loan to finish the out-buildings (mortgage+insurance+taxes= ~$300)

[truedelphi]

119. And boy, is it hard to feel sorry for them

They are the ones who scoffed at you and me when we went out in last year's duds - while their brand new ones razzle dazzled - never mind that like you say, they didn't even own those outfits!

[formercia]

13. Junior was trying to keep it propped-up with infusions of money

and ended up screwing Carlyle because they were going short and predicting the market would fall more than it did. If he had left the market alone, they would have made a killing, instead, they failed to meet their margin calls and may have to completely unwind their portfolio.

Bush redux, wrecking the family business. Poppy must be proud.

[H8fascistcons]

23. Vincardog: Yeah But......

I agree it's unraveling on their watch but I fear the Dem's are so inept, somehow they will let the republicans off the hook and we will end up taking the blame instead....


Never forget that the criminal Fascist enablers Nanci Pelosi, Harry Reed, Rahm Emanuel, Jay Rockefeller, Steny Hoyer continue to let the Bush crime family commit crimes and destroy our constitution. Never forget until they are all voted out of office.....Thanks

[Up2Late]

27. Fascist enablers Nanci Pelosi, Harry Reed...? NO, they are not the problem...

...it's the Senate Republic Party Fascist enablers and the people who are still voting for them who are the problem. Until we get 61 Democratic Votes in the Senate (and I'm not counting that turn-coat Lieberman) before we can fix any of this crap.:mad:

[pattmarty]

28. WHAT WE NEED is 49 more Senators like.........

....... Bernie Sanders and 434? more Congressmen like Dennis Kucinich. Then we can talk about an America that even some of these right wing wackos can love and appreciate.

[depakid]

64. Reid is one of those who need replacing

Not only has he proven to be the WORST Senate leader in my lifetime (based on his abysmal record) - but the guy actually crosses over to vote with the far right at times- as he did with the Bankruptcy Bill.

If I were a Nevadan, I might consider doing the unthinkable just to get rid of him. He hurts the party much more by his presence than a Republican would in his place.

That goes for about 8-9 others. The usual suspects we see every time the Dems cave. Until THAT is dealt with, no real progress will be made.

[Viva_La_Revolution]

80. Hey! We were just talkin' about you the other day...

How ya been? :hug:

[H8fascistcons]

108. O.K. But...

You are certainly entitled to your opinion but I completely disagree, they took an oath to uphold the constitution, period. They do not get to pick and choose which crimes against our constitution to ignore.

[pretzel4gore]

60. is it possible they're hoping to maintain order, hoping for time?

we all chatter how bad things are, but then we expect the dems to act as if... if things ok, but maybe we're right, and maybe the dems feel a revolution, which would occur if the wheels fell off bush's crap maker (it takes gold and incense and myhrr etc and makes crap outta them) if the truth became widely known...the dems think a revolution could result in chaos, with too many innocent people murdered etc, so they're trying to affect regime change meanwhile (and bush inc has them over the barrel due to the dem's public interest concern)?

[wordpix]

131. don't call Nancy a fascist---she just filed a civil suit over Mukasey's refusal to hold BushCo

responsible for the firings of the state attorneys. Specifically, over Harriet Meirs and Gonzo refusing to testify before Congress when asked to come to the Hill.

[pretzel4gore]

58. for years now it's as if the financial news was being spiked!

i have this tic tac toe theory, that requires no esoterica understanding, or hocus pocus as it was once called. It's this:
a) the rightwing know they are doomed by numbers, so back in nixon era they begin to plot against the working of democracy, of government...
b) despite everything, a sorta native wisdom exists, which, if it ever alerted, would destroy the entire rich/power class in a twinkle :)...this wisdom is best shown by Clinton's popularity, though the pigmedia spends billions demonising him- this is the last straw!
c) the bushevik insiders decide now or never: they stage the fake 2000 election, pretend there's a vote tie yada yada, with result junyer put into power (and this thanks to vast rightwing conspiracy in the national newsmedia, which carefully eases the takeover of power that took place)
d) 911! This was the bush nazis telling the gop/rightwinger/mediawhores there no going back- bush will survive despite anything he does, and the msmeadia knows that they're dead men if bush ever nailed, which cause them to lie constantly, to mislead the people etc, iow the 'alice in wonderland' quality to what we see, which keeps bush going, despite national loathing for him.....
> this theory then invokes the 'samson' option, which the pig has taken. The 'samson' option was white south africa's scheme that, if the masses rose up, they, the white folk would bring everything down- they'd nuke themselves! (hahaha) In the present case, the 'powers that be' have lost control of the economy, and a 'survival of the most vicious' attitude took over, which saw trillions of worthless dollars printed, vast schemes to stripmine the public treasury allowed, with everything hidden and the rich pigs devising false id etc to escape, as alan greenspan, tom ridge, tom brocawcaw, sam donaldson, kookie, pj ororke, ari, powell, asscrack, rumsmell, wolfwitz, perle, frump, and a vast horde of other rats who have been fleeing the disaster for years, despite the rewards of staying on, have done! lol.

[mahatmakanejeeves]

153. Not HA HA

When Republicans prosper, people get hurt.

[whistle]

4. Not to worry, the Federal Reserve will just print more dollars and put these

...into circulation until January 23rd 2009

[roamer65]

137. ...and the dollar creation will go beyond Jan 23 '09.

Helicopter Ben is fairly independent of oversight, so expect M3 money supply growth to go well beyond 20% soon. M1 isn't growing very much right now. M3 is already nearing 17% as the Fed buys up junk mortgage paper and dumped Treasury paper.

[kineneb]

5. really big house of cards about to fall, hold hats, folks.

in fact, you may wish to don a hard hat...

manure, meet ventilator.

[Vincardog]

7. Ray Gun would be soo proud

[ocd liberal]

8. As soon as I read this, I started laughing!!!

I work at Morgan Stanley and for about a year I have referred to the Dow Jones going down as the "Wake the Fuck Up" market and the Dow Jones going up as the "Bi-polar" market.

HA! I say, as someone who does NOT own a home at 46 years old - HAHAHAHAHA! I told them all!

[OKthatsIT]

9. But their buddies in CONGRESS wil make US bail them out.

BANKSTERS offer perk$ to Washington politicians...because Congress forces laws upon the citizens TO PAY THE DEBT THESE BANKSTERS/POLITICIANS CREATE.

THIS IS SLAVERY.

[aquart]

16. Oh, we ARE going to have to bail them out.

But not quite yet.

[girl gone mad]

11. Lots of people spent a few years..

living in houses they could never afford for 0% down, paying less than what rent would be. Many of them will just walk away. A few others have found ways to stay in those houses for free for the months and years it often takes the banks to foreclose. I think a lot of these "homeowners" are having the last laugh.

[2Design]

32. exactly my thoughts - why did my integrity not allow me to scam

and skim off the top as these other people with 0% down

[jaybeat]

51. A lot of us are trying to hang on to some of what we *could* afford

Don't tar us all with the same brush, GGM.

We bought our house 7 years ago and promptly invested 40K in it so my MIL could live here, too. (That was part of the plan.) Only, the SAME month we moved in, my employer decided that my manager had been "mistaken" when she had given me a raise the previous September. And they wanted the money back! They took it out of my paychecks before they laid me off in May, dot-com crash and all...

Right about the same time, both my mother and my MIL had serious accidents with hospital stays followed by extensive rehab--at home. Just as I got a new job, in September, my wife had to drastically cut her income to take care of them...

Fast forward to the present day, after high 5 figures of un-insured medical bills (not related to our moms' accidents), 3 more layoffs for me, bankruptcy, repossession of a modest used car, an interest-only ARM refinance (set to adjust this summer) that was in, but is now out of foreclosure, and we are still in our house.

We don't have "more house than we can afford"--we have less employment than we need to live! We have no health insurance, and I have the curse of being overqualified for most of the openings in my field. (People can't or won't hire me for what they know I'm worth, and don't want to hire me for what they would pay someone with less experience, even though I'd take it--I guess because they're afraid I'd jump ship for a better offer. Plus experience tends to indicate that you know something of what the fuck you're doing, and a lot of employers don't like that. They want sheeple who'll do it their way because they don't know enough to ask questions.) My salary, both what I've made and what I can expect to make, has stayed flat in real dollars since 2000. My unemployment insurance ran out right before Christmas.

Finally, if you want to compare median home prices, incomes, etc., we are, have been and should be "middle class." We can't "walk away"--where the hell would we live? Rents keep going up just as housing purchase prices are falling, and too many people are still coming here (Pacific NW) which keeps demand for rentals high along with competition for the few jobs out there. And we'd be giving up the equity that we do have and handing that to the bank.

I know of MANY people in similar circumstances. I know ANYBODY who are "living in houses they could never afford for 0% down, paying less than what rent would be..." or who are able to "stay in those houses for free for the months and years it often takes the banks to foreclose." That sounds disturbingly like "blame the victim, borrowers own fault for living beyond their means, blah, blah, blah..." right-wing crap that is used to justify bailing out the bankers and screwing the people that *really* are getting ripped off.

If you want to point fingers, point them at the speculators who buy something, rent it out for 6 months at a profit (since rents are high), then sell it for a profit, driving the price of houses up and up beyond what most people can afford. Point fingers at the Bush tax cuts, that tax profit-taking (stocks, real-estate, whatever) at *half* the rate of wages (otherwise known as working for a living). Look at homebuilders, who have all the incentives in the world to build more of the highest $ per square foot houses, since that's what makes them the most money and those buyers are the only people who are doing better than they were 8 years ago. Affordable, middle-class housing becomes local government's problem, only they also get more tax dollars from developments over the median so they are as likely as not to encourage the developers. Point them at the companies who boost their share prices by outsourcing, mergers, and cutting "costs"--wages and benefits. Point them at Republican policies that have radically decreased the taxes on those who make money with shell-game buying and selling of "stuff" and stuck it to people who work for wages. Point them at trade policies that say it good for America to buy cheap crap made in China from Wal-Mart, at the expense of jobs that pay enough to let you afford anything else. Point them at exurban sprawl that drives people looking for affordable houses to live 1, 2 or more hours away from where they work, at the expense of congestion, oil consumption, greenhouse gas emissions, and kids stuck 10 hours a day in day-care.

The vast majority of people are not "living beyond their means." We're just trying to live, and it keeps getting harder and harder. My kids now, even when both of their parents ARE working, live no better, and sometimes worse, then my wife and I did growing up in single-earner households, where the wage-earner was either a secretary or a teacher. We each earn *twice* what one of those jobs would pay now, but we're barely treading water. In less than 30 years, the entire economy has been restructured to the detriment of people who work for a living--not just "working class" jobs, but college-educated professionals. AKA, the middle class.

It won't be long before there is no such thing.

Maybe I'll have to be a guest worker in India, and send money home to support my family.

Or be a contractor for KBR in Iraq.

America. The land of opportunity.

[truedelphi]

55. I agree with you,but so many times when I point out that the

Income tax needs re-structuring, DU'ers jump on me and say, Why do you hate this country - don't the kids need education, the infrastructure needs repairs, mail carriers need to be paid.

The tax system needed to be fixed a long time ago so that the inflated income people have to earn just to survive no longer puts them into the side of the balance sheet where they pay the taxes.etc

Why did single earner households in the nineteen fifties do just fine with only one parent working - and always a thousand in the bank (back when rents were only $ 100 a month - 1000 meant you could pay your rent for ten months if laid off.)

Because if you made only 5 to 6 K then, your paid income tax was around 8%.

And even Social Security was only 1.5%.

[jaybeat]

66. Yup. Corporate and high-income tax rates have plumeted since then

While middle- and lower-income rates have stayed the same.



Corporate and high-income tax breaks, deductions and loopholes have also mushroomed, while personal deductions have shrunk. (All consumer interest used to be deductible, etc., etc.) The self-employed have to pay twice the Social Security tax that everyone else pays, unless, of course, you make more than the $90-some thousand dollar cap, in which case *all* your income above that cap is *tax-free* (at least as far as FICA is concerned). Businesses also pay taxes quarterly, while wage-earners pay every time they get a paycheck, which means that they get to hold on to and use tax money for up to 3 months before it is due, but workers don't even see it for a day.

Working people also bear an increasing percentage of the costs for their own health care, their own retirement (*we* fund our own 401Ks now, unlike employer pensions that were the rule 50 years ago), the costs of their children's education (take a look at the cost of the required school supplies list lately?), transportation, etc.

Companies employed people for "life," or at least a very long time. One-page resumes for people with 30 years of experience were common.

Besides taxes, it is also clear that purchasing power has shrunk *far* more than fictional inflation measures like the CPI make it seem. I think I saw one study that showed a family of four in Seattle would need to earn over $100,000 a year to have the same standard of living as a median-income earning family of four had in 1960. But HUD estimates the median income for a family of four in Seattle at $74,300.

So, we're trying to raise our families as well as our parents raised us (economically, anyway), on only 75% of the purchasing power--or even a lot less. With job insecurity, health-care insecurity, retirement insecurity to boot.

And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?...Am I wrong?
And you may tell yourself
MY GOD!...WHAT HAVE I DONE?

[DemReadingDU]

94. Thanks for posting, similar story in SW Ohio

Ohio is a state with a high rate of foreclosures as well as being a state with a high unemployment rate. We who read and pay attention, can see the recession is already here.

Yet some people I know are still clueless. I guess when something affects them bad enough, they will be in for a rude awakening.

[truedelphi]

118. Those who own stocks in the oil sector might ride it out

If they haven't invested in the banking sector.

I've known a few very rich people who - the gloomier I was about the rise in my commute expense - the happier they were.

[truedelphi]

112. I consider Social Security a tax - it has been "borrowed" for various

Government policies - and with the soaring deficit and the bankrupt government, Who among us will see it? (Probably only those already in their mid sixties, on up.)

[varelse]

73. This post rocks

I wish I could recommend it...

You are far from alone. Would that it were not so, but this is the reality for hundreds of thousands of people in the USA. It is "coming soon" to hundreds of thousands more, no doubt :(

[jaybeat]

85. Thank you. Perhaps some of us will vote.

Of course, my wife and I will. But this fall, we'll have a huge choice--McSame, who'll bail out the banks and wag his finger at the rest of us, or either Obama or Clinton, who, no matter your personal persuasion, are bound to do better. Hopefully a lot better.

If half the people who've been screwed in this "economy" vote their own best interests, the Dems will have it in the bag.

But that's a BIG if...

[girl gone mad]

89. Please don't take offense to my comment.

You have absolutely no reason to. I was not referring to honest people in your circumstance, but to those that gamed the system. Not that I feel any sympathy for the mortgage lenders that created the whole mess. Mainly my point is that many of the borrowers now going into foreclosure may actually come out ahead of renters and responsible borrowers.

A few months ago a friend told me that people had gone crazy buying homes. I told him that the reality is that people's behavior never changed, lending practices changed. People acted the way they would be expected to act when given access to easy money.

A bailout to these people would be a bailout to the banks.

[jaybeat]

98. OK, personal offense off. But people "coming out ahead"?

Purely from a political/policy point of view, I seriously wonder about your assertion "that many of the borrowers now going into foreclosure may actually come out ahead". I really don't see how that's possible, at least not for owner-occupiers. (Or, for that matter, speculators, since they won't be able to borrow again to flip houses if they've defaulted. But I don't have any sympathy for them, so let's set that aside.)

The only people who really stand to gain from foreclosures are the whole industry of real-estate predators. It was creepy. As soon as the foreclosure was announced in the public record, all these weird people and companies came out of the woodwork, offering to "help" us (by buying our house, of course). People walked up our driveway (we live in the country) and put hand-written, misspelled notes on our door or in our mailbox. But many were quite sophisticated and clearly this was a big business for them--buying properties out of foreclosure and then selling them for what they were really worth. Or, they stake out the courthouse (we never got that far, thank God) and try to buy it from you as you're walking in. If that doesn't work, they bid on it there and still get it for way less than it is worth.

The thing is, if the house sells for less than you owe, the bank still comes after you for the difference. They can sue, get a judgment and garnish your wages or seize assets. Plus, your credit is trashed, even more than it already was by having been in default. You might "get" to live in your house for a few months without paying, but it will be the last house you own for a very long time. I don't see how that's "getting ahead."

To me, the notion of the "reckless borrower," who's found a way to somehow "game the system," sounds an awful lot like a right-wing red-herring to blame the victims of the foreclosure crisis and justify no relief for them, but bailout for the banks. I'm NOT saying that's how you meant it. But it does sound like the kind of thing we can expect to hear from McLame and his Republican banker friends. "Stabilize the system!" they'll cry, meaning, protect the wealth of bankers and shareholders. How? By sticking it to all of the working folks who can no longer afford the homes they bought on good faith before the economy tanked and their adjustables adjusted up.

I think we should stop foreclosures for people who are trying to make payments, freeze adjustable rates from adjusting up and reform the banking and credit-rating systems so they work better for people, instead of lenders. Then get this economy fixed up so that the wealthy contribute to the good of all society, instead of sucking the life out of it for their own gain, at everyone else's expense.

Many people think that canceling the debt of poor countries is essential to those countries making things better for their people--why not something similar for working PEOPLE? Maybe then people could afford to have 10 months salary in the bank, which would not only help them weather a personal storm, but would bring much-needed liquidity to the banking system. Either spend or save, regular people do something with their money that helps the economy. (Unlike the wealthy, who so often look for shell games, spec deals and paper trades that create more wealth for themselves at a huge cost to the rest of us.)

[wordpix]

133. "we have less employment than we need to live!" Therein lies the rub, or

part of it. This is why we need a Green Progress Administration fashioned after FDR's WPA. Get the nation back to work fixing infrastructure, developing mass transit systems that WORK, wind, solar and other renewable technology, etc.

As I see it, a lot of the Wall St. mess is based on chasing paper, unsustainable building that ruins the environment, and housing prices the average Joe can't afford. How about real jobs that produce clean tech, clean energy and rebuild our infrastructure with transportation systems like high speed rail, bike paths, and cars that get great mileage?

[truedelphi]

116. Yeah - but who were you!! You obviously were not

Schooled in these matters - haven't you heard of The Chicago School - and the trickle down theory of economics?

It is all gonna recover tomorrow after our President gives a speech and reassures us. Honest!



:bounce:

[SpiralHawk]

10. Republicon economics hits reality

Ptooey on the republicon lies and corruption and fantasies and propaganda and all the rest.

[aquart]

14. This is going to be a very bad week, isn't it?

[kineneb]

19. uh, yup. care to join us over at SMW on Monday am?

(Stock Market Watch- LBN)

should be mighty excitin' come Monday morning...

don your overcoat, hat & goggles... manure may be a'flyin'...

don't say I didn't warn you... ;-)

[aquart]

20. Oh, nooooo.

I don't have that kind of courage. I can't even go into GD-P on a day like today. I'm way too timid a creature.

[ozymandius]

26. I'll be ready with my goggles and raincoat.

Blood and eyeballs on the floor again. Excrement involuntarily and explosively evacuated by all holders of bank stocks. Heck we might not need to wait until Friday to see these shareholders rid themselves of stocks that they 'don't want to hold over the weekend'.

:hi:

[Demeter]

34. And So It Ends, Not With A Bang, But a Whimper

It was the best of times, it was the worst of times....

[Warpy]

86. Looks more like a plop

The sound of a bursting soap bubble at the very top, the sound of a Hefty bag full of vegetable soup landing on the pavement at the bottom.

[Dr.Phool]

41. I always go to the morning SMW with my morning coffee.

I think Monday it'll have Irish Whiskey in it.

St. Paddy's day comin' and all.

[formercia]

33. I think i'll break out my oilskins and hip boots.

Ahyuh, she's gonna' blow a corkah!

[Pale Blue Dot]

149. 7:50pm Sunday: Dow futures down 46 pts.

:scared:

[Dogmudgeon]

15. Jee. Sus. Christ.

That is NOT good news.

Buy tuna and bottled water.

--p!

[ladywnch]

17. gee this makes the Clinton "bubble" economy look stable and rock

solid by comparison. If the Repubs hadn't passed the legislation (which Clinton vetoed)that allowed for "enron accounting" the bubble would never have burst. We need more Republican compassionate conservatism economy don't ya think?!

[BlooInBloo]

21. No problemo! Glibertarians are here to save the day!

http://calculatedrisk.blogspot.com/2008/03/feldman-plan-just-get-yourself-latte.html

Despite the bliss, there are downsides to being a nation full of fucking idiots.

[Torn_Scorned_Ignored]

22. Look on the bright side

The Administration will not want to stay in office to fix this.

:hi:

[Demeter]

37. Since They Never FIX Anything, What Do They Care?

As long as there's anything left to steal, they won't let go. When the US is a dry husk, then they'll go to Dubai.

[Torn_Scorned_Ignored]

56. at the risk of :tinfoil:

this is their version of separating the grain from the shaft.

Class Warfare.
Banks fold, mortgages foreclose, credit available only to those without risk, high unemployment, lack of decent wages, skyrocketing oil prices etc.

They already Fixed bankruptcy and gutted social programs.
Now they try to get away with calling this a recession.

DEEPrecession.

[Viva_La_Revolution]

82. separating the grain from the chafe

I refuse to be a grammar nazi, but I do insist that metaphors be correct. :evilgrin:

:hi:

[foo_bar]

93. that's "chaff" :)

Chafe \Chafe\ (ch<=a>f), v. t. (imp. & p. p. Chafed
(ch<=a>ft); p pr. & vb. n. Chafing.) (OE. chaufen to warm,
OF. chaufer, F. chauffer, fr. L. calefacere, calfacere, to
make warm; calere to be warm + facere to make. See
Caldron.)

1. To excite heat in by friction; to rub in order to
stimulate and make warm.
(1913 Webster)

Chaff \Chaff\, n. (AC. ceaf; akin to D. kaf, G. kaff.)
(1913 Webster)

1. The glumes or husks of grains and grasses separated from
the seed by threshing and winnowing, etc.
(1913 Webster)

2. Anything of a comparatively light and worthless character;
the refuse part of anything.
(1913 Webster)

The chaff and ruin of the times. --Shak.

[Ghost Dog]

99. The Merchant of Venice, Act 2, Scene 9

... ARRAGON

And so have I address'd me. Fortune now
To my heart's hope! Gold; silver; and base lead.
'Who chooseth me must give and hazard all he hath.'
You shall look fairer, ere I give or hazard.
What says the golden chest? ha! let me see:
'Who chooseth me shall gain what many men desire.'
What many men desire! that 'many' may be meant
By the fool multitude, that choose by show,
Not learning more than the fond eye doth teach;
Which pries not to the interior, but, like the martlet,
Builds in the weather on the outward wall,
Even in the force and road of casualty.
I will not choose what many men desire,
Because I will not jump with common spirits
And rank me with the barbarous multitudes.
Why, then to thee, thou silver treasure-house;
Tell me once more what title thou dost bear:
'Who chooseth me shall get as much as he deserves:'
And well said too; for who shall go about
To cozen fortune and be honourable
Without the stamp of merit? Let none presume
To wear an undeserved dignity.
O, that estates, degrees and offices
Were not derived corruptly, and that clear honour
Were purchased by the merit of the wearer!
How many then should cover that stand bare!
How many be commanded that command!
How much low peasantry would then be glean'd
From the true seed of honour! and how much honour
Pick'd from the chaff and ruin of the times
To be new-varnish'd! Well, but to my choice:
'Who chooseth me shall get as much as he deserves.'
I will assume desert. Give me a key for this,
And instantly unlock my fortunes here.

He opens the silver casket

PORTIA

Too long a pause for that which you find there.

/... http://etext.library.adelaide.edu.au/mirror/classics.mit.edu/Shakespeare/merchant/merchant.2.9.html

Edited to add emphasis. But it's the wrong choice in this case...

[Up2Late]

24. Thornburg Mortgage Inc.?!? Hey! That's the one that holds MY Mortgage!

Anyone know what this could mean to the average Joe like ME!?!?:shrug:

[Karenina]

25. Mebbe not

Should trouble come (bitte nicht), do demand they PROVE they own it.

[SlowDownFast]

81. Not Sure, but I made ALOT of $ shorting them the last few weeks. n/t

[debbierlus]

29. The Carlyle Group: Bush Inc.

The criminals won't pay their bills and then, they will shove it off on us!

It is time for the people to say ENOUGH IS ENOUGH.

[OKthatsIT]

150. GET RID of the FEDERAL RESERVE

This is perfect time to dump their asses...Why should pay out the ass just to let them create fake values on paper?

WE, THE PEOPLE, should print our own goddamn money back by real equity/gold!

ENOUGH of these BANKSTERS!

[ozymandius]

30. Wall St Week Ahead: Stocks may fall anew on recession fears

NEW YORK, March 7 (Reuters) - U.S. stocks could face a further pounding next week as evidence mounts that the economy has entered a recession and problems in the financial sector accelerate.

Next week's economic agenda is relatively light, until Friday, when the Consumer Price Index will command attention, especially with oil's jump this week to a record over $106 a barrel and the surge in other commodity prices.
.....
The negative news trend is showing few signs of letting up, and could mean further losses for stocks.

.....

WANTED: EARNINGS REALITY CHECK

Next week's earnings schedule is short, but some quarterly results are expected from retailers, including American Eagle Outfitters (AEO.N: Quote, Profile, Research). For a full earnings diary, see

Many analysts have said earnings estimates are overly optimistic and need to come down, further adding to worries for stock investors, who continue to see stocks as a bargain.

As the result of an eroding earnings outlook, stocks are slightly more pricey now than they were at their previous lows on Jan. 22, with a 12-month forward price-to-earnings ratio at 13.03 now versus 12.93 then.

http://www.reuters.com/article/newsOne/idCAN0732951420080307?pageNumber=3&virtualBrandChannel=0

[truedelphi]

35. What is the actual worth of the USA? Is it 17 trillion??

Nineteen trillion?

I don't even think I know how much a trillion is worth.

So what it this 325 Billion in the wake of it all?? What percentage is it??

[Name removed]

65. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Zynx]

79. Net national wealth is about $52 trillion.

[truedelphi]

114. I am not critiquing your answer, Gawd knows I am uneducated

About these matters - but how did the 52 trillion dollar amount come about?

It it earned monies in a given year? (Which I assume is the same thing as GNP, but I could be wrong.)

Or the value of our land, buildings, corporate worth, plus businesses that are not corporations,
and private wealth? Plus the yearly GNP?

What would the seventeen trillion dolalr number I am remembering refer to?

[Zynx]

154. GNP is the amount of annual consumption of goods and services by

consumers, businesses, and government with adjustments for inventories, investment, and international trade.

The net national wealth is the value of all equities, real estate, capital stock, etc minus the amount of debt outstanding.

[NJCher]

36. trends forecaster says dollar will be worth 10 cents

I was listening to this guy by the name of Gerald Celente on a radio show. He's a trends forecaster and he said that this contraction is a necessary phase we have to go through to restore our monetary system to a solid basis.

It's not all bad, guys: does anyone here seriously support the financial system the way it is now? Or any part of the system, for that matter? No one wants to see the financial system crash but with the types of people we have running it, that is the only way there will ever be any change.

Celente (about whom I have serious questions of credibility, based on his juvenile remarks about Bill Clinton) says that the media is paying attention to the Clinton-Obama circus while the real story is oil going up so drastically this last week. He said it will force more regional farming, manufacturing, and production of all sorts because it will be too expensive to transport.

As with any huge upheaval, this can be a time of opportunity.

Oh, and as for all the people around DU telling others to get out of debt, Celente says he's borrowing all he can because he can pay it back on a devalued dollar. He says the dollar will be worth about a dime when this is all said and done.

Here's his site if you want to check him out:
http://www.trendsresearch.com/




Cher

[Demeter]

38. Still Not a Good Plan, IMO

The carrying charges can kill you while waiting for it to unwind. The Market can outlast you, no matter how much you think you've got.

[Nay]

45. Paying it back on a devalued dollar only works if you are getting PAID

MORE in your paycheck--IOW, paychecks have to start inflating too. There is no indication that this will happen, so going into debt is a pretty dumb thing to do.

[melody]

69. Not bad? Tell that to the starving homeless folk

Sorry, this was brought about by other people and they should be imprisoned.

[leveymg]

40. The banks don't have the reserves to cover a $325B call on mortgage losses

This is disaster

[truedelphi]

148. They have, according to their experts on March the 4th, 285 billion

But of course that woul dmean they are still 40 billion short.

And despite it all, they also need to keep sending out the dividend checks.

It was interesting to watch Senator Dodd talk about the banks and their huge ability to raise capital.

I'm not so sure that people will sign up for a cruise on The Ship of Stae when the Ship is sinking.

[marmar]

43. Everyone step away from the fan......

..... a foul substance has hit it! :scared:

[pa28]

44. Time for Bernanke and company again . . .

He's developed the habit of stepping in with cheerleading/emergency rate cuts every few weeks just to delay the inevitable. I'm sure he'll be at it again Monday morning cranking out paper.

[Ghost Dog]

63. If you believe the Federal Reserve message, you'll believe anything

Larry Elliott, The Guardian, Saturday March 8 2008

Pure coincidence. That was the message from the Federal Reserve as it made the announcement that it was giving emergency help to Wall Street banks, just as dreadful employment numbers were announced.

If you believe that, as the saying goes, you will believe anything. The Fed knew about the fall in non-farm payrolls, knew what the reaction of the financial markets would be, and took pre-emptive action. The impact, though, was short-lived.

Wall Street has a touching faith in the omniscience and the omnipotence of the Fed, but it is not quite that gullible. So what is the explanation for the Fed's action?

There are three points to bear in mind. The first is that yesterday's employment report is the clearest indication yet that the US economy is in recession, with the slump in the housing market spreading to other sectors.

The second is that the credit crunch has entered a new and potentially even more dangerous phase. Despite cuts in the Fed funds rates, interest rates paid by companies and individual borrowers have been rising as credit has become scarcer and, as a result, more expensive.

...

Finally, the Fed's apparent indifference to the current level of inflation in the US - the headline rate is well above 4% - has spooked investors in the foreign exchange markets. The dollar is in freefall, dropping to record lows against the euro and prompting a flight into the safe haven of gold.

...

Yesterday's decision to pump extra liquidity into the financial markets is a sign that this (a 75 point rate cut) is not going to happen. Quite rightly, the Fed has taken the view that anything other than a half-point cut on March 19 would smack of panic and lead to a meltdown in the dollar.

In truth, though, that may still happen. The Fed would like us to think it is still in full control of events; the opposite is the case.

/... http://www.guardian.co.uk/business/2008/mar/08/marketturmoil.useconomy

See also:

Fear of domino effect as (Carlyle) shares suspended

Simon Bowers, The Guardian, Saturday March 8 2008

Credit market turmoil is stretching a growing number of highly-indebted hedge funds to breaking point. Lending banks are taking an increasingly uncompromising line on the funds operating in parts of the financial markets worst hit in recent months.

Experts warned of a domino effect in the hedge fund industry as bank lenders responded to declining markets by raising collateral requirements on loans and by demanding increased margin calls. A margin call is a requirement on an investor to put up more cash to cover potential losses on the investment.

Willem Sels, head of credit strategy at Dresdner Kleinwort, said: "We are certainly of the view that forced selling at certain highly leveraged hedge funds is leading to risk being put back into the market - it is putting pressure on other hedge funds, which then also run into trouble."

...

Sels said the domino effect could be accelerated if hedge fund clients, alarmed by a breakdown in relations between funds and their lending banks, rush to withdraw their cash at the end of lock-in periods.

/... http://www.guardian.co.uk/business/2008/mar/08/marketturmoil.investmentfunds

[Cheney Killed Bambi]

46. Sounds like a wave of bankruptcies

are on the way. When banks can;t lend money, Companies go bankrupt. Good for bankruptcy lawyers, bad for everyone else.

[rpannier]

47. My new car going over the 1500 ft cliff with george bush in it

My car --> The economy

george bush --> the carlyle group

[stubtoe]

48. We'll see a return to increased regulation of financial practices. So much for

Reaganomics and allowing the All-Knowing Market to sort itself out. When the banks get hurt, that's when the financial sector puts on its glasses and takes a hard look at practices.

On the bright side, Republicans may have a tough time getting elected for YEARS.

[Divine Discontent]

49. shiiiiiiiiot!

that's bad and there's no one to blame but the predatory lenders and the shrub cabal...

water and tuna? right? I'm on it...

if I have some cash WHAT should I do? buy some gold, or just hold it since I could see the market taking a huge hit if this really gets ugly, like I've felt it will for 3 years now...

[Divine Discontent]

57. anyone??? eom

[Roland99]

62. Talk to a financial advisor is what I'd do. Depending on the amount of cash you have.

If it's not a whole lot, just put it in something like an ING account and earn some interest.

[Divine Discontent]

72. thank you Roland99! :) EOM

[SlowDownFast]

83. You might consider gold and/or silver.

Otherwise, it's the Bank of Sealy (under your mattress) or short term (4 week) US Treasury Bills (www.treasurydirect.gov). If you go with short term T-Bills you can just roll them over and over and when your ready to withdraw, have the funds sent to any bank that survives the Insolvency Musical Chairs.

Think of short term T-Bills as a cash park backed by 6,000 nuclear weapons. If Treasury Bills fail, then it's time to break out the lead and brass.

If you want to assume some risk and ride the market on it's way down while getting some return on it, consider 2x inverse index ETF's like QID, SRS, SKF, etc (http://www.proshares.com/funds).

Probably a little of everything I've mentioned in this post is a good bet.

Believe me, I have been studying this hard for some time, and some VERY knowledgeable I people I rub elbows with concur.

Disclaimer: I personally own everything I've mentioned in this post.

[DemReadingDU]

95. It would take a LOT of cash to buy gold

Gold is almost $1000 per ounce. Way too expensive for me to buy now.

Last year I had a smallish fund at Fidelity, I sold it, paid the taxes on the gain, then put the balance in a FDIC CD at the local bank. Last year interest was 5%, now interest is only 2.5%, less the rate of inflation. ugh

Maybe I should take the balance and invest in canned goods, water, and toilet paper.

[Divine Discontent]

100. wow, what a drop in yield! 2.5?

I love your idea about using the balance, however, sadly sounds like a decent decision... scarily enough!

[pinto]

50. Whoa...n/t

[Roland99]

52. In related news... Mortgage market needs $1 trillion, FBR estimates

Mortgage market needs $1 trillion, FBR estimates
Without that, prices of securities will fall, raising interest rates on home loans

http://www.marketwatch.com/news/story/mortgage-market-needs-1-trillion/story.aspx?guid=%7B359B5377%2D39DB%2D4C8B%2D9178%2DC45726A45272%7D&dist=TNMostRead

SAN FRANCISCO (MarketWatch) - Why are interest rates on 30-year fixed-rate mortgages rising even as the Federal Reserve slashes interest rates and yields on Treasury bonds fall?

The answer is that the mortgage market is short of roughly $1 trillion in capital, according to Paul Miller, an analyst at Friedman, Billings, Ramsey.

The modern mortgage market works with lots of leverage, or borrowed money. Investors, including hedge funds and mortgage real estate investment trusts, buy mortgage securities, but finance a lot of their purchases with this leverage.

FBR's Miller estimates that $11 trillion of outstanding U.S. mortgage debt is supported with roughly $587 billion of equity. That's a leverage ratio of 19 to one.

[Roland99]

53. Oh, and don't think that it's all tied to just sub-prime. It's Alt-A and more.

Conventional and Jumbo loans for good credit consumers, too.

[Purveyor]

61. Correct. This Thornburg mortgage outfit that is in serious trouble served the 'jumbo loan' market.

This has moved well beyond the 'sub-prime' market.

[Baby Snooks]

74. The banks are insolvent

The constant infusion of funds from the Federal Reserve are merely band-aids for a gaping wound in the banking system. The banks are insolvent.

As interest rates fall for the banks, interest rates for customers of the banks will rise in the hope that enough people will start borrowing again from the banks that the interest the banks make off the loans will "balance the books" but it is folly at best.

This is the result of over 20 years of Alan Greenspan's policy which the Federal Reserve is continuing simply because it doesn't know what to do.

In the 1990s, easy money was made available for "venture capital" and the best example of how "venture capital" was utilized are the corporations like Enron and World Com that used banks like ATMs to cover increasing debt. Anyone who thinks Enron was completely investigated is a fool. Ken Lay and Jeff Skilling and Andy Fastow were just diversions to convince the American people that the Justice Department took fraud seriously. Billions of dollars were involved. Where did it all go? Not all of it went into Ken Lay's pockets and Jeff Skilling's pockets and Andy Fastow's pockets. What went into their pockets in fact was a proverbial drop in the bucket. The Justice Department focused on one group of partnerships which were used by Andy Fastow to enrich himself. There were over 2,000 of these partnerships. The rest were not looked at. Because of who invested in them.

The easy money was used to keep insolvent corporations solvent and now the banks are insolvent. The subprime market was just another scam to make billions without regard for investors or employees. Even the Carlyle Group has lost significant value in its hedge funds. Most have. The only ones who have done well of course are the hedge fund managers.

The hedge fund managers. Hillary Clinton talked about those. Without realizing she was talking about her daughter.

We are bleeding to death. And the Federal Reserve will keep putting bandaids on the gaping wound believing it can at least save us by reducing the amount of blood we are losing. We have lost too much already.

The truth about our economy is in the dollar. It is basically worth 50 cents at this point. Literally overnight.

And there isn't a thing anyone can do at this point except allow it all to collapse. Which eventually it will. Some believe sooner than most expect.

Of course the Republicans will blame the Democrats. With regard to Bill Clinton, they are partly right. The endorsement of Hillary Clinton by Alan Greenspan in itself indicates how right it may be.

Everyone thought happy days were here. They were. And still are. If you're a corporate crook.

[MrScorpio]

54. Start learning the lyrics to "HAPPY DAYS ARE HERE AGAIN"

Music and Lyrics by J. Yellen and M. Ager

So long sad times
Go long bad times
We are rid of you at last

Howdy gay times
Cloudy gray times
You are now a thing of the past

Happy days are here again
The skies above are clear again
So let's sing a song of cheer again
Happy days are here again

Altogether shout it now
There's no one
Who can doubt it now
So let's tell the world about it now
Happy days are here again

Your cares and troubles are gone
There'll be no more from now on
From now on ...

Happy days are here again
The skies above are clear again
So, Let's sing a song of cheer again

Happy times
Happy nights
Happy days
Are here again!

[liberaltrucker]

68. Brother, can you spare a dime?

They used to tell me I was building a dream
And so I followed the mob.
When there was earth to plow or guns to bear,
I was always there, right on the job.
They used to tell me I was building a dream
With peace and glory ahead --
Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run,
Made it race against time.
Once I built a railroad, now it's done --
Brother, can you spare a dime?

Once I built a tower, up to the sun,
brick and rivet and lime.
Once I built a tower, now it's done --
Brother, can you spare a dime?

Once in khaki suits, gee, we looked swell
Full of that Yankee Doodle-de-dum.
Half a million boots went slogging through hell,
And I was the kid with the drum.

Say, don't you remember they called me Al,
It was Al all the time.
Why don't you remember, I'm your pal --
Say, buddy, can you spare a dime?

Once in khaki suits, ah, gee, we looked swell
Full of that Yankee Doodle-de-dum.
Half a million boots went slogging through hell,
And I was the kid with the drum.

Say, don't you remember they called me Al,
It was Al all the time.
Why don't you remember, I'm your pal --
Buddy, can you spare a dime?

[NYC]

70. Another version:

Happy days are here again,
the stocks you hold have split again,
we plan to raise the dividend.
Happy days are here again.


That was a cartoon in The New Yorker many, many years ago.

[liberaltrucker]

67. self delete

Something about image contains an illegal code.

:shrug:

[sarcasmo]

71. Rome is burning, it will be falling in a matter of time.

[greyghost]

77. No time.

[Missouri Blue]

84. And Bush's recommendation is: everybody shop.

He's addicted to Red Ink. And Republicans say Bill Clinton was a reprobate influence! People aren't going to spend out of this crisis. They have to pay off debt and save. Supply side economics is bankrupt and the American consumer economy is finished. I can't celebrate, we are all going to get screwed.

[Ghost Dog]

88. International experts foresee collapse of U.S. economy

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.

Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.

The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.

The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.

Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:

"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."

The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.

We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.

What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.

The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").

It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.

Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.

The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.

So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves.

- http://www.intelligencer.ca/ArticleDisplay.aspx?e=918803

[melody]

91. Thus destroying our country and our people while leaving Europe,Japan &other economies untouched??

George Bush has done his job for his masters.

How the hell does this bastard sleep at night?

[Ghost Dog]

92. Untouched, doubtless not so. Less touched, hopefully.

Also hopefully, most Americans on this board can be big enough to see the potential justice in this, if so.

[melody]

96. I see no justice in it given the vast majority of innocent Americans who did nothing to deserve pain

However, one of the strokes of genius of BushCo and what they've done to the US is they've
managed to make the world hate their primary victims. When we do go down and people are
homeless and hungry, no one will mind. In fact, some people will be happy about it ... but
one can't expect everyone to be "big" enough to appreciate that.

And when people here wake up and realize what caused the destruction and that rich people in
Europe were party to this, too, if I were you, I'd be very worried about the children of 300
million people with that much anger.

[Ghost Dog]

102. No, I think you misunderstand me. I refer to the relative justice

in that America should suffer relatively more than other countries as this shit hits the fan, since this situation is overwhelmingly the result of US politics and policies (with the UK as a poodle). Or would you really be happier were America to take down the rest of the world along with itself? The heart of the problem lies in the majority of Americans' mostly-brainwashed, self-absorbed and all-consuming desire for self-satisfaction tending to planet-destroying greed, I'm very sorry to have to say.

Yes, you're absolutely right, the vast majority of innocent Americans did nothing. They didn't even vote for these policies of economic ruin. But they have mostly (and mostly proudly, in relation to the rest of the world) gone along with and taken advantage of the status quo. And they mostly appear still to somehow believe in the myth of a 'we the people' big-money-takes-all big-party-based political system somehow called democracy which it should be clear to all is little more than a shroud behind which the real pocket-lining string-pullers lurk, including now in their armory the strings of the mass-media the majority so eagerly, or so narcoleptically, laps up.

It is a radical reappraisal, re-evaluation and realignment of this essentially corrupt and counter-productive free-market political turd (which is even supposed to be for export!) for which a majority, or at least a vocal minority, on this board, it has been my impression, hopes. And, for at least as long as freedom of expression is still allowed in the USA, it is a realistic hope, I believe. And it may, yet still, be the greatest hope for the world.

And yes, melody, re. your last paragraph, I think I can assure you that the rest of the world is highly aware of what tends to happen when a bunch of spoilt children armed with dangerous toys find the immediate satisfaction of their every desire, albeit through their own fault, mysteriously thwarted. Let's hope the childish tendency to lash out in a tantrum at relatively much more innocent (although long-screwed) bystanders can be tamed, and some maturity through learning the hard way attained.

Thanks for listening. Sorry. Very sorry. Off :rant: Rant.

[melody]

103. Spoiled children? I fear that underscores your bias against Americans

It's this need to see us as these emperor children that is so pervasive in the world media that feeds
the hatred toward us.

No, I didn't go along. Most people I know didn't. The majority of Americans are NOT mostly brain-washed and
self-absorbed, etc. I live in California. We led the world, at one time, in green thinking and living. The
younger people of Europe don't remember that, but this was back many years ago before BushCo and their international
brotherhood took us over.

I know a lot of bigots who think they have reasons for hating the target of their bias. My right-wing fundie uncle
likes to ascribe similar qualities to black people, because they are the target for his own need to blame his problems
on somebody else. He'll be happy to explain to you all the "reasons" for his hatred -- all of them rank nonsense
when looked at logically. But they are notions that exist only in his own head -- he can't see beyond them.

There are people in Europe far, far more to blame for all of this than the majority of Americans. They won't suffer at all.
Where is the "justice" in that?

[Ghost Dog]

104. Then let's see people like you take America back, dammit!

I'd dearly love to see Americans once again take the lead in the most important things that need to be done, starting with treading lightly and saving the planet and social justice and, you know (yes, I do remember), peace and love. Ok?

Going to chill now :hug: :hi:

[melody]

106. I don't WANT to take back the planet - I want my people taken care of and let everyone share burdens

I'm tired of Americans having to be global police. That caused the problem in the first place.

It's time for us to deal with our own problems, give our citizens the benefits so many people in the
world (in places we've been "protecting", hint, hint) have long enjoyed while we've suffered without
them, and demand some kind of equal responsibility from all governments.

Yes, I'm a liberal protectionist.

[Zhade]

141. You nailed it.

Truth.

[melody]

144. Self-deception based on emotions, not truth

There is no "truth".

[Zhade]

140. You're fooling yourself. We're all somewhat guilty.

Those of us who do something, could do more... but we're too comfortable.

Fact is, Americans ARE selfish, and so imbued with feelings of entitlement that they refuse to admit it.

No one made people charge things.

No one made them live outside their means.

No one made them demand ever-increasing luxury at the expense of others on this planet.

[Name removed]

142. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[melody]

152. I love this ... you unjustly insult million of innocent Americans and then alert on my post

You're insulting your neighbors, all your friend, all your relatives, all the good people of the US with your blanket
statement. Beat up on 300 million people you don't know, many of whom are suffering far worse than you and I ... and
then alert on someone refuting you? Yup, that's fair. LMAO

Welcome, once again, Zhade, to my ignore list.

[Zhade]

139. I see it. We're all guilty, no matter how much we try to deny it.

We're just a little guilty, while the rich are enormously so.

[melody]

145. No, the rich aren't enormously guilty -- none of us are guilty except those who control the game

We're all subject to the same drives.

The sociopathic criminals in the globalism movement are the only blame-holders. They did what they did
consciously to everyone. They played nations against each other. They played nationals against each
other -- just as we're all doing here.

There's nothing to blame except the game.

[CountAllVotes]

128. It is not just "us" ...

- LONDON (Thomson Financial) - The combination of a record-high euro and scarce credit is straining the euro zone's economic union, raising new questions over how well a single monetary policy will be able to handle the region's looming economic slowdown.

So-called peripheral economies in the euro zone -- mostly in the South, including Italy, Spain, Greece, and Portugal but also Ireland -- are having a more difficult time coping with a strong currency and tighter lending conditions than Germany or the Netherlands.

Some, like Spain and Ireland, are facing the consequences of housing market bubbles that could lead to recessions, while others like Italy are plagued by political uncertainty and structurally lower trend growth rates.

This new economic divergence has become painfully apparent in financial markets, where the spreads between government bonds yields in Germany and peripheral economies have reached record highs, suggesting investors are wary of the future in these economies.

more here:

http://www.thomsonfxhub.com/fxhub/forex-news-detail.jsf?newsId=14562&title=FOCUS%20Rising%20euro,%20credit%20crunch%20testing%20European%20economic%20cohesion

It is not just here in the USA. The same thing is going on overseas. I hear regularly from my relations in Ireland and there are homes aplenty that are not occupied, only standing vacant waiting to perhaps be sold as they rot away. Building has about dried up and the McMansions in Ireland are empty because the credit has about dried up and many people have already lost their homes bought on credit.

FYI, they do not have fixed-interest loans in Ireland, only ARMs. Yikes.

This has already spread across the seas, believe me and this is nothing new either (this been going on for the past couple of years or more from what I know). Greed is not uniquely an American trait, and yeah it sucks badly as we see the consequences of it manifesting globally. :(

[melody]

143. Superb post -- exactly

Anyone feeling smug and comfy in Europe or elsewhere, preparing popcorn to watch the evil US fall is fooling themselves.

[GliderGuider]

101. My favourite financial blog says "The game is over"

The Automatic Earth is a newcomer to the financial blog scene, but they are hitting all the right notes (disclaimer: the authors are friends of mine). Here's what they have to say about the meaning of this story:

Late yesterday, I added the following article to the Debt Rattle, and put in bold letters above it: The Game Is Over! It might be a good idea to explain that.

JPM states that Wall Street banks are facing a "systemic margin call", in other words a margin call that will pervade through the system. The banks will have to cough up $325 billion, and fast, when called upon., or its assets will be sold off for whatever the creditor can get for it.

The only way the banks can do this is by calling in their own loans. That means urgent phone calls to smaller banks, hedge funds, and any other funds and businesses, first those that depend heavily on borrowed money to fulfill oblgations. These parties then need to do the same: call in what is owed to them. Down the line, that means you may get a phone call to pay up for your loan or lose your home. It doesn’t matter if you are a good client, pay in time, have a great job. The banks and lenders need to call up everyting they can, just to stay alive.

You would, and will, do the same: if someone holds a gun to your head, and tells you to pay up, you go to those who owe you money, and demand your cash. Same thing.

We already have seen what this whole picture entails: the selling off of large amounts of assets. Since this happens in a market where buyers are rare, prices drop. Well, imagine that, multiplied a thousand times. And there’s still no buyers. It’s obvious where prices are headed, for all assets, including precious metals. And especially real estate. All assets will be marked to market, in a market without buyers. Pennies on the dollar is poised to become the next household term added to out vocabulary. It will be brutal. That means your home will lose value very fast, and that in turn will make that dreaded phone call come even sooner.

Remember that Wall Street has so far written off about $150 billion. Many banks have had to sell parts of themselves to foreign funds in order to stay liquid. Of course, the first $150 billion was hard, but it was also the easiest part. Now they have to come up with over twice as much on top of that, and probably with far more time pressure. There will be -many- banks who don’t succeed. But before giving up, they will ravage the entire financial system, all the way down to your mortgage, car loan and all other debt. If there’s a way to get their hands on it, they will do so. They must.

Hedge funds will fail en masse. Many institutional investors, like pension plans, will also be killed. Anyone with leveraged investments in non-100% liquid investments will be caught under the wheels of the oncoming steamroller. All businesses have credit lines, all levels of government do too. Get the picture?

This is why the game is over.

I've joined the flight to safety - cash is king right now.

[salin]

105. great post... I have been trying to get my brain around

what this might mean - interms of what happens next. This is a really good explanation. It misses one critical aspect - that many of the exposed loans are to businesses large and small - and those loans would likely be called in as well.

[GliderGuider]

107. He does say this:

That means urgent phone calls to smaller banks, hedge funds, and any other funds and businesses, first those that depend heavily on borrowed money to fulfill oblgations. These parties then need to do the same

Even business loan shortfalls will be recouped from their customers who bought on credit. Basically, we can view the whole loan structure as a food chain: hungry lenders at the top will feed on the next layer beneath them, and those on the layer beneath them and the whole thing will domino right down the food chain until they come to the plankton, which just happens to be your credit card bill, student loan, car loan or mortgage.

[salin]

109. what about the HUGE loans taken on to finance major corporate mergers?

I think there will be a lot of companies that will be stripped of all equity and then "disappeared" as in locked shutters. That is going to effect a whole lot of folks jobs.

[GliderGuider]

111. No question about that.

Leveraged "Merger and Acquisition" loans will be right in line behind the hedge funds. Lots of jobs will be going away in the next 6 months.

[Zorro]

122. Check your mortgage paperwork

Many contain a clause that lenders can call for the payment of the entire loan principal at any time.

Traditionally banks haven't exercised this option, but it will be interesting to see what happens if they begin getting squeezed.

[salin]

115. You should post this in GD.

I think folks - myself included - are not really grasping how big this "margin calls" news really is.

[GliderGuider]

127. Done. Thanks for the suggestion.

[truedelphi]

117. I just watched the C Span airing of Chris Dodd's hearings

On the banks - A replay of Tuesday the 4th of March.

The FDIC has 62 to 64 billion dollars on hand.

According to the experts - The worst case scenario for the banks would be if they were asked for 600 billion dollar on the margin call. The 600 billion dollar request would be considered equivalent to "A Hurricane Five"

Banks currently have about 285 billion on hand.

All the "experts" testifying say there is no need to worry - the banks are good at raising capital.

Of course, this was way back on Tuesday - wonder if by now they are changing their mind.

[salin]

120. and yet the corporate executives involved, are undoubtedly

receiving multimillion dollar compensation packages and bonuses.

What a bold statement by the experts... "banks are good at raising capital" - if we are at the beginning of the crisis - and the major banks have already been begging for foreign investors (I believe they are on round two) for bail-out relief, then when do they reach the point of diminishing returns? These loans were being made on a big scale through the first half of 2007 - that means rounds of "resetting" mortgages are going to keep playing out each quarter or so with more rounds of a hundred or so billion dollars of debt writeoffs needing to be made.

[truedelphi]

123. LOL - not at your post - but at what went on in the hearings

Experts were saying - Well our forecasting and our methods to look out for the security of the banking industry are only as good as the data that we put in, and please don't blame us, but since everything had been so rosy, all the data was constructed along the lines of similar rosy or benign events.

How could we the experts ever think that anything bad would happen?

Experts, my fat arse.

They have about the same amount of wisdom as the twenty somethings involved in the Dot COm's "This is a new market. Its stock prices can only go up and never go down" -- Except that some of those twenty somethings knew enough to get out before the bottom fell out.

[salin]

124. and in retrospect, the dotcom bubble was somewhat more contained

this is widespread and connects to multiple industries - and the financial industries getting shaky has the potential to rock the entire economy. These folks were blinded by their greed.

[truedelphi]

126. Agreed. n/t

[wordpix]

157. don't forget the 20-somethings are in investment banking, too

I have a couple of friends who have kids in the 20's working for Wall St. investment firms, making hundreds of thousands a year each because they're so bright. I shudder to think of giving my life savings to someone that young. Yes, there are whiz kids who know what they're doing but there are many more who just don't have the judgment or wisdom one gets from living a while.

[truedelphi]

159. The problem that comes from hitting on a fad & It's not limited to age

The main maxims in economics are
1) Buy low, sell high
2) Diversify - never keep all the eggs in one basket
3) Don't count chickens before they are hatched
4) And always, whatever goes up, must come down.

But the new economy's philosophy is to ignore all these for whatever fad is here now, be it the miracle of dot com, housing market flips, etc.

It is more or less the Enron-ization of our entire economy - with Bush and his people (including Tony Snow) saying everything is still great, even as they themselves plan on leaving for Paraguay.

This only proves how ignoring the main four while following the newest fad works great for the short term, but puts us exactly where we are currently for the long term.

[DemReadingDU]

121. very interesting, really scary

I did not understand about the margin call when I first read this on Friday. Thankfully, we are out of debt, house is paid for, and money in FDIC CD's, though the interest rate sucks at 2.5%

I will add this blog to my other daily financial readings. Thanks for the link!

[salin]

125. I had just moved some more money into a money market account

when the feds starting lowering rates again.

[wordpix]

158. "Cash is king"? But your cash isn't worth much if there's a meltdown this large

This blog states, "Pennies on the dollar is the next household term..." So even cash won't be safe. It's just paper, after all.

[CountAllVotes]

110. hmmm ... well that explains my "mystery" telephone call of last week

I found a message on my answering machine last week from JP Morgan. They called to tell me that they had reserved a seat for me at their "Women & Investing" seminar coming up soon.

I have never done any business with JP Morgan or for that matter any stock broker. I wonder where they got my phone # from. They did not seem to have my name (or did they?).

I don't like the stock market and never have. I far prefer things like gold, silver and yeah, Cash is King and has been King ever since 2000.

I still wonder how they got my phone #. I have a CD coming due in a few weeks and I sure don't plan on investing the money with them or any other stock brokerage. Now I wonder if they some how know about this? It is not a lot of money. If they are some how mining personal info., they must be truly desperate! :puke:

:dem: :kick:

[Divine Discontent]

135. very possible

the fact you got a call, and you have a CD coming due... too obvious. I hate banks and investment companies... credit unions only, for me, and a small credit card for emergency and car rentals.

[CountAllVotes]

136. yes, that is where my $ is - in a credit union

and it is one of the biggest ones that exists from what I know. I don't worry at night.

I have a small credit card too and I make sure to pay it off every month. I use credit cards that give cash back only. I make them work for me, not against me. :)

:kick:

[Divine Discontent]

155. very good! eom

[Joanne98]

130. CUT COSTS AND INCREASE PRODUCTIVITY!

[GliderGuider]

132. It's a bit too late for productivity increases

Corporate cost cutting, however, is another story. Get rid of your workers and the "expense" column in your balance sheet shows a tasty improvement!

[Joanne98]

134. Get rid of the CEO's and upper management. Advertising and PR experts!

Keep the janitors.

[roamer65]

138. Any money gaining you less than 12% is basically being destroyed.

The actual inflation rate right now is close to 12%, using the older, more accurate 1980 measurement. During the 1980's Raygun and all the way till now, the CPI measurement has been so altered, it's not even accurate anymore.

The are two ways to fund wars...higher taxes or currency debasement. Guess which route we're following.

[truedelphi]

146. None of the people at Dodd's hearing would like yr post.

Bet most of them would say: There you go again.

The experts are not gonna be happy reading your post.

You DON'T accept the means to evaluate the cards we're dealt using a CPI that Reagan's people left us with?

And you think wars should be paid for by higher taxes, I bet.

You must be some sorta third world revolutionary.

next you'll be saying to eliminate the upper crust's tax breaks!

[roamer65]

147. LOL...yup. I'd be a pinko commie leftist liberal.

;-)

[truedelphi]

151. You might like this informative piece

A bit outdated - we stand now at many tens of billions over where our bailout was when this was written

http://tinyurl.com/2amcjm

But it does give one pause to read it.

[DemReadingDU]

156. morning kick