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Dec 6th, 2017
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Joined: Jun 2004
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Administrator Bionic Scribe
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Administrator Bionic Scribe
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Cargo containers crammed with foreign-made goods that were supposed to set a record in August at major U.S. ports took an unexpected turn, with imports sinking 1.4% in another sign of the slowing of the economy.
Imports of items as diverse as toys and tiles could also be lower in September and October, when retailers will be stocking shelves for the holidays, because shell-shocked shoppers are expected to continue to pull back.
The falloff "reflects the consumer-demand-driven weakness in the U.S. economy," said Paul Bingham, an economist with Global Insight, a research firm that monitors cargo movements for the nation's top retailers.
Life is a banquet -- and most poor suckers are starving to death -- Auntie Mame
You are born naked and everything else is drag - RuPaul
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Here's an attempt by the major banks to try and stop a run on the CDO's (SIV's)... It looks as if they are trying to pool 75Billion Dollars as an "insurance policy" against a run on any bank. Whether this might work or not, depends on juggling the non-adjusted debt... (the mark to market of the securities that the banks own.) The problem with this is that estimates of the losses may be as high as $300Billion Dollars, and $75B is just not enough. As long as the banks do not revalue, they can "claim" the original full value... but that means that no one will trust the banks. A conundrum. Link to article about attampt to bail out US banks Analysts say that investors have all but stopped buying SIV-affiliated commercial paper, and the worry is that the 30 or so SIVs will unload billions of dollars of mortgage-related assets all at once. That would put intense pressure on prices. As Wall Street firms and hedge funds mark value of similar investments they held to their new lower values, they face potentially huge hits to their profits.
Still, the impact on the biggest banks is even more severe. In times of crisis, they are committed — either legally or to maintain their reputations — to stepping in to buy those securities. Banks have already been buying significant amounts of commercial paper in recent weeks, even though they did not have to. But if they are forced to bring those assets onto their balance sheets, they might be less willing to lend to businesses and consumers. That could set off a credit crunch and thrust the economy into a recession. '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' previous warning on this: update on losses taken by major banks as of 10/8/2007... total 20 billion. writedowns for "mark to market" optimists will figger this is it! a done deal. git on with investing. some of us will be watching this... and believe it is the "tip of the iceberg". a question of "who do you trust?"
Last edited by itstarted; 10/14/07 03:49 PM.
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For everyone who doesn't understand why the subprime is so important, here's a very excellent Wiki link that clearly explains why we have the problem in the first place. Well worth reading: Mortgage backed secirities
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It appears that the onset of financial troubles for the middle class are accelerating faster that most experts thought. Now, mortgage problems are being joined by other debt problems, and the banks are beginning to take notice. Personal loans, credit card debt, and auto loans defaults are growing much faster than anticipated. In addition, student loans repayments are also lagging badly. The revision in bankruptcy regulations came just in time to protect the banks, but even with this, the reserves may not be adequate to cover the bad debt. Write downs have already started. Time will tell just how bad things really are. It's a little different now, than it was even 6 years ago. avrage creditcard debt has taken a quantum leap. In the 1990, the average credit card debt was $2550... Today, the average credit card debt is well over $8000. Consumer Debt
Last edited by itstarted; 10/22/07 01:20 AM.
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The "Motley Fool" has an uncanny way of getting to the heart of a problem. As the Mortgage/Subprime/CDO/Hedge Fund/Derivatives continue to unravel, he sees the SIV's as the trigger to cause a market meltdown. The "off the book" nature of these money instruments has been a fast and lucrative means of profit for some of the biggest banks. The basic idea of using SIV's is to move Debt Instruments and take fees. Normally this allows banks to earn money without having to take possession of the actual debt. Under normal circumstances, the banks would be making money without risk. The current problem appears to be different, in that some of the largest banks, namely Citigroup and some foreign banks, took the SIV one step further, by guaranteeing them. When parties to the transfers cannot sell or repurchase, the bank becomes liable... if not in law, in reputation. The Special "Fund" being assembled to guarantee the Subprime CDO trade, is estimated to be 80 to 100 Billion Dollars. If the "experts" are anywhere near correct, the amounts at risk, may be many hundreds of billions. What looks to be a plan by the Fed and maybe later, the World Bank... to stretch out and level the severity of the losses may not work. The Fed can't print enough money to cover the loss, in time. That's the way I see it... Here's the link to The Motley Fool on SIV's Yep... I know this gets stranger and stranger... so much so that even some of the Fund Managers who appear on the Money shows... Box Business, CNBC, and Bloomberg... areobviously unaware of how the money business works... It isn't professed ignorance... to continue their cheerleader status... It's that they are in over their heads. But... listen to the President and his friends... The economy is strong, vibrant, and we're on the edge of a new bull market... When Pigs Fly.
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Administrator Bionic Scribe
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Administrator Bionic Scribe
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Sales of Southern California houses in November fell by 43% from the year before, while median prices fell 10%, a real estate information service reported today.
The price decline was the sharpest -- and November sales level the lowest -- in 20 years, according to DataQuick Information Systems.
November home sales in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego counties have averaged 22,749 units for the last 20 years. Last month, 13,173 houses and condominiums were sold in the region.
The Southern California median home price of $435,000 is on par with what prices were in early 2005, or off 14% from a peak of $505,000 earlier this year.
But there was one potential bright spot in the numbers: November sales climbed slightly from October, by 2%. November sales historically fall from October levels, a decline averaging 7.4% over the last 20 years, DataQuick reported.
Life is a banquet -- and most poor suckers are starving to death -- Auntie Mame
You are born naked and everything else is drag - RuPaul
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Bump...
Sometimes it's good to look back at one's own prognostications. After re-reading my own predictions from 6 months ago, it looks like they were pretty much on target.
The two parts that haven't hit the headlines yet, are the staggering losses to the pension/endowment/insurance funds, and the part that derivatives is playing in the ongoing mess.
The part about 20% inflation by the end of 2008?... for the time being, I'll stand by that.
Oh yeah... and about the gold? Don't bet against $1000/oz. by the end of '08.
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.... re Pension Plan problems... an update here, from the NYT. The Fog of Pension Plans And finally... a place where ya might be able to check out your own plan.
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Keeping this thread going... WAMU in Washington is an NPR station, that features my favorite Interviewer, Diane Rehm. This link is to an archive page. Direct your attention to the 17th of April and the interview with Kevin Phillips. If you care about what is going on in the financial circles, you will be glad that you listened to this interview. In my humble opinion, Phillips has brought together the most insightful details about the financial market that make sense without the nonsense. Please take time to listen to this. I'm sure you will be glad you did. Diane Rehm interview with Kevin Phillips
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Not that anyone would want to know, but heres a book review of the Kevin Phillip's book Bad Money review , "Bad Money". In essence, this the subject of the Diane Rehm show interview in the last post. Knowledge is Power.
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