Warning. Don't wait for the 'I told you so'

Discussion in 'Financial Cents' started by melbo, Nov 24, 2007.


  1. melbo

    melbo Hunter Gatherer Administrator Founding Member

    There is a mountain of paper about to morph into just that: a mountain of paper, but paper that nobody will take in exchange for anything of real value.
     
  2. Blackjack

    Blackjack Monkey+++


    So when are you predicting?
     
  3. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    That and a trillion terabits of commercial, corporate and personal financial data on value and wealth that will cascade to "zero"....[boozingbuddies]

    Oh wait... That's already started ![smsh]

    Sheesh! No one looks at, uses or keeps paper anymore...

    Except for.... [flush] [lolol]

    Party on!....[booze]
     
  4. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Significant stress fractures (failures) for the rest of the year
    Corporate and commercial earnings and condition cracks (catastrophes) in the first quarter 2008
    Full "Richter Scale" activity by the 2nd quarter 2008

    JMHO....

    Party On![boozingbuddies]
     
  5. Jonas Parker

    Jonas Parker Hooligan

    Remember, the new accounting rules kicked in on 11/15/2007. Look for the banks' and brokerage houses' 2007 annual reports to show the write-offs. Right now the politicians just want to keep the sheeple happy and spending for the Christmas Season.
     
  6. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    FASB 157 ... the day it went into effect... FASB issued an exception... albiet for "non-financial" assets... it was still an exception for one year... interesting that the day it went into effect... they issue an exception for certain items... hmmmmmm......
     
  7. ozarkgoatman

    ozarkgoatman Resident goat herder

    Me thinks someone said "OH $#!+ Houston we got a problem!!!!!"

    OGM
     
  8. kckndrgn

    kckndrgn Moderator Moderator Founding Member

    Maybe I'm going off on a tangent here, but this weekend I heard a commercial for some auto fincancing place.

    "We wont even look at your credit score, you DESERVE a NEW car!"

    I'm thinking, no one "DESERVES" a new car, they are handing out car credit just like housing credit. Pretty soon there will be a bunch of auto repos due to companies giving credit to people can't afford it. Geesh then the companies will be crawling to the .gov for a handout to get themselves out of the mess they put themselves in!!
     
  9. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Credit Cards and Auto Loans.... are already on the radar screen big time.... delinquencies and inventories are rising... [boozingbuddies]
     
  10. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    So are )(*&*&(%%#@ bailouts acommin'. Saw something in the news indicating that fannie mae and freddie mac are looking for congressional loosening of restrictions on lending criteria, and for an infusion of capital (read as more credit creation.)
     
  11. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Yes, if they can sell them. If the FED and Treasury can figure out a way to sell this new debt to foreigners and still keep up with the existing negative sales, then I sense a bailout on the taxpayers dime. Were still paying for the S & L, Penn Railroad bailout (by creating the AMTRAK annual negative since 1971), other banking fiascos, etc.....keep piling on the debt. Eventually they won't be able to sell it and when that happens, the system as we know it will vaporize.
     
  12. hacon1

    hacon1 Monkey+++

    The real problem is starting to rear it's ugly head and no one is taking notice. Take a good look at the banks that sit on the Federal Reserve's board. These are the banks that control the money for the Fed. What you will quickly notice, is the fact that they are the same banks that are about to loose everything. Now I know that I don't really need to point this out BUT anyone have a guess as to what happens when these banks can't support the Fed any longer becasue they are broke? If you guessed that it's not gonna be very good....good guess. 1929-1933 will look like a small speed bump. It's gonna be a quick slippery slope. Keep prepping and don't believe the hype about how it's "just a correction".
     
  13. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Did you read who "bailed out" Citi ?....[lolol]
     
  14. hacon1

    hacon1 Monkey+++

    Yeah, but the bad thing is this: Now we are loosing control of our banking instutions to an instution in the Middle East, who has controling members that we will never truely know about, good or bad. What's worse is this: Citi is one of the banks that sits on the Fed board and has controling stake in what and how things happen.

    Should we start a poll and place bets as to what "good" things are coming down the pike on this one?
     
  15. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Here's some links... for the Citi deal...

    Hope this helps... Annie...[beer]

    http://www.freep.com/apps/pbcs.dll/article?AID=/20071128/BUSINESS07/711280320

    http://biz.yahoo.com/ap/071127/citigroup_abu_dhabi.html

    Here's the text for one of the articles...

    http://www.reuters.com/article/businessNews/idUSL2741009420071127?feedType=RSS&feedName=businessNews
    Abu Dhabi blazes trail with Citi deal

    Tue Nov 27, 2007 4:16pm EST
    By Dayan Candappa and Sujata Rao
    DUBAI/LONDON (Reuters) - A $7.5 billion Abu Dhabi deal to buy Citigroup Inc (C.N: Quote, Profile, Research) shares may have created a model for acquisitions by Gulf and other emerging-market investors scouring the ruins of the U.S. mortgage crisis for bargains.
    The Abu Dhabi Investment Authority (ADIA) sought no role in managing Citi, allowing the world's wealthiest sovereign fund to invest as a saviour of the largest U.S. bank without the risk of being perceived in the United States as an Arab predator.
    Investors from Dubai to China could be considering similar deals with cash-strapped U.S. banks, hoping to ride a recovery in their stocks and avoid the political barriers that could have been thrust in their path in better times, analysts said.
    "There will be more such investments," said Giyas Gokkent, head of research at the National Bank of Abu Dhabi. "The other buyers will likely play the same white-knight role," he said of other Gulf Arab investments in Wall Street firms.
    Citi, which could book $17.8 billion in second-half credit-market losses, said ADIA would buy 4.9 percent of stock, eventually becoming the largest shareholder of a bank that has lost 42.5 percent of its market value in the past five months.
    Other Gulf investors, backed by $1.2 trillion in state reserves, say they could follow, depending on when they expect the worst of the crisis triggered by defaults on high-risk home loans to have passed.
    Investment Corporation of Dubai said on November 20 it was looking to benefit from the U.S. crisis, but judged shares of Citigroup to be too expensive as were those of Merrill Lynch & Co (MER.N: Quote, Profile, Research), which reported the biggest credit losses after Citi.
    DIFC Investments, the Dubai government agency that bought into Deutsche Bank (DBKGn.DE: Quote, Profile, Research) this year, said last week it could invest in banks and property among other U.S. assets.
    MINORITY STAKES
    Dubai's state-owned private equity firm Istithmar said in September it was considering buying into two U.S. companies hit by exposure to subprime, or high-risk, mortgages. It did not name them.
    These investments would likely be minority stakes that offer the buyers no say in how the banks are run, said Gokkent. Sovereign funds such ADIA, with an estimated $650 billion in assets, lack the expertise or desire to run a bank, he said.
    "The idea is to capture growth for their investment portfolio," Gokkent said.
    Funds and firms in the world's biggest oil-exporting region have been snapping up assets from Japan to Africa as their government-owners reap the windfall from a five-fold increase in crude prices since 2002.
    Gulf investors have spent more than $70 billion on foreign acquisitions this year, twice as much as the record set in 2005, to reduce reliance on oil revenue.
    Increasingly Gulf buyers are running into resistance from governments wary of allowing foreigners to control assets they say could affect their economic interests and national security.
    Dubai's DP World (DPW.DI: Quote, Profile, Research) relinquished control of U.S. ports after lawmakers threatened to block its 2006 acquisition of British rival P&O on national security grounds.
    Dubai Aerospace Enterprises' failed attempt to buy New Zealand's Auckland International Airport Ltd. (AIA.NZ: Quote, Profile, Research) and Borse Dubai's offer to takeover Nordic exchange operator OMX (OMX.ST: Quote, Profile, Research) encountered political opposition this year.
    The growing power of sovereign wealth funds is raising concerns in the West, with the Group of Seven industrial nations calling for greater scrutiny of their role this year.
    Still, the initial response to the Citi investment was different, even though it came from the largest and most secretive of these funds.
    U.S. Senator Charles Schumer, who opposed the DP World deal and raised questions about Borse Dubai's plans to swap stakes with Nasdaq Stock Market Inc (NDAQ.O: Quote, Profile, Research), said ADIA was helping New York retain its status as the world's financial centre.
    The U.S. mortgage crisis could hold similar opportunities for investors from other emerging markets, especially China, which is still smarting from Washington's opposition in 2005 to CNOOC Ltd's (0883.HK: Quote, Profile, Research) bid for U.S. oil firm Unocal.
    "Emerging economies have welcomed Chinese investors with open arms but acquisitions in developed markets have been more problematic for them so far," Flemming Nielsen, Asia economist at Danske Bank in Copenhagen.
    "It may still be a problem but my guess is pricing and banks' liquidity problems may make it more possible," he said.
    Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) agreed a $1 billion equity swap with China's CITIC Securities (600030.SS: Quote, Profile, Research) last month and industry sources said China Jianyin Investment Securities, controlled by an arm of the central bank, was eyeing a tie-up with a global brokerage, possibly Merrill Lynch.
     
  16. hacon1

    hacon1 Monkey+++

    I wish I could say that it gives me a warm and fuzzy feeling but it's really more like vertigo and nausa!

    The debt is still there, just owned by some "friends". (sarcasim....just one more service I offer):lol:

    Artificial propping up of the markets with even worse later outcome!:evil:
     
  17. Jonas Parker

    Jonas Parker Hooligan

    Boy did the Arabs get screwed on that Citibank deal! Now if we can get Iran to invest in Merrill Lynch...
    [beer]
     
  18. monkeyman

    monkeyman Monkey+++ Moderator Emeritus Founding Member

    If it becomes worthless and no one else will give you anything for it I'll take it, might even give a little trinket for some. lol Ifigure in a way it would be good for me since the only debts of any consequence I have would be for our land and its at a fixed rate so it dont matter if that $1 FRN is worth a .22 shell or a cow, I still owe the same number of them but I have a lot more .22 shells than cows.

    Sorry just had to mention the other side of the coin. Even for those of us able to feed our selves it would be decidedly inconvenient for the financal market to colapse but there could be an up side.
     
  19. Tango3

    Tango3 Aimless wanderer

    So what kind of leverage does this give"our "friends"? could it be used against us if the owners ship of the paper work changes hands in the middle east??
     
  20. Jonas Parker

    Jonas Parker Hooligan

    No leverage at all that I can think of. They surely can't move a building from Midtown Manhattan to the desert somewhere. Nor can they move the land. A federal judge pretty much put the wrench in the works of foreclosure when Deutschbank tried to foreclose on 14 homes in Ohio without proof of lien and the foreclosures were denied. The value of these oddball commercial paper packages is dubious at best now.

    The worst case scenario that I can think of is that the dollar goes the way of the old USSR ruble... nobody will take it. This would put a screeching halt to all US imports, which may turn out to be a good thing in the long run by forcing us to put out manufacturing base back together.
     
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