for the 1.4 trillion dollar gift to the corrupt banking industry.
- Waye Allard (R-Colo.) - John Barrasso (R-Wyo.)- Sam Brownback (R-Kan.)- Jim Bunning (R-Ky.)- Maria Cantwell (D-Wash.)- Thad Cochran (R-Miss.)- Mike Crapo (R-Idaho)- Jim DeMint (R-S.C.)- Elizabeth Dole (R-N.C.)- Byron Dorgan (D-N.D.)- Michael Enzi (R-Wyo.)- Russ Feingold (D-Wisc.)- James Inhofe (R-Okla.)- Tim Johnson (D-S.D.)- Mary Landrieu (D-La.)- Bill Nelson (D-Fla.)- Pat Roberts (R-Kan.)- Bernie Sanders (I-Vt.)- Jeff Sessions (R-Ala.) - Richard Shelby (R-Ala.)- Debbie Stabenow (D-Mich.)- John Tester (D-Mont.)- David Vitter (R-La.) - Roger Wicker (R-Miss.) - Ron Wyden (D-Ore.)
The most crappy companies were up again due to the pending bailout (Tuesday + Wednesday):
Bank of America: up 20% in 2 days
Citigroup: up 22% in 2 days
JP Morgan: up 10% in 2 days
Most of the real economy companies were down. Normal companies don't benefit from this government gift, only a few banks and we all have to pay the price. Sad, Sad, Sad.
It doesn't feel right, it bothers me that millions of Americans have to suffer because CEO's screwed up and were paid millions of dollars, meanwhile the government caused this mess by not checking the banks and by lowering interest rates to 1% in 2001.
It just doesn't seem fair.
Monday, September 29, 2008
I am proud of these senators who voted NO
America's Lost Decade
This is the Jim Rogers, the "Indiana Jones" of finance. He is probably one of the best worldwide investors alive. He travelled the world a few times and is in the Guiness Book of Records for his accomplishments.
He was one half of the best hedge fund that ever existed: The Quantum Fund.
From 1970 to 1980 (US economy collapsed during the 70's) the stockmarket did go up 47%, his fund went up 4000% (no typo, 4 thousand).
He didn't work for Goldman Sachs and is a TRUE economist, this is his take on the markets.
You can follow the destruction of the US economy LIVE
CNN LIVE
The Senate vote regarding the 1.4 trillion dollar plan to wreck the US economy, the US dollar and to help the "usual suspects" aka the banks on Wallstreet.
The Palin case
"That’s why I say I, like every American I’m speaking with, were ill about this position that we have been put in where it is the taxpayers looking to bail out. But ultimately, what the bailout does is help those who are concerned about the health-care reform that is needed to help shore up our economy, helping the—it’s got to be all about job creation, too, shoring up our economy and putting it back on the right track. So health-care reform and reducing taxes and reining in spending has got to accompany tax reductions and tax relief for Americans. And trade, we’ve got to see trade as opportunity, not as a competitive, scary thing. But one in five jobs being created in the trade sector today, we’ve got to look at that as more opportunity. All those things under the umbrella of job creation. This bailout is a part of that."
- Sarah Palin, September 2008
A summary of the "typical" homebuyer's story
1) Listen to a realtor and mortgage broker on commission
2) Rent money from a bank in order to overpay for a home that's not yours
3) Watch home value plummet
4) Even though you can make the payments, walk away, screwing whoever owns your mortgage
5) World economy melts down
6) US taxpayer pays for your stupidity by buying up the bad mortgage
It is the mindset of those morons, that got us into this mess worldwide:
In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank.By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase.
"I thought 'this is crazy'," Ms Trainer says. "It just does not make financial sense. Is the bank going to pay for my retirement because I was a good girl and paid my mortgage."As a successful professional, Karen could comfortably have managed the higher mortgage payments her bank demanded. Instead, she decided to stop her mortgage payments altogether and let her bank repossess her apartment.
Her credit record will be badly damaged by the decision, but Ms Trainer expects this to recover soon."Generally speaking, within 5 years you are about back where you were, so my husband and I decided we'll take the hit and live with it."
What companies will benefit from the pending bailout?
Bankrupt, trash companies rallied on Wallstreet. The worst of the worst, companies that redefine the word "crap", those companies will benefit the most from this gift/bailout plan.
A list of the most active stocks today.
These companies rallied because the broke US consumer will help these companies to survive.
Mind you, the ONLY official offer that was made by a private company (BNP Paribas) on Fortis was 1.6 euro per share + a guarantee that the government would incur 7 billion in losses on Fortis' paper.
Fortis has 2.5 billion shares outstanding, that means BNP Paribas offered -1.4 euro per share for Fortis...
And that's why all those companies are worth (MINUS)-X.XX euro/dollars, Bank of America, Citigroup, Wachovia, AIG, Washington Mutual, Bear Stearns, Lehman Brothers, Dexia, ...
But heck, why don't they spend our tax dollars on some PRIVATE institutions that are already bankrupt! It's better than throwing your money in a bottemless pit...
1.4 trillion bail out plan was sent to Congress ... not just 700 billion
Roubini (PhD Economics, professor)reminds us that this just isn’t the $700 billion plan being sent to Congress today, there are other bailouts as well:
Bailout plan $700B
FHA/Housing $300B
Term Auction Loans $200B
JPMorgan repayments $87B
AIG takeover $85B
Money Market Insurance $50B
Roubini says the bailout might be good for the market to rally for a few days, but then "fundamentals will kick in". Losses will continue. He says "it’s expensive, and doesn’t do the job."
Just how expensive? Roubini says that this will cost us $37,000 for every man, woman and child in America. How are we supposed to go buy homes and save the housing market when we’ve got a bailout to pay for?
I wonder how long the "no-voters" can keep it up? 2 days, 4 days?
No, they will vote yes pressured by the public that as always was MISinformed regarding the bailout. Wallstreet will rally a few % and then crashes down like 1929. A bailout doesn't solve the problem, it SHIFTS the problem from the banks to you, me and John Doe.
A bailout postpones the inevitable, invest accordingly.
Another drop like that tomorrow and
a banking holiday becomes VERY likely...
Better start stocking (better safe than sorry)
No money out of the ATM = a lot spaghetti for us
Those boxes of cereal will last us a while.
For when we have friends over :-)
That's about 60 l, 120 times 0.5 l, Arizona can be hot.
A 30% drop in homes didn't have an effect on the American consumer, wonder what a 10% drop in the stockmarket will have on their "shopping-spree- spending-thrift"...Today I am proud to be an American
Republicans kept word and are (for now)not signing their soul away. If they would sign this bill, the damage would be a lot worse than it is right now.
Something to think about...
With no government intervention, banks who abused the trust of their customers and shareholders will go bankrupt. After a while when prices come down, the big guys will start seeing value and start bidding for the assets. It's the best way to overcome the banking disaster.
The good thing of the carnage is : at least gas is cheaper now...
Historic proportions
Three-month bill rates fell to 0.02 percent on Sept. 17, the lowest since reaching 0.01 percent in January 1940, four months after Adolf Hitler’s invasion of Poland triggered the Second World War.
Insane
Who wins, who loses under proposed bailout plan?
"There are other winners, too, if the bailout works as intended: anyone soon trying to borrow money -- for cars, student loans, even to open new credit card accounts."
WaaaW keep the "living beyond your means"dream alive. Way to go!
"Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke are potential winners.
In just a few months, they have remade Wall Street. If the plan helps to get the economy moving again, they may be remembered for having kept the financial crisis from spreading throughout the economy."
This must be a bad dream... they couldn't have stated this ...
Oh my did they really write this?
wtf THOSE 2 people GOT us into THIS mess and now they are the savers of our planet's economy?
People just don't seem to get it.
Oops, Dexia down 30% today
They probably won't reach the next weekend without some (French) government money. ALL banks will go bankrupt.
Now it's pretty clear that those "electronic" numbers at the banks mean "sh*t" ... people will go back to real money, that has been used over thousands of years. In the not too distant future... gold will shine again.
Sunday, September 28, 2008
What have we learned this weekend?
Don't trust your banking buddy, he is only your buddy because YOU are paying his car, his home and his mistress.
I don't know if there will be any lines at Fortis bank tomorrow BUT
NEWSFLASH: Fortis biggest bank in Belgium is "insolvent"
NOT official:
Fortis will receive money from the Belgian and Luxemburg governments to keep operating (7 billion euro). Which means they are insolvent, don't have enought money for day to day operatons.
The Belgian government can't let the biggest bank go bankrupt (socialism) so a rescue is not surprise at all. I am wondering if this capital from the government is a (socialist) "gift" or do they get something in return? (shares)
Or maybe it is a short term loan?
They will sell ABN AMRO which they bought for 24 billion euro 8 months ago, to ING for 10 billion euro (auch, -60% on 8 months, even the Maricopa real estate market performs better).
Will update this post if more information becomes available.
Update 1: The 5 billion of the government will equal a 49% stake in the company. Fortis has about 2.5 billion shares. The 49% stakes will create another 2.4 billion shares so the company is now worth 10 billion with about 5 billion shares, which means that the stock is now worth about 2 euro.
Update 2: Fortis will postpone the final press release to 2 AM Belgian time but then the Asian markets are open for 4 hours and everybody will sell fortis' assets and it will be worth even less than it is now...
Some newspapers think that they postponed the press release because BNP Paribas is interested in taking over Fortis. (euro amount not known)
Update 3: BNP Paribas offered 1.6 euro per share. The government rejected the offer as too low. BNP Paribas and ING have no withdrawn and will offer no money. Fortis is now bankrupt and it will have to get money from the government to survive(i.e. to open its doors tomorrow ...)
Saturday, September 27, 2008
US Election
Just what the Bush government tried to avoid, an economic collapse just before the election, has taken place. Let's take a look at the odds of the candidates with the bookies (bookmakers). I have never trusted polls, BUT the bookies I trust, because they have to put their money on the line. If they make a wrong judgement in giving you better odds, they lose a lot of money. They have their OWN money on the line.
How to interpret the images below:
Red line: McSame
Blue line: Obamania
Vertical axes: odds
Money the bookmaker will give you when you bet 1 dollar on the candidate.
Example: 2.5/1: Bookie will give you 2.5 dollars for every 1 dollar bet.
The lower this number, the higher the odds that candidate is going to win according to the bookies.
The higher that number, the lower the odds that candidate is going to win according to the bookies.
Overview ALL bookmakers combined odds 6 months
Overview ALL bookmakers combined odds 14 days
If you bet 100 dollars on McSame now, and he wins you get 300 dollars back. (profit 200%, $200)
If you bet 100 dollars on Obamania now, and he wins you get 155 dollars back.(profit 55%, $55)
Which means at this time the bookies think that there is a 1/5 chance that McSame will win and a 4/5 chance that Obamania wins.
114 days left and the worst president ever who totally destroyed the economy, the dollar, the status of the USA abroad, the civil rights, ...will have to go. THANK GOD!
Friday, September 26, 2008
What do 200 top economists say?
Senator: "I have in my hand a letter with over 200 of the most eminent economists in the USA to the leadership saying: ""Do not adopt this Paulson plan, it is fundamentally flawed, it's going to have a layer of debt on our children. We don't know if it's going to work, it doesn't seem fair. We should not rush about it, we should be linear in this."" ".
So, how much is 700 billion anyway?
You could buy 21 new Marlin’s stadiums for EACH COUNTY in Florida
You could buy braces for everyone in Great Britain…..and France!
You could buy all 32 NFL teams - 27 times
2 cups of Starbucks everyday for everyone in Brazil for a year
Gasoline for a year for every adult in America. (175 billion gallons of gas)
You could literally buy the world a Coke. One 2-liter bottle per week for a year.
You could buy a 60-inch HDTV for every man, woman and child in the U.S.
You could buy 7 Mac laptops for every school-age child in U.S.
You could buy every adult in Miami-Dade County an average priced house
You could buy everyone in America 2200 McDonalds apple pies.
Disney tickets: 18 (3-day) passes to Disney for the entire U.S. population
How did other countries fare when the government intervened in the banking system?
We are definitely NOT in unchartered territory, other countries throughout history have done the same thing the US is doing right now: intervene in the marketplace to bailout the banks.
So how did they do after the "intervention / bailout" plan?
Japan had a big banking crisis and decided to bailout all the banks in the early 1990's...
Japanese interest rates
Japan nationwide land prices 1980-2004
Nikkei Stockmarket index 1970 - 2010
The bottom just fell out the Californian home market
California Home Prices Drop Record 41% Amid Defaults
Sept. 25 (Bloomberg) -- California home prices tumbled a record 41 percent in August from a year earlier as foreclosure sales pushed down values in the most populous U.S. state.
The median price of an existing, single-family detached home fell to $350,140, the lowest since March 2003, and will likely fall further, the Los Angeles-based California Association of Realtors said today in a report. Sales increased 56.7 percent from August 2007 and 1.8 percent from July.
And it will only gets worse if we have this bailout...
In a presentation on its WaMu acquisition, J.P. Morgan forecast a 58% peak-to-trough slump in California home prices if the U.S. enters a severe recession. In Florida, house prices could fall 64% in such a scenario, while nationwide prices could drop 37%, the bank said.
And of course the Republicans have to play "hard to get"
Republican senators have to act as if they oppose the plan, but they will approve it in the coming days. They just have to show that they oppose it so later on they can tell their voters when the economic system collapses, we tried to disapprove it but we had to.
Fortis bankrupt?
The same faith as Washington mutual awaits Fortis bank, the biggest bank of Belgium. People will start withdrawing their money from the bank and it won't have enough liquidity for day to day activities. Will the government save it, or will a private institution buy it?
Thursday, September 25, 2008
Washington Mutual is bankrupt
Biggest deposit bank of the USA is bankrupt, Paulson's friends (JP Morgan) were able to buy the depostis (assets, no liabilities) for peanuts. The government will probably take over ALL the liabilities in the next few days.
Way to go!
Citigroup or Wachovia, who is going to be next?
Update
FED's Bailout list
Bear Stearns: check
Fannie Mae: check
Freddie Mac: check
AIG: check
Washington Mutual: bankrupt (for now, probably bailed out in the next few days)
Citigroup:
General Motors:
Ford:
Airlines:
Some of these CEO's really deserve to go to jail:
To Our Valued Customers:
September 22, 2008
As WaMu's new chief executive officer, I am writing to discuss the extraordinary economic environment for all banks in the United States and why you can count on us to continue to serve you safely and soundly.
When I was recently approached about the opportunity to lead this great company, I did my homework to satisfy myself that WaMu has the capital, the liquidity, and the business plan to serve your needs and protect your money through these challenging times.Let me explain why I felt good about joining WaMu.
All financial institutions have been affected by the turmoil in the mortgage and financial markets, but WaMu is very different from the investment banks, such as Bear Stearns, Lehman Brothers and Merrill Lynch, that you may have read about. Those firms have very different sources of funding than we do. WaMu's business is funded largely through the deposits that customers like you put with us. We also borrow billions of dollars from the Federal Home Loan Banks system.
Most importantly, your deposits are insured to the limits established by the Federal Deposit Insurance Corporation (FDIC). (WaMu partners at your local WaMu store are happy to work with you to maximize your FDIC insurance coverage.)
Capital ratios describe the financial strength of a bank. Our ratios continue to be well in excess of the levels that government regulators require of "well capitalized" institutions. We also have an ample supply of funds on hand to meet your needs and the needs of our other customers and our day-to-day operations.
AND JUST 3 DAYS LATER
September 25
In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co.
[JP Morgan to take over Wamu] Associated Press
Pedestrians walk past a Washington Mutual branch in downtown Seattle.
The closing represents the demise of what once was the largest U.S. thrift but came to symbolize many of the worst excesses of the mortgage boom. Federal regulators said WaMu has suffered an exodus of $16.7 billion in deposits since Sept. 15, leaving the Seattle thrift "with insufficient liquidity to meet its obligations." As a result, WaMu was in "an unsafe and unsound condition to transact business," according to the Office of Thrift Supervision.
This CEO will probably receive a nice severance package of 10 million + some money from the govt... n-i-c-e.
If McSame wins the elections I will WALK to school the next 2 days(4 miles). I will take pictures for my blog to prove I did it.
So the $64000 question remains: Are the mortgage brokers, bankers and realtors
going to give back their bonuses and commissions they made from the last 5 years?
Wednesday, September 24, 2008
Just when you thought it couldn't get any worse, they bring in ... the army
LINK
Well they are pro-active that is something ... maybe it would be better if the FED, the government and the banks would have been pro-active 3 years ago...
6 months ago he didn't have a clue
Paulson: Subprime mortgage fallout 'largely contained'
The truth is starting to get out
Just let the ones who got us into this mess go bankrupt, how can that be the wrong choice in a free market?
Let's all hope that congress doesn't approve the Paulson plan (3 pages lol, made in a hurry)
You are a socialist
If it is worth more than 700 billion why wouldn't anyone else buy it for 700 billion?
Outrage
Running home to mama
From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check.
We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully
Minister of Treasury Paulson
Tuesday, September 23, 2008
This is the first buyer in the world that wants to PAY MORE and says so UPFRONT (updated)
Federal Reserve Chairman Ben Bernanke told Congress Tuesday the government should pay more than "fire-sale" prices for the toxic assets it would acquire under a proposed $700 billion bailout plan. That could mean both higher initial costs for taxpayers and reduced returns when the assets are later resold.
America is run by morons.
US Debt:
before crisis:
$5000000000000 (5 trillion)
taking over Fannie + Freddie:
$5000000000000 (5 trillion) backed up by 4 trillion mortgages declining double digits year over year
800 000 000 000 (800 billion) for banking bail out
150 000 000 000 (150 billion, loans for AIG, FNM FRE, BSC)
500 000 000 000 (500 billion, Bush govt budget deficit only for 2008)
7.5 trillion / 300 million people = $25000 a person or about $100 000 per family
Monday, September 22, 2008
The U.S. NEWS from a foreign perspective
Regarding the consultants:
Price Waterhouse Coopers (PWC = consultant), the administrator to Lehman's European
operation has demanded that the firm repay £4.4 billion that was transferred
from the UK to Lehman's US holding company just hours before the firm
collapsed. This left London with no money to pay staff.
That's what I would call excellent consulting advice...
Best performing asset class (disregarding commodities) during the last week?
Phoenix median home prices, only down 1.5% in dollar terms.
Sunday, September 21, 2008
Price comparison
Let's check out how cheap / expensive the USA is:
We went to a club yesterday: Myst in Scottsdale
Entrance: $10
Red Bull: $5
Vodka Red Bull: $11
Tequila: $6
all taxes but no tips included.
Prices of other items: (except where mentioned, prices do NOT include 8% tax, ordering through internet website is no tax)
2l Orange Juice: $3.5
2l (normal)milk: $2
2l (organic/bio)milk: $3
24 bottles of 0.5l water: $4-5
1l Gatorade: $1
Bread: $2.3 - $4
French Bread: $1.5
4l of gas for car: $3.5 (incl tax)
4l of diesel for car: $3.8 (incl tax)
Oil change (small car): $20
Oil change (luxury vehicle, cadillac): $31
Nutella: $4.29
Senseo (standard version): $60
Senseo pads (original ones): $5.9
Apple iPod touch (2nd generation, is no phone): $220
Apple iPod touch (2nd generation, is no phone): $290
Apple iPod touch (2nd generation, is no phone): $380
Apple iPod Nano (4th generation, 8GB): $ 150
Apple iPod Nano (4th generation, 16GB): $ 195
Tuna (regular can): $0.88
500 Print paper: $4
High Speed Internet: $40
Movie ticket: $7
Saturday, September 20, 2008
So what effect does this "nationalization of the banking industry" have on us mortal people?
Mortgage rates have come down because all mortgage in the USA are now backed up by the (broke) US government. There is no risk of default anymore, mortgages are now similar to US treasury paper. Every mortgage that is signed now, if defaulted, is paid by the US taxpayer. Thank you, thank you.
Long term interest will shoot up. They have risen 10% on Friday, this must be the first time in my life time that interest rates rise 10% in 1 day.
Americans still can't get a grip to the idea of $3.5 a gallong gas at the pump. As amazed that they are today of gas prices above 3 dollars when only a few years ago they were 1 dollar a gallon. Wait until the dollar collapses, THEN things will become f'ing expensive. This inflation (general rise in prices) is caused by printing money out of thin air.
Because the government is now broke, bankrupt, they soon will lose their AAA status, which will cause the interest rates of the debt go up. The taxpayer pays.
The Bush administration averted a US Bush depression and created an economy with hyperinflation.
In a depression, everything becomes cheaper by the day (deflation), so everybody postpones their consumption. Result: no production and everybody loses his job and we all become poor.
With hyperinflation, we are poor as well but we can keep our jobs, our taxes and the cost of living will be so high, our purchasing power will melt like an ice cream on a summer day in Arizona. Bankers on Wallstreet can keep their jobs, luckily, goal achieved.
Maybe they can stop the collapse of the dollar by preventing people to preserve wealth and putting it into gold or silver, things that can't be printed out of thin air. Oops they already did that twice...
Friday, September 19, 2008
Nobody cares
It's not funny anymore...
Oil up 15%, gold up 15%
Whatever the numbers do, who cares... without gold you are 15% poorer than you were last week. Gold is not printable like a 1 000 000 USD note we will see similar to Zimbabwe. You don't want to own dollars when the party ends.
Wednesday, September 17, 2008
The US government just took over the entire banking industry
Just a few month before the Bush government is done with their work... Paulson buys ALL bad loans from ALL banks. He puts the US and our grandchildren in debt for the next 5 centuries.
There is no private property in the USA anymore. It is a real disgrace and a sad day for this country. The government doesn't pay me when I make a bad investment decision (except for the $3000 tax credit per year). But when incompetent bankers take unnecessary risks and get paid millions in bonusses the government helps them out. Even voters for Bush and Mcsame should understand that. This is done under a republican president...republicans use the "small" government as their priority in every election.
The dollar is toast even if the government can prop the dollar up the next few days/months/years. It is a worthless piece of paper, best to be used in the restroom.
According to the (manipulated) government figures, the economy of the United States is not even in recession...
How does it feel to go to work and come back, figuring out that you just acquired a bunch of bad debt?
Better safe than sorry
We pulled all our money out of Fortis today. I assume we won't be the only ones. It is pretty clear that Fortis will either go bankrupt or it will be taken over at 2 euro per share. Fortis is basically insolvent.
So how can banks can go bankrupt in such a short amount of time? Bad investments and the multiplicator effect.
In brief:
John Doe deposits $1000 on his Washington Mutual (the FED takeover target)bank account. The bank will put 10 or 20 % of that money into a "safe" government insured financial instrument. They are by law required to do this, it is their required reserve ratio. Assume the bank puts 10% of that money in a safe place.
It uses the other 90% to make a profit... it invests that money...
Because the multiplicator effects also works on the next transaction, the original$1000 John put in his bank now become $5000 of investments and $4000 in new loans.
Most banks invested that money in "MBA's", mortgage backed assets. But because of the housing collapse those MBA's have declined in value.
That wouldn't be a problem if those bets weren't leveraged as much as they were. (leverage: investment were a small move in the assets will have a big impact on your investment, example: 5% move in the asset would have a 50% move on your money).
So banks bought and sold those MBA's from each other, so they are connected with each other for each of those products. If one goes bankrupt, another bank that is holding assets/investments from the first bank loses that money... and idd for the next one and the next one. So a collapse of Bank XYZ in Japan or the US could have a big impact on Fortis or any other bank.
Some people find it difficult to believe that banks don't have YOUR original money. They only have electronic numbers, that's it.
This is only the beginning, a few banks will survive, the rest will go bankrupt (or taken over by the FED which is basically the same thing)
So what can you do in this environment to protect your hard earned assets?
1. Spread assets over different banks
2. Follow the quote of your bank on a daily basis
3. Keep some cash at home, this will be helpful if the economic system as we know it would cease to exist and the banks don't open for the next few days/weeks
4. Buy some gold (coins/bars) or silver, this will be helpful if the economic system as we know it would cease to exist and the banks don't open for the next few days/weeks
5. SAVE, SAVE, SAVE
What will happen next?
1. A lot of banks will go bankrupt
2. A lot of people will lose their jobs
3. Prices of every day goods will explode
4. Prices of financial assets will go down (delevering)
5. Prices of gold and silver will go up
6. Luxury items will become cheaper: homes, cars, boats, RV's, ...
7. The dollar will collapse
Tuesday, September 16, 2008
Q and A with Jim Rogers (Quantum fund up +4200 in 1 decade, 70s)
Q): Earlier this year, when we talked in Singapore, you made the observation that the average American still doesn’t know anything’s wrong – that anything’s happening. Is that still the case?
Rogers:Yes.
(Q): What would you tell the “Average Joe” in no-nonsense terms?
Rogers: I would say that for the last 200 years, America’s elected politicians and scoundrels have built up $5 trillion in debt. In the last few weekends, some un-elected officials added another $5 trillion to America’s national debt.
Suddenly we’re on the hook for another $5 trillion. There have been attempts to explain this to the public, about what’s happening with the debt, and with the fact that America’s situation is deteriorating in the world.
I don’t know why it doesn’t sink in. People have other things on their minds, or don’t want to be bothered. Too complicated, or whatever.
I’m sure when the [British Empire] declined there were many people who rang the bell and said: “Guys, we’re making too many mistakes here in the U.K.” And nobody listened until it was too late.
When Spain was in decline, when Rome was in decline, I’m sure there were people who noticed that things were going wrong.
FED buys AIG
FED pays $85 000 000 000 for worthless AIG
In the USSA the barriers between government and private property have just vanished. American International Group will get an $85 billion bridge loan from the federal government in exchange for an 80 percent stake in itself.
So the government is using our taxpayer's money to give 85 billion dollars to an insolvent company. Money that they/we will never see again of course.
FED's Bailout list
Bear Stearns: check
Fannie Mae: check
Freddie Mac: check
AIG: check
Washington Mutual:
Citigroup:
General Motors:
Ford:
Airlines:
The United States is now officially bankrupt. The only way the will be able to "repay" pay all that debt, is to print money out of thin air.
Lehman Brothers had $683 000 000 000 in losses...and Lehman is not even one of the big players like Citigroup or Washington Mutual...
Monday, September 15, 2008
Bush led us into the Stone Age
The U.S.S.A., the new Zimbabwe of the Modern world.Sunday, September 14, 2008
Financial Armageddon is here
If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system.
Must read: Ph D Roubini: IF Lehman collapses
Other part of the article
The reason why Lehman is having a hard time to find a buyer is that it is most likely insolvent. If you had to mark to market the value of it illiquid and toxic assets (the $40 billion of commercial real estate assets, its remaining residential MBS and CDOs, its holdings of real estate private equity funds) Lehman is most likely insolvent (i.e. has negative net worth with liabilities well above its impaired assets). So leaving aside the potential and now dubious value of its franchise (an option to the value of a much slimmed down financial institution) no financial institution should be paying even a single penny to buy an insolvent firm. That is why all the potential suitors of Lehman (such as Bank of America and others) are waiting for the government to provide another sleazy Bear Stearns deal where the government would buy at higher than market value the toxic assets of Lehman (the commercial real estate assets for example) so as to make the net worth of the remaining institution positive and worth buying. But such action – borderline illegal in the case of Bear as pointed out by Paul Volcker – would be a scandal in the case of Lehman and severely exacerbate the moral hazard problem.
Yep, taking over Bear Stearns was an immense dumb mistake, because now the government has to bail out Lehman Brothers, Citibank, Washington Mutual, Wachovia, Ambiac, General Motors, Ford, AIG (biggest insurer in the USA), all the airlines, all companies that can go bankrupt...
Che Guevara would be proud 
Oil futures drop under $100 a barrel
Let's see what effect this will have on demand and the speculators who are still long oil futures.
If oil would drop to $70 a barrel ... that would be by far the greatest investment opportunity of our lifetime. The oil supplies are depleting fast and the demand in China and India (even in economic collapse of the US) will explode exponentially in the near future. Only 4 million cars in China at this time. The era of cheap oil is over, we will never go back to 20-30 dollar oil. Why would someone want to pay 5 dollars for a "cafe latte" in Starbucks if that same cup of oil costs 30 cents and can drive 6 passengers 2 miles down the road. It is easy to cut back on that cafe latte...
The UK will be importing oil in 2010 for the first time EVER!
Crude awakenings (saw it last week)
Peak Oil (it is not a theory anymore, it's a fact)
The foreclosure process
There can be 3 phases when the owner of a home defaults on his loan. (default = can't or WON'T make the payments) 
1. Short sale
The owner negotiates with the lender that the lender will take part of the mortgage as a full payment of the original mortgage, example:
John Doe buys a home and after 2 years he defaults on his mortgage.
bought home for $300 000
mortgage left after 2 years: $280 000
current value home: $160 000
He negotiates with the bank to sell his home for $160 000. His credit score drops by 50 point and the bank doesn't have to go to the lengthy and expensive foreclosure process. The bank has just lost $120 000, auch.
2. Foreclosure
After a NOD (notice of default) the bank starts the foreclosure process and the home is sold at an auction to the highest bidder. Depending on the place where it is sold a 10% downpayment on the spot is necessary + the rest of the amount has to be paid within 24 hours.
3. Bank owned property
When no one bids on a foreclosure or no one wants to bid higher than the lowest price the bank would accept, the home is returned to the bank. The bank now has a home instead of a paper LOL. It now sells the home on the market, because they are not into (lol) the business of selling real estate, they want to sell ASAP. To achieve a fast sale, they price the home under the current market price. A bank owned property is a home that no one else wanted in the foreclosure process...
It is easy to inspect the inside or outside of a bank owned property but gas, electricity and water were mostly turned off for a few months. A potential buyer needs to pay for turning on water, gas and electricity before he can inspect the home.
A bank owned and foreclosure sales are "as-is", no refunds or no warranty.
Hurricane Ike
One of the reasons homes on the East Coast (Florida, New Orleans, Texas,...) are so cheap, is that you have to rebuild them every few years...
This was Katrina a few years ago, the Bush administration back then did a great job in helping those people in need. Like they always do.
America's got talent, the rejects 2/2
I feel very sorry for the first guy because he has talent, a guy singing Soprano is very difficult. Pity that the jury and the people in the audience were too ignorant to figure that out.
"Ubermensch" Armstrong found some
new drug that will enhance his performance but that can not be detected by the labs and returns to the Tour de France 2009
Everybody knows he used drugs before to win his other tours, I wonder if the French Tour Organisation will let him start in 2009.
A very brief summary/overview of his drug use.
In 2004, sports reporters Pierre Ballester and David Walsh jointly published a book alleging Armstrong had used performance-enhancing drugs (L. A. Confidentiel - Les secrets de Lance Armstrong). It contains allegations by Armstrong's former masseuse Emma O'Reilly who claimed that Armstrong once asked her to dispose of used syringes and give him makeup to conceal needle marks on his arms.[19] Another key figure in the book, Steve Swart, claims that he and other riders, including Armstrong, began using drugs in 1995 while they were members of the Motorola team, a claim since denied by other team members.[20] Allegations in the book were reprinted in the UK newspaper The Sunday Times in a story by deputy sports editor Alan English in June 2004. Armstrong subsequently sued the newspaper for libel, which settled out of court after a High Court judge in a pretrial ruling stated that the article "meant accusation of guilt and not simply reasonable grounds to suspect."[21] The newspaper's lawyers issued the following statement: "The Sunday Times has confirmed to Mr Armstrong that it never intended to accuse him of being guilty of taking any performance-enhancing drugs and sincerely apologised for any such impression." (See also[22] in The Guardian). Armstrong later dropped similar lawsuits in France.[23]
On March 31, 2005, Mike Anderson filed a brief [24] in Travis County District Court in Texas, as part of a legal battle following his termination in November 2004 as an employee of Armstrong. Anderson worked for Armstrong for two years as a personal assistant. In the brief, Anderson claimed that he discovered a box of Androstenine while cleaning a bathroom in Armstrong's apartment in Girona, Spain.[25] While Androstenine is not on the list of banned drugs, the substances androstenedione and androstenediol are listed. However, Anderson stated in a subsequent deposition that he had no direct knowledge of Armstrong using a banned substance. Armstrong denied the claim and issued a counter-suit.[26] The two men reached an out-of-court settlement in November 2005, the terms of the agreement undisclosed.[27]
On August 23, 2005, L'Équipe, a major French daily sports newspaper, reported on its front page under the headline "le mensonge Armstrong" ("The Armstrong Lie") that 6 urine samples taken from the cyclist during the prologue and five stages of the 1999 Tour de France, frozen and stored since at "Laboratoire national de dépistage du dopage de Châtenay-Malabry" (LNDD), had tested positive for EPO in recent retesting conducted as part of a research project into EPO testing methods.[28][29] For years, it had been impossible to detect the drug, called erythropoietin, which builds endurance by boosting the production of oxygen carrying red blood cells. The world governing body of cycling, Union Cycliste Internationale (UCI), did not begin using a urine test for EPO until 2001, two years after the sample were taken. This claim was based on an investigation in which they claimed to be able to match samples from the 1999 Tour that were used to hone the EPO test to Armstrong.[30] To establish a link between Armstrong and the samples, the LNDD matched the tracking numbers on the samples with those on Armstrong's record with the UCI during the 1999 Tour. Armstrong immediately replied on his website, saying, "Unfortunately, the witch hunt continues and tomorrow’s article is nothing short of tabloid journalism. The paper even admits in its own article that the science in question here is faulty and that I have no way to defend myself. They state: 'There will therefore be no counter-exam nor regulatory prosecutions, in a strict sense, since defendant’s rights cannot be respected.' I will simply restate what I have said many times: I have never taken performance enhancing drugs."[31]
In June 2006, French newspaper Le Monde reported claims made by Betsy and Frankie Andreu during a deposition that Armstrong had admitted using performance-enhancing drugs to his physician just after brain surgery in 1996. The Andreus' testimony was related to litigation between Armstrong and SCA Promotions, a Texas-based company that was attempting to withhold a $5-million bonus; this was eventually settled out of court with SCA paying Armstrong and Tailwind Sports $7.5 million, to cover the $5-million bonus plus interest and lawyers' fees. Armstrong later issued a statement suggesting that Betsy Andreu may have been confused by possible mention of his post-operative treatment which included steroids and EPO that are routinely taken to counteract wasting and red-blood-cell-destroying effects of intensive chemotherapy.[32] The Andreus' allegation was not supported by any of the eight other people present, including Armstrong's doctor Craig Nichols, [33] or his medical history, although according to Greg LeMond (who has been embroiled with his own disputes with Armstrong), there exists a recorded conversation in which Stephanie McIlvain, Armstrong's contact at Oakley Inc., told LeMond, "You know, I was in that room. I heard it."[34]
In July 2006, the Los Angeles Times published an in-depth story on the allegations raised in the SCA case.[35] The report cited evidence presented at the trial including the results of the LNDD test and an analysis of these results by an expert witness.[36] From the LA Times article: "The results, Australian researcher Michael Ashenden testified in Dallas, show Armstrong's levels rising and falling, consistent with a series of injections during the Tour. Ashenden, a paid expert retained by SCA Promotions, told arbitrators the results painted a "compelling picture" that the world's most famous cyclist "used EPO in the '99 Tour." [37] Ashenden's finding were disputed by the Vrijman report, which pointed to procedural and privacy issues in dismissing the LNDD test results. The LA Times article also provided in-depth information on the testimony given by Armstrong's former teammate Steven Swart, Frankie Andreu and his wife Betsy, and Instant messaging conversation between Andreu and Jonathan Vaughters regarding blood-doping techniques in the peloton. Vaughters later signed a statement disavowing the comments and stating he had: "no personal knowledge that any team in the Tour de France, including Armstrong's Discovery team in 2005, engaged in any prohibited conduct whatsoever." Andreu signed a statement affirming the conversation took place as indicated on the Instant messaging logs submitted to the court. The SCA trial was settled out of court, and the LA Times reported: "Though no verdict or finding of facts was rendered, Armstrong called the outcome proof that the doping allegations were baseless." The L.A. Times' article provides a comprehensive review of the disputed positive EPO test, allegations and sworn testimony against Armstrong, but notes that: "They are filled with conflicting testimony, hearsay and circumstantial evidence admissible in arbitration hearings but questionable in more formal legal proceedings."
In September 2006, Frankie Andreu and another unnamed teammate were reported to have made recent statements that they used EPO during the 1999 Tour de France. This was the same tour, and the same drug, at issue in the controversy with the World Anti-Doping Agency. While both teammates are reported as saying they never saw Armstrong use EPO, Armstrong at once attacked the article, describing it as a "hatchet job". [5]
Thursday, September 11, 2008
The perfect storm of wealth destruction
So the lesson must be to go forth and find the bull market, wherever it is.
Almost always – but not now because in a global financial marketplace in the process of delevering, assets that go up in price are rare diamonds as opposed to grains of sand.
For the past several months our PIMCO Investment Committee blackboard has continued to display the following lesson plan:
What Happens During Delevering
Risk spreads, liquidity spreads, volatility, term premiums – they all go up.
Delevering slows/stops when assets have been liquidated and/or sufficient capital has been raised to produce an equilibrium.
The raising of sufficient capital now depends on the entrance of new balance sheets. Absent that, prices of almost all assets will go down.
Bill Gross (manages the biggest bond fund in the world)
Source: Must read article if you want to understand what is going on right now.
Mortgage rates in the U.S. crash
The government is now in backing up all mortgages (even if they drop on a daily basis), so mortgages get cheaper.
Tuesday, September 9, 2008
Bear Stearns(broker), Fannie Mae(mortgage insurer), Freddie Mac (mortgage insurer), next in line for some government takeover is ...(drumroll)
Monday, September 8, 2008
CNBC (Europe) on "American Socialism"
Apparently I am not the only one, on CNBC today 9/8/08:
"Only countries like North Korea and Cuba are more socialist then the US"
"Socialism has taken over in Washington"
We'll probably won't hear enything about the great enemy "socialism" on the US CNBC channel.
Not elected, paycheck paid by the taxpayer, FED chairman until 2020, uses (at least) 200 billion of the taxpayers' money AND he has no clue
First Bear Stearns, then Fannie Mae and Freddie Mac, who is next? GM - Ford - AIG - Washington Mutual - the airlines - ...
52 days ago:Fannie And Freddie Are Fine, Bernanke Says
Chairman Ben Bernanke of the Federal Reserve told Congress on Wednseday that he believes Fannie Mae and Freddie Mac will make it through the storm in the U.S. housing market.On Bernanke's second day before Congress, this time in front of Rep. Barney Frank's House Financial Services Committee, the Fed chairman said the troubled Fannie Mae and Freddie Mac were adequately capitalized, and were in no danger of failing.
Saturday, September 6, 2008
Best News I've heard so far
Another reason to vote for Obama
Obama might pursue criminal charges against Bush
Democratic vice-presidential nominee Joe Biden said yesterday that he and running mate Barack Obama could pursue criminal charges against the Bush administration if they are elected in November.
"If there has been a basis upon which you can pursue someone for a criminal violation, they will be pursued," Biden said during a campaign event in Deerfield Beach, Florida, according to ABC.
"[N]ot out of vengeance, not out of retribution," he added, "out of the need to preserve the notion that no one, no attorney general, no president -- no one is above the law."
Killing 4000 innocent American soldiers and killing hundreds of thousands of Iraqi and Afghani. Let's put the people who lied and got us into this mess (deliberately) in jail where they belong!
5 year Halliburton chart below
Maricopa is now becoming the cheapo town of Arizona
91 homes lister below $100 000 (=120 ounces of gold ; 70 000 euro), cheapest one is $54 600. That home is 1300 sq ft and has a 1 acre lot (4000 sq meters). The Bush Depression is already holding Maricopa in its grip.
New hours for our School
Due to the lack of buses, the Board has decided we will be starting school at 7:24 and end classes at 2:02!
Auch, that's gonna hurt in the morning.
But we'll have a lovely afternoon off.
