"phil scott" <phil@[EMAIL PROTECTED]
> wrote in message
news:0f648771-04e4-466b-971a-f50a01ba2594@[EMAIL PROTECTED]
Feb 13, 1:21 pm, Vide...@[EMAIL PROTECTED]
wrote:
> Hope is the only thing being offered to the desperate investors who
> see the value of their "creature feature" securities plunge deeper and
> deeper into the toxic waste dump, from which they initially
> arose...and Hope dies last
>
> i to find this situation amazing. the desperate free market
> indoctrinated fundies will grasp at any straw, including ones that
> point to the coming disaster.
> how the market could have viewed yesterdays offer by buffet as a
> positive, is beyond me. if anything it should point to how worthless
> most financial positions our cor****ations, financial institutions, and
> investments by almost all american entities are.
> the markets are simply running on borrowed money, borrowed time, and
> a feverish belief in free market economics.
> todays admittance of out of control inflation sparking a rally is
> again, stupidity that well may be rewarded with a rather large, well
> deserved splat!
> as far as the car companies go, remember, the humvee is used up
> rather fast in iraq.
>
> http://suddendebt.blogspot.com/
>
> WEDNESDAY, FEBRUARY 13, 2008
> Suspended Animation
>
> Markets seem to be in suspended animation mode, zipping and getting
> zapped by a variety of relevant and irrelevant newsbits, rumors and
> wishful expectations. The latest were Mr. Buffet's offer to assume the
> monolines' municipal bond insurance books and the agreement between a
> group of banks to freeze home-owner foreclosure actions for 30 days.
>
> They are both "no-brainers"..
>
> Of course, Mr. Buffet wants the muni insurance business! It's the
> profitable cream which, if removed from the monolines' books, will
> leave them with the rapidly souring structured finance insurance
> business, hastening their demise. The sly old gentleman does not
> expect the ailing insurance companies to accept voluntarily; he's just
> placing a marker on the table, for the event that monolines go under
> and their municipal business has to be transferred to other insurers -
> for example, his own recently formed credit insurance company.
>
> In the meantime, credit risk for cor****ate bonds keeps going up and
> up, even for investment grade names.
>
> CDX Investment Grade Index (Chart: Markit)
>
> As for the 30-day "freeze" plan, it's a delaying tactic in
> anticipation of further deep Fed interest rate cuts, which could ease
> some of the pain in the upcoming wave of adjustable rate mortgage
> resets. The initiative's name is straight out of Depression Era
> programs: "Hope Now". Now, it looks to me, Hope is the only thing
> being offered to the desperate investors who see the value of their
> "creature feature" securities plunge deeper and deeper into the toxic
> waste dump, from which they initially arose...and Hope dies last.
>
> So far, attention has been focused almost exclusively on banks'
> holdings and their write-offs, amounting to some $130 billion. But
> this is a small part of the problem; after all, banks acted as
> intermediaries, packagers who funnelled the merchandise to the
> ultimate buyers: pension, mutual, hedge and private equity funds, plus
> SIVs and cor****ations who parked their cash there. In other words, the
> banks' holdings were the leftovers and the rotting main course is
> still to be accounted for. Only a few foul whiffs have escaped so far,
> as a small number of non-financial cor****ations took charges against
> fourth quarter 2007 earnings to write down losses in their holdings.
>
> There is more to come. According to SIFMA, a total of $1.5 trillion in
> CDOs alone were issued globally during 2004-07.
that 1.5 trillion is the just the hard cash money on the line... not
the derivitive mess that springs from it at a 20 or 100 to one
ratio... one huge bag of foul smelling, but none the less explosive
gas.
Derivatives are a zero-sum game.When one person loses, someone else is
winning.
The total effect of derivatives on the economy is zero.
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