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Bear Stearns

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Well, things do not seem to be recovering unfortunatly.

 

 

http://news.bbc.co.uk/2/hi/business/7504122.stm

 

2 companies that hold 50% of the lending market in the USA are about to go belly up.....

 

Suprised Icon hasn't posted anything on this yet.

 

 

The US government has announced sweeping measures to shore up the nation's two largest mortgage finance companies, Freddie Mac and Fannie Mae

 

New York says the emergency measures are meant to allay fears that the two companies are about to run out of money

 

 

And as Korona put it in the first post...

 

While it is true that Stearns bought into the subprime fraud in a big way, their troubles will have huge repercussions on the rest of the economy as the cash flow gets even more clogged up.

 

My advice would be to withdraw all your cash savings and buy land

 

 

 

And in other news.... Brazil's oilworkers are going on strike. Price of oil is bound to go up as a result, yet again.....God is it getting expensive to drive...glad I bike and bus.

Edited by Feuersturm

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It is even going to get worse, as more and more banks and financial institutes are having difficulties holding their breath and keep up the smiling "no worries" face.

From what i've read so far, several ppl are putting september as the turning point, because that's the point where most banks and financial institutes, that are deep in problems, will be unable to keep up the facade.

This type of emergy measures can't be kept doing for ever without undermining the fed's (and America's) financial credibility. Which could have far reaching international consequences...

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I've been gone for a bit, so the collapse of that Californian bank and the troubles of Fannie May/Freddie Mac are very troubling.

 

See, why I wouldn't trust the Federal Reserve is, as you all likely know, it is a conglomerate run by the biggest banks. Why anyone would TRUST them to 'rescue' the ailing banks, is beyond me.

 

Trust me Feur, I've been on it.

 

Very good article on The Feds looting of Bear Stearns

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I believe a majority of opinion now foresees a recession in the UK; the two main focuses of our economy are Finance and Land. So we're more exposed than most developed economies.

 

The average house price has already fallen 6.1% on this time last year, and the number of house sales are down 50%. At the same time, inflation is above the 2% +-1 CPI band; http://www.statistics.gov.uk/cci/nugget.asp?ID=19 . Traditionally, like i believe the New Deal famously did, they would cut interest rates to stimulate the economy, but the ONLY objective assigned to the Bank of England is to conrol inflation, so they're in danger of having to actually raise interest rates.

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bumped into this troubling fact :

 

Consider: Only 20 years ago, the U.S.'s total outstanding mortgage debt made up roughly 30% of our GDP. Homeowners held large stakes in their houses – close to 70% of the equity on average. Today, mortgage debt equals nearly 80% of GDP. The average homeowner owns less than half the equity in his home. This seismic change in the nature of home ownership and debt financing occurred nearly overnight – in less than one generation.

 

No wonder they have a "superior" economical model then....:D

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...are putting september as the turning point, because that's the point where most banks and financial institutes, that are deep in problems, will be unable to keep up the facade....

 

Judging how it goes with the Lehman (4th largest bank in the USA) and the "shotgun" marriage of Merrill Lynch with BoA, my prediction of a few months ago was spot on.

And more will follow soon...

Dunno if you realise it enough, but the edge of a "systemic world wide failure" gets uncomfortably close, guys...

 

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I read that. I was deeply concerned by this....

Flyby is bang on again, which in this case is not a good thing.

 

Rumor has it Russia had a 50% stock decrease overall over past month?

 

Im hoping the US can correct its economy before it pulls us down into an abyss.

Edited by Feuersturm

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Now it will all depend on how deep all the banks are interlocked. If in the coming weeks there are more big banks falling on their knees, i fear we"ll be in a domino effect.

Most companies can absorb the losses inflicted of 1 client, but if several of his clients go down, it also brings down that company. You get a rippling effect tearing down one giant after another.

 

I'm worried, tbh.. several Belgian banks already admited that the damage done by Lehman to their portfolio was around 900mil euro's...and they are relativly little exposed to the US market.

 

I think the FED did not want to buy Lehman, unlike the other cases, because they had a huge exposure abroad and less critical for the US market. Consequently, the damage abroad seems to be severe...

But that's short time thinking. It is the foreign banks that keep the US economical system upright. Breaking that confidence could result in foreign banks not wanting to buy US debt certifactes...which would accelerate the deficte growth to unseen proportions and eventual lead to the defaulting of the US government. A dangerous game to play.

 

 

What got me to believe this banking crisis is going to be major :

months ago i've seen a graph with the increased money volume world wide: in 9 years time it had grown to 465%. If you believe this is backed up with real goods and production, you're still believing in fairy tales. This enormous capital has been "created" artificially and has all the properties of an inverse piramid game. We all know that these are set to collapse...

 

The question is now, will it go domino or not?

 

update:

I'm starting to hear problems for AIG (American International Group) , the biggest ensurance company in the world. Their credit rating has been lowerd, meaning they'll have it much harder to get money to plug the holes... If that one goes....it will be an unstoppable domino...

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“You can see that this is welfare for the rich. This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters... This is outrageous. Who are these people who are taking our money and doing this and ruining America?"

 

Word -

I think it's funny that they are acting like this is something new though :lol:

 

 

They should allow the banking system to take the damage here, it sowed the seeds of this crisis, its time for it to reap the whirlwind.

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Yes, AIG is in trouble :(.

 

As for Lehman and why it wasn't bailed out, I can make a guess. Lehman dudes weren't connected enough to get the bailout. But of course, a large severance package is probably on the books for this crook as well <_<.

 

AIG insures our car :(.

 

Another article told in storyish format.

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The status of the current economy is worrying. AIG better keep its head above the water, lest we risk the possibility of a depression.

 

 

Edit:

 

Morgan Stanley was down 24% at $21.75 despite better-than-expected quarterly profits. Goldman Sachs fell 13.9% to $114.50.

 

The tech-heavy Nasdaq index also plummeted - shedding 4.94% to 2,098.85.

 

Shares in AIG fell a further 45% to $2.05.

 

Earlier the FTSE 100 closed 2.2% lower while France's Cac 40 shed 2.1% and Germany's Dax shed 1.7%.

 

Washington Mutual shares ended 14.8% lower while Wachovia fell 20.7%.

Edited by Feuersturm

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HBOS - Lloyds TSB: Biggest rescue deal in British banking history :(

 

And also, much much illuminating:

 

Morgan Stanely to merge with Wachovia

 

This basically leaves only Morgan and Goldamn Sachs standing. Well Bain is too, ironically formerly led by Mitt Romney. Chase went out months ago I believe. Well if Morgan Stanley falls, and Manhattan too, then we know for sure where the pirates home base is <_<.

 

Also, the US government is seizing AIG.

Edited by IconOfEvi

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I wouldn't call LLoyds acquisition of Halifax a rescue... 44000 ppl will loose their jobs, in an attempt to keep it standing.

 

Looks to me that the USA will be more communist then Russia, if it keeps nationalising its banks at this rate... :P

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lol thats what I was thinking. PRC ain't got nothin on us at this rate. :P

 

Also, looked for and thought of some songs prudent to the situation:

 

 

EDIT - talks are in the way for the government to form a corporation to buy bad credit :unsure:. WHAT, THE, FUCK.

Government run corps, in the USA. Who'd a thought.

 

EDIT - the only two investment banks left are Morgan Stanley and Goldman Sachs. If GOldman is the last one standing, you know the most pirates came from there.

 

EDIT - One of the best articles on the situation. Also, bring back Spitzer.

 

EDIT - Also, Der Spiegel - The World As We Know It Has Come To An End

Edited by IconOfEvi

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So yeah more socialism for the rich. Uncle Sam sure is generous to that top 10% of the country. Where did the principal of the free market go? Oh yeah it's not making double digit profits, better use taxpayer money to bail it out then. FFfffffffffffftttt

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Now, what's next, after the "Great Bailout" ?

 

How many trillions can one add to the existing debt mountain before it all collapses?

 

I have no clear sight yet where it will go from here, but something tells me there will be an ever bigger backslash from this. It's plain common sense...

It's like borrowing money from credit card companies to fill the previous pit : It temporarily solves your problem, but in the end, it only gets worse with each ittiration....

 

Fact is the past week is one that will be kept in history books, just like the imfamous "Wallstreet Crash" in 1929.

 

So... what's next? Hyper inflation, due to the ramping dollar printing?

 

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Yeah I think we will see significant dollar inflation but it will take a few months to materialise. Enough time to pass the buck onto the next President anyway... The ability to print money in order to finance that much debt will be too much of a temptation.

 

ATM I am really enjoying seeing Bush justify this. The doublespeak is awesome. On the one hand this debt is so 'corrosive' that the Fed must take the unprecedented measure of using taxpayer money to buy it up, but its ok guys because we are sure this worthless debt will turn a profit in the end.

The other great line is an old one I think we last heard trotted out in 2003; that "the risk of inaction far outweighs the risk of action" :lol:

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Not going to catch up on this thread other than to say I disagree with the bailouts but have made a fuckton of money shorting stocks these pass couple weeks.

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Not really Korona. I just have no income at all or I would have bought some slowly and surely. Though I prefer to keep stocks as a method to get Dividends quarterly.

 

EDIT - kinda related:

84911d0baa211a439a7b7c284556fd02.jpg

Edited by IconOfEvi

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