Resolution Trust Corporation, 1989 was proposed to solve insolvent savings and loans mainly to dispose the stockpile of rubbish real estate holdings. The spinning of foreclosures started with Home Owners Loan Corporation (1933) for the management in refinancing mortgages and foreclosure of mortgage defaults which include auction and selling of foreclosures. Then there was the Federal Asset Disposition Association (1985) to help sell and manage assets under the Federal Loans and Savings Insurance Corporations.
All that were concerning RTC were the tangible foreclosed real estate holdings, commercial loan papers, Non Performing Loans, Loan applications, defaults, equity interest , partnership, JV. The size of RTC those days were considered as huge as a junkyard full of metal parts that are gigantic and immobile. The treasury secretary disclosed that the 750 – 1000 S&L accountable to them amounts to anywhere from 408 billion to 560 billion and the amount of cost to them to dispose the entire holding would stand at about 89 – 132 billion.
5 hundred sixty billion dollar bailout those days would cost = (What cost $560,000,000,000 in 1989 would cost $925,317,102,574.91 in 2007) which is about close to a trillion dollar. If you compared to the terms today you might as well flip it around 50 times that figure and you are close to the total CDO and CDS plus mortgage backed securities being valued. But, all must realize that this is near the beginning of the storm, the hurricane has just uprooted the few tree and your neighbors’ home when it hits you, all you can do is hide in the basement or take shelter at safety room full of pillows and your important documents buried underground. It would be a long way for that storm to go on as we have not seen massive further devaluation of real estate and asset pricing, FDIC have not sounded the alarm, the feds are still picking money from all around him including from thin air.
Can you tell me if RTC was so successful, the Bush Administration had a sound policy making and economic hindsight, and then what are we doing here savoring the taste of subprime mess. Everyone is involved no matter you accepts the fact or deny. They are taking a route that has been taken in 1989 and if it failed you the last time, it probably gonna fail you another.
The only question is how long will it delay the process, are you going to start another government arm to cover the defaults and foreclosure of the post 1989 upcoming RTC. Stop dumping taxpayers money and start initiate in fiscal spending to boost manufacturing, agriculture, production. Give more exemption to local goods and incentives to boost the use of locally produced goods, take a look at boosting productivity in local corporations involved, start helping US producers sell their products, trade unions, government schemes, these are a better alternative to boost the economy instead of the MAY tax rebate, come on!!!!! Education funds, employment under government agencies, start to help those recently unemployed through seminar, employment opportunity, and mass employment schemes thru recruitment agencies.
That is just on top of the entire foreclosure scheme, how about the front line, these defaults would have been flipped a few times just to reach the top, if included valuations from FADA and HOLC the figures would have jumped. And I quote Bush to say this “he will take any actions necessary to stabilize markets in the face of a crisis that is shaking confidence in the nation's financial system.” And you would come to think that what if Trillions weren’t spend on the war, would crude oil jumped? Would deficits narrow down? And once again where will all the ammunition and war machineries go to?
The Feds are buying time, they need the support of the nation and all the time to wipe this mess up, the DOW rallied last night, but did your holdings surge a lot? And if you look at the chart last night, initially no one was confident about the plan and the Dow went to negative zone, only to see some short covering after SEC stepped up and the move of invisible hands, check the sell down of gold, would precious metal of such great demand being sparked with such great sell down regardless of intrinsic and extrinsic valuation, treasuries are still too near the OPR, Libor is still a mile away from the rates, we are still seeing bank not providing loan. The new plan was to buy hope and confidence, America needs hope, the rest of the world looking upon them needs hope.
This situation is like a family crisis, where the brother does not talk to the father but the father acknowledges that his son needs money for his home loan, he has no job anymore. So the father pushes the money to the sister to give to the brother to pay his loan. That is what the entire situation looks like, when the mess will end I would not know, but I am keen to look at how the big illiquid, immobile, insignificant papers and toxic derivatives being held by the government and FDIC has to clear. When the Real Estate market further demise, investors continue to look at areas to flea to and that would be none other than gold.
Showing posts with label hedge fund. Show all posts
Showing posts with label hedge fund. Show all posts
Thursday, September 18, 2008
Wednesday, September 17, 2008
Read this now
With the downfall of equities, people will turn to look at different alternatives they might use to able to defend their purchasing power from being scrapped away. If you take a look on my right i am a big fan of GOLD and yesterday we have had a comeback run in this precious metal. This is one way to preserve the Purchasing power, it is not a interest return investment scheme, it is not going to give you short term gains, it is not dividend paying; let me tell you it is a shelter in a storm, a finite metal that has been conditioned by men to value against Fiat money, u can deny the fact that gold holds nothing against the dollar, but you cannot underestimate the differences in terms of valuations (inflation V.s Goldprice; Dollar today V.s Gold Price)
Stocks will continue to take more beatings, any rally is non sustainable in the bigger picture! Falling 400 points is nothing, take 20 % fall for first cover, another 20% , another 10% your 100% retracement point is being raided what are you going to do? Cry? Come on tell me how many people are trading commodities futures? How many are considering taking on GOLD? Is it as populated as the stocks? You can short it but are you the central Banker? Wouldn't you like to arbitage on the valuation differences!! Dont follow the herds or stand being slaughter!! With a debased dollar, i would throw it for GOLD, yen is making a comeback from carry-trading uncertainties , take a look!!! Would the common denomination change in the future? would you still want to hold fiats compared to actual bullion and physical currency, it is finite so bear in mind the valuations is going to rocket.
Demand for Gold did not shrink but increased over the past few months, prices are not seen as sold down but being manipulated, safehaven, take a longer term perspective. If you don't believe me, in two years compare the DOW to Gold price. More and more fiat money are being created, more and more liquidity is being pumped up, the more inflated money is going to be, the more debased a currency the more likely i would abandon it. I mean what are reserves for in the first place when u don't need to defend your currency!
I am not asking you to jump into the pool blindly, do some research and do not attempt to time markets! After all, it is not part of investing to time a market, and it is even heavier priority not to lose insight and control over self when investing. At least not like cramer, bu...Bu... bu.... BUll S***!!! This could be the start of another round of bull in commodities, people keep in mind that Oil has retraced a lot, it could not be justified in surrounding nations that produce oil to keep selling at such a low price, OPEC will cut supply to boost pricing and curb too much supply, are you still shorting it? Lean hog, Soy, CPO, Sugar, Natural Gas are still waiting to bounce, if equity is not the safehaven, Hedge funds will raid the Commodities......Defecits, Debt that are haunting them(cheaper dollar pays debts cheap), dollar pumping, shorting of gold by CB cartels.
and they say this :
-The U.S. government is now on the hook for future Fannie (FNM)/Freddie (FRE) losses. Total losses will depend on the severity of the housing/credit debacle, but it isn't a stretch to imagine losses in the $1 trillion range.
-The U.S. budget deficit in August alone was $112 billion.
-The U.S budget deficit is forecast to be $407 billion in 2008 and a record $438 billion in 2009.
-The $438 billion for 2009 does not include any funds used to "conserve" Freddie or Fannie or any new fiscal stimulus package, and it doesn't account for the full cost of the Iraq War (let alone any new incursion into Iran, the Caucasus region, or Pakistan/Afghanistan).
-About the only thing supporting GDP growth in the past two quarters has been net exports, thanks to the falling value of the dollar. The recent strength in the dollar is likely to blunt this tailwind.
-The risk of competitive currency devaluations is very real as every country battles for a piece of the shrinking pie of investment and consumption spending.
-The Fed continues to swap high-quality Treasury securities for garbage securities.
-U.S. unfunded liabilities range from $50 trillion to $95 trillion (depending on the assumptions used).
"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd."
- Benjamin Graham
" currency that has taken the test of time , none other than gold/silver"
Stocks will continue to take more beatings, any rally is non sustainable in the bigger picture! Falling 400 points is nothing, take 20 % fall for first cover, another 20% , another 10% your 100% retracement point is being raided what are you going to do? Cry? Come on tell me how many people are trading commodities futures? How many are considering taking on GOLD? Is it as populated as the stocks? You can short it but are you the central Banker? Wouldn't you like to arbitage on the valuation differences!! Dont follow the herds or stand being slaughter!! With a debased dollar, i would throw it for GOLD, yen is making a comeback from carry-trading uncertainties , take a look!!! Would the common denomination change in the future? would you still want to hold fiats compared to actual bullion and physical currency, it is finite so bear in mind the valuations is going to rocket.
Demand for Gold did not shrink but increased over the past few months, prices are not seen as sold down but being manipulated, safehaven, take a longer term perspective. If you don't believe me, in two years compare the DOW to Gold price. More and more fiat money are being created, more and more liquidity is being pumped up, the more inflated money is going to be, the more debased a currency the more likely i would abandon it. I mean what are reserves for in the first place when u don't need to defend your currency!
I am not asking you to jump into the pool blindly, do some research and do not attempt to time markets! After all, it is not part of investing to time a market, and it is even heavier priority not to lose insight and control over self when investing. At least not like cramer, bu...Bu... bu.... BUll S***!!! This could be the start of another round of bull in commodities, people keep in mind that Oil has retraced a lot, it could not be justified in surrounding nations that produce oil to keep selling at such a low price, OPEC will cut supply to boost pricing and curb too much supply, are you still shorting it? Lean hog, Soy, CPO, Sugar, Natural Gas are still waiting to bounce, if equity is not the safehaven, Hedge funds will raid the Commodities......Defecits, Debt that are haunting them(cheaper dollar pays debts cheap), dollar pumping, shorting of gold by CB cartels.
and they say this :
-The U.S. government is now on the hook for future Fannie (FNM)/Freddie (FRE) losses. Total losses will depend on the severity of the housing/credit debacle, but it isn't a stretch to imagine losses in the $1 trillion range.
-The U.S. budget deficit in August alone was $112 billion.
-The U.S budget deficit is forecast to be $407 billion in 2008 and a record $438 billion in 2009.
-The $438 billion for 2009 does not include any funds used to "conserve" Freddie or Fannie or any new fiscal stimulus package, and it doesn't account for the full cost of the Iraq War (let alone any new incursion into Iran, the Caucasus region, or Pakistan/Afghanistan).
-About the only thing supporting GDP growth in the past two quarters has been net exports, thanks to the falling value of the dollar. The recent strength in the dollar is likely to blunt this tailwind.
-The risk of competitive currency devaluations is very real as every country battles for a piece of the shrinking pie of investment and consumption spending.
-The Fed continues to swap high-quality Treasury securities for garbage securities.
-U.S. unfunded liabilities range from $50 trillion to $95 trillion (depending on the assumptions used).
"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd."
- Benjamin Graham
" currency that has taken the test of time , none other than gold/silver"
- who Leaps ?
- A failure to keep the insurers, what more after banks
- 1999? imagine the dollar index at 76 how abt gold n oil?
- Now they start to tell you this
- Look at GATA they have the best Vids and writings
- Panic? no gold rush yet
- is it a correction or manipulation; i mean how high dollar can go?
- Beware mortgage application were high, but why are they cheap?
- deleveraging
- 1600?2200?what is the value of gold
- Hey don be so sour! mistakes are made by man! we are all men(hyperinflation?)
- Hedge funds involved big time, no wonder Bernake sat them down Sunday(HF or CB cartel?)Pls note the -ve correlations dollar to gold, and how sell downs that dont see fundamentals and pricing!Must see this
** at this time Crude oil looks like a round curve waiting to head up? only worries are slowdown in demand as people will not spend more**
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