Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: isopatch who wrote (78830)	11/13/2000 8:39:21 PM
From: SliderOnTheBlack	Read Replies (2) of 95453

re: the Bank Meltdown - "you aint seen nothin' yet" ...I'll share what I can of some first hand information that I got today with a conversation with a key person in the Mortgage Banking Business. - there is a huge iceberg & it's dead ahead - of explosive deliquencies & defaults in the mortgage & consumer finance business. Greenspan & Rubin's credit expansion which is the most reckless in US history is coming home to roost. We saw what happened to Fist Union when they bought the Money Store & Conseco when they bought Green Tree Financial (alert- who just bought Associates ?!?!)which occured in the last consolidation move from the 1998 shakeout in the banks - but; now it's not just subprime lending & credit cards - it's conforming and "A" paper that is defaulting. In my personal experience; the deliquencies reported to the market from banks, mortgage lenders, consumer finance companies and credit card issuers are one of the most manipulated & near fraudulent statistics in the market. Companies use everthing from aggressive accounting interpretations to refusing to move accounts to charge off status after in some cases - 12+ mos with no payments received, to irresponsible "flips" - which are refinances just for the purpose of making deliquent accounts "current". In a nutshell folks - the credit expansion reached irrational levels to where mortgage loans were made with little , or no equity - many times up to 125-140% of apprasaised value's on 2nd mortgages. Traditional debt ratio & prudent underwriting guidelines were literally thrown out the window in order to grow the topline - period. The US Consumer now has a NEGATIVE SAVINGS RATE - and they are not just tapped out - they're going under and imho; are about to "go under" at unprecedented rates. I'll make a prediction here people - in 2001 with this economy, with this unemployment rate; US Personal Bankruptcies will hit an alltime record and credit card chargeoffs & delenquencies will as well. There is "FEAR" to a degree that I have never seen before in this Industry. Companies realize that this can no longer be contained, nor turned around. It is very clear that this Xmas retail season is NOT going to be a success. Today I went to strong defense - added some puts on tech, bought some Silver stocks - SIL & PAAS got awfully cheap today; sold much of my Oils, but added some out of the money outlying calls to give me subsantial upside; but defining & limiting my downside & overall exposure. Gold's have traditionally moved up at the end of Oil Shock cycles and we are poised for a move here imo; as the foreign repatriation is going to start & the US Dollar must and will correct. The XAU has held very well here for a month; forming a solid bottom technically between XAU 42-45 of late & refusing so far to breach XAU 40; while virtually everything else has set new lows in the last 4 weeks... the XAU has performed pretty damn well in comparison to the OSX, or NAZ for the last 2-4 weeks imo. As of today portfoliowise I'm: 20% Oils - with many out of the money calls for Feb-May. 40% Gold/Silver - Pm's - added SIL & PAAS today 15 % short - via puts 25% Cash Good Luck - it isn't "all" about the election - but, the election debacle is enough of a catalyst that has got the ball rolling downhill and I don't know if we're going to be able to stop it soon... I think the US Dollar is going to correct substantially very soon & the market could have a long way to go before finding a bottom... and Gold is going to surprise people....

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