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Technology Stocks : Semi Equipment Analysis

SOXX 292.04

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To: Sam who wrote (67877)	3/16/2015 9:21:04 PM
From: Elroy	Read Replies (1) of 95609

The New York Times’ DealBook profiled Redleaf’s call, in late 2006, for a “sudden, profound and pervasive loss of faith in the alchemy of structured finance as currently practiced” within the next 18 months. That, as readers no doubt recall, did indeed happen. Hmmm, I thought what happened was 1. House values declined, while at the same time 2. Many "risky" mortgage borrowers defaulted. 3. Those two combined to drive the entire banking industry - which is highly leveraged (what, they need to hold $8 actual capital relative to each $100 of loans??) into near bankruptcy. 4. Every financial institution stopped lending to each other until they figured out who was going bankrupt and who was going to remain as an ongoing entity. 1 & 2 were the key drivers. Mortgage defaults and a decline in home values. Calling it a loss of faith in the alchemy of structured finances sounds like a high falootin' rootin' tootin' way of sounding like a hedge fund manager pontificator rather than just saying something really simple. The leveraged banking industry can only absorb so many asset value declines and defaults before it goes bust. No kidding. ==== The latest sign of fray can be seen in the currency market and the euro’s spectacular implosion, Redleaf says. How the recent fall of the euro and volatility in currency markets relates to the 2008 housing/financial crisis is beyond me. “I think it is a truly scary time. There are some parallels with the collapse in home prices which preceded the financial crisis. What are these parallels? It strikes me as completely plausible that a further decline in the euro triggers a recession in the U.S. Why? This guy is just making big claims without any explanation.

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