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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (46877)	12/9/2005 10:46:45 AM
From: ild	Read Replies (1) \| Respond to of 110194

Botched Stock Trade Costs Japan Firm $225M By HANS GREIMEL, Associated Press Writer 2 hours, 12 minutes ago Japan's government rebuked the Tokyo Stock Exchange and one of the country's biggest brokerage firms Friday after a typing error caused Mizuho Securities Co. to lose at least 27 billion yen, or $225 million, on a stock trade. The glitch roiled the Japanese market, and jitters over the reliability of the exchange's trading system contributing to a 1.95 percent drop in the benchmark Nikkei 225 index Thursday. The Nikkei rebounded 1.45 percent Friday to finish at 15,404.05, but the mishap triggered concern among some traders just a month after an embarrassing glitch at the Tokyo exchange shut down the market for almost an entire day. The trouble began Thursday morning, when Mizuho Securities tried to sell 610,000 shares at 1 yen — less than a penny — apiece in a job recruiting firm called J-Com Co., which was having its public debut on the exchange. It had actually intended to sell 1 share at 610,000 yen, or $5,041. Worse still, the number of shares in Mizuho's order was 41 times that of J-Com's true outstanding amount, but the Tokyo Stock Exchange processed the order anyway. Mizuho says it tried to cancel the order three times, but the exchange said it doesn't cancel transactions — even if they are executed on erroneous orders. By the end of the day, Mizuho Securities — a division of the nation's second-largest bank, Mizuho Financial Group, Inc. — had lost at least $225 million. That total could rise, Mizuho Securities spokesman Hideki Sakuma said Friday, adding that the mishap was sparked by human error. Japan's Financial Services Agency, the country's financial watchdog, began an immediate investigation into what went wrong and how to prevent a repeat. "In order to maintain the credibility of the Tokyo Stock Exchange, I very strongly want this issue to be resolved quickly," Economy and Banking Minister Kaoru Yosano told reporters Friday. "The first thing for the Financial Services Agency to do is to determine what happened in detail. Based on that, we will decide what is needed based on the rules and regulations." Chief Cabinet Secretary Shinzo Abe echoed the sentiment saying that the Finance Ministry was working with Mizuho and the Tokyo Stock Exchange to formulate countermeasures for the future. "It's extremely regrettable this caused confusion in the market and such huge problems for the related parties," Abe said. J-Com's shares debuted at $5,600 on the Tokyo exchange's Mothers market and plunged to $4,767. But a big buy bid placed after Mizuho Securities' sell order helped lift J-Com to $6,433 at the close. According to a Ministry of Finance filing, Morgan Stanley ended the session with a 31.2 percent stake in J-Com. The Tokyo Stock Exchange suspended trading of J-Com on Friday, but declined to specify how it will sort out a mess created by the botched order. Many of the sell orders have yet to be carried out, meaning further trading could "cause instability in the market," said Tomio Amano, the exchange's managing director. The botched trade comes at a sensitive time for the Tokyo exchange, which has surged on record volume, spurred by buying from foreign investors. For Mizuho Securities, the news is even worse. Mizuho Financial Group said it would fully back its security arm's losses from erroneous trades on J-Com. But the red ink could wipe out Mizuho Securities' profit of $233 million for the fiscal year that ended in March 2005. news.yahoo.com

To: ild who wrote (46877)	12/9/2005 10:50:28 AM
From: John Vosilla	Respond to of 110194

"Buyers don't look at interest rates, he says, they look at what their monthly payment will be." Yeah and lenders qualify you on that first year's monthly payments too. Can you believe I'm getting cold calls from mortgage companies almost daily telling me they'll lower my high rate mortgage interest rate to 1.95% for 30 years. My fixed rate is 4.8%<g> It sure is all about the monthly payment and not the APR these days with interest rate risk or a drop in property values not even a remote thought to the masses.

To: ild who wrote (46877)	12/9/2005 12:34:08 PM
From: Ramsey Su	Read Replies (1) \| Respond to of 110194

Chapman’s 2006 (Orange County) Forecast: Job Growth to Slow, Housing Prices to Fall 4.2% Let us assume that is the case and examine what a drop of 4.2% means. 1. The liquid value of real estate is then 11.2% less than "before". Liquid value is defined as how much cash on hand after you push the sold button. The 11.2% came from 4.2% reduction in price plus 7% total selling cost. 7% is probably conservative. 2. Using San Diego as an example, lets say the average home price is $600,000. We are heading into slower months now but let us just use 3,000 sales per month as a yardstick. $600,000X3,000 = $1,800,000,000 in sales. A 4.2% drop equates $75.6 million per month. That is $75.6 million less to put down on the next MacMansion, $75.6 million less for whatever consumption plan joe6pak had in mind. 3. Prof Pigg can probably provide the data. Take the total value of real estate in San Diego, reduce that by 4.2% and you can figure the reduced wealth effect. 4. For California, the state cannot count on that 2% property tax increase for revenue, there may even be some assessment appeals. 5. For someone facing a recast and had already maxed out in LTV with the last refi, they need approximately 3-5% appreciation to facilitate a new refi. A 4.2% drop in value may wipe out whatever gain they may had, putting them in a pretty tight spot. 6. Would a 4.2% drop in value equate a 4.2% drop in real estate related employment? That is probably too simplified but in reality, the effect is likely to be higher. 7. What else?