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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Riskmgmt who wrote (24187)	10/16/2007 8:58:58 AM
From: TobagoJack	Read Replies (2) \| Respond to of 218816

Hello Ray, I am in fact shopping tomorrow for real estate in nearby neighborhood, in stanley en.wikipedia.org , in the first to the left of the four buildings in this pic images.google.com . I am doing so now that the village future is more discernable, and I can see the place will be irresistable for somebody to rent at a bargain of USD 3.89/sqft-month, yielding 4%, and that inflation will shortly zoom and vroom the rental yield on cost basis to 8 and then 12% soon enough. The newly built (not in old photo) The newly relocated historic / heritage pier is done and done well, leading into another historic / heritage antique building full of restaurants featuring lots of wood, ceiling fans, and extra wide/deep terrace for in/outdoor feeding. Nearby enough, Ocean Park, now to be expanded with three top end hotels, just reported almost 5 million visitors for the 12 months. Even better, the subway is planned to reach within 15-20 min drive from the sleepy village. And yes, Star Bucks and Pacific Coffee shops are just around the corner. <<mortgages>> are plentiful, real interest rate is negative, and 1.3 billion northern neighbors would love to move in, and their RMB Yuan is good, in fact better than my USD-proxy HKD. The place can be used for a office/home combo, a retirement home, or a love nest, and the ground floor is chokablock with funky eateries serving oysters, goose liver, and good drinks. I am bullish on real estate, as long as it is not in a place where there is endless land on which to build. As to the USA real estate market, I think it is stuffed / rogered / done for, for the next ten years when measured against gold and almost all non-USD regimes, except perhaps Zimbabwe dollars. The coming interest rate and property tax rate reset will be much worse than what has already transpired. The good news? The officialdom already decided what they will do to paper over the mess that will get messier. Witness that Citi and BoA has apparently organized a fund of funds that will in effect be used to buy up their own junk, mark it to good market price, resolution trust style, which actually is bullish for HK real estate, with its currency now tagged to USD, and borrowings tagged to same, whilst its future is very definitely pinned to the RMB and leveraged to what Dawn of TeoTwawKi must be. Chugs, TJ

To: Riskmgmt who wrote (24187)	10/16/2007 11:20:07 AM
From: Joe S Pack	Read Replies (1) \| Respond to of 218816

Is there smoke in the shade of Enroning the earnings at GS? money.cnn.com Questions arise about Goldman's blowout quarter Much of the bank's spectacular third quarter earnings were paper gains from financial instruments that Goldman values largely according to its own estimates. FORTUNE Magazine Peter Eavis, Fortune senior writer October 15 2007: 5:36 AM EDT (Fortune) -- The glitter is already coming off Goldman Sachs' golden quarter. Goldman (Charts, Fortune 500) wowed just about everyone when it reported very strong earnings for its fiscal third quarter, a period when rival investment banks did poorly because of the steep downturn in bond markets, from which investment banks try to generate trading profits. However, Goldman's blow out quarter benefited from large gains in hard-to-value financial instruments, and its trading results in the period were particularly volatile, according to data contained in a Goldman filing of quarterly financial results with the Securities and Exchange Commission. Goldman's stock has gained 13% since its earnings came out, as investors have bought into the notion that the bank is a cut above its peers and is able to weather, and even profit from, tough market conditions. But that view could get revised, now that it can be seen in the numbers that a large proportion of its third quarter profits were 'unrealized' - i.e. paper gains, and not hard cash payments from fully closed out trades - and came from financial instruments that Goldman values largely according to its own estimates. "The opaqueness of Goldman's balance sheet makes us immediately question how they made money in the quarter," says Charles Peabody, analyst with Portales Partners. Friday, Goldman stock was up $3.54 , or 1.56%, to $232.55. So what do the numbers actually say? Much of the focus is on Goldman's trading revenue, which totaled a spectacular $8.23 billion, up 70% on the year-earlier quarter. Part of that increase was due to a bold bet that made money if mortgage-backed bonds and financial instruments tied to mortgage values fell in price. Of course, because of the credit crunch, they did plunge in value, netting gains for Goldman that the banks said "more than offset" the losses it saw on the mortgages it was holding. It's impossible to trace exactly how that bet against mortgages was made, but the financial filing does describe some very telling details about what made up the enormous $8.23 billion of trading revenue. The interesting data comes from disclosures in the filing about 'level 3' assets and liabilities, which are securities and derivatives that can't be valued according to observable prices in liquid public markets. Because of their illiquidity, Goldman has to attach values to them chiefly according to in-house models and estimates. Investors typically prefer banks to make money from liquid assets and liabilities that trade regularly because they have greater confidence that they are valued on the balance sheet at their real worth. This is why level 3 gains have recently become a hot topic for the brokerages, and it is a subject Fortune has looked at closely. And Goldman reaped huge gains within the level 3 pot in the third quarter. For example, it made a net gain of $2.94 billion from level 3 derivatives, financial instruments whose value is based on the value of underlying securities. And get this: $2.62 billion of that gain was unrealized. Was that amount unrealized because there's no way illiquid level 3 derivatives could be cashed out at the prices Goldman attached to them? "Common sense tells me that a lot of their losses were real and a lot of their gains were paper, and that's something we'd like to know more about," says Portales' Peabody. Indeed, if that level 3 derivatives gain does include the stupendously prescient bet against mortgages, it deepens the mystery over what type of institution is on the other side of that trade, effectively holding the losses. In other words, if hedge funds - which operate with thin capital and high leverage -- are on the other side of a large part of this mortgage bet holding the losses, it may not be easy for Goldman collect all it is owed. Asked about the derivative gain, Goldman spokesman Lucas van Praag responded that the level 3 derivative gains "did not come from level three inputs," but from "observable" data taken from more liquid markets. Why not classify the derivatives in the theoretically more liquid level 2 and level 1 pools, then? "The rules preclude us from doing so," says van Praag. Okay, let's say Goldman does end up making cash gains from all its trading gains in the third quarter. How likely is it that the bank can do it again? That's the question Bernstein analyst Brad Hintz is asking after looking at the filing. Often, aggressive trading strategies that result in large gains can also lead to large losses. And Hintz notes that in the third quarter, Goldman Sachs lost money on just over 25% of their trading days, despite having the most diverse trading business on Wall Street (diversification is supposed to reduce volatility of returns). That 25% number is substantially above the average annual number of 17.5% for 2002 through 2006. Van Praag says this particular 'loss day' approach is unreasonable. It doesn't make sense to compare one quarter's loss days with annual numbers for loss days, since volatility is dampened over time, and he notes that the third quarter was a very volatile period for every broker. Hintz isn't convinced, responding: "Goldman Sachs has increased financial leverage, added illiquid assets and has the highest percentage of level three assets in the industry. This might also explain why trading volatility would logically increase." All that glitters... Top of page Some feel bullish about Bear

To: Riskmgmt who wrote (24187)	10/17/2007 5:12:35 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 218816

As usual, savers will be robbed, money holders diluted. < How do you see this sub-prime situation playing out? Are we indeed through the worse of it? > Interest rates will be slashed. They are not through the worst of it, with price falls proceeding apace. Markets will clear. The USA is on bargain ratings and getting cheaper. Americans will travel less, buy less overseas, foreigners will buy cheap USA holiday homes, buy American. It's not just sub-prime, it's prime and all other debts and financial shenanigans which need to be tidied up, not to mention umpty $trillion in those derivatives thingamies. There has been a huge borrow and hope trend with houses being bid way up on the basis of going up, rather than being the minimum house needed in which to live within one's means. While interest rates don't need to be as high as they once did because people expect to live longer so the risk of them dying without spending their money themselves has gone down, with money detached from gold and depending on politicians' promises and electorates' good judgments, both of which are notoriously unreliable, interest rates need to go up to compensate for dilution. The vast dilution of existing holders of currencies has been concealed by vast expansion of economies as populations have burgeoned and economic activity has not been totally stifled by Big Brother governments kleptocratting most of people's income. But when populations and economic systems stabilize, then the game will be over. As Mq's new currency takes over from national currencies, there will be a stampede for the exits and the pixelation processes by Helicopter Ben et al will come to a halt and inflation will take off. There has already been two years since peak housing mania and the slide started [in the USA]. That's quite a lot of market clearing. But mortgagee sales are soaring so there's a LOT of fun to be had yet. Check out HOV, TOL and BZH Here's BZH finance.yahoo.com As you can see, they had a LOT of fun while interest rates went to world record lows. Now, the party's over, the hangover is on, just as after the Biotelecosmictechdot.com boom. Mqurice