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

To: Moominoid who wrote (40300)	9/24/2008 1:43:57 AM
From: TobagoJack	Respond to of 217608

just in in-tray Law of unintended consequences, part II: Had a plumber over to our house recently. He was telling us how his mortgage is now 4000/mo given he had a reset mortgage with teaser rate and he can't afford it and the bank (forget who he was with) wasn't willing to negotiate a lower rate (probably b/c they no longer own the loan and can't lower rate even if they wanted to). He put 10% down on his house in Novato (a suburb north of SF). His said credit was good, never missed cc payment or mortgage/bill payment, etc but he simply can't pay more than he takes home and the mortgage was eating into his savings big time. He heard about the govt program to help distressed homeowners so he he went to check out the program but to his surprise he didn't qualify even though he could amply document his distress....the reason?? He was not behind in his mortgage payment. For him to qualify under this program he needs to miss 2 payments. Guess what....that's what he's doing. How absolutely and utterly idiotic is this? He ruins his credit rating and another house goes into foreclosure hurting local real estate values in an already depressed economy as well as adding to the bad debt pool, all for him to qualify as distressed. how many other bailout landmines such as this have already exploded or are waiting to.... Separately, I spoke to a local silver/gold dealer here in the bay area today. No shortage of anything except Krugs (has been for 6 months) but to buy larger amts (say 100k) you need to wait 1-2 weeks, for 50k or less 2-3 days but so far he says he has not dk'ed anyone and has been able to access coins/bars. He was quite aggressive in selling me some of his inventory. told me he's been in biz for 30 years. premiums are 3-4 bucks over spot for 1 oz Ag coins, and 1/10th eagles are selling for 100 bucks, Eagles are selling for 950-60 (at the time). Told me old ladies are shifting their savings to silver and gold, that many of the general public he deals with expects gold to be confiscated within the next 6-12 months and that the US will descend into anarchy after the dollar is devalued to pennies. Clearly the gold newsletter writers have had a successful campaign. Since he was trying very hard to sell me some gold coins - which alone makes me suspicious how real the demand is although he did sound busy - I take all of this w a grain of salt. IMO gold sells off again here

To: Moominoid who wrote (40300)	9/24/2008 2:02:14 AM
From: TobagoJack	Read Replies (7) \| Respond to of 217608

stratfor is hinting at future disasters, just in in-tray Geopolitical Diary: Wall Street Drama September 23, 2008 What a day. Within the past 24 hours, the last major American investment banks submitted to Fed oversight, the U.S. Treasury pushed out its initial recommendation for a $700 billion mortgage bailout and oil skyrocketed (briefly) by a record $30 a barrel. First, Goldman Sachs and Morgan Stanley abandoned their fight to survive as the remaining investment houses — firms who busy themselves primarily with managing the investments of others — on Wall Street. As clients concerned about their financial stability abandoned them in droves, the two icons of American finance formally — and somewhat meekly — submitted requests to the U.S. Federal Reserve to be reincorporated as plain old banks, the logic being that banks have depositors, depositors deposit cash, and right now they need cash to rectify their books. Other major investment houses that did not come to this decision were either taken over by others (Merrill Lynch), taken over by others for a song (Bear Stearns) or crashed into bankruptcy (Lehman Brothers). Stratfor expects this to trigger stark changes in how the industry of trading functions. Until now the United States government argued heavily — on points of principle and practicality both — against nearly all regulations on financial transactions because such regulations would have heavily targeted Wall Street’s primary source of business. Now that all of Wall Street is undergirded by actual banks, the American taboo against restrictions has lost strength. (Many countries — the United States included — have recently enacted temporary bans on many such practices as a means to limit the recent market turmoil.) The primary target of this new wave of regulation will be hedge funds which can no longer count on the age-old Wall Street institutions to defend them. We expect European and Southeast Asian states — many of which blame hedge funds (often wrongly) for some of their economic troubles — to target such funds with glee. While it would be too bold a statement to say that actions such as short-selling and speculation are now a thing of the past — or that governments will find it a simple thing to shut down the hedge fund industry — such activities will no longer be allowed no-holds-barred. Second, the U.S. Treasury floated its barebones plan for a $700 billion bailout of the U.S. mortgage market. A final text is expected to be put before Congress for a rapid vote by the end of next week, before Congress breaks for elections. Details of the three-page plan are extremely sketchy, but in essence Congress will authorize the Treasury to spend up to $700 billion to purchase (at prices the Treasury has the market position to dictate) mortgages in various forms of packaging for sale to other interested parties (at costs the Treasury will be able to set) at a later time. In a stroke this ends this chapter of the subprime crisis. Those assets will now be transferred to the government — the current holders will take whatever loss the Treasury feels is appropriate — and sold back to the market as conditions improve. In the long run this is great for both the housing market and the government — for the housing market because it puts a floor under current falling housing prices and allows America’s positive population growth and net inmigration to slowly raise future prices, and for the government because while it will increase debt in the short term, in the long run it will probably earn the government a profit. The Treasury will be aiming to buy low and sell high, and in most cases should be able to, yet it has the authority to raise its paying prices or lower its sale prices as necessary to ensure that both ends of the market continue to function semi-normally. But as with the upheaval on Wall Street, this will have a hidden impact. The U.S. Treasury is about to get tossed a fat account with broad powers, but for a project for which it will have full legal and regulatory indemnity. Squeezed into that double-spaced, three-page document the Treasury jotted in that no private entity or government agency could challenge the legal or regulatory basis of its mortgage operations. Add in the burgeoning efforts to clean up Freddie Mac and Fannie Mae and the Treasury now has $1 trillion in projects that no one short of the Supreme Court itself can challenge. Not even Josef Stalin acted with such freedom on such a scale. The next Treasury secretary had better know what he is doing. The final big news of the day was Nymex crude oil, which shot up a record $30 a barrel briefly — largely on the news that the $700 billion bailout was going forward. What happened is that many traders were counting on oil falling and so they short-sold crude (remember those pesky trading practices from the first event of the day?). When the bailout package surfaced, other traders — realizing that the entire package would be funded on borrowed money — bet that the dollar was going to fall as a result, and so shifted their investments from the dollar to oil. That sent oil up, working against the bets of the oil short sellers. With deadlines approaching, these traders had to secure oil contracts and so they bought oil and bought oil and bought oil and so prices shot up $30. Which was ridiculous. So prices went on to crash by $24 — all within about two hours. Some of us have been at Stratfor quite some time now, but we have to say we never thought we’d live to see the day that a $30 change in the price of oil would be the small news of the day.