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Old 11-10-2007, 07:53 PM   #31
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Originally posted by Bluer White
Let's remember that many of the large firms are well diversified, at some point soon these beaten down stocks will be great buys.
I agree. I wish I had the money to cash in when that happens.

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I'm not sure that the last rate cut was a good move. Combine it with $95+ oil and you start to have inflation concerns. The cut sets a bad precedent for lenders too...screw up and we'll bail you out.
These have been my thoughts recently too, actually.

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I don't think the average homebuyer is 'stupid.' Naive is a better word. Most folks weren't looking to flip a home and make a profit. They bit on the lenders' sales pitch to finance that dream house, but when it sounds too good to be true...it probably is. And now everyone is feeling the pinch.
Financial literacy in this nation is woefully inadequate. I imagine that this illiteracy has an awful lot to do with that "naivete."
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Old 11-10-2007, 08:03 PM   #32
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I think it would be a brave investor, at this point, that would be buying bank stocks. That's not to say there aren't value bank stocks out there - there probably are - but how does the ordinary investor know what losses are buried where, when even the rating agencies don't?

If, like me, you believe there's a lot more S.H.I.T. out there, then:-

Short banking stocks, buy gold, buy the Swiss franc.

(This is not, of course, formal investment advice.)
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Old 11-10-2007, 09:53 PM   #33
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I wouldn't buy banking stocks either at the start of a recession or stagflationary period. Every oil shock has triggered a recession, and this will be no different IMO. Agree with getting partially out of the US dollar - and possibly into the swiss franc, euro, canadian dollar e.g. as well as going long gold and/or oil.
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Old 11-11-2007, 11:16 AM   #34
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Originally posted by Infinitum98


There is nothing wrong in buying a smaller home that costs less $. If thats not possible, there is nothing wrong in renting. These people took out Adjustable Rate Mortgages becuase they were stupid, they deserve everything they get.
Even a smaller house cost a lot of money in the days of the housing boom. And if you think there's 'nothing wrong with renting' you've never rented. People want a real home of their own, an investment, something they can have for their families and their futures. They had no idea how things would turn out. They weren't stupid.
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Old 11-11-2007, 03:29 PM   #35
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Originally posted by financeguy
I think it would be a brave investor, at this point, that would be buying bank stocks. That's not to say there aren't value bank stocks out there - there probably are - but how does the ordinary investor know what losses are buried where, when even the rating agencies don't?
The key phrase is, though, "at some point." There's probably nothing worth buying right now.
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Old 11-11-2007, 05:37 PM   #36
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Originally posted by Butterscotch


Even a smaller house cost a lot of money in the days of the housing boom. And if you think there's 'nothing wrong with renting' you've never rented. People want a real home of their own, an investment, something they can have for their families and their futures. They had no idea how things would turn out. They weren't stupid.
Yes of course people want their own home, but why buy a home that you can't afford to pay the mortgage on? These people were either stupid or greedy to take out adjustable rate mortgages in buying a home.

And for your information, I have rented before, and I live in a house now because we were able to afford it, but if I wouldn't have been able to afford it, i'd still be renting, and saving up my $$$, I wouldn't have made a big bet on interest rates like all these other folks did.

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Old 11-11-2007, 05:40 PM   #37
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Originally posted by financeguy
I think it would be a brave investor, at this point, that would be buying bank stocks. That's not to say there aren't value bank stocks out there - there probably are - but how does the ordinary investor know what losses are buried where, when even the rating agencies don't?

If, like me, you believe there's a lot more S.H.I.T. out there, then:-

Short banking stocks, buy gold, buy the Swiss franc.

(This is not, of course, formal investment advice.)
The key is to find the most quality companies that have been beaten down undeservingly along with the rest of the sector. There aren't many of them, but if you look hard enough there are those very few quality firms that are undervalued. I can think of one bank and one investment bank like that. Can you guess the ones i'm thinking of?
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Old 11-11-2007, 05:45 PM   #38
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I also blame corrupt and greedy appraisers and lenders who thought the boom would go on forever and had few standards for lending. The borrowers aren't the only ones getting hit. We are all paying the price (thanks to the Fed) with a devalued dollar, inflation, and a recession. I've hedged against this trend fortunately.
You're right, greed existed with both the lenders and borrowers and they are both paying the price now. More than 60 mortgage lenders have gone bankrupt, I think the good news out of this is less competition for the lenders that are still standing.

We are all paying the price, you are right. Although I love bear markets because that is usually when I buy, buy, buy stocks.
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Old 11-12-2007, 04:11 PM   #39
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Etrade down into the 3s. It's a freefall. Worries for a run on the bank.

http://www.ecommercetimes.com/story/...ing-60269.html

More....

Investor assets in E-Trade accounts said to be safe
Marketwatch - November 12, 2007 3:54 PM ET


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ETFC Trade 3.55 -5.04
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NEW YORK (MarketWatch) -- As investors shaved more than half the value from E-Trade Financial Corp. shares Monday, financial advisers, regulators and the company said that account holders have several layers of protection, and in general do not have to fear that the current problems will cause customers losses.

"Brokers are highly regulated and SIPC insurance is in place, meaning that their assets are safe," said John Deyeso, a certified financial planner at Financial Filosophy.

He added that the insurance does not protect against losses due to market drops, but it does protect against brokers going out of business or not being able to supply the investments on demand.

Shares of E-Trade (ETFC) lost more than half their value Monday, plunging as the company faces more subprime-related write-downs and as analysts at Citigroup suggest a possible bankruptcy for the online broker. See full story.

The SIPC is the Securities Investor Protection Corporation. It is the first line of defense in the event a brokerage fails owing customers cash and securities missing from customer accounts.

E-Trade is a member of the SIPC, and as such, its protections cover securities customers up to $500,000, including $100,000 for claims for cash, E-Trade said Monday.

"SIPC does not cover individuals who are sold worthless stocks and other securities," according to the company's Web site. Rather, "SIPC helps individuals whose money, stocks and other securities are stolen by a broker or put at risk when a brokerage fails for other reasons." Read more about SIPC.

The Federal Deposit Insurance Corporation insures deposits at E-Trade Bank to at least $100,000, the company added.

E-Trade also said that its E-Trade Clearing LLC unit has insurance from London insurers that provides additional protection, with an aggregate limit of $600 million, to pay amounts in addition to those returned in a SIPC liquidation under certain circumstances. This coverage does not protect against loss of the market value of securities, E-Trade disclosed.

On Sunday, Citigroup downgraded the online broker's shares to sell and raised the specter of bankruptcy, and now retail investors may be wondering what they should do with their E-Trade accounts.

"Bankruptcy risk cannot be ruled out," Citi analysts wrote in a note Sunday. They also lowered E-Trade's rating to sell. See full story.

Citi's Prashant Bhatia, in a move criticized by E-Trade as irresponsible, cautioned that there is a higher probability that customers will start a run on the firm's bank, given the worries that it may be beyond repair.

Clients have other options, such as moving assets to competing brokerages, Bhatia said.

The analyst added that active traders, who are a segment that is in tune with daily market events, generate a large proportion of E-Trade's activity and earnings

"The continued negative news flow could be a catalyst to transfer assets out of E-Trade," according to Bhatia.
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Old 12-03-2007, 04:37 PM   #40
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U.S. organizing an adjustable-rate freeze

By Mark Trumbull
Christian Science Monitor, Dec. 4


Help is coming to address one of the most important factors hammering the US housing market: the large number of home*owners at risk of foreclosure because their interest rates will soon reset upward. The emerging plan – a voluntary effort to temporarily freeze mortgage interest rates for some – won't be a one-step fix for the nation's mortgage troubles, said Treasury Secretary Henry Paulson, who is coordinating the private-sector plan. But it would provide meaningful aid to as many as 1 million homeowners facing foreclosure.

It could also help the economy escape a possible recession next year. A rising tide of foreclosures has become a key force behind the unusual severity of the current housing downturn. "There's no silver bullet," says Brian Bethune, an economist at Global Insight, a forecasting firm in Lexington, Mass. But reset relief "is going to help." In much of the nation, home prices have been declining over the past year after a historic run-up. The good news is that the decline is helping to make housing more affordable for buyers who had been priced out of the market. Over time, that should help restore a balance of supply and demand.

But right now, the economy faces some risks if home prices fall too far. The further prices fall, the greater the number of recent home buyers who will go "upside down," having homes that are worth less than the balance of their mortgage loans. The result could be even more foreclosures – and more homes up for auction in an already glutted market. Banks, already smarting from large losses tied to mortgage loans, could further restrict credit to new home buyers out of uncertainty about property values. "The mortgage markets can't withstand that kind of pressure," Mr. Bethune says. Lenders have already been tightening credit standards in response to a shifting economic climate. They felt they could lend on easy terms when prices were rising, but with prices falling they have less appetite for risky loans.

Against this backdrop – rising borrower defaults and tighter bank credit – the Bush administration is under growing pressure to contain the economic fallout. At a housing-related conference Monday, Secretary Paulson discussed the emerging plan to help at-risk borrowers. The basic idea is for banks to allow many homeowners who have adjustable-rate loans to postpone a rate reset that they won't be able to afford. Instead, they would keep paying their initial interest rate, which are often low "teaser" rates.

The plan wouldn't give help to people who are already behind on their loans. Nor would it cover people who can afford to pay the mandated reset. Still, as many as 1.1 million homeowners could fall into the middle category – able to pay their current rate but not the higher reset one – and could qualify for help.

What's in it for the lenders? They would lose some potential income, but they would gain by having fewer costly foreclosures to process. And it could help stop the downward momentum in home prices that threatens the industry. "I am confident they will finalize these standards soon," Paulson said, referring to the loan-servicing companies and lenders in an alliance called HOPE NOW. "As a result, what was a fragmented, cumbersome process can be a coordinated effort, which more quickly helps able homeowners."

Indeed, a central virtue of this plan will be speed. Currently, mortgages are resetting at such a pace that companies holding the mortgage loans can't process such "workout" deals with borrowers as fast as loans are going into default. The Treasury's goal is to help banks develop large "categories of borrowers eligible for appropriate modifications and refinancings," Paulson said.

Some economists and federal officials have been hoping that the mortgage industry can shift many borrowers from adjustable-rate mortgages (ARMs) to fixed-rate loans. But according to news reports, industry participants w opt to simply postpone the day of reckoning. Instead of resetting next year, eligible borrowers might get to continue paying their teaser interest rates for two to five years.

But anything that helps borrowers caught in the middle – those who have jobs and incomes but can't afford the reset – could help the economy, analysts say. "I am leaning towards liking the administration's Teaser Freezer plan," economist Ed Yardeni, head of his own Great Neck, N.Y., research firm, wrote in a note to clients Monday. "Are we making some progress toward resolving the credit crisis? I think so."

Despite the economy's strong performance in the third quarter of 2007, many economists see the US as walking a fine line between recession and growth in the months ahead. The housing slump has hurt not only the construction industry but also the ability of consumers to tap housing wealth through refinancing their mortgages and taking some cash out. Bethune says the loan modifications are just part of a multistep housing recovery plan that is needed.
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Old 12-05-2007, 09:09 PM   #41
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U.S. organizing an adjustable-rate freeze
Wonderful. Just wonderful.

Nothing like rewarding bad behavior.
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Old 12-06-2007, 09:24 PM   #42
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Here's the hotline:

1-888-995-HOPE

This should be hysterical.
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Old 12-06-2007, 09:41 PM   #43
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This plan will just delay the inevitable foreclosure for most of the borrowers. The credit crunch still remains, and the Fed will have to keep cutting interest rates.
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Old 12-07-2007, 12:02 AM   #44
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and the Fed will have to keep cutting interest rates.
Hello $8/gallon gasoline.

Bring it on. F150 drivers go to hell.
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Old 12-07-2007, 12:14 AM   #45
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Wonderful. Just wonderful.

Nothing like rewarding bad behavior.
Yea its ridiculous.

However there are so many guidelines that most people won't be helped by this.

First of all you have to be on a Subprime ARM and have had borrowed the money in the time period from (I forgot what date) in 2005 - (I forgot what date) 2006.

Secondly you must be living in your house for the past however many years.

Third, only up to 5% of your home is allowed to be equity funded.

Fourth, you only get it if you need it.

And there must be other guidelines that I can't remember off the top of my head.

Having said that, it is ridiculous that people want to reward bad behavior, I certainly wouldn't expect that from a Republican administration.

There was a lady on CNBC the other day who was advocating the transfer of Wall Street bonus money to people facing foreclosure! How ridiculous is that? If I was an investment banker on wall street, I would NOT want to pay tens of thousands of dollars to some fool who shouldn't even have borrowed money for a car, let alone a house.
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