Subprime credit crunch... - Page 5 - U2 Feedback

Go Back   U2 Feedback > Lypton Village > Free Your Mind
Click Here to Login
Reply
 
Thread Tools Search this Thread Display Modes
 
Old 07-11-2008, 09:07 PM   #61
Rock n' Roll Doggie
Band-aid
 
ntalwar's Avatar
 
Join Date: Feb 2004
Posts: 4,900
Local Time: 05:11 PM
Some new developments in the mortgage fallout:

Quote:
July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash.


Quote:
Shares of both Freddie Mac and Fannie Mae were pressured by prospects that the mortgage giants, which help make the American dream of home ownership possible for millions, will need to be bailed out by the U.S. taxpayer.
A report that the Federal Reserve will allow the mortgage giant to access the discount window to relieve capital pressures later rallied the shares from more than 50% losses into positive territory, though they later slipped back into the red.


Quote:
WASHINGTON - Struggling homeowners who can't afford their mortgages and banks facing big losses would get government help under a foreclosure rescue that has broad bipartisan support.

...

The new program would let the FHA insure as much as $300 billion in new mortgages, helping an estimated 400,000 homeowners.


The socialization of the mortgage losses continues, and will probably get worse.
__________________

__________________
ntalwar is offline   Reply With Quote
Old 07-11-2008, 09:48 PM   #62
ONE
love, blood, life
 
financeguy's Avatar
 
Join Date: Dec 2004
Location: Ireland
Posts: 10,122
Local Time: 11:11 PM
I noticed that the Danish authorities had to bail out a bank today.
__________________

__________________
financeguy is offline   Reply With Quote
Old 07-12-2008, 10:10 PM   #63
ONE
love, blood, life
 
financeguy's Avatar
 
Join Date: Dec 2004
Location: Ireland
Posts: 10,122
Local Time: 11:11 PM
Monetarists warn of crunch across Atlantic economies - Telegraph

Quote:
The lifeblood of countries' economies is draining away - with grim consequences for us all, writes Ambrose Evans-Pritchard

The money supply data from the US, Britain, and now Europe, has begun to flash warning signals of a potential crunch. Monetarists are increasingly worried that the entire economic system of the North Atlantic could tip into debt deflation over the next two years if the authorities misjudge the risk.


The key measures of US cash, checking accounts, and time deposits - M1 and M2 - have been contracting in real terms for several months. A dramatic slowdown in Britain's broader M4 aggregates is setting off alarm bells here.

Money data - a leading indicator - is telling a very different story from the daily headlines on inflation, now 4.1pc in the US, 3.7pc in Europe, and 3.3pc in Britain.


Read more by Ambrose Evans-Pritchard
More on economics
Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc.

"The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.

Leigh Skene from Lombard Street Research said the lending conditions in the US were now the worst since the Great Depression. "Credit liquidation has begun," he said.

The Fed's awful predicament does indeed have echoes of the early 1930s when the bank felt constrained to tighten into the Slump in order to halt bullion loss under the Gold Standard. Investors - notably foreigners - dictated a perverse policy. Over 4,000 US banks collapsed. This time a de facto "Oil Standard" is boxing in Ben Bernanke. Benign neglect of the dollar has started to backfire. It is pushing up crude, with multiple leverage.

The monetary picture is highly complex. The different measures - M1, M2, M3, M4 - have all given false signals in the past. Each tells a different tale, and monetarists fight like alley cats among themselves.

The Federal Reserve stopped paying much attention to the data a long time ago. It has abolished M3 altogether. The US economic consensus is New-Keynesian (dynamic stochastic general equilibrium model). Delving into the money entrails is derided as little better than soothsaying.

That attitude, retort monetarists, is the root cause of the credit bubble. The money supply almost always gives advance warning of big economic shifts. Those who track the data are now calling on central banks to move with extreme caution. If the rate-setters overreact to an inflation spike caused by oil and food - or confuse today's climate with the early 1970s - they may set off an ugly chain of events.

"The data is pretty worrying," said Paul Ashworth, US economist at Capital Economics. "US lending is shrinking dramatically in real terms, and we know from the Fed's survey that banks want to tighten further. People are clamouring for higher rates but we think deflation is now the biggest threat. The idea that the Fed should tighten with unemployment soaring is preposterous," he said. The jobless rate jumped from 5pc to 5.5pc in May.

advertisementIn Britain, the Shadow Monetary Policy Committee - hosted by the Institute for Economic Affairs, and a refuge for UK monetarists - issued its own alert this week. The focus is on "adjusted M4", which covers loans to "private non-financial corporations" and may offer the best insight into the health of British business.

The growth rate has dropped from 16.1pc a year ago to minus 0.5pc in April. It is the suddenness of the decline that matters most. The data reeks of recession. Professor Patrick Minford from Cardiff Business School called for an immediate rate cut, arguing that the credit crunch is a more powerful and long-lasting force than the oil inflation.

Professor Tim Congdon from the London School of Economics said the UK was lurching from boom to bust. "Real money growth is virtually nil. The British economy is taking a thrashing and it is going to get worse. Corporate money balances have contracted 3pc over the last three months, which is double digits on an annualised basis. This is a serious squeeze for companies," he said.

Mr Congdon warned three years ago that surging M4 would lead to a "dangerous" bubble, which is what occurred. He now fears the MPC will react too late as the process goes into reverse.

Roger Bootle from Capital Economics said Britain could be facing a "real economic crisis and a financial collapse. The MPC does not have the luxury of waiting until all is absolutely crystal clear. By that time the bird will have flown."
__________________
financeguy is offline   Reply With Quote
Old 07-13-2008, 07:22 AM   #64
Rock n' Roll Doggie
VIP PASS
 
Vincent Vega's Avatar
 
Join Date: Jul 2005
Location: Berlin
Posts: 6,615
Local Time: 11:11 PM
It's funny how monetarists have pushed for liberalisation and "the market knows best" and now that this card house is collapsing the neo-Keynesian Fed is to blame.
__________________
Vincent Vega is offline   Reply With Quote
Old 07-13-2008, 08:08 AM   #65
Refugee
 
MadelynIris's Avatar
 
Join Date: Jun 2000
Location: Craggy Island
Posts: 1,504
Local Time: 05:11 PM
I had a CD at IndyMac until about a month ago. Schwab offered their CDs.

I believe we're about to dig a little deeper.
__________________
MadelynIris is offline   Reply With Quote
Old 07-13-2008, 04:33 PM   #66
Blue Crack Addict
 
deep's Avatar
 
Join Date: Apr 2002
Location: A far distance down.
Posts: 28,501
Local Time: 02:11 PM
I have a money market account there, at the FDIC limit.

I have no concerns.

I also have an account at Country Wide, and since they were bought by Bank of America, and I have an account there, I now exceed the FDIC limit.
But B of A in not at risk, yet.
__________________
deep is offline   Reply With Quote
Old 07-13-2008, 06:48 PM   #67
ONE
love, blood, life
 
financeguy's Avatar
 
Join Date: Dec 2004
Location: Ireland
Posts: 10,122
Local Time: 11:11 PM
Batten down the hatches, it's gonna be a rough week.
__________________
financeguy is offline   Reply With Quote
Old 07-14-2008, 04:16 PM   #68
Blue Crack Addict
 
deep's Avatar
 
Join Date: Apr 2002
Location: A far distance down.
Posts: 28,501
Local Time: 02:11 PM


People started lining up at 5 am. at IndyMac Bank.

Some will wait all day, and not get in.

They can only process about 100 people a day.

I still am not concerned.
__________________
deep is offline   Reply With Quote
Old 07-14-2008, 04:40 PM   #69
Rock n' Roll Doggie
Band-aid
 
ntalwar's Avatar
 
Join Date: Feb 2004
Posts: 4,900
Local Time: 05:11 PM
The IndyMac failure will use up a good chunk of the FDIC's ~$52 billion fund, which is about 1% of insured funds. A wave of failures could easily overwhelm the insurance fund and will probably require congressional intervention.
__________________
ntalwar is offline   Reply With Quote
Old 07-14-2008, 07:33 PM   #70
Rock n' Roll Doggie
Band-aid
 
maycocksean's Avatar
 
Join Date: Jan 2006
Location: The Most Important State in the Union
Posts: 4,882
Local Time: 05:11 PM
So are we headed towards another Great Depression or what?
__________________
maycocksean is offline   Reply With Quote
Old 07-14-2008, 07:54 PM   #71
Blue Crack Addict
 
deep's Avatar
 
Join Date: Apr 2002
Location: A far distance down.
Posts: 28,501
Local Time: 02:11 PM
Quote:
Originally Posted by maycocksean View Post
So are we headed towards another Great Depression or what?
It is possible.

I sometimes think our whole international financial system is one big ponzi scheme.
__________________
deep is offline   Reply With Quote
Old 07-15-2008, 02:54 AM   #72
Rock n' Roll Doggie
Band-aid
 
maycocksean's Avatar
 
Join Date: Jan 2006
Location: The Most Important State in the Union
Posts: 4,882
Local Time: 05:11 PM
Quote:
Originally Posted by deep View Post
It is possible.

I sometimes think our whole international financial system is one big ponzi scheme.
Great.

Genius over here decides THIS is the time to have a kid.
__________________
maycocksean is offline   Reply With Quote
Old 07-15-2008, 02:59 AM   #73
Blue Crack Addict
 
deep's Avatar
 
Join Date: Apr 2002
Location: A far distance down.
Posts: 28,501
Local Time: 02:11 PM
I just found out my little sister is having her 6th..

and not to derail, but BigBrother 10 is up
and they do have a decent cast this season.
__________________
deep is offline   Reply With Quote
Old 07-15-2008, 06:15 AM   #74
Rock n' Roll Doggie
VIP PASS
 
Vincent Vega's Avatar
 
Join Date: Jul 2005
Location: Berlin
Posts: 6,615
Local Time: 11:11 PM
It's always the right and the wrong time to have a child.

It is possible that we will see a large credit crunch, it might be that it will be ugly, but nothing is certain at the moment. I doubt it will get as bad as with the Great Depression, especially not long-term.

One thing that is still a big problem is that the interbanking money market is notfunctioning properly. That means, the banks are still hesitant to give loans to each other, which is essential for our banking systems.
And the other problem is, as deep hinted, that the international banking system is so closely intertwined that a problem in a country like the US almost certainly becomes a problem for banks in other countries, dragging down the whole financial system and, in the long-run, the real economy.
__________________
Vincent Vega is offline   Reply With Quote
Old 07-15-2008, 06:29 AM   #75
Rock n' Roll Doggie
Band-aid
 
maycocksean's Avatar
 
Join Date: Jan 2006
Location: The Most Important State in the Union
Posts: 4,882
Local Time: 05:11 PM
Quote:
Originally Posted by deep View Post
I just found out my little sister is having her 6th..

and not to derail, but BigBrother 10 is up
and they do have a decent cast this season.
Reallly. . .

I had given up on Big Brother after last summer's season. . .which I found just atrocious.

Anywho. . let me amble over to Zoo Station and discuss it there so as to avoid further derailment.
__________________

__________________
maycocksean is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off



All times are GMT -5. The time now is 05:11 PM.


Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Design, images and all things inclusive copyright © Interference.com