[quote=anabuhabkuss][quote=Guests]

Scary. 

Do you think he'd be able to understand the business if he had been taught that the first letter in a sentence is to be capitalized?

[/quote]

Scary.

What makes you think I'm a "he"? Or do you just swing that way?

[/quote]

You're too smart to be a girl.

Thanks bobby

[quote=Bobby Hull][quote=anabuhabkuss][quote=Guests]

Scary. 

Do you think he'd be able to understand the business if he had been taught that the first letter in a sentence is to be capitalized?

[/quote]

Scary.

What makes you think I'm a "he"? Or do you just swing that way?

[/quote]

You're too smart to be a girl.

[/quote]

Ahem!... 

Ana,

Banks are holding adjustable rate mortgages that they sold to people that can't afford them.  Rates went up, they defaulted on their mortgages.  Now nobody will buy these bad loans.  The banks are stuck with them.  There is now a liquidity "crisis" as banks cannot sell loans that they also aren't getting paid on.  Banks are no longer lending to "no-doc" or "low-doc" borrowers, or people with low credit scores (usually the same crowd), so they are writing fewer loans (thus less cash coming in).

I'm wondering what regulatory changes may come out of this one. Someone earlier said that banks are tightening their boxes after the damage has been done. That's exactly right.

I wonder if our Democratic Congress is going to see it that way & wonder how we got ourselves into this position. How much more expensive will such changes cost us?

Governmental interference by boneheaded ignoramuses into areas that they have no reason to be involved is what has gotten us into this mess in the first place.  The law of unintended consequences rules when it comes to politicians pandering to special interests.

http://www.baltimoresun.com/news/opinion/oped/bal-op.sowell0 8aug08,0,522262.story

God, please spare us from well meaning liberals.

So back to original topic. One of the greatest books ever is “Maestro” by Bob Woodward (I’m 99% certain), it’s about Alan Greenspan and his running the Fed. A phenomenal read on how the big boys think. Some would say he was terrific, others would say otherwise. If you look at where we are economically, we are absolutely ripe for a full-blown recession, whether with a specific incident to set it off, or not.



You can always tell we’re at full employment when the bag person at Costco is a former PenPal (if you get my drift), and your checker at Target is fresh off a welfare roll.



Look around, it’s not too tough.



Other than that, we’ve been through similar credit crunches before. It happened in 98, but I think this one was far more calculated. The major investment banks controlled the mortgage puppets, and that means a middleman is involved, which means, if you take out the middleman, you can lend direct, or take a bigger slice of the pie. What do you think happened? It’s not finished yet. Of course, there was a huge amount of negligence on the underwriting side and just plain stupidity on the borrower side. Stupidity, with a side of unparalleled optimism.



Sad.

OK i am interested in getting a more firm grip on this situation. 

1) Banks can't sell there loans and are not bringing in revenue for these loans; no liquidity. 

2) So banks who do have funds to loan are driving up the feds fund rate b/c they are charging more to lend due to more risk.

3) To offset the rise in the fed fuds rate they have injected much cash into the system the last few days.  Bringing rates back down.

4)The market is scared b/c the perception is that the economy has been driven to its new levels by the mortgage markets.  If this company's fall apart we could erase much of our gains.  Market also scared b/c lending policies tightening means less access to capital for economic growth.

Correct?  Anything alse that needs to be factored in?

Markets are concerned because there has been a lack of information relating to exactly how much exposure the banks and financial institutions have to the sub-prime mess... Remember, in recent years there has been an abundance of cheap money and liquidity in the markets... Hedge funds and other players have gotten into the mortgage industry with increasing amounts of leverage... A couple bad bets that unravel could have many players left holding severly depreciated assets...

It is a scary thought to see how much this debacle could unfold...

Sorry… severely

Big ripple effect too.  Even internationally... Look at the effect in France:

http://marketplace.publicradio.org/shows/2007/08/09/PM200708 091.html

The other issue is the hedge fund clients are starting to cash in.  Because of these redemptions, hedge funds are locking in some gains, selling large blocks, typically their large, liquid positions (blue chips).  That is why some big names are down so far right now, with no real good explanation.  However, it is my belief that mutual funds are going to snap up some bargains.

[quote=Broker24]

The other issue is the hedge fund clients are starting to cash in.  Because of these redemptions, hedge funds are locking in some gains, selling large blocks, typically their large, liquid positions (blue chips).  That is why some big names are down so far right now, with no real good explanation.  However, it is my belief that mutual funds are going to snap up some bargains.

[/quote]

What qualifications do you have to conclude that mutual funds will be snapping up the holdings of hedge funds that are locking in their gains?

I suggest that what is happening is the hedge funds--and mutual funds--are being forced to unload positions to satisfy redemtion requests and what they're selling are their weak positions.  It goes against good portfolio management to sell your winners and hold your losers.

That would mean that as the liquidations continue--and they will continue--we will eventually get to selling the winners, but that we're not there yet.

Why is my opinion less valid than yours?

[quote=DAtoo][quote=Broker24] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The other issue is the hedge fund clients are starting to cash in.  Because of these redemptions, hedge funds are locking in some gains, selling large blocks, typically their large, liquid positions (blue chips).  That is why some big names are down so far right now, with no real good explanation.  However, it is my belief that mutual funds are going to snap up some bargains.

[/quote]

What qualifications do you have to conclude that mutual funds will be snapping up the holdings of hedge funds that are locking in their gains?

I suggest that what is happening is the hedge funds--and mutual funds--are being forced to unload positions to satisfy redemtion requests and what they're selling are their weak positions.  It goes against good portfolio management to sell your winners and hold your losers. [/quote]

Read closer, dimwit. He said sell LIQUID positions to meet redemptions, and he assumed those would be gains, given the market's performance the past few years. You injected winners and losers.

[quote=DAtoo]

Why is my opinion less valid than yours?

[/quote]

Because you're a clerk who washed out at being an FA and you obviously have reading comprehension issues.

Putface,

Here is the fundamental difference between most posters here and you. Your post had a semblance of wisdom there, and I personally agree with your statement. Those types of posts belong here, and are welcomed...

If I had posted it, you would have immediately dismissed it since I havent yet had my 30th birthday. "What credentials.." blah blah bah...

Respect. Although I dislike you and feel you are no more than a washed up old man now struggling with adjusting to his new lot in life, I still respect your thoughts... In contrast, you are incapable of giving respect to those younger than you and whom you feel you are superior to...

[quote=blarmston]

I still respect your thoughts... In contrast, you are incapable of giving respect to those younger than you and whom you feel you are superior to...

[/quote]

That's true--and the reason is becasue I am superior to you.  I have more experience--which is the currency in Wall Street.

Do you believe that if you're lucky enough to make it for thirty five or more years that you will know more than you do today?

Or have you peaked and now know all you need to know and will not bother to learn more?

That's true--and the reason is becasue I am superior to you.  I have more experience--which is the currency in Wall Street.

 We aren't looking for currency on Wall Street.  Our clients are on Main Street, Elm Street, and every other street.   Your management track kept your head up your company's butt instead of dealing with client's.   That's old age that you have, not experience.

[quote=anonymous]

That's true--and the reason is becasue I am superior to you.  I have more experience--which is the currency in Wall Street.

 We aren't looking for currency on Wall Street.  Our clients are on Main Street, Elm Street, and every other street.   Your management track kept your head up your company's butt instead of dealing with client's.   That's old age that you have, not experience.

[/quote]

Child, I could follow you from client to client and ACAT every one of them except your Mommy and Daddy--and they would stay up all night talking about if they should or not.

DAtoo- those types of responses are why I feel sorry for you…

[quote=blarmston]DAtoo- those types of responses are why I feel sorry for you...[/quote]

What are you talking about?

Sorry old man... Just put in 8 hours, set a new meeting for TUE with a VP of Bus. Develop., had a conference call with a client back east who is adding another $300k to their account, made about 50 dials, ate some great Thai food with this girl I am seeing, and about to hit the gym for a quick workout.

After that its home for a nap then off to the W downtown where my friends and I are getting a table to enjoy the night...

I dont have time to explain things to you. Enjoy your Friday... Sitting in front of your computer.