Create an Account
username: password:
 
  MemeStreams Logo

I live on a pirate ship

search

Hijexx
Picture of Hijexx
My Blog
My Profile
My Audience
My Sources
Send Me a Message

sponsored links

Hijexx's topics
Arts
  Movies
   Documentary
  Electronic Music
Business
  (Finance & Accounting)
  Telecom Industry
Games
Health and Wellness
Home and Garden
Miscellaneous
  Humor
Current Events
Recreation
Local Information
Science
  Biology
Society
  Politics and Law
   Civil Liberties
    Internet Civil Liberties
  Media
Sports
Technology
  Computer Security
  Linux
  High Tech Developments

support us

Get MemeStreams Stuff!


 
Current Topic: Finance & Accounting

This Isn't The Bottom Part Deux
Topic: Finance & Accounting 10:39 pm EST, Nov 20, 2008

Remember that more than a year ago Subprime Mortgage Bonds forecast a total meltdown in that industry, and that nearly all of the companies in that space would go bankrupt. We were told that this sort of "Armageddon" scenario would not and could not occur, and that the credit market was playing "histrionics". A number of so-called "smart money" investors (Wilbur Ross anyone?) stepped in and bought these supposedly-undervalued instruments - and promptly got slaughtered when the actual performance was worse than the credit markets were forecasting.

The credit market was right and those who said it couldn't happen were wrong.

Now the credit market is saying that we are going to have more defaults than happened during The Great Depression. That is, it is forecasting a Greater Depression that worse than the 1930s. The TNX (10 year yield) is threatening to break three percent, down another 6% (!) this morning to 3.16%. The bottom going back as far as my charts extend is 3.07%. Almost there.

The 13 Week T-Bill (IRX) stands at 0.1%, which is for all intents and purposes zero. The Effective Fed Funds trading rate has been between 0.2 and 0.3% since the last putative rate cut to 1% - that is, effectively zero.

Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the "high grade" and "high yield" corporate bond markets.

The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.

That's one person in five in the US without a job, deflation of 20% cumulatively or more in prices, over 2 million businesses going bankrupt in the next three years, and literal starvation and privation - all across America. No part of this nation will be spared.

The market callers are all saying all this is impossible.

Even though every thing the credit market has forecast thus far since this problem began has been not only proved correct but conservative; that is, if you bought believing that it would not be as bad as the credit market is forecasting, you have had your head handed to you.

So who are you going to listen to?

Ben Bernanke ("we won't have a recession") and Hank Paulson ("the economy is fundamentally strong"), along with all the market "callers" on CNBC, who have been wrong every single time for more than 18 months?

Or the credit market which has been right 100% of the time thus far since this crisis began?

This Isn't The Bottom Part Deux


This Isn't The Bottom Part Deux
Topic: Finance & Accounting 6:39 pm EST, Nov 20, 2008

Remember that more than a year ago Subprime Mortgage Bonds forecast a total meltdown in that industry, and that nearly all of the companies in that space would go bankrupt. We were told that this sort of "Armageddon" scenario would not and could not occur, and that the credit market was playing "histrionics". A number of so-called "smart money" investors (Wilbur Ross anyone?) stepped in and bought these supposedly-undervalued instruments - and promptly got slaughtered when the actual performance was worse than the credit markets were forecasting.

The credit market was right and those who said it couldn't happen were wrong.

Now the credit market is saying that we are going to have more defaults than happened during The Great Depression. That is, it is forecasting a Greater Depression that worse than the 1930s. The TNX (10 year yield) is threatening to break three percent, down another 6% (!) this morning to 3.16%. The bottom going back as far as my charts extend is 3.07%. Almost there.

The 13 Week T-Bill (IRX) stands at 0.1%, which is for all intents and purposes zero. The Effective Fed Funds trading rate has been between 0.2 and 0.3% since the last putative rate cut to 1% - that is, effectively zero.

Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the "high grade" and "high yield" corporate bond markets.

The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.

That's one person in five in the US without a job, deflation of 20% cumulatively or more in prices, over 2 million businesses going bankrupt in the next three years, and literal starvation and privation - all across America. No part of this nation will be spared.

The market callers are all saying all this is impossible.

Even though every thing the credit market has forecast thus far since this problem began has been not only proved correct but conservative; that is, if you bought believing that it would not be as bad as the credit market is forecasting, you have had your head handed to you.

So who are you going to listen to?

Ben Bernanke ("we won't have a recession") and Hank Paulson ("the economy is fundamentally strong"), along with all the market "callers" on CNBC, who have been wrong every single time for more than 18 months?

Or the credit market which has been right 100% of the time thus far since this crisis began?

This Isn't The Bottom Part Deux


Show Of Hands
Topic: Finance & Accounting 5:53 pm EST, Nov 19, 2008

How many of the automaker CEOs (and by the way, that includes Gettlefinger, if my viewing of the hearings is correct) travelled commercial to get to Congress yesterday and today?

Zero.

.....

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

.....

GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.

.....

Fine.

As a US Taxpayer this is my answer to your request for a bailout:

Is that clear enough or do you need it spelled out one letter at a time?

Show Of Hands


 
 
Powered By Industrial Memetics
RSS2.0