Archive for July, 2008

Apocalypse Down Under

Wednesday, July 30th, 2008

Full article here. Well, somebody finally blinked on lousy mortgage valuations. Now it’s hard to pretend what “market value” is after someone says it’s 90% less than what you have on your balance sheet.  (more…)

FDIC being too generous?

Wednesday, July 30th, 2008

I got this from my mole in the banking industry:

“<generic bank> has been informed by the Federal Deposit Insurance Corporation (FDIC) that it has released funds to The Depository Trust & Clearing Corporation (DTCC) today, July 30, 2008 to pay all holders of IndyMac Bank, F.S.B., Pasadena, CA, (IndyMac Bank) certificates of deposit (CDs) at 100%. This includes the amounts exceeding the insured limits.

FDIC informed <generic bank> that this is a one-time deal only that will NOT apply to any other bank failures. <generic bank> anticipates that DTCC will begin to release the funds today, July 30, 2008, and we will allocate the funds when received…”

Wow, I didn’t know the FDIC could overstep its bounds and pay out more insurance than is covered. I wish Allstate were so generous! “One time deal” sounds like something you get at a used car dealership, not a federal agency. Who’s money got covered by this “one time deal”? I can’t believe that the FDIC was worried about little old ladies getting gyped.

Breaking Free from Dollar Hegemony

Wednesday, July 30th, 2008

Full story here. Another article from economist Henry CK Liu. I always thought history and finance were boring. Little did I know how much fun they were when applied in real time.

Use ShadowTraders to have fun playing, and not getting played.

“The vast expansion of US-led globalized trade since the Cold War ended in 1991 had been fueled by unsustainable serial debt bubbles built on dollar hegemony, which came into existence on a global scale with the emergence of deregulated global financial markets that made cross-border flow of funds routine since the 1990s.  (more…)

Weekly Commentary July 28 thru August 1

Sunday, July 27th, 2008

We almost had an up-week…almost! But the Market was hit with a double whammy on Thursday…34,000 initial claims, existing home sales sank to 17 year low. And earnings have not been helpful. Google and Microsoft have hurt the Nasdaq. Learn to trade futures and stay out of the stock market. (more…)

Blade Runner Finance

Thursday, July 24th, 2008

Found this little morsel here.

Here’s an updated version of the Voight-Kampff test from Ridley Scott’s “Blade Runner” movie. Instead of identifying Replicants, however, these questions sort the financial optimists from the reali…I mean, pessimists.

  1. A Tale of Two Economies You see a line of badly dressed people snaking along the sidewalk, seemingly oblivious to the wind and rain. A guy with a beard is pouring himself a steaming cup of something from a thermos. You conclude that they are:  (more…)

Housing Legislation — a bad idea gets worse

Wednesday, July 23rd, 2008

Full data here. Just caught this excerpt from a blog I frequent:

“The housing bill in Congress â?? which has now morphed into a housing-and-Fannie/Freddie-rescue bill â?? appears likely to become law within days.

The president has dropped his objection to $3.9 billion in largesse to city and state governments to dole out to favored constituencies in exchange for the assurance of a blank check for Fannie and Freddie.  So everybody wins â?? except the taxpayer/dollar holder.  (more…)

The Innovator, The Imitator, and The Idiot

Wednesday, July 23rd, 2008

Full story here. Guess which phase we’re in right now…Use ShadowTraders now, because you can’t say we didn’t warn you.

by Chris Mayer

While in Vienna last week, I grabbed hold of the international edition of The Wall Street Journal. Over a classic Viennese breakfast of coffee, a boiled egg and pastry, I stumbled across an interview with Ted Forstmann, titled, “The Credit Crisis Is Going to Get Worse.”  (more…)

Cherished Myths Fall Victim to Economic Reality

Wednesday, July 23rd, 2008

Full story here. Once again the mantra of “Look, don’t think” holds true. Whilst holders of 401(k)s, SIVs and other “assets” keep trying to see the bright side, smart ShadowTraders are making real money– and keeping it– every day.

The financial crisis continues to create victims. Not only people but also some of our most cherished ideas risk falling by the wayside. Take the hugely influential idea that financial markets are efficient. Its proponents told us that when financial markets were left free, they would work miracles. Savings would be channelled to the most promising investment projects, thereby boosting economic growth and welfare. In addition, these financial markets would spread risk around over a large number of participants, thereby lowering the risk of doing business, again boosting growth and welfare. In order to achieve these wonders, financial markets had to be freed from the shackles of government control.  (more…)

Bankers, Bull**** and Bullion

Monday, July 21st, 2008

Full article here. A timely piece, further revealing that the emperor has no clothes…

“…With US housing prices continuing to fall, it was evident, contrary to government assurances, that Fannie Mae and Freddie Mac did not have the requisite capital needed to meet future obligations. The sudden decline in the value of their shares forced US authorities to come to their rescue; but, it will not be the last time the US will be forced to act in such a manner. The systemic distress set in motion by last Augustâ??s credit contraction is still continuing and the recent collapse of Bear Stearns and now Fannie Mae and Freddie Mac are witness to that fact. We are only one year into the contraction and although the liquidity provided by central banks has gone beyond all previous levels, financial institutions are continuing to falter and collapse.


Is America ‘Too big to fail’?

Monday, July 21st, 2008

Full story here. The biggest $64 question yet.

“…Economic policymakers in the United States took swaggering pride in the cutthroat but lucrative form of capitalism that was supposedly indigenous to their frontier nation.

Through this uniquely American lens, saving businesses from collapse was the sort of thing that happened on other shores, where sentimental commitments to social welfare trumped sharp-edged competition. Weak-kneed European and Asian leaders were too frightened to endure the animal instincts of a real market, the story went. So they intervened time and again, using government largess to lift inefficient firms to safety, sparing jobs and limiting pain but keeping their economies from reaching full potential. (more…)