Housing Bubble Bursting?

[Riick]

I don't get your connection of the war to the lower price of oil. The uncertain situation is one of the reasons that the price is constantly going up.

Well, some people think that we went into this war to make sure that oil would continue to flow to the Seven Sisters, and continue to be priced in US Dollar$.

If you're keeping posted on international -or national- News via your 6-7pm Network News (including FOX and CNN), you're not getting much in the way of hard information or most any alternative viewpoint.

 

[Randolph Kinney]

Whoops! Banks are in trouble - risk? What risk?

The trouble stems from the banks’ significant involvement in collateralized debt obligations, which raise money by selling bonds to investors and using the proceeds to buy other bonds, many of which are backed by subprime home loans.

Merrill and Citigroup were the biggest issuers of C.D.O.’s in the first half of the year; together they put together more than $61 billion in deals, or about 20 percent of all debt obligations, according to Asset-Backed Alert, a trade publication.

Though many details are unclear, it appears that the banks kept a sizable part of the bonds issued by their C.D.O.’s on their own books this spring and summer, believing that they were safe and that the market for them would recover from the slightly lower prices that the securities were fetching at the time.

C.D.O.’s were created on the premise that managers could lower the risks of default by investing in loans made by different companies and dispersed across the country. The notion that one could lower risk by diversifying, and including a small reserve of cash, was supported by historical patterns and allowed the bonds issued by C.D.O.’s to earn higher ratings than the bonds they owned, said Mark Adelson, an independent analyst and consultant.

(The first collateralized debt obligation was created by Drexel Burnham during the heyday of Michael Milken, the junk bond dealer who gained notoriety for an insider trading scandal in the 1980s. Mr. Milken asserted that investors who bought a basket of diverse junk bonds would earn a high-rate of return without incurring significant risk.)

 

[sunnycal]

Well, some people think that we went into this war to make sure that oil would continue to flow to the Seven Sisters, and continue to be priced in US Dollar$.

If you're keeping posted on international -or national- News via your 6-7pm Network News (including FOX and CNN), you're not getting much in the way of hard information or most any alternative viewpoint.

As a matter of fact I consider myself a news "junkie" but I don't understand the previous post that said if we didn't have this war then gas would be more than double it's current price. On the other hand, stable markets and lack of war in the oil regions of the world usually results in lower and more stable pricing. It's the uncertainty of the supply due to wars including Iraq that makes the market more unstable and increases prices.

One could surmise that the war was based on the desire to control more oil because if you look at the oil revenue sharing agreement that the US wanted passed by the Iraqi parliament it basically gave the majority of profits to foreign oil companies (coincidentally from countries that supported the US) not to Iraqis. Secondly, there is no clause about those foreign oil companies reinvesting in Iraq nor using local Iraqi companies to help build the economy back up.

Basically, they are going to raid their most valuable natural resource and then leave once it's all gone. Most likely resulting in an even more unstable environment in the future. The US tried everything to get the measure passed by the parliament but the more the Iraqis looked at it the more they were not happy with it.

 

[Austin]

I don't get your connection of the war to the lower price of oil. The uncertain situation is one of the reasons that the price is constantly going up.

Sunnycal: I think your disconnect is that you don't have any idea what this war is all about. The people we are fighting want to destroy our economy and us in the process. They hate our way of life. They want control of oil to use as a weapon against us. There is a war raging in the entire Muslim region in which the radicals are trying to take control. They are on the verge of getting nuclear weapons and their reason for living is our destruction. To do nothing in response is to sacrifice our entire way of life and standard of living. We have three options: Do nothing and lose. Create a stalemate and spend eternity swatting flies. Win by taking the radical Muslim regimes down one by one starting with Iraq.
The instability of which you speak is due to a lack of resolve to engage and win and giving aid and comfort to the enemy by attacking Bush and the war effort. If resolve for victory on our part were assured there would be no uncertainty in the oil market. Would you invest your money in oil on the assumption that a Democratic US president would cut and run as they always have in the past? If you think the war in Iraq is costing money, if a pull out happens you haven't seen anything yet. The modern world is powered by oil energy and the radical Muslim World hates the modern world and wants to destroy it. Connect the dots.

PS: Stop getting your information from moveon.org.

 

[sunnycal]

Sorry Austin but your regime has had about 7 years to implement their strategy and we can all see the results. The problems that you mention did not exist prior to our misguided and fumbled attempt at "regime change" these ideas you refer to have given us nothing but chaos, destruction of the constitution and civil liberties and created the most instability in the middle east that we've ever seen. The middle east was much more stable when Saddam Hussein was in power despite being a tyrant. There was no Al Queda in Iraq pre invasion. If anyone one else ran the country, the war or the economy the way the current regime is then they would have been fired a long time ago. What happened to fiscal responsibility? No nation building? Conservative values? We haven't seen such corruption and profiteering since I've been alive as we have right now. I guess Ronald Reagan was a coward when he "cut and run" from Lebanon? Nixon in Vietnam was a coward? Which democratic president cut and run? Anyway, this is off subject.

 

[Austin]

http://news.independent.co.uk/business/news/article3132507.ece

Markets fear banks have $1 trillion in toxic debt

By Sean O’Grady, Economics Editor

Published: 06 November 2007



A new phase in the credit crunch, one of “$1 trillion losses” seems to be dawning. The crisis at Citigroup and renewed doubts about some of the world’s leading banks disquieted stock markets on both sides of the Atlantic yesterday, with the fractious mood set to continue.






Bill Gross, the chief investment officer of Pacific Investment Management, said US mortgage delinquencies and defaults would rise in 2008. “There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults. “We’ve only begun to see the pain from rising mortgage payments,” he added. Brian Gendreau, an investment strategist at ING, commented: “Financials are 20 per cent of the S&P 500 and if that sector doesn’t do well all bets are off. People just don’t know what’s on the balance sheets.”

 

[Riick]

"....People just don’t know what’s on the balance sheets.”

Didn't I hear that their accountants were refugees from Enron, or trained by them?

~~~ Some folks rob you with a gun, others with a fountain pen - Will Rodgers

 

[JSmith43]

Sunnycal, you are messing with the purpose and legacy of the 456 page bubble thread founded by Austin, hijacking it toward reckless political pontification. Besides, Austin is kicking your behind with logical arguments, while you go primarily political, in case you didn't notice.

I realize it is tough to avoid intermingling macro economic and political conclusions if you really think it starts and ends with the little people at the top. However, I'm sure you can make a salient point using what are primarily economic arguments rather than political charges and characterizations, if you so commit.

Thank you

 

[sunnycal]

Sunnycal, you are messing with the purpose and legacy of the 456 page bubble thread founded by Austin, hijacking it toward reckless political pontification. Besides, Austin is kicking your behind with logical arguments, while you go primarily political, in case you didn't notice.

I realize it is tough to avoid intermingling macro economic and political conclusions if you really think it starts and ends with the little people at the top. However, I'm sure you can make a salient point using what are primarily economic arguments rather than political charges and characterizations, if you so commit.

Thank you

well if you look I think Austin is the one who began our disagreement over politics but I am not sure where he is kicking my .... Politically, I am sorry the arguments presented are all proven wrong by the current mess we are in. All I can say is the current administration policies have helped fuel the fire for the current mess. On the other hand, I am amazed that all of the educated MBA's and CPA's couldn't have figured out that this end game was coming. Just about any average joe or appraiser knew that while the "eating" (at the trough) was good while it lasted it had to come down at some point and now we are in store for the big correction. What goes up must come down. What goes down eventually goes back up. When the average joe gets out of the market then the big boys come back in and buy up the bargain basement properties and then the cycle begins all over again. We've seen the same thing in the stock market.

 

[Cigar]

We have a local Credit Union which served the University of California which has gone into receivership:

The takeover signals yet another misfortune in the unfolding mortgage crisis in which homeowners are defaulting on their loans and losing their properties. The bulk of Cal State 9's loans are for real estate transactions.
The state's action "is related to the credit union's defaults on mortgages," California Department of Financial Institutions spokeswoman Alana Golden said Saturday.*

* http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/04/BAJ3T65Q4.DTL&hw=credit+union&sn=001&sc=1000