Housing Bubble Bursting?

[Karl]

CW Just lost 400 Million plus in the fourth quarter.Their stock is up today , man I love the Enron crowd.

Depends on where you consider up from I see no UP in a company that was @ 45 one year ago & now cant get to a 2 digit number In fact can't get to 7

 

[Couch Potato]

Mostly, I see the rich that live along the coastal areas.

There is an endless supply of counter examples to that comment. It is beyond ridiculous.

 

[Randolph Kinney]

The bubble making machine - the new paradigm

In America, land of the bubbles, the next pop will be the biggest

"That the Internet and the housing hyperinflations transpired within a period of 10 years, each creating trillions of fake wealth, is, I believe, only the beginning."

Translation: The next bubble is already expanding.

"There will and must be many more such booms, for without them the United States can no longer function. The bubble cycle has replaced the business cycle."

What's next? More asset-backed bubbles. The dot-com '90s created $7 trillion in market value. The housing boom created $12 trillion in "fake wealth." Janszen predicts the next great bubble will be a $20 trillion "alternative energy" bubble.

Yes, our economy has become a self-sustaining "bubble-blowing machine" inventing new bubbles at warp-speed even before the last is buried, in endless reincarnations of Schumpeter's "creative destruction" cycles.

But be warned: Even before we near the end of the "alternative energy" bubble, the law of unintended consequences could trigger a meltdown, not of the bubble but of the "bubble-making machine" itself! The machine will implode, taking down Wall Street, Washington, Corporate America ... and with it, the "new economy," the "new paradigm" and the "bubble-making machine!"

The trigger? A "black swan" off the radar and invisible to the quants managing the world's derivatives.

The brilliant supertrader and risk manager Nassim Nicholas Taleb says a "black swan" is an extremely rare, improbable event (like 9/11) that cannot be predicted, yet has catastrophic impact. Black swans are events outside the vision, experience and technology of the world's derivative traders' geniuses.

What will the black swan destroy? How about the derivatives market that spreads so far beyond subprime loan obligations.

Pimco's Bill Gross warns that $500 trillion of derivatives are hiding in a "shadow banking system" that "craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage ... with no requirements to hold reserves against a significant 'black swan' run that might break them."

Derivatives have become a renegade army of "I, Robots." "According to the Bank for International Settlements ... total derivatives amount to over $500 trillion, many of them finding their way onto the balance sheets of SIVs, CDOs and other conduits of their ilk comprising the Frankensteinian levered body of shadow banks."

Of course, you do need the cooperation of the FED and Congress to make these bubbles possible.

 

[Randolph Kinney]

Just another word for taking a loss

MarketWatch First Take: Write-downs find another name at Morgan Stanley: 'reclassifying'

NEW YORK (MarketWatch) -- Imagine a Morgan Stanley broker telling his or her client about some assets that are nearly worthless because they can't be sold. Would that customer feel any better that the brokerage was simply "reclassifying" that investor's losses?

 

[Terrel L. Shields]

What will the black swan destroy? How about the derivatives market that spreads so far beyond subprime loan obligations.

Some are not black but shades of grey. When you create derivatives, the end result is someone always tries to 'tweek' the model to generate more wealth. The purpose of derivatives was to REDUCE risk. They are now played where it is obvious (especially so to someone like Talib who admits that he puts most money in "safe" bets then bets the rest levereaged on what is seen as extreme risk...like shorting CW a year ago...) they are thought to be safe but are not.

 

[Riick]

Mogambu Speaks on $150B Bush(league) Plan

Mogambu Speaks:

"I get a real laugh ("Hahaha!") out of the emergency stimulus program of just giving away $150 billion dollars in $800 increments to various citizens, who total, I assume, 18,750,000 people at 800 clams apiece. Hahaha! Free money! "

<snipped>

"In case you were wondering, $150 billion is actually chump change. Hell, the federal deficit alone is over $600 a year! So $150 billion merely matches 3-month's worth of federal borrowing due to their overspending! Hahaha!


"And the federal budget is about $3.4 trillion a year, resulting in federal spending (when actual deficits from "supplemental appropriations" are included) of more than $4 trillion a year! For crying out loud, total GDP, which is the total of all the goods and services created (and consumed) by the United States in an entire year, is only about $14 trillion!

"And if that is not enough to make you gag up blood, when unfunded liabilities are accrued and added, the federal deficit alone, according to the GAO, was $4.5 trillion last year! The actual deficit was bigger than the budget itself! Yow!


"Then we come to the startling realization that federal government spending is about $8 trillion, more than half of GDP! And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending!


"And now some piddly $150 billion is going to make a big difference in preventing the overdue bust at the end of the biggest boom the world has ever seen? Hahahaha! Stop! I'm laughing so hard my stomach hurts! Hahahaha! Stop! Stop! Hahahaha!"................ <snipped>
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[JSmith43]

There is an endless supply of counter examples to that comment. It is beyond ridiculous.

I'm not talking about Ocean view from a mud bog. Are you saying, I don't get out much?

 

[Lloyd Bonafide]

"total derivatives amount to over $500 trillion"

$500 trillion!! Why, that's half of a ......??

What is the next number after a trillion, anyways?

 

[Dee Dee]

Gazillion?

 

[Randolph Kinney]

GDP 4th quarter 0.6%

Growth in U.S. gross domestic product slows to 0.6% in fourth quarter

WASHINGTON (MarketWatch) - The U.S. economy slowed sharply in the fourth quarter, growing at a 0.6% annual rate, the weakest growth since the economy was pulling out of recession in 2002, the Commerce Department reported Wednesday. The growth rate was lower than the 1.1% expected by economists. The economy grew at a 4.9% pace in the third quarter. Consumer spending and business investments slowed slightly in the fourth quarter. Investments in houses fell at the fastest rate in 26 years. Exports grew at a slower pace. For all of 2007, gross domestic product grew 2.2%, the slowest growth since 2002. GDP increased 2.9% in 2006.

There will be revisions, of course, to the GDP number. It is very strange how government keeps score. :Eyecrazy: