[Paquadez]

Right at this time, there are really TWO markets at work: the first is the REAL underlying market, which brooks no allegiance to the vain posturing of idiot politicians, drunk on power plays and in charge of Joe Public's cheque book!

The real market identifies two realities: first, that equities and bonds were much over-priced and with a coming deep recession in the US and much of Western Europe, not only will the indiginous economies of those regions suffer serious and significant contraction, what had been almost endless appetite markets for Asian manufactured consumer semi-durables will also savagely contract.

Second, that by the Fed throwing money into the US banking markets like a drunken octopus, this insane act will simply depreciate US dollar values on the global Forex markets.

Thus the smart money is factoring these two realities into their pricing equations.

The second market is of course the imaginary Ivory Tower in which dwell the Hank Paulsons of this World...........................................

Having been one of the architects of the mess during his time with Goldman Sachs, Paulson and the Bush administration simply desire to perpetuate a wholly flawed mechanism and stick Joe Public with the tab.

[plschwartz]

This years version of the Big Lie invented by Herr Goebels in the 1930'sand honed by Rove is that F&F pushed to loan to those really too poor to own houses.
The Community Reinvestment Act only applied to roughly those banks covered by FDIC.
You all watched TV for these last years. Can you remember what companies were shouting that they offered loans to just about anybody?
I don't watch much TV except ball games so I missed most ads. But outside of WaMu and the herd of bankers it was mostly IIRC Ditech and HRBlock.
Hot Flash these were not covered by CRA and they often sold loans to be bundled by Lehman etc the "shadow" banking system eho were completely unregulated and now mostly busted.
F&F although chartered by Congress were run as private companies with a board of directors and very expensive executives.There was no specific mention of being backed by the govt. They bought up the subprimes because they generated better income. The Bushies however needed to sell F&F bonds to China etc. So they told the Chinese that they were govt backed.
Guess who insisted that the govt bail them out when they got caught up in the same mess as Lehman etc.

At Monday's (Waxman House committeehearing, Rep. John Mica, R-Fla., gamely tried to pin Lehman's demise on Fannie and Freddie. After comparing Lehman's small political contributions with Fannie and Freddie's much larger ones, Mica asked Fuld what role Fannie and Freddie's failure played in Le hman's demise. Fuld's response: "De minimis."
(Nothing).
see http://www.slate.com/id/2201641/pagenum/2/

Lending money to poor people doesn't make you poor. Lending money poorly to rich people does.

[Wino]

Originally Posted by plschwartz

............................................................Lending money to poor people doesn't make you poor. Lending money poorly to rich people does.

Had a cousin that was a regional manager for Zale's Jewelery for Texas. In our city the south, west and east sides are the poorest, the north the richest. He said the largest default on charge sales were on the north side - like 95:1 ratio. Poor people did not put us in the crapper we're in - the rich did. It will be the middle class and poor that get us out.....................the burden has already been placed upon us thanks to the bailouts.

[eggplant43]

http://www.salon.com/tech/htww/2008/...ier/index.html

[iltos]

Originally Posted by eggplant43

http://www.salon.com/tech/htww/2008/...ier/index.html

I can also see how this exacerbates Krugman's "international finance multiplier." September was one of the worst months ever for hedge fund performance, and massive redemptions are expected by the end of October. To raise capital to make good on those redemptions, hedge funds are forced to sell more assets. By selling more assets they create even more downward price pressure, here in the U.S., in Brazil, in Russia, and everywhere else.

I am definitely beginning to wonder whether the global economy can survive its own interdependence.

i've got a question for all you investment wizards
i did a bit of snarfeling around the internet....it looks likes there's just short of 2 trillion dollars that were tied up in hedge funds. As the author of the article points out, they are pretty much limited to wealthy investors....those who, for lack of a better cliche....have money they can play with.....
.....which strikes me as akin to the smart gamblers in las vegas, who only gamble what they can afford to lose.

how much, then, of what is referenced in this article as the global economy's "interdependence" is actually dependant on hedge funds? what's 2 trillion worth, as a "butterfly effect"?

[Paquadez]

Originally Posted by iltos

i've got a question for all you investment wizards
i did a bit of snarfeling around the internet....it looks likes there's just short of 2 trillion dollars that were tied up in hedge funds. As the author of the article points out, they are pretty much limited to wealthy investors....those who, for lack of a better cliche....have money they can play with.....
.....which strikes me as akin to the smart gamblers in las vegas, who only gamble what they can afford to lose.

how much, then, of what is referenced in this article as the global economy's "interdependence" is actually dependant on hedge funds? what's 2 trillion worth, as a "butterfly effect"?

Eggy:

Hedge funds by their name were originally High Risk investment funds in which other regular funds and hyper-wealthy individuals took a long punt.

The concept being say 5% of total portfolio value in a Hedge Fund, "Hedged" the overall investment risks against the unexpected extraneous happening.

Unfortunately, Hedge Funds started acting like Private Equity Funds and were a few years back buying up controlling interests in publicly quoted corporations.

A sort of Back to The Future replay of KKK in the early 80s and the LBO funds.

Everyone became blasé about risk exposure and were throwing money around like it was going out of style.

A classic Hedge Fund ploy during the past few years was to massively short the target: they did this, for example, with the UK troubled mortgage bank Northern Rock.

No difference really to T Boone Pickens et al and their so-called Greenmail scams.

http://www.famoustexans.com/boonepickens.htm

In terms of the overall global impact on financial markets, Hedge Funds are not seriously significant.

Fannie and Freddie, for example, together guarantee $ 5 trillion in mortgage debt.

What is potentially significant and thus serious is the destabilising effect their actions have on global capital market confidence.

[SlackAli]

What really makes me laugh about what's going on is that for years the US and to a lesser extent the UK have lectured the rest of the world on sound economics. Developing economies have been subject to the unregulated free market diktats of the IMF and WTO - American dominated institutions - as well as having their aid packages determined by their adherence to the anglo saxon economic model.

China has been lectured constantly about the problems with its banking structures: ironic really now that, at a stroke, China could cause the dollar and the real US economy to collapse

[Paquadez]

I agree, Slack.

It is risible that given the circumstances of the past ten years or so, the theoretical American "Super-Power" has been the author of its own demise by failure to adequately exercise good trusteeship over its core and main asset: its currency.

Same to a lesser extent with the UK.

To me the analogy would be rather like Rome arming its soldiers with tin swords............

[eggplant43]

http://www.nakedcapitalism.com/2008/...rors-risk.html

[xico]

Retirement Savings Lose $2 Trillion in 15 Months
http://www.truthout.org/100808R
Nancy Trejos, The Washington Post: "The stock market's prolonged tumble has wiped out about $2 trillion in Americans' retirement savings in the past 15 months, a blow that could force workers to stay on the job longer than planned, rein in spending and possibly further stall an economy reliant on consumer dollars, Congress's top budget analyst said yesterday."

Yeah this is the kicker.

Good thing we had our funds in land, Iltos!

[ekim68]

Geez, plan B please....

Treasury Moves Quickly to Recruit Private Bailout Managers

The Treasury Department this week plans to start outsourcing the management of up to $700 billion in troubled securities, using special contracting authorities that enable it to retain private portfolio managers, custodians and other financial services consultants without following standard acquisition procedures.

The department's quick turn to the private sector will help it prepare for the massive task of overseeing mortgages and other financial assets to be acquired by the government as part of the Emergency Economic Stabilization Act that was approved by Congress and signed by President Bush on Friday.

http://www.washingtonpost.com/wp-dyn...100702821.html

[poochee]

Originally Posted by ekim68

Geez, plan B please....

Treasury Moves Quickly to Recruit Private Bailout Managers

The Treasury Department this week plans to start outsourcing the management of up to $700 billion in troubled securities, using special contracting authorities that enable it to retain private portfolio managers, custodians and other financial services consultants without following standard acquisition procedures.

The department's quick turn to the private sector will help it prepare for the massive task of overseeing mortgages and other financial assets to be acquired by the government as part of the Emergency Economic Stabilization Act that was approved by Congress and signed by President Bush on Friday.

http://www.washingtonpost.com/wp-dyn...100702821.html

I'm no expert so no comment!

[ekim68]

Ok, well I'll comment...They're using the same formula that got us here...A genius bunch I guess...

[xico]

Originally Posted by poochee

Maybe all this is part of the "One World" theory that gets put down all the time?

I read somewhere it was 88 billion!

[xico]

Originally Posted by poochee

I'm no expert so no comment!

Neither are they. You'd probably do a better job.

But what happened to the billions that were lost in Iraq? They brought pallets of 100 dollar bills in to Iraq, and then they went missing.

And what about the billions missing from the Pentagon?

Somebody knows where they are. Hmmmm. Check the signing statements?