No shit the gold standard exacerbated the situation, hence the Greenback Party and the major reason we no longer operate on the gold standard

10/14/2008 2:30:52 PM

Then you realize that your earlier statement, "the Panic of 1873 and the Long Depression are what this event might turn into over the long haul" is unfounded, since to day we are neither on the gold standard nor without a frederal rapeserve.

10/14/2008 2:45:14 PM

wow, this is getting rich.....
a bunch of 20-somethings arguing over the Panic of 1873, like any of you know what the fuck you're talking about.

10/14/2008 2:47:36 PM

We need to get people who lived during the Depression of 1873.

10/14/2008 2:54:02 PM

^^ Yes, it's clearly impossible for young people to know anything about the past.

10/14/2008 3:45:45 PM

I didn't say that. And i think it's great of some people here are intimately schooled on that event.

I just find it curious that after 23 pages in this thread and countless pages in other thread of conversation about the economy, the housing crisis, the stock market, etc, the Panic of 1873 wasn't brought up once, but as soon as it's mentioned, a swarm of guys on here start talking about it like they're experts.

Here's what I think happened: one of you read about it in a newspaper or blog posting, then the rest of you looked it up on Wikipedia to see what the hell they are talking about. Maybe a couple of you have vague remembrances of hearing about it in 11th grade American History.

10/14/2008 4:07:23 PM

well, you gotta realize that nutsmackr thinks he's an expert on everything.

10/14/2008 4:27:03 PM

All I know about the 1870s I learned from this book:


[Edited on October 14, 2008 at 4:59 PM. Reason : img]

10/14/2008 4:59:20 PM

http://money.cnn.com/2008/10/14/news/economy/budget_deficit.ap/index.htm?postversion=2008101416

Quote :

"Highest budget deficit ever Red ink hits $454.8 billion in 2008, more than double that of 2007; economists say bailout to weigh on next year. The federal budget deficit soared to $454.8 billion in 2008 as a housing collapse and efforts to combat the economic slowdown pushed the tide of government red ink to the highest level in history. The Bush administration said Tuesday the deficit for the budget year that ended Sept. 30 was more than double the $161.5 billion recorded in 2007. It surpassed the previous record of $413 billion set in 2004. Economists predicted a far worse number next year as the costs of the government's rescue of the financial system and the economic hard times hit the government's balance sheet. "

Why do I get the feeling that we're like the guy who puts a cruise on his credit card the week before his home is foreclosed?

10/14/2008 6:04:23 PM

Quote :

"unfounded, since to day we are neither on the gold standard nor without a frederal rapeserve."

not at all. you are acting like the greenback along with the federal reserve prevents a depression to happen. The lack of the greenback and federal reserve did exacerbate the problem, but wouldn't have had a chance to stop it.

I will acknowledge that the Panic of 1873 is probably weak, since it was relatively isolated to the United States

Quote :

"well, you gotta realize that nutsmackr thinks he's an expert on everything."

compared to the likes of you, I am.

Quote :

"Here's what I think happened: one of you read about it in a newspaper or blog posting, then the rest of you looked it up on Wikipedia to see what the hell they are talking about. Maybe a couple of you have vague remembrances of hearing about it in 11th grade American History."

Or some of us read more than just the morning newspaper and internet blogs. They are called books, they are worth reading.

[Edited on October 14, 2008 at 6:42 PM. Reason : .]

[Edited on October 14, 2008 at 6:46 PM. Reason : .]

10/14/2008 6:40:30 PM

so, pray tell.... in what illustrious volume that you keep on your bedstand did you first run across the Panic of 1873?

10/14/2008 8:07:12 PM

Quote :

"well, you gotta realize that nutsmackr thinks he's an expert on everything."

10/14/2008 8:16:38 PM

Quote :

"Here's what I think happened: one of you read about it in a newspaper or blog posting, then the rest of you looked it up on Wikipedia to see what the hell they are talking about. Maybe a couple of you have vague remembrances of hearing about it in 11th grade American History."

Ya Rly.

I've taught US History, and the sum total of my knowledge on the subject is:

1. It happened.
2. It was called the Panic of 1873
3. It indirectly helped end of Reconstruction
4. It more directly cause the Great Train Strike of 1877
5. It is most definitely never going to be on the state test

10/14/2008 8:28:20 PM

I first read about the Long Depression when reading about the Hapsburgs, which lead me to reading about the Panic of 1873

10/14/2008 8:35:51 PM

http://norris.blogs.nytimes.com/2008/10/20/first-birthday-for-the-recession/

Oops, this thread was the perfect contrary indicator! Made me a ton of money off this one here!

10/22/2008 3:57:28 PM

That blog post was halarious!

Quote :

"This recession is likely to last longer than that. If so, it will become the longest downturn since the 43-month recession that lasted from August 1929 to March 1933."

Get this! 'I' think this recession is going to last longer than the longest we've had since the great depression. If so, in other words if my guess is right, then this will be the longest recession we've had since the great depression!!!

WTF?

While I doubt we are going to avoid a recession, to suggest that it is going to be the longest or the worst we have ever had is an absurd jump when the author needs to dance around the numbers just to get to call a recession at all.

10/22/2008 5:59:36 PM

OH YES, THE US ECONOMY IS CERTAINLY IMPRESSIVE

if by "impressive", you mean the sense that our bundled (bungled), mortgaged-backed securities was able to derail the entire global economy and is the catalyst for the deepest worldwide recession in a lifetime.

IN OTHER NEWS: Alan Greenspan's faith in the self-correcting free market is "shaken"

Quote :

"WASHINGTON — For years, a Congressional hearing with Alan Greenspan was a marquee event... But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform. Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry. Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending. “You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?” Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.” On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken."

oh, well, whatever

Obama is a socialist terrorist america-hater, and he's fathered two black babies.

Sarah Palin for President 2008. If you know what's good for you




[Edited on October 24, 2008 at 2:26 AM. Reason : ]

10/24/2008 2:21:58 AM

^ sounds like he's trying to cover his ass.

Regardless, this whole housing mess was caused by government involvement. Changes to the community reinvestment act in '97 forced banks to loosen standards and lend to unqualified borrowers. Unqualified borrowers took on the risk when they should have stayed renters.

Next thing you know, government directed Fannie Mae starts bundling subprime mortgages into securities and selling them like they're gold.

If people banks were allowed to lend to whomever they felt fit, and government stayed out of it, we would have been fine, and renters would have stayed renters and kept their homes.

10/24/2008 2:34:49 AM

Quote :

"While I doubt we are going to avoid a recession, to suggest that it is going to be the longest or the worst we have ever had is an absurd jump when the author needs to dance around the numbers just to get to call a recession at all."

you're really being a partisan jackass if you won't admit that we're already in a recession

10/24/2008 5:19:26 AM

We're in for a bad day...

Dow index futures drop 550 points, maximum allowed price change

Quote :

"NEW YORK - Wall Street headed for another precipitous drop Friday as fears of a punishing global recession stirred panic among investors and sent world financial markets into a tailspin. The Dow Jones industrial average futures were down 550 points, triggering a freeze in selling. The massive decline was caused by increasingly grim news from overseas. In Japan, shares of Sony sank more than 14 percent after it slashed its earnings forecast for the fiscal year. In Germany, Daimler’s stock dropped 11.4 percent in morning trading after it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance. Japan’s Nikkei stock average fell a staggering 9.60 percent. In Europe, Germany’s benchmark DAX index was down a massive 10.76 percent, France’s CAC40 was down 10 percent while Britain’s FTSE 100 was 8.67 percent lower after third quarter GDP fell 0.5 percent, putting the country on the brink of recession."

http://www.msnbc.msn.com/id/3683270/

[Edited on October 24, 2008 at 8:24 AM. Reason : link]

10/24/2008 8:23:34 AM

Here's a game/simulation I have on my computer that deals with stocks and what it takes to run a company. It's pretty realistic, I think, and gives a unique insight on how the stock market works as well as investing and whatnot. It's only a shareware version so it has limited gameplay, but it's still enough to get it's point across.

http://www.roninsoft.com/

The download link is on the right side under Wall Street Raider Financial Simulation header.

10/24/2008 8:43:31 AM

Quote :

"Regardless, this whole housing mess was caused by government involvement. Changes to the community reinvestment act in '97 forced banks to loosen standards and lend to unqualified borrowers. Unqualified borrowers took on the risk when they should have stayed renters. Next thing you know, government directed Fannie Mae starts bundling subprime mortgages into securities and selling them like they're gold. "

Please, for your sake, get educated about this matter. The CRA didn't force anyone to loan to anyone. This is a right wing talking point that needs to be put to sleep. Fannie and Freddie had stricter loaning standards than most subprime houses giving out 2/28s like free candy at halloween. And it wasn't the government that directed them to bundle the mortgages, it was sovereign investors and other big bettors with a crack addiction for high yields that was demanding. Then, you can thank the rating agencies for wanting a slice of the pie and not doing due diligence to what they were rating. Greed at multiple levels swirled into a perfect storm to create this mess, to try and pin it onto any one thing is just lazy. To pin it on any one thing because of partisan politics is even worse.

10/24/2008 10:24:47 AM

Hmmm

http://market-ticker.denninger.net/archives/626-To-Our-Government-CUT-IT-OUT-NOW.html

Quote :

"Now let's talk banks. You know, those things that are supposed to hold reserves against deposits when they make loans? Well guess what - there are no reserves. The non-borrowed reserves have been negative for months - since the turn of the year, in fact, and now total over $300 billion dollars. What does this mean? Simple - the banks lost (blew, speculated with and got caught on the wrong side of, issued or purchased crap securities with, paid bonuses with, paid the light bill with, etc) the reserves they are supposed to hold against deposits. This would usually result in them being declared insolvent and the FDIC would seize them, but that would be inconvenient. So instead they went to The Fed which loaned them reserves so it appears they have some. It appears they have subsequently lost some of that money as well, because the "non-borrowed" reserve number continues to increase in the negative direction (that is, its a negative number - a very large negative number.) But wait - where did that money they borrowed come from? Why Treasury issued debt against which was issued money, cranking The Fed's balance sheet up. So in effect, what were bank reserves held back from your deposits are gone (kaput, vaporized, in some banker's yacht at The Hamptons, etc) and have been replaced by debt issued by Treasury against FUTURE tax collections to be levied against you! That's right - your reserved deposits were lost, and replaced by an IOU from Treasury against YOUR FUTURE EARNINGS. You not only gave your money to a bank which lost it, they then (by the magic of the Treasury and Fed) then turned around and enslaved you going forward to get it back from your tax payments."

By the way, this is some pretty scary shit:

Quote :

"Let's put in stark relief why Congress and the rest of our government must cut the crap right here and now: "The FSC has not only limited insurance company exposure to Fannie, Freddie and Ginnie bonds and mortgage-backed securities, but has decided that existing credit ratings are meaningless. The Insurance Bureau at the Financial Supervisory Commission in Taipei announced revised rules on how insurance companies can treat investments in mortgage-backed securities (MBS). The FSC says it cannot see how the United States will develop a valid mechanism to assess the credit quality of MBS issued by US federal housing loan agencies, namely Fannie Mae, Freddie Mac and Ginnie Mae." That's right folks. Taiwan's primary regulator for insurance companies has ruled that: 1. Ratings issued by our so-called "agencies" are worthless. 2. Agency securities can no longer be considered sovereign, "money good" debt. Now maybe you think this is funny. It is not funny. In fact, there is absolutely nothing funny about it. This is how we lose our credit access worldwide. It has now officially started and what Taiwan has done will spread. Count on it. Russia may be about to have exactly that happen: "Russia's financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default. The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland's debt before it sought a rescue from the International Monetary Fund." .... "This crisis is starting to look like the Black Wednesday in 1992. Unless we see an extension of central bank swaps in dollars and euros to Eastern Europe within days to stop this uncontrolled process of deleveraging, this could get out of control and do serious damage to Western Europe. We could see the euro fall to parity against the dollar by next year," he said. "

[Edited on October 24, 2008 at 11:28 AM. Reason : new quote]

10/24/2008 11:17:45 AM

Quote :

"aikimann: Regardless, this whole housing mess was caused by government involvement."

wait, wat? do you choose to remain deliberately uninformed, or are you just lying??

this whole global financial meltdown is totally due to deregulation and lack of oversight. and THAT is why Greenspan is about ready to collapse under the weight of his own congnitive dissonance.

now is he, personally, to blame? is it his fault?

yes, it's his fault that his own blind adherence to his ideology forced him ignore the simple fact that people running these huge investment firms are motivated by pure greed and unable to see past short term profits.

it was his JOB to steer the economy. and like the captain of a ship which has run aground, he has to take responsibility. never mind the fact that he jumped ship after the course had been set, and left Bernake to take the fall.



[Edited on October 24, 2008 at 3:06 PM. Reason : ]

10/24/2008 3:00:35 PM

Quote :

"this whole global financial meltdown is totally due to deregulation and lack of oversight. and THAT is why Greenspan is about ready to collapse under the weight of his own congnitive dissonance. now is he, personally, to blame? is it his fault? yes, it's his fault that his own blind adherence to his ideology forced him ignore the simple fact that people running these huge investment firms are motivated by pure greed and unable to see past short term profits. "

DEREGULATION!! CORPORATE GREED!!

Hey, maybe if you blame these scapegoats over and over again somehow it'll make it true.

Schmoe, stop with the bullshit. Nothing is so black and white. The greed in Wall Street is legendary. Why did it result in such a catastrophe this time around? And once again, what is at the root of the crisis? The root of the crisis revolves around the housing correction that resulted from over-inflated home prices. This bubble was created by sub-prime loans.

As a matter of fact, the subprime phenomenon started with the Community Reinvestment Act (CRA), and later the Federal Housing Enterprises Financial Safety and Soundness Act (FHEFSS) of 1992 which required Fannie Mae and Freddie Mac to purchase the substandard loans made by covered banks pursuant to the CRA in the interest of supporting "affordable housing." Prior to 1992, there was no market for these sub-prime loans and they accounted for less than 1% of all home loans. This is because if a lending institution wrote a sub-prime loan they essentially had to accept the risk of making that loan, of whether or not that loan would be repaid. Fannie Mae would not purchase the loan because sub-prime loans did not meet their guidelines. But with the passage of this act, and the resultant lowering of FM2 guidelines to purchase sub-prime loans, these lending institutions could now make them with impunity. Thus, from 1992 onward, the number of sub-prime loans ballooned dramatically. Everyone applauded the great increase in the number of low- and moderate-income homeowners. Very few noticed the risk to FM2 and the entire financial system.

By 1998, they accounted for more than 12%. During this time, Fannie Mae and Freddie Mac, regulated by HUD, were encouraged to digest hundreds of billions of dollars in subprime loans pursuant with the goals of CRA and FHEFSS. In 2004, HUD increased the exposure of FM2 to even more sub-prime loans by raising the percentage of loans written to low- and moderate-income homeowners from 50% to 56%. This increased the risk of a financial meltdown even more. Finally the bubble burst, and it took down the whole financial system with it.

Subprime loans are a creature of government policies, as is the secondary market for them. Though many mortgage backd securities were purchased by non-GSE investors, the entire market, the security intruments, and their appearance of legitimacy were all created by government. It wasn't deregulation that created this mess, it was wrongheaded regulation designed to create loans for low income homebuyers that created it.

And so history repeats itself: government interferes in the market, blames the market for the problems that ensue, then rationalizes further interference in the market to correct problems for which it is itself responsible.

[Edited on October 24, 2008 at 3:53 PM. Reason : 2]

10/24/2008 3:46:21 PM

Talk about conspiracy theory

http://www.princeton.edu/hubbert/current-events.html

You have to have a lot of free time on your hands to cook this stuff up. Interesting regardless.

10/25/2008 11:16:21 AM

Is there a better thread (here or Lounge maybe?) to put some of this stuff?

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html

The silver lining in all this mess is we take down all the other world economies which might have a positive effect on us? We are already seeing the dollar strengthen compared to the Euro. These are wild times indeed.

10/26/2008 2:55:55 PM

^ im fine with that. misery loves company

10/26/2008 4:54:00 PM

Quote :

"Subprime loans are a creature of government policies, as is the secondary market for them. Though many mortgage backd securities were purchased by non-GSE investors, the entire market, the security intruments, and their appearance of legitimacy were all created by government. It wasn't deregulation that created this mess, it was wrongheaded regulation designed to create loans for low income homebuyers that created it."

The subprime problem has virtually nothing to do with anything that the government did and only a slight bit to do with anything the government didn't do.


The genesis of the crisis was in the development of CDOs and advanced risk modeling. This is part of the general rise of quantitative trading and asset management that has grown up in the last ten years.

In short, it seemed for a time that CDO structure and quant analysis created a world in which risk could be management far more effectively than in the past. This opened up a market for securitizing loans which previously were not securitized.

The rise of the CDO market was not unlike the rise of the junk bond market and like the junk bond market I think CDOs are ultimately a positive innovation. However, in the short run they were oversold and a credit bubble ensued.

As we will see subprime is not where most of the losses will occur. There will be losses in Alt-A, losses in Prime, losses in consumer credit, losses in auto loans, and losses in corporate bonds. Moreover, the same underlying forces drove much of the spectacular rise in commodities that is now reversing itself.

Everywhere there was a bubble, subprime mortgages just burst first. This is also why so many people underestimated how this would play out. We have over $1 Trillion in losses and counting but there are only roughly $1.2 Trillion in subprime loans.

So even if everyone of them went bust tomorrow with zero recovery it barely explains the damage to the banking system. I think right now we are looking at delinquency rates of 18% on subprime and recovery rates of about 40%.

This is not just subprime. This is not just housing.

[Edited on October 26, 2008 at 5:23 PM. Reason : .]

10/26/2008 5:14:28 PM

yeah, that's right... what he ^ said.






[Edited on October 26, 2008 at 5:35 PM. Reason : ]

10/26/2008 5:33:01 PM

http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=319

I'm not even going to pretend like I understand CDS and how they are used to manage risk, but as I continued to read about the ongoing crisis, certain things jump out at me, like such:

Quote :

"In both cases, the normal operation of the OTC derivatives markets is creating a cash position that must be funded in the real world and is thus distorting these benchmark cash markets such as LIBOR. This distortion is magnified by the dearth of liquidity due to the breakdown in the rules regarding valuation and price. So far, the Fed and other central banks have addressed the on-balance sheet liquidity needs of global banks. But as retail and corporate default rates rise, funding the trillions of dollars in notional off-balance sheet speculative positions in CDS, which become very real and require funding when a default occurs, could prolong the economic crisis and siphon resources away from the real economy. "

Quote :

"But until global regulators and politicians summon the courage to restore reasonable rules to the financial markets, particularly a balance between risk allowed and transparency required, attempts to understand price and value, and thus capital, will be fruitless and the confusion will continue. Markets like societies, after all, must have clear rules in order to function properly. What a shame that private market participants do not have sufficient political wit and savvy to lead the discussion and instead must await the judgment of the same political class that caused this mess in the first place. "

What is it going to take for this to happen? Another 3000 points on the Dow? Will the leadership in Washington get a clue? Or will the market somehow magically make this happen? Bailing companies out without forcing their bad balance sheet tricks out into the open is preventing the natural order of things from happening.

10/27/2008 10:57:16 AM

Quote :

"I'm not even going to pretend like I understand CDS and how they are used to manage risk,"

don't sell yourself short - CDS's are not hard to understand. They are almost exactly like insurance, except not in name or legal status.

Company A will buy a whole bunch of securities like CDOs, which have a certain risk associated with them, like any investment does. To try to cover their asses in case the value of the investment goes down, Company A will buy a CDS from Company B, just like you would buy car insurance just in case you get in a crash. If the investment is valued at $1M, then Company A would buy a CDS from Company B for, for example, a yearly $10k premium. By paying this premium to Company B, then if the investment turns belly-up, Company B is supposed to pay Company A some or all of the $1M of the value of the original investment, just like State Farm would pay you if you crashed your car.

So the idea was that all of these companies were buying CDOs and CMOs (types of investments, which turned out to be particularly risky b/c they have lots of sub-prime loans tied up in them), then buying CDSs from other companies to cover their investments.

But a lot of problems have crept up for many reasons:
1) the purchasing and sales of CDSs were not regulated at all by the government. I believe they were deregulated under the "Commodity Futures Modernization Act of 2000" and therefore:
2) companies buying and selling CDSs do not have any leverage rules. Insurance companies have to hold a certain percentage of cash on hand. For example, if they have $500M of outstanding insurance policies, they have to hold something like 10% of $500M cash, so they have enough to pay out if and when some of those policies are claimed. Companies selling CDSs can sell as many as they want with no leverage requirements. So Lehman Brothers, for example, could sell $5 Trillion worth of CDSs, but weren't required to keep a dime in the bank in case they had to pay those out.
3) CDSs are not bought and sold on any public market. They can be bought and sold directly between companies with no transparency, and therefore their true market values is very hard to find out. Ideally, there should be a market-type operation where, for example, Company A says "i have a $5M investment and i want to insure it", then other companies would bid on a market for the right to sell a CDS to Company A.

there are several other problems, and a lot of other stuff tied into CDO/CMOs, but that should hit the high points.

CDSs are under the umbrella of financial tools that Greenspan talked about last week when he said he had a "flaw" in his understanding of how free markets work, when he said that he had thought the market would always work in their own self interest. It's clear that in the case of CDSs, companies were more than willing to dig their own graves by selling trillions of $ of CDSs they would never be able to cover in exchange for short term gains based on faulty intelligence.

10/27/2008 2:33:45 PM

^You forgot the biggest problem of all with CDSs: It's not like other insurance. When someone gets in a car crash, it doesn't increase the likelihood of anyone else crashing, so the insurance company never gets hit too hard at one time. In the case of the financial crisis, it's the equivalent of millions of drivers crashing at the same time, and the issuer of the CDS's (AIG) could not possibly cover all the losses.

AIG's whole CDS business model was built on the market staying rational, but the market can be irrational longer than you can stay out of bankruptcy.

10/27/2008 2:46:51 PM

we like to think of the market as being rational, but the past year has shown that to not be the case. the rules of the market are rational, but the people operating the rules are far from rational.

10/27/2008 2:50:33 PM

I'm trying to deposit my funds in some Viking banks, anyone know how to do it

http://www.bloomberg.com/apps/news?pid=20601068&sid=ay61s1zV3NCA&

Iceland Central Bank Raises Key Interest Rate to 18%

[Edited on October 28, 2008 at 8:47 AM. Reason : just a joke folks]

10/28/2008 8:46:14 AM

No Thanks, We're Waiting on Our Bailout

Quote :

"An auction that netted $7.5 million in bids on 56 distressed Utah properties fell through last week after the owners -- three banks and two private lenders -- decided they may get a better deal by holding out for the government's bailout plan. "There were buyers, but we couldn't sell the homes because free enterprise has gone out of the market," said Eric Nelson, founder of Las Vegas-based Eric Nelson Auctioneering. His company on Sept. 30 put up for sale 56 foreclosed properties and lots, most of which are in Utah County. The auction, held in Salt Lake City, attracted thousands, including 200 bidders who bid between $275,000 and $615,000 for 10 luxury homes in Midway and Murray that were appraised at between $525,000 and $652,000. They bid between $26,000 and $100,000 for 44 custom lots in Mapleton, Elk Ridge, Lehi, Alpine, Ogden, West Haven and Willard that were valued between $112,000 and $290,000 a piece. The most-expensive properties on the auction block included a $1.2 million unfinished home in Draper, which attracted the highest bid at $615,000, while a 62-acre parcel in Park City that's valued at $3.5 million, snagged the highest bid at $1.125 million, said Eric Taylor Nelson, the company founder's nephew. But all those bids were rejected late last week... "This has never happened before. In the 25 years we've conducted lender-owned auctions, we've consistently closed over 95 percent of all high bids," Nelson said. "The stock market's historic drop last week and the bailout plan are some of the main reasons why the lenders rejected the bids," he said. "They're thinking, 'Why sell the properties for 50 cents on the dollar when they may get 75 cents or 80 cents through the bailout?' ""

http://www.heraldextra.com/content/view/284279/18/

10/28/2008 10:49:48 AM

More scary shit

http://market-ticker.denninger.net/archives/631-Oh-No....-Foreign-Debt-Bought-by-The-Fed.html

Quote :

"There is one problem with this - it is insanely inflationary, especially when the government is running a fiscal deficit. In fact it virtually guarantees a "feedback" cycle that ultimately will destroy both the government and the monetary system. Here's why."

10/28/2008 12:31:51 PM

dows up close to 600 today


i blame bush

10/28/2008 3:35:31 PM

Quote :

"The free market punishes irresponsibility. Government rewards it. -Harry Browne (1996 & 2000 Libertarian Party Presidential candidate) "

10/28/2008 3:40:14 PM

^^ so the DOW is back to where it closed 6 days ago??!!
awesome!! Does that mean the financial crisis is over!?

10/28/2008 3:49:06 PM

yep over

10/28/2008 3:53:06 PM

Quote :

"They are almost exactly like insurance, except not in name or legal status. "

A couple of key points about CDS

1) CDS can and is written on all types bonds not just CDOs. This is important because CDS on Lehman bonds was a big nightmare this past month.

2) Unlike how you might think of insurance CDS is not necessarily or even usually written by a company that specializes in insuring risks. Technically, anyone can write a CDS contact.

3) CDS functions like a derivative. If a bond fails then CDS pays. It is not necessary for you to own the bond, have ever seen the bond, or have anything to do with the bond. You can buy CDS on anything someone is willing to sell it on. I could theoretically buy CDS on your mortgage.

4) There is no clearing house for CDS. So if I have written CDS but decide that I do not want to take on the risk what I do is buy CDS from someone else. This can create responsibility chains that are a nightmare.

Person A buys from B who buys from C who buys from D who buys from E.

So ultimately A's money comes from E in the event of default but if anyone along that chain fails to honor the chain collapses.

5) Default under CDS does not necessarily mean that the bond is no longer paying. A default could mean that a company has lost its credit rating or falls short on cash on hand or something else. This means payouts can occur even when it seems like nothing is happening.

6) The underlying bond issuer has no incentive to protect your CDS. So while I may not want to let my house burn down even for the insurance money, I may not t care at all about whether or not I "default" under the terms of your CDS.


All of this means that CDS contracts create a lot of counterpart risk. That is the risk that when time comes to pay up the writer of that CDS may say "too bad, so sad, I don't have the money"

[Edited on October 28, 2008 at 5:35 PM. Reason : .]

10/28/2008 5:34:34 PM

Quote :

"^^ so the DOW is back to where it closed 6 days ago??!! awesome!! Does that mean the financial crisis is over!?"

It means that we probably hit the bottom on Monday and there's nowhere to go but up.

A 900 point gain is nothing to sneeze about. Looks like people are betting that the worst is over.

10/28/2008 5:44:11 PM

No, I predict that the DOW has stabilized and the current up and down is just fluxuations. I suspect it will go way down again, then way up, on and on for weeks.

10/28/2008 6:04:30 PM

[Edited on October 28, 2008 at 6:13 PM. Reason : double post]

10/28/2008 6:11:49 PM

Just a reminder for people who take comfort in the adage that stock prices always go up in the long run.



Note that the Nikkei closed at 7621 yesterday after hitting a 26 year low on Monday.

10/28/2008 6:12:50 PM

its going up and can only go up

next pres. will love it when that happens


just how should we tax these people?

10/28/2008 6:22:32 PM

lol, if Obama knows anything its how to tax people. I don't think he'll have any problems with this at all.

10/28/2008 6:30:04 PM

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLgRyi4zbS3s&refer=home

Good stuff, we're bailing out other countries now too!

10/29/2008 6:28:27 PM

This pic gave me a headache:

10/30/2008 10:51:09 AM