ISEQ -> American Housing Bubble Bailout

johnfás wrote:

Yup!

You can stop them doing it by getting them to issue you the share certs but most people wouldn't be bothered.

You should always hold your own certs if it is shares you intend to sit on for any length of time.

I look at the brokers like this; imagine my house needs looking after when I am away and I give the keys to a friend, just in case something should happen. That friend then goes out and rents out the house and pockets the rent. He does it without my permission and makes use of my assets. If that is what passes as professional ethics no wonder we are in a mess, or am I missing something in this?

Then there is naked short selling. Trading takes place with shares that have not yet been borrowed and may never be. Naked shorting lets traders short sell large amounts of stock that may not be available to borrow in the market. Sometimes, lenders of securities tell several short sellers that they can borrow the same shares. Yep sure fills you with confidence.

http://www.sec.gov/news/press/2008/2008-211.htm

come back nick leeson, all is forgiven!!!!

Nick Leeson is not too far away. He lives in Galway and is Chief Executive of Galway United Football Club.

I'm liking this Economist cover, very dramatic altogether...

This graph is also pretty indicative of the evolving nature of this crisis...

Short selling is a red herring. Nothing else, and it isn't meant to be anything else. If it were so evil, why has it existed for over a century? If it is so evil, why can you still short every other company on the exchange bar the financials? If it is so evil, why are the measures only temporary.

The stock market is an auction. For every seller, there has to be a buyer. It cannot be made any more simple. If I borrow a stock and sell it, there has to be a buyer on the other side. No one puts a gun to the buyer's head. In fact the buyer doesn't know he/she is buying a shorted stock. They buyer believes the stock is the right price to buy.

Today the stock price of various financial institutions increased dramatically where only a week or two ago they were being valued at recent historical lows. Today the holders of those stocks, which just a mere week or two were ago were dogs, just made small fortunes. And they've been rewarded for making poor financial decisions! A week or two ago they were bricking themselves for making incorrect financial decisions.

There is some conspiracy talk about short sellers; like they are some seperate mafia of stock punters who sit in some dark, dank corner waiting to pounce on well run companies who've fallen on hard times. Well, got news for yees. They're the same punters who are going long (buying) today. They are mostly the same big unit trusts, hedge funds and some individual traders. They have the exact same ability and desire to go long or short as their own anaylsis dicatates.

The only manipulation of the markets taking place are by central banks, the SEC, the FSA and so on. The rise in financial's prices today have very little to do with short selling and everything to do with enormous manipulation of rules, rewriting of laws, breaking of existing laws and wholesale distortion of market pricing mechanisms across the globe. Why have they done this? Because the very institutions they oversee and are supposed to regulate have spent over a decade ignoring rules; breaking laws; and spending billions on lawyers fees to get around existing laws and regulations.

I can't really be to diplomatic here. It just boggles the mind. Short selling! Time to wake up and smell the coffee.

The reason financial stock prices rose today, bar the minimal affect of not being able to short sell, is that the US govt has stated its intention to bail out every US financial company or intermediary by taking their toxic debt and every variety of toxic derivative onto the books of a new US formed company. They are taking these actions on top of becoming the world's largest mortgage securities broker (F&F) and the US's largest insurance company (AIG). This from a country who loathes socialism but has nationalised companies without blinking and eye, and who is about to redress a decade+ of historical financial excess by rewarding the very people who wrecked the US financial system. Essentially the Fed has written a blank check for the people who created this mess and handed a bill to the US tax payer for trillions (the off-balance sheet derviatives toxin is valued at over $400 trillion).

You can just as easily replace the term socialism with the new in vogue term: "too big too fail". Socialism for the wealthy. Costs placed squarely on the average tax payer. Nice redistribution of wealth.

And isn't funny that over the last week that some banks just got that much bigger.

Short selling. Jesus wept.

Auditor #9 wrote:

$400 trillion rocky ... are we seeing a war on the horizon? I can feel it in my water.

Well, there's alot caveats to this value tag. There will be offsetting trades. There will be some instruments that once the markets settle and financial intermediaries begin to trust each other will be bought and sold at face value. Others will be sold for some percentage of their value. And yet others aren't worth the price of the paper (electronic keystrokes) they're written on.

The basic problem is no one (or at least it seems like no one) knows the true "tradeable" value of all these off-balance sheet items. And, of course, the US taxpayer seemingly will pick up the bill for the total and unsaleable junk.

Nice job if you can get it. Structure up some debt instrument and sell it. The buyer holds onto it and it becomes worthless - so they just unload the value onto the tax payer. My big question is if the New Govt Corporation will be buying these worthless pieces of paper or just taking them off of financial company balance sheets. Even if the govt corp ends up buying this shite for pennies on the dollar, the final bill will come to trillions. We should remeber that many of the Investment Banks which went bust lately still had reams of dot.com stock on their books at notional values. I suppose the US tax payer will finally end up paying money for this worthless paper also.

The upshot, if the Fed plan works, is that the amount of money the US govt needs to borrow will dwarf anything we've seen in the past. I just can't see how this is sustainable in the long run, and of course real inflation rates should reflect the amount of money being pumped into the global system. Monday I though deflation was going to be the problem. Friday I think inflation will be the problem. Both positions are justifiable given wholesale market manipulation we've just gone through. How long inflationary pressures will take hold is hard to say due to the fact that mainstream business will be affected by these financial distortions for quite awhile.

One thing for sure is that the Banking landscape has changed radically this week. I just couldn't figure out the timing of the Lloyds-HBOS merger. HBOS just wasn't in that much trouble. There was no urgency last week and all of sudden the Uk Dáil is rewriting the competition laws to allow the mega-merger. I'd say the English are clued up or have been given a signal by the Yanks that the era of mega-banks is in the offing.

You can wait indefinitely. Once they are falling it could be years until you decide that they are as low as they are going to go. Then you buy them and return them to the broker. If you are wrong and the stock goes up then you will be asked to put more cash into your account so that the broker won't be caught. If you don't come up with cash fast the broker will say, screw you, and and will buy back the shares himself. You will owe him the loss. This is a margin call that you fail to "meet" and is a sad event. This can happen very quickly and a lot would have suffered today.

I agree with Rocky that the shorting (nasty and brutal though it is) is a red herring. People are saying that the"tax payer" is bailing out the bankers, but I'd like to know where the money is to come from. The US national debt is over 9 trillion.

http://www.brillig.com/debt_clock/

cactus flower wrote:

I agree with Rocky that the shorting (nasty and brutal though it is) is a red herring. People are saying that the"tax payer" is bailing out the bankers, but I'd like to know where the money is to come from. The US national debt is over 9 trillion.

http://www.brillig.com/debt_clock/

Youngdan explained last year where the money comes from. The US Treasury. They have an infinite amount of money.

Except.. when you put that much in, you get rapid inflation, so interest rates have to go up. So Jo soap pays it back.

The magic circle of friends.

You still did not watch the video cactus. It is the Fed that has an infinite amount of money. The Treasury gets the money by borrowing. They do this by selling bonds. They pay back the bonds/loans over time. If there are no buyers then the Fed buys them. They do this by creating money out of thin air and gives it to the Treasury. The Treasury loves the Fed because there is always a buyer of their debt so they can continue to spend more than they take in every year. The Fed loves the Treasury because they allow them to print trillions of dollars out of thin air.

They are 2 gigantic parasites engaged in a financial sixty nine.

It is the greatest scam in history and all these shenanigans are designed to keep it going.

What will end it is when the scam is so blatant that people will cop on because there seems to be a mental block with most people in that they are afraid to figure out where money comes from. Then investors will sell the dollar. They do this by selling the assets they have denominated in dollars. These will be stocks and more importantly US bonds. As bonds are sold the interest rates rise as explained before.

You are the very one that posts that the US spends billions on wars and they are broke but yet you do not understand how they do this.

So EVM is correct the US has an infinite supply of money. The fact that they spend 10 billion a month on Iraq and 10 billion on Afghanistan means nothing. They can invade Iran and spend 500 billion if they want. Pakistan needed 10 billion so they gave them 10 billion. The Paki's were stupid because if they had Aids then Bono would have had the Americans give them 50 billion. If the Irish come back here with a bowl of shamrock and does a bit of begging then we will give them 100 billion and the Celtic Tiger can continue for another 10 years.

A few months ago everyone in the country was sent a check. Ours was 2300 dollars. The fuel is pretty high so this winter they might send a check for 5000 dollars. We don't believe in global warming because last night was close to freezing.

Things might get better because they are talking about lowering taxes.

youngdan wrote:

You still did not watch the video cactus. It is the Fed that has an infinite amount of money. The Treasury gets the money by borrowing. They do this by selling bonds. They pay back the bonds/loans over time. If there are no buyers then the Fed buys them. They do this by creating money out of thin air and gives it to the Treasury. The Treasury loves the Fed because there is always a buyer of their debt so they can continue to spend more than they take in every year. The Fed loves the Treasury because they allow them to print trillions of dollars out of thin air.

They are 2 gigantic parasites engaged in a financial sixty nine.

It is the greatest scam in history and all these shenanigans are designed to keep it going.

What will end it is when the scam is so blatant that people will cop on because there seems to be a mental block with most people in that they are afraid to figure out where money comes from. Then investors will sell the dollar. They do this by selling the assets they have denominated in dollars. These will be stocks and more importantly US bonds. As bonds are sold the interest rates rise as explained before.

You are the very one that posts that the US spends billions on wars and they are broke but yet you do not understand how they do this.

So EVM is correct the US has an infinite supply of money. The fact that they spend 10 billion a month on Iraq and 10 billion on Afghanistan means nothing. They can invade Iran and spend 500 billion if they want. Pakistan needed 10 billion so they gave them 10 billion. The Paki's were stupid because if they had Aids then Bono would have had the Americans give them 50 billion. If the Irish come back here with a bowl of shamrock and does a bit of begging then we will give them 100 billion and the Celtic Tiger can continue for another 10 years.

A few months ago everyone in the country was sent a check. Ours was 2300 dollars. The fuel is pretty high so this winter they might send a check for 5000 dollars. We don't believe in global warming because last night was close to freezing.

Things might get better because they are talking about lowering taxes.

The check was to pay for your votes, that's simple.

What you say about the Treasury explains why the Fed is the main holder of the US National Debt ( about two thirds of it, yes?). China has the next big chunk. People are saying the Fed has no money, but presumably the Treasury is paying massive interest to the Fed on those loans and that the US taxpayer is paying that.

I understand that the US is borrowing money to fight these wars. Halliburton, the oil companies and the likes make money out the wars. The taxpayer pays for them, unless the US defaults on the National Debt.

In Ireland in the last few years the Government has spent less than the tax take. That is ended and we are going to start ratcheting up a debt. In the US no matter how it is masked by printing money or issuing bonds, a debt is still a debt. It has to be repaid with interest, or you default. If the banks are paid a rake of money to keep operating, that adds to the debt. Printing money dilutes the value of the dollar. Driving down the dollar reduces the value of the debt to outsiders like the Chinese lenders, but not, I presume the debt to the Fed.

Why then are we not seeing runaway inflation in the US ? Or is that next week ?

We are not seeing runaway inflation because people hoard money abroad. For example a hundred dollar bill ends up in Mongolia. A lad there will hide it away as he knows it is a good store of value comparedto the local currency. Look upon the C-note as a cheque written by the US Treasury. The Mongol sticks it in the mattress. It is taken out of circulation or in another it(the cheque) is never cashed. This always the US to write another cheque with no effect seen and it is not cashed either.

The problem is that the day will come when the Mongal will see the value of the C-note falling and he will decide to spend it that will hold vallue better. Then all the mattress's will be emptied at once and the value will plummet and inflation will be obvious

The Treasury is indeed paying massive interest to the Fed. That is one of the beauties of owning the Fed, you can print money out of thin air and charge interest on it. When Kededy wanted the Treasury to print them themselves,thereby saving the interest, look what happened to him.

The US will default. the only question is whether it will just tell the bond holders to screw or if the will pay them in worthless dollars. The Chinese are indeed afraid of the value of the debt declining but if they try to sell some of it that will drive it down faster. They are stuck

The realcrisis could indeed be next week. If the dollar collapses then the US is beat and the wars are over. It would be a difficult job to get the troops out of Iraq alive in this situation as the Sunnis could no longer be paid off.

If a real crisis occurs it will be the speed at which things happen that will surprise

The dollar has hit the floor today and oil up 25 dollars a barrel last time I looked.
This has answered my question about why the dollar hasn't collapsed.

Oil finished up 17 according to BBC Radio 4 just there which is the greatest one day increase on record.

It will be interesting to see how Congress deals with Hank's interventionist rescue plan. Delay or argue and possibly cause loss of confidence, accept and make him arbitrator of who should be bailed out, and if he fails take the political blame. Do they want to be seen to accept the costs on behalf of the tax payer?

Thought I heard on the radio that Goldman Sachs were offering to manage the property portfolio that the US government is acquiring, for a fee, modest of course. The cheek!

johnfás wrote:

Oil finished up 17 according to BBC Radio 4 just there which is the greatest one day increase on record.

That figure on the portal is 108 - it's also the price given on Bloomberg

johnfás wrote:

Oil finished up 17 according to BBC Radio 4 just there which is the greatest one day increase on record.

It seems to be the drop of the dollar that is driving oil prices up. How much longer can the dollar be the "oil currency"?

I've just been listening to the Ticker Man youtube video (the top one) - he is pointing out that Paulson was Chairman of Goldman Sachs throughout the development of the bubble and is as responsible as anyone. Paulson is now trying to bump Congress into voting through legislation that will give him extraordinary powers, and deprive people who object to his decisions on say bank mergers from the right to sue. People seem to be losing confidence in this supposedly 700 billion dollar (Tickerman says it is much more) deal.

The deal is beginning to come under pressure against Bush's will - prevention of foreclosures, national shareholdings, are going into the deal, but people are going cracked as there is no limit to golden handshakes.

Squire wrote:

It will be interesting to see how Congress deals with Hank's interventionist rescue plan. Delay or argue and possibly cause loss of confidence, accept and make him arbitrator of who should be bailed out, and if he fails take the political blame. Do they want to be seen to accept the costs on behalf of the tax payer?

Thought I heard on the radio that Goldman Sachs were offering to manage the property portfolio that the US government is acquiring, for a fee, modest of course. The cheek!

I suppose youngdan is out burying his stash of bullion somewhere

Quote :

he price of oil has jumped by more than $16 to $120.92 a barrel, the biggest one-day gain on record.

Some traders believe that the US government's bail-out plan will help the economy, increasing demand for oil.

BBC News

Auditor #9 wrote:

Squire wrote:

It will be interesting to see how Congress deals with Hank's interventionist rescue plan. Delay or argue and possibly cause loss of confidence, accept and make him arbitrator of who should be bailed out, and if he fails take the political blame. Do they want to be seen to accept the costs on behalf of the tax payer?

Thought I heard on the radio that Goldman Sachs were offering to manage the property portfolio that the US government is acquiring, for a fee, modest of course. The cheek!

Sure why not? Goldman would have the requisite skills, people and connections to ensure an orderly management of those assets. The government isn't qualified to do that and should delegate the task to those who can do it best. Goldman have survived the crisis well and remain largely unscathed by the ructions on world markets. This is to their credit and suggests that they will be good stewards of this new public property. It's another example of the power of private sector organisations to provide the ways and means out of almost any quandary.

I dunno, AT, I dunno. it's like giving the autopsy job to the head vulture...I'm sorry but the Gospel of the Church of Mammon vis a vis the "free" market is something I am becoming increasingly sceptical of.

Looks like "free market" is the biggest oxymoron in history, at least for the poor auld US tax payer. It's gonna be bloody expensive

Ard-Taoiseach wrote:

Sure why not? Goldman would have the requisite skills, people and connections to ensure an orderly management of those assets. The government isn't qualified to do that and should delegate the task to those who can do it best. Goldman have survived the crisis well and remain largely unscathed by the ructions on world markets. This is to their credit and suggests that they will be good stewards of this new public property. It's another example of the power of private sector organisations to provide the ways and means out of almost any quandary.

NO NO NO!!!!!!!!!

I can tell you without any shred of doubt that the last people I would have managing a portfolio of property is a Bank. Fair play they are trying to get a bit of work, but in reality to manage this properly they would need to sub contract the work to others.

Expat Girl.

I agree, but it is also about their ability to realise the best return. Essentially it is a practical matter, and clever derivatives and all the rest are not really what is required just now. What is needed is back to basics. Can they be rented, fixed, sold. What work needs done, how much, how quickly etc. They need to plug the holes in the bucket.

I was out doing some work buy today was an exciting day. This article might be hard to follow but look at all the stuff people have learned in the last few months. Morgan runs the Fed and the head of Goldman is the Treasury Secretary. This is an astonding allegation http://www.financialsense.com/Market/wrapup.htm