OK, Who's Holding the Bag?
Lisa Lisa
Shaky markets prompt rumors of who's in trouble
By Julie Creswell
Friday, August 10, 2007
NEW YORK: The global stock and bond markets these days seem to be
playing a giant game of hide and seek.
In this version, investors are scrambling to discover which banks,
hedge funds or public companies are holding potentially hundreds of
billions of dollars in bad loans and subprime-related mortgage
securities that are imploding.
On any given day, traders are exchanging rumors of a hedge fund that
has blown up or a Wall Street brokerage firm that has incurred losses
in subprime or other mortgage-related securities, creating a frenzy
and a whipsaw of trading activity in the stock and bond markets.
So far, most rumors have turned out to be unsubstantiated and untrue.
Still, exposure to and losses from subprime and other mortgage-related
securities are being revealed, slowly, all over.
On Thursday, France's largest bank, BNP Paribas, stopped withdrawals
from three of its asset-backed securities funds, saying it could not
value them accurately because of problems in the subprime market in
the United States.
Also Thursday, the insurance giant American International Group
revealed that it held $28.7 billion in subprime securities, but that
given its size, it was not under any pressure to sell the securities
at a loss.
Already the turmoil in the mortgage market has led Germany's central
bank, the Bundesbank, to bail out IKB Deutsche Industriebank, which
held subprime investments. Several hedge funds in the United States,
four in Australia and at least four additional funds in Europe have
either closed or halted investor withdrawals as they sort out the
value of their subprime and other mortgage-related investments.
In reaction to the growing losses on subprime mortgages and related
securities, the European Central Bank stepped in Thursday morning and
provided $130.2 billion in emergency loans to European banks, while
the U.S Federal Reserve injected $24 billion in liquidity into the
American banking system. Asian banks also stepped in Friday.
Capital markets have undergone periods of extreme turmoil and lack of
liquidity in the past. In 1998, the credit markets virtually froze up
after the hedge fund Long-Term Capital Management buckled and Russia
defaulted on its debts. Many investors dumped mortgage securities and
prices tumbled.
Yet, the nervousness seems more intense given the amount of leverage,
or borrowed money, that had been made available to hedge fund
investors in the subprime and mortgage arena. The use of borrowed
money, along with the sheer size of the mortgage market, should only
worsen investor losses.
"This is a market that has grown tremendously in the last five years,"
said Stijn Van Nieuwerburgh of the Stern School of Business at New
York University, "and whereas a lot of the mortgages were previously
held by banks, now, particularly with subprime mortgages, they are
held by a lot of new players who are essentially just getting used to
them."
Last year, Wall Street firms issued $773 billion in mortgage-related
securities, up from $217 billion in 2001, according to the Securities
Industry and Financial Markets Association.
Yet trying to ferret out which one of these relatively new players
will be the next to report big losses on subprime or mortgage-related
securities, whether it be an Asian bank or American hedge fund, is
difficult.
Unlike investors who hold large stakes in publicly traded American
stocks, and must report those holdings to the U.S. Securities and
Exchange Commission, no central government agency or private
organization tracks who may be holding subprime or other mortgage-
related securities with any regularity. The U.S. Treasury does track
broad foreign country holdings of American mortgage securities.
"I don't think any of the regulators have a handle on where the net
exposure of subprime is," said Christopher Whalen, managing director
of Institutional Risk Analytics, which builds risk systems for
regulators and auditors.
Whalen said it was worse in Europe, where less public data was
available.
Furthermore, because of accounting rules, some holders of these
mortgage-backed securities do not have to disclose or recognize any
losses until they actually sell them.
But these days, trying to value certain subprime securities or the
more complicated collateralized debt obligations, which are pools of
mortgage securities, is difficult as well. Unlike stocks that trade
openly on exchanges and whose value can easily be determined at any
point of the day, mortgage-related securities and collateralized debt
obligations change hands behind the scenes via individual bids and
offers made on trading desks across Wall Street.
Some analysts said that because these securities are held by so many
investors, the pain will be spread among many participants instead of
taking down one large financial institution.
Moody's and Standard & Poor's said this week that the large American
investment banks face modest risks and manageable losses because of
subprime-mortgage losses.
"The good news is that the losses will be widely distributed across
the different owners of these pools of securities," said Stuart
Gabriel, a finance professor at the University of California, Los
Angeles.
"The bad news," he said, "is because of the difficulties in valuing
these mortgage pools and the high levels of uncertainty and panic that
have set into these markets, we have a situation where there is a
severe lack of liquidity in the mortgage market and that has created
an extremely dangerous situation for our economy and the global
economy."
Copyright © 2007 The International Herald Tribune | www.iht.com
Vid...@tcq.net
it appears that the bag holders are far and wide, and into deep dodo.
the hundreds of billion of dollars(perhaps trillion/trillions?)
financed by the serfs to prop up the rugged individual, self reliant,
self responsible, pull yourself up by your own bootstraps capitalists,
is a world wide event.
star...@yahoo.com
> it appears that the bag holders are far and wide, and into deep dodo.
> the hundreds of billion of dollars(perhaps trillion/trillions?)
> financed by the serfs to prop up the rugged individual, self reliant,
> self responsible, pull yourself up by your own bootstraps capitalists,
> is a world wide event.
In short, it's completely over.
The first wave of the end of the house of cards has already come down.
Mike
com...@webtv.net
same bull from "your kind' about how it is "all over" for the past 40
years...like he lead article said " most of the rumors were untrue"
...that sums it up. bet the market ends UP next week.
" Children should be treated as ambassadors from a higher culture "
Bill Reid
<com...@webtv.net> wrote in message
news:23891-46B...@storefull-3174.bay.webtv.net...
> bet the market ends UP next week.
Uh, dude(s) (and "Wendy" too), the market ended UP this
week too...
Only took a few hundred $billion in central bank liquidity
injections to do it, but by the blessed saints in heaven the
US markets rose for the week...
---
William Ernest Reid
Post count: 733
Vid...@tcq.net
i hope they get there's. but the silver spoon crowd never rests. they
became a aristocracy thru cleverness and the gullibility of the middle
class. they never rest.
and the central banks which act in tandon, will leave no stone
unturned to bail them out.
Blash
> i hope they get there's. but the silver spoon crowd never rests. they
> became a aristocracy thru cleverness and the gullibility of the middle
> class. they never rest.
> and the central banks which act in tandon, will leave no stone
> unturned to bail them out.
........and they're all out to get YOU!!!!!
Mani Deli
Vid...@tcq.net
> Vide...@tcq.net wrote on 8/11/07 10:57 PM:
you mean stealing our money. where is your outrage that they are
getting bailed out from their own irresponsibility's with our money?
err, maybe its because you are getting bailed out to:) hypocrite!
Blash
> On Aug 12, 6:46 am, Blash <bla...@comcast.net> wrote:
>> Vide...@tcq.net wrote on 8/11/07 10:57 PM:
>>
>>> i hope they get there's. but the silver spoon crowd never rests. they
>>> became a aristocracy thru cleverness and the gullibility of the middle
>>> class. they never rest.
>>> and the central banks which act in ***tandon***, will leave no stone
>>> unturned to bail them out.
>>
>> ........and they're all out to get YOU!!!!!
>
> you mean stealing our money. where is your outrage that they are
> getting bailed out from their own irresponsibility's with our money?
> err, maybe its because you are getting bailed out to:) hypocrite!
>
I don't get "outraged" very often.......maybe that's why I haven't
developed a persecution complex.....BTW, the word you were searching vainly
for is tandem, not tandon(you were close).......
"Some people take Usenet far too seriously. Anyone totally devoid of
functioning brain cells should avoid N/Gs altogether. Then they won't get
their delicate little feelings hurt."
FrediFizzx
news:C2E4D3BD.7751F%bla...@comcast.net...
> Vid...@tcq.net wrote on 8/12/07 1:50 PM:
>
>> On Aug 12, 6:46 am, Blash <bla...@comcast.net> wrote:
>>> Vide...@tcq.net wrote on 8/11/07 10:57 PM:
>>>
>>>> i hope they get there's. but the silver spoon crowd never rests.
>>>> they
>>>> became a aristocracy thru cleverness and the gullibility of the
>>>> middle
>>>> class. they never rest.
>>>> and the central banks which act in ***tandon***, will leave no
>>>> stone
>>>> unturned to bail them out.
>>>
>>> ........and they're all out to get YOU!!!!!
>>
>> you mean stealing our money. where is your outrage that they are
>> getting bailed out from their own irresponsibility's with our money?
>> err, maybe its because you are getting bailed out to:) hypocrite!
>>
>
> I don't get "outraged" very often.......maybe that's why I haven't
> developed a persecution complex.....BTW, the word you were searching
> vainly
> for is tandem, not tandon(you were close).......
Some people have figured out how to take part in the "American Dream"
and some haven't. ;-) Less bitchin' and more doin' might get them
there.
Fred
Blash
> Some people have figured out how to take part in the "American Dream"
> and some haven't. ;-) Less bitchin' and more doin' might get them
> there.
>
> Fred
Some are just born to be "Whiners"........
GoForward
... and if this mess gets messy enough, that is, enough people
with a lot of money losing a lot of money, they will in fact demand
that the gov't bail them out - for the sake of the poor, poor
individuals
who will otherwise lose their homes, no doubt - just as we saw after
the S&L shenanigans.
GoForward
> "Blash" <bla...@comcast.net> wrote in message
> Some people have figured out how to take part in the "American Dream"
> and some haven't. ;-) Less bitchin' and more doin' might get them
> there.
>
> Fred
... so stop bitchin' and start writing checks to your congressman,
the guys and gals on the House Banking Cmte, the reelection cmtees
of both major parties (one has to hedge one's bets...), and various
and sundry other politicos that might help grease the way to another
bailout (capitalism is great, but we'll let someone else live it,
we're
just businessmen doin' the best we can with what we got...)
Vid...@tcq.net
> Vide...@tcq.net wrote on 8/12/07 1:50 PM:
>
> > On Aug 12, 6:46 am, Blash <bla...@comcast.net> wrote:
> >> Vide...@tcq.net wrote on 8/11/07 10:57 PM:
>
> >>> i hope they get there's. but the silver spoon crowd never rests. they
> >>> became a aristocracy thru cleverness and the gullibility of the middle
> >>> class. they never rest.
> >>> and the central banks which act in ***tandon***, will leave no stone
> >>> unturned to bail them out.
>
> >> ........and they're all out to get YOU!!!!!
>
> > you mean stealing our money. where is your outrage that they are
> > getting bailed out from their own irresponsibility's with our money?
> > err, maybe its because you are getting bailed out to:) hypocrite!
>
> I don't get "outraged" very often.......maybe that's why I haven't
> developed a persecution complex.....BTW, the word you were searching vainly
> for is tandem, not tandon(you were close).......
>
awe, just as i expected. you know your opponent has nothing when they
attack spelling grammar etc.
i must be getting close. the last refuge of a scoundrel is personal
attacks which they try to use to shift the argument away from reality.
> "Some people take Usenet far too seriously. Anyone totally devoid of
> functioning brain cells should avoid N/Gs altogether. Then they won't get
> their delicate little feelings hurt."
this is correct. if you have nothing but personal attacks, then you
are wasting bandwidth, as well as our time.
if we wanted to see worthless people using attack adds, we would be
watching swift boaters instead of arguing the merits of economics.
which may be over your head.
Vid...@tcq.net
money, so that the rest of us will not suffer. i would rather suffer
than to keep piling on more debt that we have to pay back because of
their irresponsibility.
Blash
> i must be getting close. the last refuge of a scoundrel is personal
> attacks which they try to use to shift the argument away from reality.
Constant whining does NOT constitute reality!!!
Vid...@tcq.net
> Vide...@tcq.net wrote on 8/12/07 11:04 PM:
>
> > i must be getting close. the last refuge of a scoundrel is personal
> > attacks which they try to use to shift the argument away from reality.
>
> Constant whining does NOT constitute reality!!!
i am getting closer. you do not like attacks on wealthy parasites,
hey:)
bob wald
Sushi Fish
> Shaky markets prompt rumors of who's in trouble
> By Julie Creswell
>
> Friday, August 10, 2007
> NEW YORK: The global stock and bond markets these days seem to be
> playing a giant game of hide and seek.
>
> In this version, investors are scrambling to discover which banks,
> hedge funds or public companies are holding potentially hundreds of
> securities that are imploding.
>
> On any given day, traders are exchanging rumors of a hedge fund that
> has blown up or a Wall Street brokerage firm that has incurred losses
> and a whipsaw of trading activity in the stock and bond markets.
>
> So far, most rumors have turned out to be unsubstantiated and untrue.
> securities are being revealed, slowly, all over.
>
> On Thursday, France's largest bank, BNP Paribas, stopped withdrawals
> from three of its asset-backed securities funds, saying it could not
> the United States.
>
> Also Thursday, the insurance giant American International Group
> given its size, it was not under any pressure to sell the securities
> at a loss.
>
> Already the turmoil in the mortgage market has led Germany's central
> bank, the Bundesbank, to bail out IKB Deutsche Industriebank, which
> four in Australia and at least four additional funds in Europe have
> either closed or halted investor withdrawals as they sort out the
>
> In reaction to the growing losses onsubprimemortgages and related
> securities, the European Central Bank stepped in Thursday morning and
> provided $130.2 billion in emergency loans to European banks, while
> the U.S Federal Reserve injected $24 billion in liquidity into the
> American banking system. Asian banks also stepped in Friday.
>
> Capital markets have undergone periods of extreme turmoil and lack of
> liquidity in the past. In 1998, the credit markets virtually froze up
> after the hedge fund Long-Term Capital Management buckled and Russia
> defaulted on its debts. Many investors dumped mortgage securities and
> prices tumbled.
>
> Yet, the nervousness seems more intense given the amount of leverage,
> or borrowed money, that had been made available to hedge fund
> money, along with the sheer size of the mortgage market, should only
> worsen investor losses.
>
> "This is a market that has grown tremendously in the last five years,"
> said Stijn Van Nieuwerburgh of the Stern School of Business at New
> York University, "and whereas a lot of the mortgages were previously
> held by a lot of new players who are essentially just getting used to
> them."
>
> Last year, Wall Street firms issued $773 billion in mortgage-related
> securities, up from $217 billion in 2001, according to the Securities
> Industry and Financial Markets Association.
>
> Yet trying to ferret out which one of these relatively new players
> securities, whether it be an Asian bank or American hedge fund, is
> difficult.
>
> Unlike investors who hold large stakes in publicly traded American
> stocks, and must report those holdings to the U.S. Securities and
> Exchange Commission, no central government agency or private
> related securities with any regularity. The U.S. Treasury does track
> broad foreign country holdings of American mortgage securities.
>
> "I don't think any of the regulators have a handle on where the net
> of Institutional Risk Analytics, which builds risk systems for
> regulators and auditors.
>
> Whalen said it was worse in Europe, where less public data was
> available.
>
> Furthermore, because of accounting rules, some holders of these
> mortgage-backed securities do not have to disclose or recognize any
> losses until they actually sell them.
>
> more complicated collateralized debt obligations, which are pools of
> mortgage securities, is difficult as well. Unlike stocks that trade
> openly on exchanges and whose value can easily be determined at any
> point of the day, mortgage-related securities and collateralized debt
> obligations change hands behind the scenes via individual bids and
> offers made on trading desks across Wall Street.
>
> Some analysts said that because these securities are held by so many
> investors, the pain will be spread among many participants instead of
> taking down one large financial institution.
>
> Moody's and Standard & Poor's said this week that the large American
>
> "The good news is that the losses will be widely distributed across
> the different owners of these pools of securities," said Stuart
> Gabriel, a finance professor at the University of California, Los
> Angeles.
>
> "The bad news," he said, "is because of the difficulties in valuing
> these mortgage pools and the high levels of uncertainty and panic that
> have set into these markets, we have a situation where there is a
> severe lack of liquidity in the mortgage market and that has created
> an extremely dangerous situation for our economy and the global
> economy."
>
> Copyright © 2007 The International Herald Tribune |www.iht.com
It's the Federal Reserve, with blessing from Alan Greenspan, through
Fannie Mae to revive
the economic downturn after 2001 to endorse growth of housing market
as forefront of
forever monetary liquidity to carry on a stagnant economy. Some
consumers take risks with hope to cash on growing equity w/o
anticipation of raising of interest rate and cost of living due to
shunted economy and inflation.