SOS | We're sinking fast!

Any chance you Brits will help bail U.S. out?

http://www.iht.com/articles/2008/09/15/business/15lehman.php

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPTIdpST8HJ0&refer=worldwide

http://www.reuters.com/article/idUSN1546989720080915

http://online.wsj.com/article/SB122139688846233147.html?mod=hpp_us_whats_news

http://www.reuters.com/article/reutersEdge/idUSN1341059120080914

http://online.wsj.com/article/SB122142278543033525.html?mod=special_coverage

http://www.hemscott.com/news/static/tfn/item.do?newsId=67010081197910

Oh wait...You mates are sinking too...
http://finance.yahoo.com/intlindices?e=europe

mamma mia

Those banks dug themselves into this; they never should have gotten into the business of giving loans to people who couldn't pay back. This needed to happen.

Dovella said:

mamma mia

I love that response, classic.

wisemx said:

Dovella said:

*snip*

I love that response, classic.

Mamma mia!

It's a good thing I'm at least 30 years from retirement. It will take that long for my 401K / 403b to recover.

matthews said:

Those banks dug themselves into this; they never should have gotten into the business of giving loans to people who couldn't pay back. This needed to happen.

Umm, Lehman isn't a bank and loans had nothing to do with their problem, at least not in the context inferred.

Lehman owes like $400bn in loans that it secured as operating cash, another 500bn in exposure to toxic derivatives and another few hundred billion of misc junk exposure.

phreaks said:

matthews said:

*snip*

Umm, Lehman isn't a bank and loans had nothing to do with their problem, at least not in the context inferred.

Lehman owes like $400bn in loans that it secured as operating cash, another 500bn in exposure to toxic derivatives and another few hundred billion of misc junk exposure.

"misc junk exposure"

I usually just get fined $50 for this.

yeah we're just as screwed...

wisemx, Europe is doing worse than the US, as they have been for a while, even when our economy was better, high unemployment, and low growth.

brian.shapiro said:

wisemx, Europe is doing worse than the US, as they have been for a while, even when our economy was better, high unemployment, and low growth.

You can bet that some where (or in the past) someone is profitting from all this. It seems driven by greed and various people not paying off loans etc.

The bit that irritates me is the media making it much worse by going on about it. E.g. people get scared dont buy as much/withdraw all their money which means lower profits, low funds etc 

In the UK from my perspective the biggest problem is outrageous house prices in certain parts of the country. I havent noticed much of a difference in employment but my wife who is a contract accountant has noticed a big difference. Expenses like food, petrol and utility bills definatly cost more than they did some time ago.

Harlequin said:

phreaks said:

*snip*

"misc junk exposure"

I usually just get fined $50 for this.

???

I could list the majority of the junk securities like CDS, CDO, ARS, Sub-prime bonds, Alt-A bonds, and others, but really there is so much junk out there right now, what is the point?

The bottom line is that they bought, packaged and leveraged a bunch of crap.

I am guessing that this will have big effects on Citi whom was already hurting as well.
At least Citi does have some sellable assets, which will probably ultimately save them from an all-out failure, but the Citigroup of next year will probably not look anything like it does today.

alexmac said:

brian.shapiro said:

*snip*

You can bet that some where (or in the past) someone is profitting from all this. It seems driven by greed and various people not paying off loans etc.

The bit that irritates me is the media making it much worse by going on about it. E.g. people get scared dont buy as much/withdraw all their money which means lower profits, low funds etc 

In the UK from my perspective the biggest problem is outrageous house prices in certain parts of the country. I havent noticed much of a difference in employment but my wife who is a contract accountant has noticed a big difference. Expenses like food, petrol and utility bills definatly cost more than they did some time ago.

The problem that caused all this in the first place was people spending without thinking. If they'd actually learn to live within their means, IE don't spend what you don't have, there'd be no problem.

matthews said:

alexmac said:

*snip*

The problem that caused all this in the first place was people spending without thinking. If they'd actually learn to live within their means, IE don't spend what you don't have, there'd be no problem.

I thought it was started by a bunch of "low interest rates!!!111!!!". Everybody thought they could get a house and pay for it, not knowing that in 2 years they couldn't keep up when the rates went up.

Harlequin said:

matthews said:

*snip*

I thought it was started by a bunch of "low interest rates!!!111!!!". Everybody thought they could get a house and pay for it, not knowing that in 2 years they couldn't keep up when the rates went up.

That's only 1 factor to this mess, albeit a heavy weighted one.
It takes more than 1 area to wreck this level of havoc in the global economy.

If real estate had continued to be in demand, home values would not have plummeted, and the majority of the people stuck in option ARM's would have had the equity available to refinance out to a low fixed rate.

Of course if the Clinton administration hadn't forced the market to relax qualifications for obtaining credit, this area wouldn't be suffering to the same effect it currently is, but hind-sight is always 20/20.

Predatory lending and unchecked policies under little review or regulation certainly helped facilitate the meltdown. Corporations such as Ameriquest and Argent on the front-end and un-collateralized derivatives such as CDS's on the back-end; and a whole lot of conspiring in the middle.

The losses were then passed on to investment houses that were holding the securitized MBS's and CDO's; the effect of which is tighter lending standards.  Tighter lending translates to higher interest and lower consumer spending, which is another factor.

There are other dynamics here as well, but I don't want to bore anyone nor do I want to write a 20,000 line essay on the credit crunch on C9.


The point is that there were/are lots of factors in play here.

I hope everyone has a big mattress.

phreaks said:

Harlequin said:

*snip*

That's only 1 factor to this mess, albeit a heavy weighted one.
It takes more than 1 area to wreck this level of havoc in the global economy.

If real estate had continued to be in demand, home values would not have plummeted, and the majority of the people stuck in option ARM's would have had the equity available to refinance out to a low fixed rate.

Of course if the Clinton administration hadn't forced the market to relax qualifications for obtaining credit, this area wouldn't be suffering to the same effect it currently is, but hind-sight is always 20/20.

Predatory lending and unchecked policies under little review or regulation certainly helped facilitate the meltdown. Corporations such as Ameriquest and Argent on the front-end and un-collateralized derivatives such as CDS's on the back-end; and a whole lot of conspiring in the middle.

The losses were then passed on to investment houses that were holding the securitized MBS's and CDO's; the effect of which is tighter lending standards.  Tighter lending translates to higher interest and lower consumer spending, which is another factor.

There are other dynamics here as well, but I don't want to bore anyone nor do I want to write a 20,000 line essay on the credit crunch on C9.


The point is that there were/are lots of factors in play here.

I hope everyone has a big mattress.

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

"Traditionally, the risk of default (called credit risk) would be assumed by the bank originating the loan. However, due to innovations in securitization, credit risk is frequently transferred to third-party investors"

"In 2007, 40 percent of all subprime loans were generated by automated underwriting. ^[63] An Executive vice president of Countrywide Home Loans Inc. stated in 2004 "Prior to automating the process, getting an answer from an underwriter took up to a week. We are able to produce a decision inside of 30 seconds today. ... And previously, every mortgage required a standard set of full documentation."

"As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default. Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers."


While that's not the entire story it's easy to see that if the lender doesn't have to worry about risk anymore, they can just get some software the stamp OK on all loan applications and well that can't be good in the long run can it?

Glad I sold all my stock right before this. Plan on buying again but will see what happens; "The average investor is now poor".

matthews said:

alexmac said:

*snip*

The problem that caused all this in the first place was people spending without thinking. If they'd actually learn to live within their means, IE don't spend what you don't have, there'd be no problem.

Exactly right.

Yes, I know the banks have to bear some responsibility for lending to folk who couldn't afford the repayments; but at the end of the day, folk should try harder to live within their means.

Always amazed when I see a house that looks like its on the verge of collapse, with a brand new BMW in the garage.

Good article on Newsweek, which explains why the government let Lehman go to the wall ...

They didn't screw up enoug by the looks of it ...