Empiric Student Property Share Discussion Threads

[briarberry] 05/11/2007 10:44

makes you wonder - 1929


Empire of Debt I: The Great Unraveling Begins

Allow me to sum it up: the money's lost, folks. You can't borrow more and pretend you made the money back. All those trillions in bad debt and derivatives are already lost. The Ministry of Propaganda is in a tizzy, trying to mask the meltdown and offer up a facade of normalcy. But the money's already lost.



they might all be insolvent

[briarberry] 04/11/2007 22:52

Oil, world oil production does seem to have been flat for the past couple of years despite the incentive of high prices to produce more...

(chart on page 2)
(Jan2005 to 2007 chart on the right on page 4)

in the USA they are drilling a lot more but production is still flat, falling


Not even an offshore oil boom in the Gulf of Mexico has been able to reverse the trend. New oil coming from there simply cannot replace the production being lost in played-out fields onshore.

Recent declines have been most spectacular in Alaska, where production is half what it was a decade ago.

[briarberry] 02/11/2007 22:52

Market insight: Prepare for the credit drama sequel
By Gillian Tett - Financial Times - ft.com

More specifically, the experience of living through the Enron scandals earlier this decade means that the audit industry is now terrified that it could face lawsuits if it is perceived to be too lax towards its clients. So some now appear to be demanding that their banking clients reprice their mortgage assets according to the only visible market tool – namely the ABX. It is thus little wonder that some banks have suddenly been forced to increase their writedowns in recent weeks. Indeed, I would wager that the pernicious combination of ABX and the "Enron factor" is a key reason for the recent shocks emanating from Merrill Lynch.



yes AAA rated ABX down around 20% and lower rated stuff almost worthless

[briarberry] 02/11/2007 18:08

gasoline, should see average retail price at the pump back up over $3 now...

[briarberry] 02/11/2007 15:06

MER, caught telling lies, trying to cover up how large their losses really are (I expect this is the case for a lot of US financials - it's only a matter of time)...


In one deal, a hedge fund bought $1 billion in commercial paper issued by a Merrill-related entity containing mortgages, a person close to the situation said. In exchange, the hedge fund had the right to sell back the commercial paper to Merrill itself after one year for a guaranteed minimum return, this person said.

While the Merrill-related entity's assets and liabilities weren't on Merrill's own balance sheet, Merrill might have been required to take a write-down if the entity was unable to sell the commercial paper to other investors and suffered losses, the person said. The deal delayed that risk for a year, the person said.

At issue with any hedge-fund deals is whether there was an attempt by Merrill to sweep problems under the rug through private transactions kept out of view from investors. Some previous scandals, such as the collapse of Enron Corp. and the troubles of Japan's financial system in the 1990s, involved efforts to hide problems through off-balance-sheet transactions.



down 8% today




(these Wall Streeters aren't so clever after all, they bought First Franklin when it was already obvious that the slump had begun)

One source of problems was the First Franklin mortgage company, which Merrill bought in December 2006. First Franklin catered to subprime, or less credit-worthy, borrowers. Subprime loans have fallen sharply in value this year due to rising default rates.

[briarberry] 02/11/2007 12:32

payrolls 166K

but CES Net Birth/Death Model 103K


"However, a separate survey of 60,000 households showed a loss of 250,000 workers. Economists say the payroll survey is more accurate, while acknowledging that it may not work as well when the economy is at a turning point"

[briarberry] 02/11/2007 12:06

WSE keeps pointing this out (from yesterday)...

This news item fails to mention the $42.50 billon that expired today, hence the Fed actually removed a net $1.50 billion from the system.



WASHINGTON (AP) -- The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch.

[briarberry] 01/11/2007 15:51

imported cheap from China, not anymore...


BEIJING (AP) -- China raised gasoline and diesel prices by almost 10 percent Thursday amid fuel shortages that oil companies blame on a lack of refining capacity due to price controls.

[briarberry] 01/11/2007 12:39

exports vs imports ... Japan 90s vs USA 2007

The gap is so big that US exports would have to double and triple to make a difference

The fall in the US$ hasn't made a significant difference so far

what's worse is that the popular media say that the fall in the US$ is good for both US profits abroad plus exports, whereas common sense tells you that you cannot have both! (obviously - you cannot make it elsewhere and export it)

Japan did OK in the 90's because it still had Sony and Honda etc to export

whereas the US has too much already made abroad for the fall in the US$ to make much of a difference to exports

one good US manufacturer - Apple, already made in China, AAPL as you know 10% of NDX

as far as I understand it you can only devalue once, then the trick doesn't work anymore and foreign investors will be once bitten twice shy (as far as I can remember from the figures, the USA's biggest export is debt)

and most of the benefits of manufacturing go to the workers and the country of origin, not the investors

[briarberry] 01/11/2007 11:50

Analyst Raises Doubts About Citigroup Dividend

A longtime banking analyst said late last night that Citigroup may be forced to cut its dividend or sell assets to stave off what she said was a $30 billion capital shortfall, moves that could pull down its shareholder returns for several years.

[briarberry] 30/10/2007 21:43

the new route for US mortgage funding...


Oct. 30 (Bloomberg) -- Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression.

Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest.

(worth reading, too much to copy & paste)

[briarberry] 30/10/2007 21:40

yeah CFC is obviously lying, they must have lost more...


Bernard wrote:

Looks like Countrywide is insolvent and defrauding the public, just like all the investment banks.

Excerpt from Barrons:

"This independent rating company (Egan-Jones) noted "a disconnect" in the Countrywide report. "CFC has $209 billion of assets and took charges of $1 billion; a 5% charge equates to $11 billion compared to equity of $15 billion.

"Even a 5% haircut would be modest, based on the plunge in prices in the ABX index of credit-default swaps on asset-backed securities.""

This is just sickening.

Posted on 30-Oct-07 at 8:18 am

[briarberry] 29/10/2007 20:00

This is a good explanation of why the US authorities are worried about a STONG dollar.

There's more to the mystery than that, however. One advantage for the US is that the dollar is the primary currency used in international reserves of other nations and for invoicing international trade and investment, such as for oil and other commodities.

So when the dollar loses value, foreign holders of dollar assets lose on their dollar investments. Almost all US foreign liabilities are in dollars and about 70 percent of US foreign assets are in foreign currencies.In what Gourinchas calls an "eye-catching, back-of-the-envelope calculation," a 10 percent depreciation of the dollar represents a transfer of 5.3 percent of US GDP from the rest of the world to the US. America's GDP is currently $13.7 trillion, and the dollar is down 20.6 percent since 2002. So foreigners have – in effect – given the US about $1.3 trillion.

It's not really that simple, emphasizes Gourinchas. Nonetheless, the US has had a free lunch.

[briarberry] 29/10/2007 19:55

From the Economist

While some investors have clearly been getting carried away, the crisis in credit markets is far from over-and may be about to get worse. One depressing indication of this was a vast, $8.4 billion writedown this week by Merrill Lynch, an investment bank.

The most striking (and overlooked) aspect of this was that it involved mostly securities that only a few months ago had been considered platinum-plated: collateralised-debt obligations (CDOs), or tranched pools of mortgage-backed securities, that were not only rated triple-A, the highest level, but had also received extra credit enhancement, making them "super senior". Until recently it was assumed that such well-protected paper could not lose its value. No longer. Worryingly, hundreds of banks, insurers and hedge funds around the world hold such securities. Fooled by false alchemy, they face a terrible reckoning.

Woefully slow at first to act, rating agencies are now falling over each other to downgrade these securities. This week Moody's marked down a big batch of CDOs, some of them highly rated. This caused another plunge in the ABX indices, which are used to bet on subprime-backed bonds. One index of AAA-rated securities fell to just over 80 cents on the dollar. Those reflecting poorer-quality paper languish below 20 cents.

Fears are growing that the rating agencies could soon be forced to downgrade one of the so-called "monolines", companies that insure corporate bonds and structured products. MBIA, the largest of these, has just reported its first-ever quarterly loss after cutting the value of its own mortgage holdings and setting aside money to pay clients who had wisely taken out cover on CDOs

[briarberry] 29/10/2007 19:50

Yen carry trade - have a look at the chart of the Euro/Yen ratio vs SPX, if you've not already seen it. There's a negative divergence for the lastest top in the SPX.

The Martin Market Report
Analysis of the Financial Markets by Martin Goldberg

An Almost Perfect Market Correlation

Over approximately 1-1/2 years, there is an almost perfect correlation between the Euro/Yen ratio and the price performance of the S&P 500. This is too good a correlation that has occurred over an extended period of time to be just a coincidence.

chart near the bottom of the page

[briarberry] 29/10/2007 17:39

clarification.... the overall circuit breakers were not cancelled

DJ NYSE To Remove Index Arbitrage Trading Collars

DOW JONES NEWSWIRES

The New York Stock Exchange said it has made a rule filing with the
Securities and Exchange Commission to remove index arbitrage trading
restrictions known as "trading collars."

The exchange said since the trading collars had applied only to the NYSE and
not to other exchanges or trading platforms, the rule hadn't effectively been
serving its purpose of stabilizing markets during periods of especially
volatile trading.

The NYSE noted that this action doesn't apply to the market-wide circuit
breakers, which remains in effect.

[briarberry] 29/10/2007 14:41

Fed, from Dr Hussman...

With regard to the Fed, the amount of "liquidity" created in recent months continues to be nil. As usual, the next batch of rollovers will be on Thursday, and they will represent exactly that – rollovers of existing repurchase agreements, not "new injections of liquidity." Total bank reserves continue to fluctuate in the $40-$45 billion range, and a total of $294 million dollars of loans are outstanding through the discount window. It is useful to keep in mind that the size and variation in foreign purchases of U.S. Treasuries swamps all Federal Reserve actions many, many times over.

Given that the effect of Fed movements is almost entirely psychological, and that we've got a long way to go as problems emerge among trillions of dollars of mortgage debt, my guess is that the Fed will want to save its weak ammunition to assuage fear in periods where crisis is more evident. So I'd expect a 25 basis point cut, not that I think it matters. Given that virtually all investors assume the same thing, but quietly hope for 50, my guess is that they'll be disappointed. If the Fed goes 50, investors will probably be disappointed shortly anyway because we'll probably observe a plunge in the dollar and a quick move to $100 oil. As usual, I don't take investment positions on expectations such as this, but such considerations do affect where I place strike prices and so forth.

[briarberry] 29/10/2007 12:19

maybe someone big is insolvent ? I'd like to know who was charged 7% and 15% for overnight credit...

From WSE - The stop out rate at today's repo auction was 4.71, just slightly below target, after Fed Funds traded at a volume weighted average 4.86 overnight. However, the high end of the range was 15%. I haven't noticed anything like that before. Interesting.

[briarberry] 28/10/2007 16:57

UK - economically inactive working age...


Aleman - 28 Oct'07 - 12:37 - 38707 of 38735

7,969,000 are economically inactive working age (up 190,000 annually). Note that this does NOT include the unemployed at 1,655,000. Economically inactive working age was 32% a few months back but has fallen to 26%, presumably due to reclassifications to hide the trend which has been rising for over two years.



maxk - 28 Oct'07 - 18:27 - 38739 of 38758

1.1 million "bad backs" when noo labour came to power, now it is 2.7million "bad backs".

[briarberry] 28/10/2007 01:13

sounds like Wall Street is pretending not to have lost at least $269 billion...


Forbes - Merrill Under Fire - Liz Moyer, 10.25.07

Collectively, five big Wall Street firms have moved $74 billion of assets during the quarter into a relatively new accounting category called "level 3," which means the fair value of those assets, including subprime mortgages and derivatives, couldn't be determined because there was no observable market for them.

Those same five firms, Goldman Sachs, Morgan Stanley, Lehman Brothers, Bear Stearns and JPMorgan Chase, now collectively have $269 billion in level 3 assets (assuming JPMorgan's estimate of 4% of total assets as of the end of September is accurate when it makes its formal disclosure next month).

Citigroup, Bank of America and Merrill Lynch have yet to disclose how much they added to level 3 assets.

Ballooning level 3 assets "are on the list of things to worry about," Petrou says.

[briarberry] 27/10/2007 20:13

finally these two sh*t shares have started to take a dive...





Doubts emerge over guarantors' creditworthiness

The perceived creditworthiness of two of the largest financial guarantors in the US on Thursday plunged to lows not seen since the worst of the credit squeeze in August.

MBIA and AMBAC are specialist companies that guarantee the repayment of bond principal and interest in the event of an issuer default - including bonds backed by subprime assets.




This is one too...
MGIC Investment Corporation, through its subsidiary, provides private mortgage insurance to the home mortgage lending industry in the United States. The private mortgage insurance covers residential first mortgage loans and expands home ownership

[briarberry] 26/10/2007 23:04

NYSE Eliminates Trading Curbs Dating Back to 1987

Oct. 26 (Bloomberg) -- The New York Stock Exchange said it will no longer impose curbs on computer-program trading that were put in place after the crash of 1987, claiming they're no longer as effective in damping swings in prices.

The exchange will stop prohibiting brokerages from entering some program trades when the NYSE Composite Index rises or falls more than 2 percent, according to a notice sent to member firms today. The so-called collars had been in effect since 1988 and were triggered 17 times this year, according to a filing with the Securities and Exchange Commission.

[briarberry] 26/10/2007 21:33

Fed is on Wednesday Oct 31 (I said Tuesday before)

[briarberry] 26/10/2007 14:28

A Record Year for Layoffs in Finance

It's official. This is the worst year ever for layoffs in the U.S. financial-services industry -- and there's still more than two months to go.

As of October, finance companies had announced 130,000 job cuts for the year to date, according to outplacement firm Challenger, Gray & Christmas. That's more than double the 50,000 cuts announced in 2006 and well ahead of the record 116,000 announced in 2001. Finance firms are reeling from deep losses in subprime mortgages, as well as from risky corporate bonds and loans. "It's the worst year on record for job cuts in the financial-services sector," says John Pedderson, a Challenger, Gray spokesman. While the firm tracks job cuts, it makes no effort to compare them to job creation, or to track total employment for the sector.