World Markets Continue their Slide

World Markets Continue their Slide

Source Link: news.bbc.co.uk

Japan's Nikkei index closed 3.4% lower - its biggest one-day fall in nine months - while Shanghai's composite index was 3.5% down.

In London, the FTSE 100 was down 86 points, or 1.5%, at 6,031.3 by 0825 GMT, having earlier dipped below 6,000.

French and German markets also slipped in early trading - with the Cac and Dax indexes losing close to 2% each.

In Taiwan shares closed down 3.7% while the main Indian market was 3.6% lower in mid-afternoon trading.

(visit the link for the full news article)

[edit on 3/5/2007 by Gools]

Looks like it's going to be an interesting week on the markets.

A point that many people seem to have missed last week is written about here:

70-Minutes In The Dark

However, and although a potentially innocent event, the interesting thing about Tuesday’s computer malfunction is that it persisted without being recognized for 70-minutes! The question to ask, naturally enough, is what on earth was going on during this 70-minute interval?

70-Minutes In The Dark

What is most puzzling about this incident is not that a tech-guy at Dow Jones Indexes may have went out to catch a movie in the middle of a trading-day, but that the media and regulatory bodies have failed to try and aggressively investigate whether anyone profited excessively during the 70-minute period.

I'm sure the Plung Protection Team had nothing to do with it.
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Well, Gools you beat me to this continuation of the stock market "correction".
Funny that it took the "experts" 70 minutes to figure something was wrong, when I was wondering what happened almost as soon as I saw the 200 point freefall. Stocks just don't fall that fast naturally.
Great find!

Another take on today's events:
Global stock markets battered as yen rises

European shares sank to three-month lows on Monday, led by banks and resource stocks, as the global equity sell-off continued to batter investor confidence and the yen hit three-month highs against the dollar.

Among major movers, British Airways (BAY.L) tumbled after the
European Union and United States came to a provisional "open skies" deal while Sonaecom (SNC.LS) tumbled after its hostile bid for its rival Portugal Telecom (PTC.LS) failed.

"We think that the dominant issue facing markets in the second half of 2007, i.e. after the correction, will be the search for genuine, sustainable growth," said ING strategists.

Gools- we all know if it was insider trading, no one is going to get caught, becasue who ever did it, would have to be some big players.

those never get caught.

What is getting some mention is the alarming amount of mortgage defaults goin on in the world.
Britain and the U.S. specifically.
What will happen to all this bad paper and how much does it affect the stock market/global economy?

www.abovetopsecret.com...&flagit=270885

Originally posted by DontTreadOnMe
What is getting some mention is the alarming amount of mortgage defaults goin on in the world.

The subprime market is an absolute bloodbath and leading the housing collapse!

Since the end of 2006 until today there are a total of 31 mortgage lenders who have gone out of business! You can keep track of all of the sordid details here:

The Mortgage Lender Implode-O-Meter

I set this page up on December 31, 2006, to keep track of mortgage lenders in the US going bust since approximately December 2006, when it seems the first of them started going under. Many observers (including myself) had been anticipating this for some time, as rising home prices (and other financial assets) have collided with the deteriorating consumer balance sheet and low-as-they-can-possibly-go interest rates (heavily reliant on the dole of China and the oil exporters).

It appears what had to give is now finally giving: the latest subprime loans are going delinquent the quickest, and it seems likely that their prior kin will soon follow (and many of these will likely end up in foreclosure). Further, I expect a large swathe of prime loans to go bad (the prime/subprime distinction is quite fuzzy anyway). Originators cannot handle the buybacks, and so when challenged by them are immediately folding. The phenomenon is just getting started. What will the banking industry—often all or part owners in these enterprises—do? Stay tuned.

List of the Defunct Lenders:

This is our list of lending operations that have shut down (see also ailing lenders). This includes all types (prime, subprime, or a mix of both; retail or wholesale; subsidiaries and entire companies) as well as modalities (exiting the business, shutting down under distress, voluntary or forced by MBS buyers, or going bankrupt). The list, with links to stories and whatever details we have available (most recent first) follows: [see link for all the info]

Many have been watching the carnage since early this year:

Subprime Lenders gone Too Far - A Time Bomb Waiting to Explode

January 12, 2007

Well guess what - the chickens are coming home to roost. By late in 2006, the rate of subprime loan delinquencies of over 60 days was up to nearly 8% according to UBS. The Center for Responsible Lending (CRL) projects that nearly 20% of subprime loans made in the period 2005 to 2006 will fail. The New York Times stated that “about 2.2 million borrowers who took out sub-prime loans from 1998 to 2006 are likely to lose their homes”. One of my favorite commentators, Peter Schiff, believes the the NY Times estimate are too optimistic.

Subprime Titanic Hits Iceberg!

February 22, 2007

Between reps and warranties and widening mortgage credit spreads, most subprime lenders will end up closing down or heading to Federal Bankruptcy Court. Indeed, even mortgage firms with limited exposure to subprime loans could fail. Even if a mortgage company survives, it will now have to dramatically raise interest rates to borrowers and put in place sound loan underwriting.

Market reports show that at least 21 sizeable subprime lenders have already shut down or filed bankruptcy [as of Feb 22 - 10 more since then!], and the head of Countrywide Financial estimates that as many as 20 to 30 small mortgage originators are failing every day!

In markets where prices are failing like a stone, lenders will be dangerously exposed to serious losses.

Anyone aware of the fraud and foolish underwriting that has been ongoing in mortgage origination should be honest enough to admit we’ve only seen the “tip of the iceberg” so far, and mortgage lending is heading straight towards a massive piece of ice.

All of the recent fun in the stock markets is related to this imploding bad debt situation.

Last week there were rumours that HSBC was in some kind of trouble. The Hongkong and Shanghai Banking Corporation (HSBC) is one of the largets banks in the world with deep rooted ties to China. Over one quarter of US motgage debt is owned by "Chinese" interests. You will recall that I had speculated about something like this. Well...

Today HSBC has announced that they will be taking an $11 billion dollar hit due to bad US loans. That's gonna leave a mark!

HSBC reportedly to write off $11 billion on U.S. mortgages

Last Update: 5:44 AM ET Mar 4, 2007

LONDON (MarketWatch) -- HSBC Holdings will take a charge of $11 billion to cover the bad debts seen by its acquired Household division in the U.S., according to reports from the Sunday Times and Sunday Telegraph newspapers. HSBC reports its annual results on Monday. The bank recently issued its first profit warning over mounting bad debts in the U.S.

Here's coverage in Forbes from yesterday: Subprime Virus On Wall Street

And this from Today's New York Times:

Mortgage Crisis Spirals, and Casualties Mount

Now an escalating crisis in the market, which seemed to reach a new crescendo late last week, is threatening a wide band of people. Foremost are the poor and minority homeowners who used easy credit to buy houses that are turning out to be too expensive for them now that mortgage rates are going up, but the pain is also being felt widely throughout the business world.

Large companies that bought subprime lenders during the boom, like H&R Block and HSBC, are now scrambling to sell them or scale back their exposure.

Things are quickly getting so bad that household names like Goldman Sachs and Merrill Lynch and Morgan Stanley now have credit ratings of Junk Status because of their exposure to bad debts Reported by Bloomberg the other day:

Goldman, Merrill Almost `Junk,' Their Own Traders Say

March 2 (Bloomberg) -- Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.

Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody's Investors Service. For Goldman, Morgan Stanley and Merrill that's five levels below the actual Aa3 rating on their senior unsecured notes and two steps above non-investment grade, or junk.

Traders of credit derivatives are more alarmed than stock and bond investors that a slowdown in housing and the global equity market rout have hurt the firms.

Like I said last week... this ain't over... not by a long-shot.

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I am no expert on money matters and what little I do have is in real estate here in Canada, though one can not deny the fall of the US dollar. I came across this article and thought it befitting of this thread. I also don't know who Lindsey Williams is so I googled him here because I found it on Rense. Are the banks getting ready for the US $ to crash, from what I have read it could be true, remember Gates and Buffett bet against the dollar .From Gates "quote"`I'm short the dollar,'' Gates told US television interviewer Charlie Rose this weekend at the World Economic Forum in Davos, Switzerland. ``The ol' dollar, it's gonna go down.''

The Condition Of The Dollar
By Lindsey Williams
www.rense.com...
Snip~~
First on our list is China. They have now announced that they are refusing to accept American Corporations purchasing into their stock market any longer as they did in the past. China also said that they are no longer going to be purchasing our securities as they have in the past, including bonds and T-bills. China's decisions and subsequent announcements at the beginning of the week has sent a panic across the World's markets.
~~
Central banks around the world are increasingly diversifying their reserves, including cutting holdings of American dollars, according to a survey sponsored by Royal Bank of Scotland Group PLC, the U.K.'s second-largest bank. Italy, Russia, Sweden and Switzerland have made "major adjustments" in foreign-exchange holdings favoring the Euro and the British pound, according to the poll conducted by Central Banking Publications Ltd. between September and December. "Central banks are open to saying they've been diversifying to improve returns and reduce exposure to any single currency," said Sean Callow, senior currency strategist at Westpac Banking Corp. in Singapore. There's no doubt that when they say 'diversification' they mean selling dollars.
~~
Last week a friend of mine told me they called their bank president in Vancouver, BC and he agreed with everything I have been saying about the dollar. What amazed me the most was her comment that he told her his bank is currently making preparations for the crash of the American dollar!

[edit on 5/3/2007 by Sauron]

Does this mean that the Chinese owns these homes that were defaulted on? How does this affect U.S. sovereignty? How will this affect people who either do not own homes or own their homes outright? Will this affect other forms of credit?

Here are some good links to monitor the housing market.

Yahoo - tracks average price and trend of home sales and foreclosures at a national level. Troublesome signs are an increase in foreclosure average value.

RealtyTrac - press release that discloses state averages for late 2006. RealtyTrac is a paid site that helps you find auction and REO properties.

I still have not found a good site that lists updated foreclosure rates for each state. You need to do some googling to find specific states; but the information is there.

You can use the free portion of RealtyTrac to get regional information. For instance, in New York, NY there are 1,609 listings, including some in the multi-million dollar range.

This will not happen until about May. UNtil then, the markets will bounce back, lamely, with the Dow Jones going to about 12,250-12300 or maybe to about 12,600.

When the crash finally occurs, it will go quickly to about 8,200.

That's why thee are buyers out in force today. The slide has run out of steam, but these buyers will drop and sprint for it as soon as another big slide occurs, making all the ground it regains from their buying, effectively just a mirage.

Once the stock market collapses, round about May, the property market will take off and soar in a second hideous bubble as all the liquidity that has flowing out of the stock market flows into it instead, and from the collapsing interest rates that will follow. Then, 12 months later, this too will go into melt down, coupled with the run on the banks and a comprehensive collapse of banks and financial institutions that will be so bad as to force them to fore close on mortgages in a futile effort to survive. With Government taking a tough international stance to draw attention away from the spiralling depression, war and civil disorder will follow.

Hi Nobodyelse,

I would like to know how you came to this conclusion. Any sources..?? Because that definitely fits the description of an economic doomsday scenario.

If this turns out to be true, I'll start visiting the survival forum, which I've ignored till now...

Anybody that has fall for the lies of a booming economy and a recovery has just going into the realization that like many of us has told over and over this nothing but an illusion.

Our economy has depended on foreign help to keep looking good for to long and now we are just starting to see the results of the reality behind the illusion.

Just ride with it we will survive just like we have survived in the past . . .

Or maybe this time we finally understand who really owns American . . .

I'm not real big on religion, but has anyone heard of Herbert Armstrong?

My dad has been trying to get me to read his books for years. I think I'll finally take a look at them now. My dad explained to me about ten years ago how this man wrote several books that predicted the rise of the Euro as well as China in the global economy and the decline and eventual crash of the US dollar. Many of this man's predictions have or are currently being realized. I never paid much attention to what my dad told me so long ago, but I do remember making a mental note when the Euro took off about 6 year ago. I'm not sure how easy these books are to find because they were distributed by the Worldwide Church of God so long ago. But, I've got a whole slew of them I think I'll dig up and start reading. I'll keep you posted.

Mortgage lenders where hit very hard today:

New Century Leads Drop in Shares of Mortgage Lenders

March 5 (Bloomberg) -- Shares of New Century Financial Corp. suffered their biggest drop ever, leading a decline in subprime mortgage companies and less-risky lenders.

New Century, the biggest lender specializing in mortgages to people with poor credit records or heavy debt burdens, plunged 62 percent to $5.53 in 12:37 p.m. New York Stock Exchange composite trading.

Fremont General Corp. slumped 22 percent,

Accredited Home Lenders Holding Co. lost 24 percent ...

NovaStar Financial Inc. declined 30 percent.

Countrywide Financial Corp., the largest U.S. mortgage lender, fell as much as 6.8 percent.

New Century, which disclosed late on March 2 that it faces a criminal probe and may need waivers from its own lenders to stay in business, probably will declare bankruptcy, J.P. Morgan Securities analyst Andrew Wessel said. The same day, Fremont said it was told to stop making loans to people who can't pay and announced plans to exit the subprime business.

``Valuation is anyone's guess,'' Wessel wrote in a report today on Irvine, California-based New Century. ``The company is running on fumes.''

A surge in defaults on mortgages to the riskiest borrowers has forced more than 20 lenders to close or seek buyers since the start of 2006. For New Century, bankruptcy is ``more likely than not,'' and the company's ``only hope'' of avoiding it to find a larger partner to provide capital in return for majority ownership, Wessel said.

Spreading to Prime

Lehman Brothers Holdings Inc. analyst Bruce Harting wrote in a separate report that there's evidence the surge in loan defaults is spreading beyond the riskiest credits. He reduced his investment rating on so-called prime lenders to ``neutral'' from ``positive'' and cut Countrywide to ``equal weight'' from ``overweight.''

The carnage is spreading...
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Hmm this isn't looking good. Whens the last time something like this has happened gools? I know you tend to keep up on this stuff last time I remember. Is this currently normal recession type thing, bad, or really bad? Further more will it get worse?

Markets go down, up, down, up, down.


What's the big freaken deal

Originally posted by Royal76
Markets go down, up, down, up, down.


What's the big freaken deal

I agree

It goes up, it goes down, up down, up down.

Oh well. Let them fuss about it. It's not my business.

/7A

Originally posted by Royal76
What's the big freaken deal

Nothing... go back to sleep.

Originally posted by grimreaper797
Is this currently normal recession type thing, bad, or really bad? Further more will it get worse?

As for the future, nobody knows for sure (except maybe 'nobodyelse' - who seems to be channeling from there) but I have a bad feeling about how things are developping... and my gut, backed with solid facts, has seldom lead me astray. Personally, I've stayed out of the market since the end of October.
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Originally posted by Royal76
Markets go down, up, down, up, down.


What's the big freaken deal

I agree completely. I think people forget that the market, whether it is stock market or a housing market, is a speculative investment tool based in part on fact (corporate earnings and costs or local home sales); and based in part on perceived value.

Typically, Wall Street likes a stock until its price to earnings ratio exceeds 20. Then it begins looking overvalued. Big money exits the stock and the price adjusts downward to a realistic level. In the Internet boom (or was it scam?) you had start-up companies that would price an IPO in the $30 range, open that day above $100 and end up closing in the low $100 range. The PE ratio was non-existent because the company had never earned money. Yet, people were willing to pay $125 per share for a company with an idea and nothing more. Perceived Value

The recent housing market is a classic example of a hype-fed bubble. Everyone had to get a house that they could resell in a few years for 40% more. Yet, not everyone had the funds to put 5-20% down. They wanted to get into a new house for nothing down because they either planned to flip the house, or, worse yet, a family wanted to upgrade their living standards yet had no liquidity due to high debt and/or bad credit. So, lenders offered 100% interest loans. The concept is you pay the interest off first, and then about 17 years later you start paying on the actual principal amount of the mortgage. Worse, these loans are usually offered with teaser rates for the first two or three years. Afterwards, the ARM readjusts and that 5% loan in 2006 becomes a 12% loan in 2008. Remember that often the biggest adjustment in an ARM is the first adjustment. This, in my opinion, is nothing more than predatory lending.

On an aside, a bad sign of the times is that the association of payday lenders is now advertising during market hours on CNBC. It's urging a responsible use of payday loans.