French Bank freezes US funds;Stocks Plunge on Rising Credit Anxiety

Too much credits in the US(4,5 credits according to some statistics that's a lot) therefore this problem i guess
Well actually and unfortunately i must say france point towards this direction too
so i will keep a low profile on this one.

Let's hope for a better day within the U.S markets

If you drop the interest rate right now the dollar will sink a lot faster, why do you think the European are acutally raising the rates? We still have not seen anything just wait 2008 that is when people will realize especially Americans what living above their means is.

Ok, for someone who has no real knowledge of economics (outside of balancing his income to house hold bills), can someone explain this to me? Is the US in bother cos there's loads of credit floating around and not actual money?

the shake down will be more than 'Junk-bonds on Steroids'

there's hyper valued, risk instruments that are scattered in great numbers
all over the investment ;andscape...including most in hedge funds, & maybe 2% in any mutual fund family...

so the 3 that had a 'liquidity' issue in that 1 fund is the harbinger of a massive reappraisal of thise fancy direitives & such...which was a much ballyhooed 'leveler' of risk....
just like the (there's a new economic paradigm) & its forever a growth market....


in the immediate future:
They forecast a DOW 14K

they sidestepped that LTCM bust, then
but i doubt they can wil be so fortunate again
(unless foreign capital supports the BS dire-ivitives scam to amelorate their losses)

Let me point something out to everyone.


Who here notices a pattern with this chart? The steady increase perhaps?

The still up about 2,200 points for 52 weeks. 2,200 points!!!!!

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To those that do not know:

The "sub-prime" problem was caused by third party lending companies offering traditional and 'creative' loans to people that had poor borrowing history and/or little down payment for their homes. Perhaps you've seen the signs around your neighborhood - "Own a home - 0% down, bad credit okay."

Previously what these lenders would do is extend the borrower either a loan with a teaser rate for a year, then would increase the loan rate to large percentage based on the prime rate. For example, you may be offered a loan at 0% for the first year, and afterwards the loan APR increases to 10% + prime. Which makes since; those with poor credit history should pay more for their loans, as they are riskier investments for lenders. As the old adage goes, the more the risk, the more the gain/loss.

Anyway, what these third party lenders would do would try to minimize their risk by selling those loans to well established banks. You may have originally signed a loan agreement with firm XYZ, but then later have your loan through Wells Fargo because XYZ sold your loan to wells fargo.

However, once these loans started going bad, the larger banks started not buying from these third party lenders; they were now too risky. So now you have smaller firms (i.e. sub-prime lenders) with investments in homeowners becoming worthless. They can't sell the loan, and they're not receiving loan payments. Eventually they stopped making money and hence bankruptcy.

Well, many of these companies are public corporations. If they declare bankruptcy, then many of THEIR investors are losing money in them. Investor's sell their holdings in those sub-prime companies and thus many market indices fall. People see this as a falling market, so they either try to play the market (sell to protect a gain), or sell because they fear where the market is going.

Originally posted by radardog
Who here notices a pattern with this chart? The steady increase perhaps?

Ummm... who here notices at least two things very wrong about relying on this chart for any useful information?

Class?
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Originally posted by Gools

Originally posted by radardog
Who here notices a pattern with this chart? The steady increase perhaps?

Ummm... who here notices at least two things very wrong about relying on this chart for any useful information?

Class?

.

Yes, it's the Dow Jones Industrials, not the banks, and it does not account for sub-prime lenders. The chart is pretty, but useless in this case.

The sub-prime market is set to implode, and I'm glad Canada has little exposure relative to the entire obligation. The fallout will be devastating, can we say recession? I'm just waiting for the other shoe, the mid-east oil exporters to switch to valuing their exports in Euros.

The greenback could resemble the Lusitania, or the Titanic in a dive to the depths!

Sleep well, I will.

Cheers,

Originally posted by Cynic
Yes, it's the Dow Jones Industrials, not the banks, and it does not account for sub-prime lenders. The chart is pretty, but useless in this case.

That's one of the ones I was going for.

The DOW Jones Industrial average only tracks the top 30 public companies in the US.

Those top 30 may change with the times, but it's always only 30 companies and thus only an index of larger economic activity. In fact, it is currently based on a scaled average, not the actual average of the prices of its component stocks—the sum of the component prices is divided by a divisor, which changes over time, to generate the value of the index. (wiki

The other major problem with the chart is the most important one IMO.
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Originally posted by bodrul
got to love Karma

wounder how long this will take for the full domino effect to take place

this is not a one line reply

Got to love karma?....

How about the karma from the United States helping France, and other European countries during the war and after WWII in the reconstruction efforts?......

That karma is forgotten huh?....

[edit on 9-8-2007 by Muaddib]

Or what about the "karma" from the United States coming to the aid of European countries even before and after WWII?....

What about the karma from the U.S. forgiving the debt from European countries and other countries?....

That karma is gone away huh?....

Europeans and the rest of the world forget very easily all the help the United States has given them and all the debt forgiven by the United States...

I think it is time to unforgive all that debt and request all that money being paid to the U.S., with interest...

[edit on 9-8-2007 by Muaddib]

Originally posted by Cynic
..................
The greenback could resemble the Lusitania, or the Titanic in a dive to the depths!

Sleep well, I will.

Cheers,

Ah, so you would sleep well knowing that American families suffer if there is a depression?....

I guess that tells us what sort of a person you are...

Hey there,

As a fellow canadian, I'm curious about your statement. Are you pretty certain this will mainly affect those south of our border?

Regards,

J.

Originally posted by Muaddib

Originally posted by Cynic
..................
The greenback could resemble the Lusitania, or the Titanic in a dive to the depths!

Sleep well, I will.

Cheers,

Ah, so you would sleep well knowing that American families suffer if there is a depression?....

I guess that tells us what sort of a person you are...

Hmm...as I recall, it was americans who decided on their own monetary system....no-one else did it for them. Unbridled corporate greed has been the undoing of the US at least once before - we didn't vote your government in - suposedly, the american public did (although there's some conjecture on this...but that's a whole 'nother ball of wax..). Those who don't learn from history, are condemed to repeat it....etc, etc..ad nauseum...infintium.

Credit cards are one of the cleverest con games ever created....do yourself a favour and cut them up. Pay off your mortgage instead. Forget fancy-ass, high-tag cars....another black hole for your hard-earned. Live smart, live carefuly....and leave a good looking wallet behind...

J.

[edit on 9-8-2007 by jimbo999]

[edit on 9-8-2007 by jimbo999]

[edit on 9-8-2007 by jimbo999]

[edit on 9-8-2007 by jimbo999]

Ok!

Well before this turns into yet another Muaddib grind them into the ground with off topic semantics until everybody gives up "special"... :shk: [back on topic please]

I'll let the cat out of the bag about the main problem with the DJIA chart that was posted. The numbers sure look pretty impressive don't they? That is until you adjust for inflation!

Here's an inflation adjusted chart going back 100 years:

so urce

Notice the last decade? The market hasn't even really recovered from the dot com crash. The numbers may be bigger but the money is worth much less. in fact the long term trend is for the market to trend back toward the lower purple line!

Here's a chart of the inflation adjusted annual average yield on the DJIA companies going back to 1946 (post WWII):

source

If you were to average that out I'm betting the line is pretty flat and that's for all of the post world war two most incredible growth in history time period! .

The mainstream media like to show you the simplified picture because, well... it gives a better picture, but the real picture is much less impressive.

Don't get me wrong, there's money to be made on all of the ups and downs and many people/companies have gotten rich but the majority of us haven't and never will.

Charts and graphs are pretty but you need to learn to read them for what they actually show and understand what's missing. The mainstream media counts on your ignorance to fool you into thinking what they want you to.

Especially when the interests they represent are robbing you blind.
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Originally posted by Cynic
Yes, it's the Dow Jones Industrials, not the banks, and it does not account for sub-prime lenders. The chart is pretty, but useless in this case.

The DJIA includes several banks/financial companies that are directly affected.

That said, the DJIA is not a really good average to use, for a number of reasons. The S&P 500 is much better.

Originally posted by Muaddib
Or what about the "karma" from the United States coming to the aid of European countries even before and after WWII?....

What about the karma from the U.S. forgiving the debt from European countries and other countries?....

As they saying goes... it's just business, nothing personal.

Companies, banks being a company, tend to owe nothing to historic international loyalties, and lean toward decisions that are financially sound for stock holders and/or money grubbing greedy CEO/owners.

Ah, so you would sleep well knowing that American families suffer if there is a depression?....
I guess that tells us what sort of a person you are...

Just jumping in here, and I know that comment wasn't direct to me... but maybe you'll have one soon.

I place maybe 60% of the blame of this current (potential) financial crisis on "American families." (Maybe 60% is low)

Why?

Because of the stupidity of buying homes that are just barely within their means to afford.

This housing crisis has been built on the exceptional stupidity of kitchen-table calculations of the maximum possible mortgage payment that can be afforded... then buying a house that ends up costing only $118.72 more per month... but the granite kitchen is worth every penny.

Yeah, I know, everyone wants to blame the deceptive mortgages. But if that was the root of the problem, we wouldn't be seeing lenders who focus on average-or-better credit reporting late payments.

The idiot consumer thinking they'll skimp on other ares in order to pay their mortgage is now slammed with higher gas prices and the incremental cost increase of everything else as a result... so BAM suddenly there's not enough cash to pay the mortgage and they didn't get that raise they thought they'd get.

Certainly there's lots of real estate sales practices, shady lawyers, hedge fund madness, and deceptive mortgage deals to talk about as contributing to the problem. But none of those would be an issue if people bought a house that cost 75% of what their calculations say they can afford.

Japan has joined in the liquidity bail-out as Asian markets take a tumble:





Asian Stocks Drop, Joining Global Sell-Off, on Subprime Concern
.

Bottom line eveyone is borrowing money...and a good % are not
cutting the loan....not like in the past

I'm failing to see how this is not just a panic. Look...this all boils down to subprime lenders, right? That's not even the whole picture in the real estate market which is only 25 % of the U.S. economy, right?

Just some garbage working it's way out of the system, that's all. American unemployment is still low and many sectors are reporting good earnings.

Originally posted by SkepticOverlord



I place maybe 60% of the blame of this current (potential) financial crisis on "American families." (Maybe 60% is low)

Why?

Because of the stupidity of buying homes that are just barely within their means to afford.

This housing crisis has been built on the exceptional stupidity of kitchen-table calculations of the maximum possible mortgage payment that can be afforded... then buying a house that ends up costing only $118.72 more per month... but the granite kitchen is worth every penny.

Yeah, I know, everyone wants to blame the deceptive mortgages. But if that was the root of the problem, we wouldn't be seeing lenders who focus on average-or-better credit reporting late payments.

The idiot consumer thinking they'll skimp on other ares in order to pay their mortgage is now slammed with higher gas prices and the incremental cost increase of everything else as a result... so BAM suddenly there's not enough cash to pay the mortgage and they didn't get that raise they thought they'd get.

Certainly there's lots of real estate sales practices, shady lawyers, hedge fund madness, and deceptive mortgage deals to talk about as contributing to the problem. But none of those would be an issue if people bought a house that cost 75% of what their calculations say they can afford.

It's all about personal choices and I complete agree with you Skeptic. I have been saying this for over 15 years now. I have been saying to people how and the hell are these people affording these homes. Answer they weren't, aren't and now it's time to pay the piper. Mortgage brokers were another catalyst that played devils advocates and banks as well.

People looked at that monthly payment and not the over all picture. WTF! are people thinking monthly payment my a##, if you can't afford it don't buy it. The greed for out doing your neighbors got way out of control, then when Mom and Dad lost their jobs that monthly payments eat them alive. All by choice.

Myself I have always bought older homes that I could afford, fixed them up and lived in them or even sold them, but I have never thought about buying a new house that I could not afford. God forbid if the $hit hit the fan I wanted to be able to manage financially. I have always been ultra conservative because of my humble European roots that came from extreme poverty.

The USA will recover, but with a sour pill to swallow and a government that isn't helping, out of the financial ashes will come a degree in the school of Hard Knocks.