How long until our financial respirator gets unplugged?

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Col. Flagg
Level 34 Illuminated
Posts: 16961
Location: Utah County

How long until our financial respirator gets unplugged?

Post by Col. Flagg »

Our day of reckoning just keeps looking worse and worse...

http://atimes.com/atimes/Global_Economy/JB05Dj06.html

http://www.bloomberg.com/apps/news?pid= ... refer=home

http://www.bloomberg.com/apps/news?pid= ... refer=home

http://www.bloomberg.com/apps/news?pid= ... =munibonds

http://ap.google.com/article/ALeqM5ihlV ... wD8UJE9S00

http://www.ft.com/cms/s/0/3028204a-d291 ... ck_check=1

http://www.canada.com/ottawacitizen/new ... 67&k=53982

and the biggie:

http://money.cnn.com/2008/01/30/news/in ... 2008013103
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sally
captain of 100
Posts: 272

Post by sally »

Pretty scary.

:?
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AussieOi
Level 34 Illuminated
Posts: 6137
Location: Sydney, Australia

Re: How long until our financial respirator gets unplugged?

Post by AussieOi »



Good stuff.

I CANNON begin to implore how significant this all is.
This article is the best I have seen in regards to explaining it.

http://www.marketwatch.com/news/story/b ... 2D334EA%7D



SAN FRANCISCO (MarketWatch) -- Standard & Poor's said on Tuesday that it may downgrade bank ratings because of trouble in the $2.4 trillion bond insurance business.
"Bond insurers are suffering as a result of their roles as guarantors of mortgage-related securities, and downgrading them could affect all markets in which they are active, including the municipal bond, commercial mortgage-backed securities, and other structured finance areas," Tanya Azarchs, a credit analyst for S&P, wrote in a note to investors. "In turn, dislocation in those markets could affect banks."
Bond insurers guarantee billons of dollars worth of complex securities known as collateralized debt obligations (CDOs). But losses on these securities have begun to rise, imperiling the companies' crucial AAA ratings. Banks and securities firms lost close to $146 billion from subprime-related products in 2007.
S&P estimated that bond insurers have guaranteed at least $125 billion of the principle and interest payments of subprime-related CDOs.
"We believe that the specific, identifiable effect on banks may be significant and, in a few cases, could lead to downgrades. Large global institutions have direct exposure to the bond insurers in a number of ways," Azarchs said.
'We believe that the specific, identifiable effect on banks may be significant and, in a few cases, could lead to downgrades. Large global institutions have direct exposure to the bond insurers in a number of ways.'
— Tanya Azarchs, S&P
If there are big downgrades, banks that have hedged CDO positions with guarantees from bond insurers may suffer more write-downs. The ratings agency pointed to several banks that have recently increased loan loss reserves and could have existing CDO risk, including Merrill Lynch, Citibank and CIBC.
S&P has downgraded Financial Guaranty Insurance Co. to AA from AAA and slashed the rating of ACA Capital's (ACAH:aca capital holdings inc com

ACAH 0.70, -0.04, -5.4%) bond insurer unit to CCC. The agency has also warned it may cut the AAA ratings of MBIA Inc. (MBI:MBIA Inc

MBI 14.28, -0.62, -4.2%) , Ambac Financial Group Inc. (ABK:AMBAC
ABK 11.01, -0.38, -3.3%) and Security Capital (SCA:security capital assurance com
.
There are, however, several moves afoot to bail out other struggling bond insurers Financial Guaranty Insurance Co., partially owned by Blackstone Group (BX:blackstone group l p com unit ltd
News, chart, profile, more


PMI 8.80, -0.71, -7.5%) , and Ambac Financial Group Inc. Both plans would focus on shoring up capital for the insurers in the hopes of dodging further downgrades.
Regulators such as New York Insurance Commissioner Eric Dinallo had been trying for weeks to cajole banks into helping faltering insurers.
That pleading has apparently worked, for now: Barclays PLC (UK:BARC: news, chart, profile) , Credit Agricole SA, UBS AG WB 34.44, +0.26, +0.8%) , Barclays, Greenhill & Co. and UBS are throwing support behind Ambac.
Regardless of any bail out, downgrades will likely continue as the market tries to digest the extent of its subprime mortgage-related contagion.
Fellow ratings agency Fitch Ratings said today that it may downgrade the more than $220 billion of CDOs that it currently assesses by as much as five levels. Fitch created new risk-defining protocols after determining it did not accurately assess dangers associated with these types of assets. It lowered ratings in November on more than $67 billion of mortgage-linked CDOs, effectively naming many of them junk.
The formerly hot CDO market has since slowed down to a trickle, with only one created in the U.S. in 2008.




READ the article, read the comments.

Here is one

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by iamrodent 1 day ago

When the next wave of downgrades comes it could take down the entire financial system of the US, if not the world. The only question is which one will be the lynchpin that will trigger a massive downgrade chain reaction. No one is getting in the ratings agencies' faces and telling them not to throw the bond insurers under the bus; this dooms any intervention by banks at propping them up to failure. There's nothing there to slow it down once it starts.

The pressure to generate cash under which banks will be placed is what will undo the financial system. They are holding worthless assets which will beome more worthless and were purchased with depositor money; these will effectively cease generating cash which can be paid to depositors. The helicopter money, which should go for conventional lending, will instead go into coal contracts to be sold to the Chinese; conventional lending does not generate the return and the cash necessary to play defense against a run on the banks. The Fed is doing nothing more than buying them some time to build cash through a high risk strategy. The first big downgrade to come is your cue to get your survival cash out of there; get ahead of this downgrade. The follow-up downgrades are what will spark the run which will collapse the banks; the pieces are already in place.

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this guy is exactly right. stay invested until the first downgrade, the consider you investments and whether cash is a better investment. once the blood runs in the streets, then buy buy buy.


I like this comment....

by reefdiver 21 hours ago

In the end there will be no bailouts. If you're an investor, you'll just have to take your lumps. Where does it say in the constitution that if you lose placing bets in the free market, the government must steal from the others to cover your losses?

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I can't open the links above, but I assume they are about this.
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Col. Flagg
Level 34 Illuminated
Posts: 16961
Location: Utah County

Post by Col. Flagg »

Aussie... where does it say in the Constitution that our government has the authority to do half of what it is doing and has done? We've basically got a mafia in Washington!
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