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Auditors, don't get fooled again...The Fed, Treasury and the Taxpayer Funded Superfund BAILOUT

October 23, 2007

Analysis of:Fed Signals Support for Paulson Commercial-Paper Plan | www.bloomberg.com

But the superfund SIV that will be funded by the “banks” is bunk, and will be done as follows. 1)The Banks are thin on liquidity 2) The bank CPA and auditors said to them 2 weeks ago, “we are not going to roll over, you need to address these SIV’s, your commercial paper, or I will not sign your annual report…we got burned by Enron, not again…” 3)Paulson brings the Banks and auditors all together and says, “Lets make a $100bln in a bucket, so you can dump your garbage CDO's, CP, and other junk in there, and we will skirt the auditors pencils” 4) The banks say to Paulson, “We’re broke and thin on capital…brother can you spare a dime?”

Uncle Ben: Do nott lose control of the dollar. If you do, you ain't seen nothing yet....Ask Norman Lamont

September 17, 2007

Analysis of:How the dollar will rock your mortgage. | www.sundayherald.com

HOW low can the dollar go? The short answer is that nobody knows but expert opinion generally agrees the greenback still has some way to fall, if only because of the outlook for America. "Currency investors continue to fear the implications of a worldwide credit squeeze on the US economy," dollar guru Stewart Douglas observed this week. The situation will become clearer later this month when the Federal Reserve, whose every pronouncement used to shift the world currency markets, votes whether to cut official rates. If it does, "this will come ultimately at the expense of the value of the dollar", Douglas adds. Everybody is just hoping the greenback does not fall off a cliff and drag Britain and Europe with it.

To cut or not to cut? That is the question...?

September 17, 2007

Analysis of:Central banks split over credit squeeze action | www.ft.com

The market is fixated on the unemployment reports as the basis for cutting the Fed Funds rate on Sept 18th. Crying that we need the relief.  I have long argued, and Mr. John Bougearel has pointed out in his post http://news.glgroup.com/cm/Analysis/PostDetail.aspx?pid=16348 that the ever widening swap, libor and credit spreads require the participants to be comfortable with counterparty risk, something that will not necessairly be satisfied by lower rates.   There is no guarantee that lower Fed Funds rates will be passed thur to market. I argue that the FED is thinking very hard about this. I believe that the Fed recognizes (they see the dollar trading right now) that IF they move aggressively on the Fed Funds, the ENTIRE system could come under serious pressure.  

The Fed and Treasury are playing for high stakes now

September 7, 2007

Analysis of:Libor Pops Up | online.wsj.com

It will be everyone's problem if the FED and Treasury pander to the market. The time is upon the leaders of the FED and Treasury to maintain a very steady course. The risks to the global financial system are the highest in over a century.

  What is the LIBOR market saying? With spreads widening to higher and higher levels, there now is cause for concern in the LIBOR markets.

With just over 20 days left until the end of the 3rd quarter for many calendar year banks, many banks are finding it more and more difficult to find a willing counterparty that can extend the size of credit the bank needs. With Swap spreads widening to higher and higher levels, there now is cause for concern in the LIBOR markets. With just over 20 days left until the end of the 3rd quarter for many calendar year banks, many banks are finding it more and more difficult to find a willing counterparty that can extend the size of credit the bank needs.  

Pushing a string

September 5, 2007

Analysis of:Banks to Test Debt Market This Week | www.nytimes.com

There is never a bad bond, just a bad bond price.

Do not underestimate who has the power right now in the Wall Street equation. Cash is king. Long live the king!

If they price the First Data correctly, it will trade. If not, it will be difficult.

There has been a market all summer for mortgage paper, BBB paper, and even AAA paper. But few are prepared to "Hit a 90.00 bid". But remember, todays 90.00 bid, could be Octobers 80.00 bid, and Novembers 70.00 bid, and Decembers 60.00 bid.

Here are the questions that EVERY trading desk that gets a call from these 7 banks will inevitably ask themselves...

What do I think delinquencies will do going forward into October, Nov, Dec? Are they likely to improve or widen?

Should we expect robust retail sales numbers this fall?

Will housing prices rebound over the winter or languish lower?

If the Fed cuts the Fed Funds rate, what will the dollar do in the last quarter? Will it devalue?

No Fed rate cuts

August 24, 2007

Analysis of:Capital One to Close Its GreenPoint Unit | online.wsj.com

1) The difference between a corporate bear market and a real estate bear market is the speed in which the markets correct. Corporations, currencies, commodities are quick to discount, and the market "remarks to the market" quickly. In a real estate bear market, it bleeds, seaps, and we wait every 30 days to get delinquency/foreclosure numbers, and the pain is not quick but spread out over months. I suspect that this will run over 16 months as mom and pop feel the pain, hold out for higher prices, and ride the price down.    

In for a penny In for a pound...

August 24, 2007

Analysis of:Bank of America to Invest $2 Billion in Countrywide | online.wsj.com

The Bank of America infusion of $2bil into a company (Countrywide) that probably borrowed $3bln from them last Thursday, highlights a couple of old sayings….”in for a penny, im in for a pound” (BOA) and “If you are going to borrow, borrow a lot. That way the bank doesn’t own you, you own the bank…” (Countrywide) I imagine we are seeing the first “im too big to let fail” transaction.  

Why would individuals open a self directed IRA or Solo401k, and acquire real estate in their retirement plan?

June 4, 2007

Analysis of:Diversify your retirement plan, Invest in residential and comercial real estate | www.forbes.com

The retirement plan space represents the fastest growing and largest segment of the financial services industry. Individuals now have significant funds inside their retirement plans ($15trillion) to now be in a position to invest in real estate, and alternative investments INSIDE their retirement plans. The use of leverage inside a retirement plan will allow the individual the opportunity to afford larger investments, gain the benefits of gearing, and allow them to have control of a larger investment inside their retirement plan. The tax deferral or tax free abilities afforded to those that invest in real estate inside their retirement plans is unmatched to investments OUTSIDE retirement plans.

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