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wamu / bank failures?
- Thread starter queenlives
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I don't think this is covert. It is obvious that the Fed is cleverly injecting liquidity into the banks without forcing them to come to the discount window. Today's actions are just another clever way to clean up bank balance sheets and get them lending again. Anyway you slice it, it affects the money supply (and thus interest rates). The Fed is just trying to get the system functioning again... they don't want to overshoot, they don't have much rope, and they don't have much inflationary leeway. If this works, they have another tool in their shed.
Ski_Banker
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MAJOR
Interesting blog. I'd agree with *most* of it, except the covert part. I don't think this (even today) is any sort of conspiracy. It's just what happens when you (the Fed) lend to a distressed enterprise... you may lose your money and wind up owning what you lent to. The thought provoking ideas were that these perpetual 28 day loans are just that -- perpetual (ie, equity), which is 100% correct.
Here's my take, in the most simplistic terms:
A non-market-based solution to a market-based problem won't work in the long term (altough it may avoid panic).
Interesting blog. I'd agree with *most* of it, except the covert part. I don't think this (even today) is any sort of conspiracy. It's just what happens when you (the Fed) lend to a distressed enterprise... you may lose your money and wind up owning what you lent to. The thought provoking ideas were that these perpetual 28 day loans are just that -- perpetual (ie, equity), which is 100% correct.
Here's my take, in the most simplistic terms:
A non-market-based solution to a market-based problem won't work in the long term (altough it may avoid panic).
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Understanding the Subprime Crisis (Priceless!)
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I agree, its a solution to a problem that shouldn't exist and will not work long term - the very concept of forgiving or absorbing failed consumer debt is only a way of creating more problems in the marketplace.
The marketplace works because the masses throw money into it - the money in it now is artificial - it was lent to the masses to throw in. Therefore there must be a devaluation of the market to properly account for the artificial increases that were exploited due to falsely created leverage.
Softening the landing doesn't mean there shouldn't be a landing - and, ultimately, if there isn't one, there will continue to be problems.
The marketplace works because the masses throw money into it - the money in it now is artificial - it was lent to the masses to throw in. Therefore there must be a devaluation of the market to properly account for the artificial increases that were exploited due to falsely created leverage.
Softening the landing doesn't mean there shouldn't be a landing - and, ultimately, if there isn't one, there will continue to be problems.
Re: i think this pretty much sums it up...
I love it! Their computer system is crying out in desperation as you transfer money out of the bank!:biggrin: :biggrin: :biggrin:
I love it! Their computer system is crying out in desperation as you transfer money out of the bank!:biggrin: :biggrin: :biggrin:
well im in process of closing my account wm. after some how wm releasing my funds to Moumental Life for a insurance premium ach w/drawl which i never authorized.
I'm switching over to Wachovia "Yes I know they have lots of fees, but there ways to dodge the fees" but atleast I dont have deal with the ridicious lines at WaMu on fridays or anytime of the week at wachovia branches. atleast the telephone banker can speak english "and reach an american rep unlike Wamu cust. rep that can bearly speak english sounds like they had a hiring freenzy in California, AZ, Tx.
I'm switching over to Wachovia "Yes I know they have lots of fees, but there ways to dodge the fees" but atleast I dont have deal with the ridicious lines at WaMu on fridays or anytime of the week at wachovia branches. atleast the telephone banker can speak english "and reach an american rep unlike Wamu cust. rep that can bearly speak english sounds like they had a hiring freenzy in California, AZ, Tx.
Wachovia's balance sheet is pretty bad too. I'd recommend you consider a bank that isn't in danger of going under.
Ski_Banker
Suspended
Wow. I really don't even know what to write.
I just got home from work. Have been watching Bloomberg TV to see the U.S. market close. Just like Fox News, lots of talking heads spouting off about a bunch of nothing. Now -- investment bank commentary right now is very suspect (will be way too rosy for obvious Bear Stearns reasons). But, when professional money managers are yapping about "bottoms" and the traditional valuation metrics, I become absolutely positively dismayed. And then, it hit me. The REASON we're in this crisis is precisely because of how many Wall St people, advisors, etc. are exactly like the jokers I'm watching on Bloomberg. These are people that can only analyse historical data and make decisions based on tried and true "investing rules." They're not stupid, by any means. They just, fundamentally, can't make forward-looking assessments.
Example? John Meriwether. He FOUNDED Long Term Capital Management. Got mostly wiped out when that fund tanked. Started a new firm with a very similar strategy. And now his current fund is tanking. What had been the strategy of both funds??? Finding very small pricing discrepencies in illiquid investments and exploiting them, with leverage. Through very very very complicated financial models, his funds have made great money when "things are normal." But, because the models are based on historical information, they won't work on the rare occasion that markets go haywire. Like now. John Meriwether should have learned that lesson in 1998. But, it seems, he didn't. Analysing historical relationships for investment decisions is ingrained in his investment psyche, and he is losing his second fortune as a result.
Why do I know more than anyone else on the Street? I don't for the most part. But, I'm more perceptive and open to new interpretations than 99% of Wall Street types.
This week: Two major UK/International bank representatives came to our offices in Mayfair, London. They were both offering *absurd* interest rates on new deposits from my wealthy senior partners. Is that a sign of cash desparation?? You decide.
I just got home from work. Have been watching Bloomberg TV to see the U.S. market close. Just like Fox News, lots of talking heads spouting off about a bunch of nothing. Now -- investment bank commentary right now is very suspect (will be way too rosy for obvious Bear Stearns reasons). But, when professional money managers are yapping about "bottoms" and the traditional valuation metrics, I become absolutely positively dismayed. And then, it hit me. The REASON we're in this crisis is precisely because of how many Wall St people, advisors, etc. are exactly like the jokers I'm watching on Bloomberg. These are people that can only analyse historical data and make decisions based on tried and true "investing rules." They're not stupid, by any means. They just, fundamentally, can't make forward-looking assessments.
Example? John Meriwether. He FOUNDED Long Term Capital Management. Got mostly wiped out when that fund tanked. Started a new firm with a very similar strategy. And now his current fund is tanking. What had been the strategy of both funds??? Finding very small pricing discrepencies in illiquid investments and exploiting them, with leverage. Through very very very complicated financial models, his funds have made great money when "things are normal." But, because the models are based on historical information, they won't work on the rare occasion that markets go haywire. Like now. John Meriwether should have learned that lesson in 1998. But, it seems, he didn't. Analysing historical relationships for investment decisions is ingrained in his investment psyche, and he is losing his second fortune as a result.
Why do I know more than anyone else on the Street? I don't for the most part. But, I'm more perceptive and open to new interpretations than 99% of Wall Street types.
This week: Two major UK/International bank representatives came to our offices in Mayfair, London. They were both offering *absurd* interest rates on new deposits from my wealthy senior partners. Is that a sign of cash desparation?? You decide.
What kind of guarantee are they giving on that deposit?
Ski_Banker
Suspended
I don't know what the FDIC-like limits are here in England. If I remember correctly, you get 90% of your deposit amount up to 100k GBP if there is a meltdown from the UK gov't.
Steve, do you think that going to a private equity firm (and numerous hedge funds in the blocks around us) to beg for deposit cash is a good idea? I think it's a frightening sign.
I know a lot of large firms who are doing just that. It is a bad sign for sure.
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Ski_Banker
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This is going to get ugly. really really really ugly.
Hang on to your hats kids -- a global financial meltdown is well underway.
:frown:
Hang on to your hats kids -- a global financial meltdown is well underway.
:frown:This is going to get ugly. really really really ugly.
Hang on to your hats kids -- a global financial meltdown is well underway.
Hay look. Chicken Little is on line.:tongue: :biggrin:
This is going to get ugly. really really really ugly.
Hang on to your hats kids -- a global financial meltdown is well underway.
You really think it is going to get that bad. I am getting ready to pick up a bunch of stocks cheap. You think they are going to get cheaper?
Ski_Banker
Suspended
Yes.
During Warren Buffet's search for a replacement/successor he has made it absolutely clear that he wants someone with his value-oriented investing style (very easy requirement) AND a person that can plan for, invest around, and avoid the risks of things that haven't yet been conceived. In other words, the next Berkshire CIO will be the person that contemplated 9/11, for example, before 9/11. And planned accordingly.
Why do I bring this up?
Honestly, Steve, I'm thinking the unthinkable. And, I'm fortunate enough to know how lending and investing decisions are made by 99% of the financial world.
Remember the Hitchhiker's Guide to the Galaxy, where mysteriously the number "42" was the answer to the meaning of life?
Well, the author was wrong. The answer, at least to this calamity, is not 42. It's 3%. That is the perpetual growth rate applied in every equity valuation analysis and credit analysis for a company and economy. It's quite the magical figure that assumes that eventually the business will only grow at the same rate as the economy as a whole. This *assumption* and the realization that it is incorrect, will bring modern finance to its knees.
Have you guys read about this? This scares the sh1t out of me more than any subprime debacle. Im praying that this mkt doesnt implode.
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}
http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}
Ski_Banker
Suspended
Yeah that's what is killing the investment banks. They aren't subprime lenders. 
That's the meltdown I'm referring to. The S&Ls and commercial banks have their own insolvency problems from real estate loans.
That's the meltdown I'm referring to. The S&Ls and commercial banks have their own insolvency problems from real estate loans.
Not to be a contrarion, but I opened a new CD with WAMU 2 weeks ago. 4% / 8 month CD.
Am also up 19.4% YTD in PRISX (Financial services)
and 10.4% in CSRIX (Real estate)
Got in both recently. Should have bought more.............
Will dollar cost ave for a couple yrs.
Am more concerned with my global funds and emerging markets funds at this point.
Thoughts?
Lots of doom and gloom here.
Don't mind me if I do not agree things are going to hell........
Am down overall this year, but am buying all I can (as always)
Now, back to the despair........... And Canada...............
Am also up 19.4% YTD in PRISX (Financial services)
and 10.4% in CSRIX (Real estate)
Got in both recently. Should have bought more.............
Will dollar cost ave for a couple yrs.
Am more concerned with my global funds and emerging markets funds at this point.
Thoughts?
Lots of doom and gloom here.
Don't mind me if I do not agree things are going to hell........
Am down overall this year, but am buying all I can (as always)
Now, back to the despair........... And Canada...............
What do you consider absurd? Aside from the rate itself, what were the terms of the rate?
Ski_Banker
Suspended
6%.
In this case, the rate is less important than anything else. I'd be just as alarmed if banks were begging at 4% or at 20%.
Rest assured (if possible, no pun intended), it is a disastrous sign.
But, if you think that governemental agencies have the knowledge/resources to offset a meltdown... now might be an ok time to buy.
I don't think so.
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