ragerunner

I hope you are right, but they didn't seem to do so good with the first batch (recognizing and accounting for - subprime). I still think they have not moved these projected future loses into the lost category. I'm not even convinced they have moved these future loses into their M3 junk pile yet.

gavster wrote: "I agree. Alt-A is next. It is a tsunami that is going to hit us while we're already down. It seems like right now most people are trying to ignore that problem." Sorry, I never get the posting of posts correct. So true. With everything going on the media and the general public have 'forgotten' that the housing bust is one of the main contributors to the financial meltdown. It will be another segment of the housing bust (Alt-A, etc...) that will cause another big leg down in our financial breakdown.

I agree that we are seeing issues in all catagories. But, I do think we will see a spike with alt-A in 2010 (give or take a few quarters). There are many homeowners with these loans still hanging on hoping for something. It will not be until their reset hits that they run for the exit in another big wave like subprime has done.

I have a friend who owns a small business and is in the process of losing it. His lawyer said the defaults on small businesses is the next be wave that is starting to build. The FEDs are full of crap, there will be no noticable recovery at the end of this year or the start of 2010, in my opinion. Alt-A home loans (which are as many as subprime and have a bigger dollar value) begin their resets at the end of 2009 and builds through 2010. Small businesses have just started their defaults and commercial loans go into the crapper later this year. (Chart of Alt-A resets - http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html) I think Bernanke's comments this week about the 'negative feed back loop' was a nice way of saying, the ship is still sinking. This is far from being over. :drunk:

Agreed, but I do think the significant increase in vacancy rates in the commercial (office, industrial and retail) sectors shows that business enterprise is shrinking. Which means businesses (in general) are not expanding but are contracting. I am sure this is leading to less need for business loans and rising default rates in that sector.

Check reply 391 on page 14 of this thread. Commercial loans, which are part of the business loan system, are the next big shoe to drop.

They are protecting their nearly 2 trillion in foreign reserves. They have to decide to either slowly deleverge, play the game to the end or take the plunge and blow the world economy up all at once (including their own). I think they are playing a little of option 1 and 2.

This has been talked about several times on this thread and the previous housing thread. Nothing like having the left hand give to the right hand. It not just us, England and many other nations face the same challenge. The party is over. "Moody's credit rating agency is warning that the U.S. government's AAA credit rating is at risk, because it has taken on so much debt that there are few creditors left to underwrite it. Foreigners have bought as much as two-thirds of U.S. debt in recent years, but they could be doing much less purchasing of U.S. Treasury securities in the future, not so much out of a desire to chastise America as simply because they won't have the funds to do it. Oil prices have fallen off a cliff and the U.S. purchase of foreign exports has dried up, slashing the surpluses that those countries previously recycled back into U.S. Treasuries. And domestic buyers of securities, to the extent that they can be found, will no doubt demand substantially higher returns than the rock-bottom interest rates at which Treasuries are available now.1 Who, then, is left to buy the government's debt and fund President Obama's $900 billion stimulus package? The taxpayers are obviously tapped out, so the money will have to be borrowed; but borrowed from whom? The pool of available lenders is shrinking fast. Morever, servicing the federal debt through private lenders imposes a crippling interest burden on the U.S. Treasury. The interest tab was $412 billion in fiscal year 2008, or about one-third of the federal government's total income from personal income taxes ($1,220 billion in 2008). The taxpayers not only cannot afford the $900 billion; they cannot afford to increase their interest payments. But what is the alternative? How about turning to the lender of last resort, the Federal Reserve itself? The advantage for the government of borrowing from its own central bank is that this money is virtually free. This is because the Federal Reserve rebates any interest it receives to the Treasury after deducting its costs, and the federal debt is never actually paid off but is just rolled over from year to year. Interest-free loans that are never paid off are basically free money. In 2008, 85% of the interest collected by the Federal Reserve (or "Fed") was returned to the Treasury. The average interest rate on Treasury securities today is only about 3%; 15% of 3% is less than 12% ­ such a negligible interest as to make the money nearly free." http://www.thelion.com/bin/forum.cgi?tf=wall_street_pit&cmd=r&t=1&msg=672513570

I thought I would post the following information that shows what is now starting to take place is much more than just about Wall Street, jobs or economics. It about countries around the world and their future position. I am not saying Putin is right (I think he is a very corrupt man - althought he does make some valid comments), but it does show that efforts are underway to alter the world power structure through this global crisis (with a focus on removing the current reserve currency, the US dollar). This would crush the US economy, since we rely on people buying our debt to keep going. Some things do need to change, but how that alters the world stage is of great importance to all. Putin Speaks at Davos "Good afternoon, colleagues, ladies and gentlemen, I would like to thank the forum's organisers for this opportunity to share my thoughts on global economic developments and to share our plans and proposals. The world is now facing the first truly global economic crisis, which is continuing to develop at an unprecedented pace. The current situation is often compared to the Great Depression of the late 1920s and the early 1930s. True, there are some similarities. However, there are also some basic differences. The crisis has affected everyone at this time of globalisation. Regardless of their political or economic system, all nations have found themselves in the same boat." .... http://online.wsj.com/article/SB123317069332125243.html?mod=googlenews_wsj

Citi, Bank of America drop on nationalization concern Banks may have to be nationalized for short time, Sen. Dodd tells Bloomberg "SAN FRANCISCO (MarketWatch) -- Bank of America Corp. shares hit a record low and Citigroup Corp.'s stock slumped to an 18-year low Friday, as the two financial giants faced investors' concerns they may be nationalized." http://www.marketwatch.com/news/story/Citi-Bank-America-fall-further/story.aspx?guid=%7B845D5D4B%2DDF85%2D4188%2D8F3D%2DF69EF77C9FE3%7D We are not the same America we were 2 years ago. When this is all said and done we may not recognized ourselves.

The next GIANT shoe to fall. Fed signals fears about commercial real estate woes 12:03 PM, February 18, 2009 "The minutes of the Federal Reserve's last meeting show a board losing hope on a housing recovery, fearful about rising problems in commercial real estate and "surprised" by the pace of economic declines overseas." http://latimesblogs.latimes.com/money_co/2009/02/fed-minutes-the.html IF OUR 'GREATEST' FINANCIAL MINDS ARE STILL BEING SURPRISED BY THIS STUFF WE ARE SO DONE. Maybe they should read a few forums and blogs and they might not be so surprised. IVORY TOWERS, IVORY TOWERS!!!!! Commercial real estate's crisis point approaching? $171 billion in loans coming due this year By Mike Freeman Union-Tribune Staff Writer 2:00 a.m. February 19, 2009 "With credit markets still shaky, about $171 billion in loans backed by offices, shopping centers, hotels and other commercial buildings are coming due this year. Experts increasingly wonder whether there's enough credit capacity in the system to refinance them. Yesterday, at a conference sponsored by the Burnham-Moores Center for Real Estate at the University of San Diego, bankers and real estate experts tried to tackle the crucial questions facing the market. ... http://www3.signonsandiego.com/stories/2009/feb/19/1b19real211833-commercial-real-estates-crisis-poin/?zIndex=55166 "Who knows?" Get out of the office and take a look around. There is so much vacant office and retail space its unreal. New office plazas and retail projects with maybe one tenant. Its simple, its just like housing, foreclosures and defaults are going to go way up. I saw a comment on this earlier that basically said, 'they are like deer in the headlights, just standing their frozen waiting to be killed.' Its like watching the housing RE industry 2 years ago. It can't happen, can it.....!!!

Which is why I have abandoned both parties, and refrain from getting into political discussions anymore. Both parties are sending us down the wrong path and I am petrified at what the outcome is going to be...... I laugh at people who will sit their and talk til they are blue in the face DEFENDING either party!!! How true.

These companies just don't get it and as long as the taxpayer keeps bailing them out they won't get it. They need to change their business plan, their focus and plan for a different future (quickly). The most telling moment (for me) that they don't get it was when Obama visited Detroit the other day and as he walked off stage GM had placed one of their biggest SUVs as a display item for the media to show in the background. Sad and pathetic. Oh well, what is another 50 billion, its only paper, right? Here is an idea, take all the innovative technology that the car companies have 'bought' over time and not 'allowed' to be implemented and make a new company that puts these innovations to work and let the dinosaurs die. The new company can focus on being proactive to world markets, higher 10,000s of people and re-strenghten the American automotive industry. GM May Need Up to $30 Billion in Gov't Aid Ailing Chrysler Has Also Asked for Billions More in Government Help The country's largest automaker said it may need upwards of $30 billion in government aid and will cut 20,000 U.S. jobs to come back from the brink of bankruptcy. General Motors has received $9.4 billion in federal loans since December and received another $4 billion today. But the company said it still needs as much as $16.6 billion more in financing to survive the troubled credit market. The company also plans to cut 47,000 jobs from its global operations -- including 20,000 hourly jobs in the United States -- and to close 14 manufacturing plants by 2012. But officials stressed that slashing costs alone wouldn't be enough to return the ailing company to profitability. ... http://abcnews.go.com/Business/Economy/story?id=6898148&page=1

It would be quiet the surprise to see any major new retail project get off the ground in the next year or two.

Now here is some shocking news. I and others have been talking about this for at least a year or two. M3 is overwhelming M1 and M2 on the balance sheets. :wink: America's Biggest Banks Are Zombies "(Newser) – In the corridors of Wall Street and Washington, a worrying consensus is growing: Some of the nation's largest banks are in fact insolvent. If banks reassessed the value of the complex mortgage-backed securities that taint their balance sheets, they would outweigh all assets on hand, writes Steve Lohr of the New York Times. For some experts, that means that only full-scale nationalization and a sell-off of the toxic debts can end the crisis. ... Source: New York Times http://www.newser.com/story/50718/americas-biggest-banks-are-zombies.html

CincyDad, You should check for copyright issues!!!

Retail sales rise 1%, first increase in seven months Most sectors see healthy gain, stand in contrast to private-sector reports http://www.marketwatch.com/news/story/Retail-sales-unexpectedly-jump-1/story.aspx?guid=%7B7551250B%2D322A%2D4A0C%2D8685%2D3308CB036D76%7D I guess you take 'positive' news when you can get it. But, its interesting to see adjusted government numbers not equate to private retail numbers.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt "Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them. U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week. If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP. ... http://www.marketwatch.com/news/story/General-Motors-cut-12-US/story.aspx?guid=%7BCD9419A5%2DF3F3%2D440B%2DAFBE%2D86CDA28ECFDF%7D Will there be anything left to bankrupt and/or save when all is said and done?

Very true. Even if most of these items could be fast tracked, its still a year at best.

Fully agree. Banks and Hedgefunds all over the world played this game, not just US corps. As far as the housing bust goes, the Europeans are more leveraged than the US in that game. Our system 'was' less controled by government than most Euro countries, so they kept the implosion more masked. That unmasking is now starting to happen and we get to watch what happens when you are even more leverage than the US (Spain, England, Italy, Iceland, etc...).

I would love to see the day the banks had to follow those rules.

This is more than just a problem, it has become the BIG problem. Most Banks now have more M3 ('stuff they say they can't value') on their books than M1 or M2 (stuff with real value). Wall Street and the FEDs have done everything to keep real value from being placed on all of this M3 paper. That is why they will go to high on pricing it values and the taxpayer gets the shaft. If they put real prices on this the Hedgefunds and most of the big banks will go out of business within 30 days. The fleecing of Main Street has only begun.

One of the problems with this is (in some industries) this will reduce the amount of competitive bids and increase the cost for those goods and services. If we want the stimulus to go as far as possible then make sure the bidding for projects and products is very competitive.

I also read that the govt includes such things in GDP counts as a guy running a red light and crashing his car upon returning from visiting his divorce attorney before checking himself into drug rehab. :wink2: The real question is, did this make the GDP go up or down. :lol:

I think my main concern here is the build up of goods on store shelves that kept the GDP from being lower. It almost feels like the reason it was not 5.5 was because of another negative problem being calculated as a positive.