7 replies to this topic

[mike123]

or the crisis was caused by them not buying MBS?


http://www.atimes.co...s/IG26Cb02.html

[selecto]

They sell us toxic toys, we sell them toxic bonds.

[mike123]

They sell us toxic toys, we sell them toxic bonds.

They stopped buying our toxic waste. Can we stop buying their toxic waste?

"What purpose, then, the $11.5 billion in credit lines—which Countrywide immediately drew down in full? Simply to enable the huge company to continue to refinance, and to buy back its MBS outstanding—to bail out Wall Street's mortgage securities holders."

Everything points to the bailout of hedge funds. CFC is being used as a toxic waste dump ground.


http://www.larouchep...k_bailouts.html

[kaiser soze]

I agree with you that CFC is being fed to the wolves by the wolves. If this scenario pans out, CFC equity holders will be left holding the bag. Which agrees with my theme that capital from every available market will be tapped to bail-out the big boyz while making it look all the time that they are doing their best to mitigate the situation.

[mike123]

We know a part time real estate agent who was not doing much in real estate for the last year. But suddenly he is very busy. Why, because people who invested in 2nd and 3rd houses are panicing and want to dump the houses as soon as possible. You will have to mark 20% down in order to move in this market.

[Jnavin]

Lots of good informative stuff, Mike, but I've got my doubts about "larouchepub" as a reliable source.

[mike123]

"In a sign of weak demand, the government received bids for the bills equal to 1.11 times the amount sold, the lowest since at least July 2001. I have NEVER, EVER seen a bid to cover ratio this low, especially in the T-Bill Market. The fact that demand for 4 WEEK BILLS was this weak raises SERIOUS QUESTIONS as to how they are EVER going to be able to issue 2 year, 5 year, 10 year, or 30 year bonds! The air is thick with scent of future monetizations.” My impression is that, folks, this is desperation slowly sinking in. US$-based toxicity is being recognized!!! The last resort will be USFed and Dept Treasury money printing and rampant purchase of US$-based securities, not just USTreasurys."


http://www.kitco.com.../aug232007.html

[mike123]

The following is from yahoo messages board. I think the poster knows the mortgage industry. I also read a transcript from nightline about a mortgage broker in the DC area who said that 7 out 10 sellers he has talked to either can't make payment now or doesn't have enough equity to sell the houses. Remember DC area is one of the strongest real estate market in the country. "For those who are not in the mortgage business and for those who think they know the mortgage business, but don't, let me give you a little mortgage 101 lesson. Prime Loans equate to conforming fixed and arm loans, and some jumbos. Confoming fixed rate loans are sold to fannie mae. Alt A equates to borrowers with decent credit but very little history and no bankruptcy or foreclosure blemishes. Sometimes referred to as A- borrowers. Subprime equates to low Fico's that usually include foreclosures or bankruptcies. Now the Subprime business was the first to go. This market actually began to unravel over a year ago. The Alt-A business is the most recent business to unravel. Alt-A loans include 80/20's and Option Arms. 80/20's are no money down loans but include a first and a piggy back second. This type of loan was devised to avoid PMI(Private Mortgage Insurance) payments. The option arm business allowed for several types of payment options. The most common being a 3 years fixed at a 1% to 2% interest rate that adjusts to market at the beginning of the 4th year. This is a large part of the loans that CFC was doing and purchasing in 2005 and 2006 when property values were at their highest. Have you figured it out yet? Yes, the worse is yet to come in 2008 and 2009 when all of these loans reset. You think the foreclosure rate is high now????? Most recently let me tell you what I think was going on with CFC. CFC continued to fund Alt-A loans even though the market to sell these loans on Wall Street had ceased. The belief at CFC was that this liquidity problem would be brief (maybe a couple of weeks) and they would be able to sell these loans that were already in their pipeline. Surprise surprise this market has not come back and CFC is stuck with a bunch of loans it can't sell and is running out of cash. What does CFC do? They go to the banks to borrow money but the banks say we are having problems too and can't lend you the money. B of A to the rescue...maybe...or for how long. CFC spins the story and says B of A made a sound investment in a good company. The whispers say that B of A made the deal with CFC to keep CFC from imploding and sending the whole financial industry into a tailspin. Since we all know that psychology plays a big part in the financial markets. If I was a betting man, I would be very careful with any financial company. With property values continuing to drop no telling how big the reserve for loan losses may be. "