[BigTex]

Cid, sounds like you have a nice setup. You live alone? No significant other? If not, are you okay with being alone? That would bother me.

[Cid_Yama]

I've actually considered a herd of goats to keep the grass down, and provide meat later. A friend of mine has a breeding pair and they are just too cute and friendly. They come running and talk to me whenever I go over there. (Probably because I always bring them some tasty leaves.)

[Cid_Yama]

I do have a girlfriend I have lived with for 20 years. I broke her of the habit of bringing people by years ago when we lived elsewhere. (It wasn't hard after we got ripped off by some people she thought were friends.) Her brother and his wife are best friends and come over but know not to ever bring anyone with them. I have them set up the same way. He's a contractor and I had him build the properties. We have an active social life away from home, it just doesn't come home with us.

[dorlomin]

$this->bbcode_second_pass_quote('patience', '
')These people think that a massive amount of commercial paper needs to roll over the first two weeks in February, into a very illiquid market. If it does not roll over, we have a problem.

[Twilight]

dorlomin, read this on SIVs.

Think of commercial paper as a rotating credit facility. A bank creates a SIV which it can keep off its balance sheet. The SIV issues commercial paper, which basically acts like very short-term bonds. It may ask investors for $1m, promising the money back in 90 days with a low percentage profit. The maximum allowed is 270 days. At the end of that period, the money and yield must be returned to the buyer, the SIV has hopefully generated a profit for its parent bank, and it is ready to issue a fresh batch of paper to meet its next funding requirements. It is expected that this credit facility will be rotated by the same buyers instantly reinvesting in new paper. That is the whole point, it is supposed to be a cheap source of funding.

This paper is bought by other entities interested in low risk steady income. The bank uses the money raised to purchase much longer term higher interest bonds, such as those derived from mortgages. Their maturity dates are measured in years. The idea is to borrow short and lend long and make a profit on the difference in rates. However, this has to run in the SIV's favour indefinitely, otherwise it can be fatal.

The problem is a lot of this paper is due this month, and no-one wants to buy any more. The SIVs are in a position where no-one will buy their paper, the mortgage paper they bought is worth a lot less than they paid for it, some may even be close to default, its insurance is worthless, and everyone knows it. They are going to have a hole. Making everyone good can cost the parent bank billions of dollars which it would have to raise by selling more liquid assets. There can be an impact on stock, commodity and currency markets when several large players have to do this.

I hope that is a good enough explanation from one layman to another. This mess has been quite the education. I wish I had known to take a class or two in this earlier.

[alokin]

back to the Islamic banks: I read that there are Islamic banks I think in Saudi Arabia, and that they are very successful.
I thought often about this, however I have no idea how they are working, but maybe the west should study these systems and trying to integrate some of the ideas, especially the idea not having interests.

We're living in Australia too, at least here in Brissie the housing market is still up in our humble area there are no houses under AUS$ 350,000.

The situation is different here: the interest rates for mortgages are at nearly 8% and there is still a need of housing as there are lots of immigrants. But I can't tell you how the crisis will hit us. (Maybe poor US citizens applying for a VISA?)

[I_Like_Plants]

$this->bbcode_second_pass_quote('alokin', 'b')ack to the Islamic banks: maybe the west should study these systems and trying to integrate some of the ideas, especially the idea not having interests.

(Maybe poor US citizens applying for a VISA?)

[billg]

PALM BEACH GARDENS, Fla. (MarketWatch) -- The Federal Deposit Insurance Corp. is gearing up for the prospect of a large bank failure.

Link

[mmasters]

$this->bbcode_second_pass_quote('Twilight', 'd')orlomin, read this on SIVs.

Think of commercial paper as a rotating credit facility. A bank creates a SIV which it can keep off its balance sheet. The SIV issues commercial paper, which basically acts like very short-term bonds. It may ask investors for $1m, promising the money back in 90 days with a low percentage profit. The maximum allowed is 270 days. At the end of that period, the money and yield must be returned to the buyer, the SIV has hopefully generated a profit for its parent bank, and it is ready to issue a fresh batch of paper to meet its next funding requirements. It is expected that this credit facility will be rotated by the same buyers instantly reinvesting in new paper. That is the whole point, it is supposed to be a cheap source of funding.

This paper is bought by other entities interested in low risk steady income. The bank uses the money raised to purchase much longer term higher interest bonds, such as those derived from mortgages. Their maturity dates are measured in years. The idea is to borrow short and lend long and make a profit on the difference in rates. However, this has to run in the SIV's favour indefinitely, otherwise it can be fatal.

The problem is a lot of this paper is due this month, and no-one wants to buy any more. The SIVs are in a position where no-one will buy their paper, the mortgage paper they bought is worth a lot less than they paid for it, some may even be close to default, its insurance is worthless, and everyone knows it. They are going to have a hole. Making everyone good can cost the parent bank billions of dollars which it would have to raise by selling more liquid assets. There can be an impact on stock, commodity and currency markets when several large players have to do this.

I hope that is a good enough explanation from one layman to another. This mess has been quite the education. I wish I had known to take a class or two in this earlier.

[Flowerr]

$this->bbcode_second_pass_quote('SchroedingersCat', 'F')or what it's worth, my bank pulled half its ATM's this week. No notice, no signs. Just nice metal panels where they used to be.

[BAM]

Man, what a load of BS

Any US site y,ou have to take with a grain of salt everything so loaded towards the veiw point of the site owner.
Look at Ticker forums totatly dyed in the wool bears every event that occurs is the end of the world.
Ticker forums is all about pumping shorts .

[billg]

Copied from another website:

$this->bbcode_second_pass_quote('', 'F')ederal Reserve disaster.

http://www.federalreserve.gov/releases/h3/Current/

There's no [mainstream] news coverage on it yet so this qualifies as a serious heads up.

Note the second numeric column. $40 Billion, has been since 1913, by law. Then notice it suddenly drops to $198 million and then two days ago the report lists the banks as minus $8.7 Billion, something which has never happened before.

How bad is it?

Think Weimar Republic. The Fed can no longer stop inflation because the banks can't secure new money with debt. People aren't buying debt anymore. Ergo, hyperinflation is the natural consequence.

Mark this day on your calendar.


Because this Federal Reserve chart, showing that the Net Free or Borrowed Reserves (NFORBRES) of Depository Institutions just fell off a cliff. Let's pray that there aren't any bank runs soon, because the till is empty.

http://research.stlouisfed.org/fred2/se ... RES?rid=19

It is a jolly good thing that the Fed is handing out so much cheap money these days, so the member banks can list part of these funds as "reserves."

so what is about to happen? yoour guess is as good as mine, but MY GUESS is the TPTB, ( you know the ones involved in 911 ) will not let it spin out of control and will either pull another stunt like noo yoik or possibly help out the bird flu situation ... because if you are going to have a crashed economy, best to have SOMETHING ELSE to blame it on...

got some food? better, as it's about to go up A LOT...

got some seeds to plant more? I hope so...

got any to share with people too stupid to prepare? might be a good idea...

got any solar panels and batteries, in case the grid gets "unstable"

got bicycles to ride to get supplies if the gas pumps are not working or TOO EXPENSIVE? xtra tubes and tires> remember all rubber ( and tires ) comes from OVERSEAS

got meds for a flu or prolonged quarantine? may not WANT to go out to get more...

[roccman]

what website billg?

[billg]

uncensored "tin foil"...
http://www.godlikeproductions.com/

[roccman]

$this->bbcode_second_pass_quote('billg', 'u')ncensored "tin foil"...
http://www.godlikeproductions.com/

[billg]

Market ticker article about this dramatic downturn

The Fed cannot continue to shovel $50 billion every two months into the banking system indefinitely. Either the "hard money" comes back, or the game is over - and soon.

[eXpat]

Banks reporting season in the UK link

$this->bbcode_second_pass_quote('', 'B')radford & Bingley kicks off the banks reporting season this week; seven of the UK's biggest lending institutions will deliver full-year numbers by 3 March. As Alastair Ryan, a UBS banking analyst, says: "The ability of the wonderfully complex financial markets to spring further negative surprises should not be underestimated."

B&B – 13 February
Barclays – 19 February
A&L – 20 February
Lloyds TSB – 22 February
HBOS – 27 February
RBS – 28 February
HSBC – 3 March

[eXpat]

The great bust of 08

$this->bbcode_second_pass_quote('', '"')Actually, I'm worried not so much about the junk-bond market itself as the huge market for a derivative called a credit-default swap, or CDS, built on top of that junk-bond market. Credit-default swaps are a kind of insurance against default, arranged between two parties. One party, the seller, agrees to pay the face value of the policy in case of a default by a specific company. The buyer pays a premium, a fee, to the seller for that protection.

This has grown to be a huge market: The total value of all CDS contracts is something like $450 trillion..... Some studies have put the real credit risk at just 6 per cent of the total, or about $27 trillion. That puts the CDS market at somewhere between two and six times the size of the U.S. economy.

All it will take in the CDS market is enough buyers and sellers deciding they can't rely on this insurance anymore for junk-bond prices to tumble and for companies to find it very expensive or impossible to raise money in this market." (Jim Jubak's Journal; "The Next Banking Crisis is on the Way", MSN Money)

Jubak really nails it here. In fact, this is what Wall Street is really worried about. $450 trillion in cyber-credit has been created through various off balance sheets operations which neither the Fed nor any other regulatory body can control. No one even knows how these abstruse, credit-inventions will perform in a falling market. But, so far, it doesn't look good.

The enormity of the derivatives market ($450 trillion) is the result of Greenspan's easy-credit monetary policies as well as the reconfiguring of the markets according to the “structured finance” model. The new model allows banks to run off-balance sheets operations that, in effect, create money out of thin air. Similarly, “synthetic” securitization, in the form of credit default swaps (CDS) has turned out to be another scam to avoid maintaining sufficient capital to cover a sudden rash of defaults. The bottom line is that the banks and non-bank institutions wanted to maximize their profits by keeping all their capital in play rather than maintaining the reserves they'd need in the event of a market downturn.
In a deregulated market, the Federal Reserve cannot control the creation of credit by non-bank institutions. As the massive derivatives bubble unwinds, it is likely to have real and disastrous effects on the underlying-productive economy. That's why Jubak and many other market analysts are so concerned. The persistent rise in home foreclosures, means that the derivatives which were levered on the original assets (sometimes exceeding 25-times their value) will vanish down a black hole. As trillions of dollars in virtual-capital are extinguished by a click of the mouse; the prospects of a downward deflationary spiral become more likely

[billg]

Feb 14 update...

Federal Reserve disaster:
http://www.federalreserve.gov/releases/h3/Current/

[WatchfulEye]

The Fed 'non-borrowed reserves' number is interesting, but it's not the whole story.

'Non-borrowed reserves' are not a tangible asset/debt - instead, it is an accounting term. Essentially, it's the difference between 'reserves' and 'borrowed reserves'.

'Reserves' are a bank's cash. There is a minimum acceptable reserve that they must hold under various codes, laws, etc. If they don't have enough cash to meet the minimum, then they must borrow cash or liquidate assets.

'Borrowed reserves' should be fairly obvious.

The numbers are now skewed because of the Fed's liquidity injection via the 'term auction facility' - an emergency measure to allow banks to borrow cash at below market rates.

Bankers are not fools, and if they can borrow at a low rate and invest at a higher rate, then they'll do it and make a profit. Guess what's happened now that the Fed has made available unlimited loans at bargain basement below market rates.

That's right. The banks are scarfing them down, and investing the money elsewhere, instead of just letting it sit idle as 'reserves'. They're borrowing far more than they actually need to meet their reserve requirements. In other words, 'borrowed reserves' exceed 'reserves' and you get this peculiar negative 'non-borrowed reserves'.