well put. The role of any government is to protect and enrich those who control it.
Hope everyone is keeping an eye on FNM and FRE.
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A test of US Capitalism...
- Thread starter empee
- Start date
well put. The role of any government is to protect and enrich those who control it.
Hope everyone is keeping an eye on FNM and FRE.
Quote from Avid_Consumer:
when central banks conduct timed injections or loans to failing overleveraged institutions, who's losing the p&l that the failing institutions are recovering?
The fed injections are for 1-3 days and the mortgaged backed securities being traded in were high quality Fannie Mae stuff.
They aren't get out of jail free cards. They are repurchase agreements as in the fed will purchase your crap today and you have to repurchase it 1-3 days from now.
The fed injected liquidity because the banks weren't loaning money to each other. I'm not sure why that is (did Citi really think BSC was going to go under on Friday?) In any event, all the idiots sitting on top of mounds of subprime mortgages are still sitting on that same mound unless they found a bid to hit. The fed hasn't bailed them out yet.
Quote from Hydroblunt:
I am sorry, but you cannot complain about the loss of the capitalist nature when these are private interest at work, not public or socialist. The only real difference is that in pure capitalism, (maybe in less crude terms) instead of creating a whole mountain of news, analysis & literature. [/B]
HEY MORON! what are you talking about when you say "most of these entities would simply tell you & the people to "shut the f**k up and mind ur own business".
Look at what is going on in the USA.
1.the dollar cant buy you anything anymore.
2. our quality of life here sucks
a. both parents need to work
b. forty hours a week is considered part time for some people.
c. our jobs(what jobs?).
d. NO MORE MIDDLE CLASS
Quote from CommunistMonkey:
The fed injections are for 1-3 days and the mortgaged backed securities being traded in were high quality Fannie Mae stuff.
They aren't get out of jail free cards. They are repurchase agreements as in the fed will purchase your crap today and you have to repurchase it 1-3 days from now.
The fed injected liquidity because the banks weren't loaning money to each other. I'm not sure why that is (did Citi really think BSC was going to go under on Friday?) In any event, all the idiots sitting on top of mounds of subprime mortgages are still sitting on that same mound unless they found a bid to hit. The fed hasn't bailed them out yet.
thanks vm for the clarification. what do they do with the emergency cash from the repo'd paper?
is it basically a reprieve from having to liquidate other assets like stock, etc to cover their temporary cash needs or until their overall position improves?
i think that if we're so levered as a national and global economy that it could take hundreds of billions of exogenous infusions on any given day to temporarily stave off a liquidity collapse... we're way too levered in general
it's not like we're crashing, this is all happening still within earshot of all time highs. why not just let overlevered firms fail, and let assets sell off? are books really that mispriced and overlevered? nobody should be too big to fail, especially after the runs these banks and funds have had on the loose money bubble
Quote from renegade trader:
HEY MORON! what are you talking about when you say "most of these entities would simply tell you & the people to "shut the f**k up and mind ur own business".
Look at what is going on in the USA.
1.the dollar cant buy you anything anymore.
2. our quality of life here sucks
a. both parents need to work
b. forty hours a week is considered part time for some people.
c. our jobs(what jobs?).
d. NO MORE MIDDLE CLASS
You're the moron because you just quoted the answer from the big corporates regarding those issues but are too stupid to realize it.
Quote from CommunistMonkey:
The fed injected liquidity because the banks weren't loaning money to each other. I'm not sure why that is (did Citi really think BSC was going to go under on Friday?)
Why should Citi get involved when the Fed will always come in and prop up the system as they are designed to do. The lender of last resorts at the expense of the people, government debt and the dollar buying power.
Of course the banks will not lend on these circumstances, it's not a profitable proposition.
And it is kind of a jail free card because money is created out of thin air to purchase the CDOs at first. Once it's sent into the system, the multiplier effect starts. Certain entities always benefit when this happens.
hhmmm...me thinks the liquidity injections are just the start .....
here are the numbers for 2Q07
The notional amount of derivatives contracts held by U.S. commercial banks advanced 10%, or $13.3
trillion, to $144.8 trillion during the quarter. Interest rate contracts grew 10% to $118.6 trillion, notable
growth given the very large size of this sector. Commodities contracts fell 6% to $0.8 trillion. Equity
derivative contracts rose a modest 2% to $2.3 trillion, while foreign exchange contracts rose 8% to $12.9
trillion. As noted earlier, credit derivative contracts advanced 13% to $10.2 trillion
here are the numbers for 2Q07
The notional amount of derivatives contracts held by U.S. commercial banks advanced 10%, or $13.3
trillion, to $144.8 trillion during the quarter. Interest rate contracts grew 10% to $118.6 trillion, notable
growth given the very large size of this sector. Commodities contracts fell 6% to $0.8 trillion. Equity
derivative contracts rose a modest 2% to $2.3 trillion, while foreign exchange contracts rose 8% to $12.9
trillion. As noted earlier, credit derivative contracts advanced 13% to $10.2 trillion
Quote from Avid_Consumer:
thanks vm for the clarification. what do they do with the emergency cash from the repo'd paper?
is it basically a reprieve from having to liquidate other assets like stock, etc to cover their temporary cash needs or until their overall position improves?
i think that if we're so levered as a national and global economy that it could take hundreds of billions of exogenous infusions on any given day to temporarily stave off a liquidity collapse... we're way too levered in general
it's not like we're crashing, this is all happening still within earshot of all time highs. why not just let overlevered firms fail, and let assets sell off? are books really that mispriced and overlevered? nobody should be too big to fail, especially after the runs these banks and funds have had on the loose money bubble
I think this is a very valid point. People are missing the issues. Even Jim Cramer on TV pounding that the Fed should cut rates. So clueless.
Many people on this board trade. So, I'll use a trading example. It's like this. You have your trading account. And b/c you trade on margin(overleveraged 40X or whatever) now the market moves against you. So, IB or your broker would normally give you a margin call then just liquidate your positions.
The very same thing is happening to these i-banks and hedge funds. But instead of liquidation, they are asking the Fed to let them borrow even MORE money so they don't have to get out of their positions at a loss HOPING(key word here is HOPING) that the markets will turn around and let them get out at a smaller loss or god willing breakeven/small profit.
Let me tell you this. This isn't good. Everytime I think like that before, things just got so bad. That's why I don't meet margin calls. If it gets liquidated then fine. Means that was a bad trade.
Now imagine it's on a HUGE scale of hundred of billions dollars. Some of these places are in deep doo doo...
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