This writer absolutely has to disagree with Beck’s assessment that the ‘perfect storm’ has just come ashore. Rather, IMHO, we are currently sitting in the still air of the eye of a Category 10 Financial Hurricane with the more dangerous backside about to hit us. And yes, the Federal Reserve is still protecting the banks to the detriment of producers. Please keep that perspective in mind as you watch Beck today.
(Subsequent segments will be added as they become available.) (more…)
(Editor’s Note: While you watch these videos from 2008, think about what the Obama administration did or did not do to circumvent the coming waves of residential resets and commercial mortgage resets during his first year in office.)
Very few people, and none that I know, would be happy to be the bearer of bad news, but this might explain why Tea Party Patriots have been screaming “stop spending money“.
The second tsunami of the residential mortgage meltdown disaster is about to roll right over us and what is left of our wallets. Amazingly enough, it was covered by ’60 Minutes’ in December, 2008.
According to Mr. Tilson, the ALT A mortgages are valued at close to $1 Trillion, and the Option ARMS come in somewhere around $500-600 Billion. Mr. Tilson expects that about 70% of these mortgages are going to default. The continued credit freeze for average Americans will, more than likely, contribute to the defaults.
Part 2, Florida Foreclosure Row
What do we have to combat this? Obama, Bernanke, Geithner, Frank, and Dodd. Have you stocked your pantry and/or root cellar yet?
So Barack Obama has decided that he does not like John McCain’s plan to buy mortgages and help homeowners stay in their homes. Guess what? Americans like it. According to Rasmussen Reports:
52% Favor McCain’s Mortgage Bailout Plan
A majority of voters (52%) favor John McCain’s plan for the federal government to buy up distressed mortgages and refinance them so homeowners can stay in their homes, according to a new Rasmussen Reports national telephone survey. Thirty-five percent (35%) oppose the plan.
Democrats like McCain’s plan more than Republicans, even though Barack Obama opposes it. Fifty-nine percent (59%) of Democratic voters think it’s a good idea, compared to 47% of Republicans – and 49% of unaffiliated voters.
Seventy percent (70%) of African-American voters favor McCain’s plan, as do 50% of white voters.
McCain says his plan, first proposed at Tuesday night’s presidential debate, will cost up to $300 billion, with the money coming out of the recently adopted $700-billion economic rescue plan. Obama says McCain’s plan is bad for taxpayers and benefits irresponsible financial institutions.
On one hand we have Obama’s rhetoric of change with no nuts and bolts plan elements and then we have the McCain/Palin ticket talking about a plan that was first put forward by Hillary Clinton. We also have John McCain talking about changing the 401k rules so that seniors do not get hammered by this market loss. (Look for an upcoming post on that).
It is 12:40 am Pacific time and I am watching the Asian markets drop like a rock and reading articles about European banks being nationalized because our Congress did not get the job done before the Asian Markets opened bolstering some kind of confidence in the markets.
The Asian and Europeans markets are off 1-2% as of this writing. If you want to watch it happen, go here. Click on “for the text version of this page, click here” to give you streaming text of what each tabbed region is currently doing.
WASHINGTON (Reuters) – U.S. lawmakers prepared to vote on Monday on a $700 billion government fund to buy bad debt as the global financial crisis kept markets on tenterhooksby forcing European authorities to rescue troubled banks.
As investors around the world hung on every twist and turn in Washington, Belgian-Dutch group Fortis was nationalized and British mortgage lender Bradford & Bingley faced the same fate.
Fortis is the first major European bank to buckle under the financial turmoil triggered in August last year by U.S. mortgage defaults, and an early relief rally in markets at news of progress in Washington soon fizzled out.
Stock markets in Japan, South Korea and Hong Kong all retreated 1-2 percent, giving up initial gains led by financial shares. U.S. stock futures pointed to a drop at the opening bell as did European stock futures.
“It’s definitely moving toward Europe,” said Joseph Kraft, head of Japan capital markets at Dresdner Kleinwort. “It’s the beginning of the end and a necessary step, so we should see more institutions nationalized, absorbed or going into default.”
The latest upheaval will only worsen the severe strains in money markets as financial firms have all but stopped lending to each other, partly as they prepare to close their books on the third quarter on Tuesday, analysts said.
EUROPEAN BANK RESCUES
In a sign the credit crisis was spreading, the Belgian, Dutch and Luxembourg governments nationalized financial group Fortis after European Central Bank President Jean-Claude Trichet held emergency talks with government officials over the fate of one of Europe’s top 20 banks. (Make sure to click on credit crisis above and scroll down to the “U.S. Bailout Breakdown” showing the breakdown of 1.8 Trillion (700B is the start).
The governments agreed to inject 11.2 billion euros ($16.4 billion) into the banking and insurance company, which has 85,000 staff worldwide.
In London, regulators were also preparing to nationalize troubled mortgage lender Bradford & Bingley and Spanish bank Santander was in talks to buy its retail deposits and branch network.
In Germany, Hypo Real Estate struck a last-minute deal with a consortium of banks to resolve a financing squeeze, saying the credit facility was sufficient to cover its capital needs well into the future.
The U.S. banking system also faced more upheaval. Wachovia Corp is in talks with rivals to be taken over, sources familiar with the situation said on Sunday.
Citigroup Inc is among the parties in talks with Wachovia, the two sources said, and one source said Wells Fargo & Co was also in discussions.
This is probably what Paulson got down on his knees for last week at the White House. He knew this was coming if the Dems and Republicans could not get their act together and get this bill passed before the Asian Markets opened. It is a Global Economy after all.
Since I started writing this post the Hang Seng has dropped another 2% in 17 minutes. I am hoping that our market holds this morning or someone steps in and shuts it down before it implodes.
Oh hell, cruised around for more data for this article and the Hang Seng is down another 1% in the following 10 minutes. The European markets are in worse shape; 2-4% loss across the board.
The crash I am historically watching in real time is due to the myopic vision of our Congress who obviously does not understand economics very well. I know that they are making an effort to look like they are protecting the American Taxpayer, but at what cost? What is the NYSE going to do in a few hours? Everybody better start praying…