Posts Tagged ‘people’

The latest “good idea” to come out of DC regarding solving the housing crisis and credit crisis would be to allow a government fund to buy troubled mortgages from the banks.  Funding would be done jointly from Uncle Sam and Vulture/Hedge Funds.  Thus, rewarding those entities for taking the risk and effort to recover value and make fortunes on the backs of the troubled homeowners!!!!

No one is a bigger capitalist and supporter of the free markets than me, but the perversity of the ideas coming out of DC and celebrated by those still with cash is absurd.

A Wall Street Journal article this week indicated that these funds would by the mortgages at $0.05 to $0.20 on the dollar of “face value” thus putting a market value and theoretically some liquidity into a market that has had a dearth of players (folks willing to buy or sell at a mutually agreed upon price).  The thought is that by adding government dollars and some guarantees against loss to these vultures and speculators, that things would then get better for all!

This is inane!  Once again, the most aggressive investors/institutions will be treated as rolyalty and “protected” by those suffering under situations created to make money from them!

The best idea still and one that I have discussed in the past and will continue to support is the following:

Allow the borrowers to buy back their outstianding mortgages and outstanding credits at the same rate as Uncle Sam is proposing they be sold to Vultures.  Provide government financing and guarantees to allow the refinancing of the principal and accrued interest at “pennies on the dollar” to those suffering, with deferrals on payments until income levels have rebounded to facilitate repayment of the reduced amounts.

Why should the Government entice vultures to buy on the distress of the public, and then profit on their further distress?  Why not have the Government be the instrument for settlement of the sources of distress?  Why not have the individual families receive the benefit from their own recovery?  Reduce the levels of sources of profit to 3rd parties and institutions?  Foster a benevolent solution, rather than dumping the paper in the hands of vultures and collection agencies to further harass those facing hardship and eviction?

Enough raping of the populace by the Wall Street Titans and Banking Giants!!!  We have see that quarterly profits and earnings for shareholders rewarded by temporarily higher stock prices is a recipe for disaster!

A change is needed. A reason for hope!  Let us hope the new administration sees the light and makes positive things happen for our society!

Also check out http://alphainventions.com/ a great website for all new posts!

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Ge, which had for all intents and purposes closed down GE Capital, its finance division, in November, has finally announced layoffs.

Back in November, GE very quietly announced that it would not be doing any financing through GE Capital, except to only the highest rated credit risks. They completely killed their Senior Bank Lending programs, their Health Care Financing, their trade financing and reviewing of most new deals.

Their announcement came as a surprise to Wall Street investment bankers, who had come to rely on GE Capital as the leading source for Senior Bank Debt when doing M&A. With GE out of the market, hundreds of deals died on the table in the 4th quarter.

GE had inidicated they would review their position re GE Capital and new lending in the first quarter. They had made some remarks in a news release, but it was very unclear as to what steps they were taking.

With the layoffs announced today, comprising of 11,000 highly paid financial professionals (15% of the employees of GE Capital), GE’s intentions and expected operations are quite clear.

GE Capital, which had once generated approximately half of GE’s net income, will be no more as we knew it. Thus, GE’s earnings, as we knew them, will be no more.

The main questions that still exist have to do with the level of potential write-offs that exist on GE Capital’s balance sheet.

Also check out http://alphainventions.com/ a great website for all new posts!

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In his article, which you can read at http://www.forbes.com/manufacturing/forbes/2009/0202/031.html?story_url=http%3A%2F%2Fwww.forbes.com%2Fforbes%2F2009%2F0202%2F031.html&username=MoneyAssistant&email=dijana.howard%40gmail.com&title=General+Manager

you will note that he is very optimistic about the future of the industry. He firmly believes and I agree with him that 10-15 years from now, there will be more auto companies, rather than less. He believes that though the changes are traumatic, the ultimate outcome will be beneficial. The future industry will be stronger, more diverse, offer a greater variation of vehicle with various energy sources, and greater flexibility in environmental compatibility.

I agree, we have much to look forward to. After, we get through the current economic storms.

See layoffs for the month of January, by the largest US employers, at:
http://www.forbes.com/2009/01/09/january-layoffs-fires-lead-cx_kk_0109january09layoffs.html

Also check out http://alphainventions.com/ a great website for all new posts!

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Thanks for reading and feel free to comment and link to this blog for more great insight!

Citi yesterday agreed to “cramdowns” for resetting mortgage amounts and rates for troubled borrowers.

Politicians all across America declared that this was a breakthrough, etc.

One would not think it at all surprising though, given the $45 billion pumped into Citi by our great Uncle, and our Uncle’s willingness to absorb more than $300 billion of future Citi losses.

Socialism clearly has some benefits. With a tight leash (like Citi is on), the master can dictate many things.

It is amazing of late to watch the news wires and see the number of successful business people who are committing suicide due to the “Red Plague” and its economic chaos.

Yesterday, we read the Steven Good of the Sheldon Good Real Estate Auction house committed suicide.

The day before we read that Adolf Merckle, one of Germany’s wealthiest men, committed suicide as his business conglomerate began having finance problems brought on the the credit crisis and the global economic slow down.

There have been hedge fund managers in the US and England who have given up hope and have left their families, as well as Rene-Thierry Magon de la Villehuchet, a private investor and aristocrat who trusted Madoff with his family fortune and the fortunes of his clients.

All these men have been successful, powerful, professionals with years of experience, as well as diverse skill sets.

The question is “Is the situation so dire as there is no escape, no hope, no solution?” We should hope and pray not.

If these men, at apexes in their careers and industries, have no hope, what about you and me? What about those folks being forced from their homes? The unemployed, the folks with credit way over their heads, the people whose life is more of a daily struggle than a “success story”.

Each should be thankful. Irregardless of how dire seems appear, there are always solutions, answers and ways of resolving things, without “escaping to the next world”.

This will get better, they always do. This time is no different in that regard. There will be opportunities ahead. Staying alive is important to future success!

Today’s Wall Street Journal had a small article buried within the paper which once again demonstrated how screwed up our American Government/Financial Systems are.

See http://online.wsj.com/article/SB123094029211850265.html

Fannie Mae announced on Monday that it is raising its fees to lenders for guaranteeing or buying certain mortgages. The article notes that the fees will increase to 3.25% of the loan amounts after April 1st, from the current 1.25%.

At a time when our Federal government is spending billions to buy up mortgage paper with the effect of lowering market rates for conforming mortgages, the two agencies now under conservatorship have the gaul to raise the fees. This has the same impact of adding 2 points to a mortgage or stepping the rates back up.

The Federal Housing Agency spokesperson has stated that they will review the public’s objections to the rate increase.

Crazy, but believable…………… Help us Barney Frank!!!!

Two Wall Street Journal columns jump from their website today.
After Dow’s Collapse, Guarded Hope

After the U.S. stock market’s third-worst year in more than a century, many investors are hoping for a turnaround in 2009. But considering the pain that has continued for more than a year, they are reluctant to bet on it.

Stimulus Versus Recession

The U.S. is preparing massive efforts to battle the twin threats of deep recession and deflation in 2009. The results will affect the investment climate for years to come.

These two observations are right on target, but the impact and implications so grand, that the folks at the WSJ should be shouting from the building tops in Manhattan, Greenwich, The Hamptons, and DC.

First, it should not be understated but the International Monetary Fund had estimated financial security losses in the range of $1.4 trillion as of this past October. To date, US institutions have only written off less than $800 billion! The IMF estimates were before the $50 billion evaporation of Madoff assets and the severe financial market declines of late October and November.

Additionally, there have been several estimates in the area of $2 trillion for the total losses to be expected by the inability of the “two pillars” of homeowners/credit users and small businesses to obtain any lifelines quickly and without “strings” of steel to further sink them. The lifelines are not appearing on Uncle Sam’s drawing boards at the moment, which means that we should not count on them in the near future. Uh, oh!!

Current LIBOR based mortgage rates are in the area of 2.25% currently for up to $2 million!!! The rates are less than the average yield of a local CD for a few months. Fixed rate conforming mortgages are at less than 5% for 30 years. We can expect mortgage rates to further decline as the Fed continues to intervene in the market for Fannie and Freddie securities. (They have billions of $ in their pockets to manipulate the market and lower the rates further.) Unfortunately, other than the variable LIBOR loans, jumbo fixed mortgages are still in the range of 8% or so. Because the government is ignoring this sector of the market, there has been only increases in the rates as the riskiness of the credits have increased.

Banks are demanding more collateral, rather than less. In a time of declining asset values, with collateral worth less, fewer and fewer are able to meet the stricter lending requirements. Where is Super Paulson and our Hero Bernacke when we need them???????? Will HOPE and CHANGE help? Or should we turn to God as our only salvation?

Today’s WSJ made the analogy of an individual escaping from a very painful marriage. The journalist stated that this individual would be very likely to resist remarrying. The journalist paralleled the experience to a stock investor during 2008 and their fear of buying stocks in 2009. I thought this very appropriate.

In a world of great interconnection, with great uncertainties, the need for faith and confidence in systems and governments, unified and coordinated efforts are crucial. Given all we have seen from our government over the past year and years, can we have confidence? Should we have hope?

Given the way America has been raped and brutalized by Wall Street, can we have faith in the Heroes of Capitalism to save us?

Please share your thoughts and ideas………

Today’s Wall Street Journal cites the anticipation of looming “mortgage cram-downs”, as a result of the failure of government’s steps to cease the increase in foreclosures.

The article notes that there are 7.5 million homes underwater currently and that foreclosures are expected to exceed 8.1 million over the next four years!!!! It also notes that Congress was hoping to help 400,000 homeowners through its latest program, “Hope for Homeowners”, but only 357 have applied for the program to date.

Sounds like one of the pillars we discussed yesterday on this blog is still not being secured!!! Unless action is taken, we will see the Red Plague sweep the homeowners and consumers downriver, like the banks and Wall Street firms were washed away this past year.

Unfortunately, the free market and refinancing will not solve the liquidity crunch paralyzing the homeowner/consumer pillar and the small business pillar.

Some insight and real hope are desperately needed. And fast!

The following was written by a friend. I thought it unfortunately appropriate for this holiday…………

Christmas eve… All the presents are wrapped and hidden from the kids. All, meaning one for each kid. For me, I hope I do not get anything. Not that I do not want anything, but because I know the money would be better spent on food or gas or books for the kids over the next week or two.

This is the first Christmas without money, without credit, without cash…. It feels horrible. I know we are not alone. That helps a bit, but still…. It is Christmas, a time for gifts and joy.

Holiday sales are a great opportunity to buy some gifts, but only if I had spare money. The money I have I need for food and necessities, not toys and games and things to throw away. As I look through our local paper this morning, I see many advertisements for 50% to 75% off. So what…. Even if it were 90% off, I would not buy do to the reasons noted above. Yeh, they can give it to me for free, but I am not a charity case, just someone impacted by the economic collapse of 2008 and the credit crunch.

I am sure tomorrow will be filled with joy and Love. The kids will really appreciate the few gifts they receive. Maybe even more than in past years, as they now understand how tight the money is.

We do have much to be thankful for, and that is really what we will focus on… Fortunately, good health, smart and good kids, a regular paycheck (though it is way too small), and health insurance…. plus much more, I am sure.

It has been a very different holiday season, and tomorrow will be a very different Christmas. It is all part of life. Struggles, success, failure, agony, money, no money, abundance and famine, etc… I am hopeful for the future, not necessarily tomorrow, but maybe the proverbial “day after tomorrow”. We can only be hopeful, and also thankful…..

God bless.

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The biggest banks that have received the biggest free giveaway of American taxpayers’ wealth, are now stealing the life blood of every household and the economy and our government is either blessing the theft or ignoring it.  The Red Plague of losses, illiquidity and falling values and prices continues.

Traditionally, interest rates on credit cards were competitive and set based on one’s credit ability, payment history, and market rates.  Today, credit card companies are bumping their rates up to 30+% because they want to.  This is in the face of the 10 year Treasury bond below 3% and the billions in free dollars they have received to stimulate the economy from our dear Uncle Sam.

At these rates, the amounts due will double over less than 3 years. These rates are userious, abusive and immoral.  But, Mz. Nancy and Mr. B Frank ignore the issue.  This is an issue that can not be ignored.

If outragious mortgages are reset, foreclosures abayed, and homeprices attempted to be stabilized to protect the American citizens’ balance sheets and financial solvency, the system will collapse around the explodign levels of consumer debt.

The average American with outstanding balances will get eaten in userious rates and ensuing fees.  Bankruptcy and further financial chaos of the American financial system, banks, Wall Street and Main Street can not be too much further behind.

God help America from the Death Wish of America’s Financial System and Greed (and the Blindness and Ignorance of the regulators tasked with protecting us)!!!!

The biggest banks that have received the biggest free giveaway of American taxpayers’ wealth, are now stealing the life blood of every household and the economy and our government is either blessing the theft or ignoring it.  The Red Plague of losses, illiquidity and falling values and prices continues.

Traditionally, interest rates on credit cards were competitive and set based on one’s credit ability, payment history, and market rates.  Today, credit card companies are bumping their rates up to 30+% because they want to.  This is in the face of the 10 year Treasury bond below 3% and the billions in free dollars they have received to stimulate the economy from our dear Uncle Sam.

At these rates, the amounts due will double over less than 3 years. These rates are userious, abusive and immoral.  But, Mz. Nancy and Mr. B Frank ignore the issue.  This is an issue that can not be ignored.

If outragious mortgages are reset, foreclosures abayed, and homeprices attempted to be stabilized to protect the American citizens’ balance sheets and financial solvency, the system will collapse around the explodign levels of consumer debt.

The average American with outstanding balances will get eaten in userious rates and ensuing fees.  Bankruptcy and further financial chaos of the American financial system, banks, Wall Street and Main Street can not be too much further behind.

God help America from the Death Wish of America’s Financial System and Greed (and the Blindness and Ignorance of the regulators tasked with protecting us)!!!!

The news is that half a million Americans lost their jobs in November and more than 1.9 million jobs have been lost since the start of chaotic 2008!!!!  The worst news though is that many, many of those who are still employed are on commission, or paid based on business volumes or other variable payments.  Their incomes generally are down significantly, extremely down!

Thus, the wammy is significantly worse than the statistics show.  Not only is unemployment skyrocketing with no end in sight, but average household income levels are dropping even faster and further!

The incoming Obama administration is talking about new infrastructure projects to create 2.5 million new jobs over the next 24 months.  Lead economists say that we need more like 5 million more jobs.  I say we need 5 million new jobs, but not necessarily in building, bridge and airport construction.  I am sure there are many construction and engineering workers out of work, but equally as many bankers, realtors, mortgage people, and other sales and service and skilled manufacturing people.  I am not clear on how new bridge projects, bigger and better airports and improved school buildings will help these folks.

If the thought is that all will benefit from the “trickle down effect”, we have much to pray for!

What are your thoughts??

Remember hearing that our brains have 100 billion neurons when we are born, and that with every glass of wine or cigarette we kill 10,000?  Didn’t 100 billion sound like an amazing amount?  I always wondered how I could have 100 billion connections inside my little brain……

I just participated in a discussion with a leading neurologist who cited the 100 billion number.  The first thought that came to my mind when I heard him say it, was “huh, 100 billion is not so much.”  I then thought, if 100 billion is not so many, what would be an amazing number?  700 billion, 800 billion, 1 trillion??????????

When our dear Uncle Sam can throw around 35 billion $, or 350 billion $, or 700 billion $, or another 800 billion $, is it really not such an amazing number?

How our perspectives have changed!!!! When 100 billion is no longer an impressively large number, and our US deficit for 2009 may well be $2 trillion!!!

The markets today gave up all their gains of last week!  Though the Black Friday numbers were much better than expected, the economic numbers regarding economic activity and future activity were horrendous.

The official group that announces recessions, announced today that the recession started December 2007.  Brilliant!!! It took them 12 months to figure it out???  Just look at any economic indicator and it is abundantly clear!

But, now that we are officially in a recession, it will either good worse or get better.  Its like alcoholism.  To be treated, first you must acknowledge the problem.  But, of course, it is not that simple.

Typically the Fed will lower rates and the lower cost of funds will encourage lending and capital investment.  The lower rates would also boost home prices through more affordable mortgages and refinancings.  This time, banks are not lending, companies cutting back on investing, and people generally unable to refinance due to the significantly reduced values of homes!  What’s Mr. Bernacke to do?

He will continue to reduce rates and flood the channels with money.

There is an old saying “Don’t fight the Fed.”  That is definitely going to be the case.  The question is how soon?

The reduced rates will ultimately make stocks more attractive.  The government bailouts, forced refinancing, numerous programs, etc.  will make things look better.  People will start feeling a bit better.  But, not until some more pain is incurred and fear speads like the Red Plague……

So, it can go lower.  It can go much lower.  It likely will retest lows over the next few weeks and then rally through inaugeration.  From there, it is the new administration’s problem, and ours………………

Leave it to Donald trump to come up with a unique reason why HE does not need to stand behind a $40 million personal guarantee made to Deutsche Bank regarding HIS hotel in Chicago.  He has claimed that the “force majeure” clause has become effective due to the economic chaos and world financial crisis.

Normally force majeure refers to catastrophic events, natural disasters, war and acts of G-d.

Fortunately the courts have rejected his absurd claim.  Unfortunately they did not penalize him for adding to the economic and financia chaos!