Here is why the real estate bubble is about to hit a shock wave...

[whistle]

...Bear Stearns, a leading sub prime lender which poured billions of dollars of mortgage-backed securities and collateralized debt obligations into hedge funds it controlled, by mid-Summer 2007, saw those hedge funds blow up. Merrill Lynch, which had loaned one of the funds some considerable amount, seized the hedge fund and tried to sell some of the fund's securities that had been pledged as collateral. Merrill Lynch found it could only get 50 cents on the dollar of face value of the fund securities, so it stopped the sale.

The implications of this failed sale have been enormous. It revealed publicly that the official valuations of the securities were completely fictitious. All of the efforts since that event by the Federal Reserve to infuse hundreds of billions of dollars of new credit into these mortgage and debt based funds with more debt and made up fictitious assets, will do nothing to stop the real problem which is that the U.S. economy is in decline.

The scramble to cash in on ever expanding leveraged profits by hedge fund managers and large mortgage banking concerns is now known for the fraud that it is. So a stock market crash is all but certain now.
:hide: :yoiks:

[jaksavage]

1. Can it get worse?

Gas might go to $5 sooner than later
dollar is falling on world markets

Yes , much worse.

[whistle]

8. I believe that also, because 17 days ago I gassed up at my local station

....for $2.589 per gallon for regular and last evening when I filled up it was $2.699. But when I drove past the station today at 11:30 am they had again raised the price to $2.789 per gallon for regular. Also, groceries continue to jump by 10% to 20% for basic items every week that I go shopping.

[lonestarnot]

68. Same lovely experience here, and PSA prices may vary by location.

Ewwwwwwwwwwwwwww we in for it now. :scared:

[FogerRox]

12. Yeah right....

All/Most Bush Policies need a 180 degree course turn at this point.

We have to build factory capacity for Solar (PV), same for wind turbines.

The Long term outlook on Global Warming and Peak Oil can make me shudder % shake.

[BootinUp]

2. Thanks for the cheery report!

you bastid!

;)

[whistle]

3. Well, spit on the messenger but is this not what is happening?

[BootinUp]

13. Sarcasm was intended but less than

adequately communicated, my apologies.

Sure, it sounds on point to me.

[whistle]

46. No problem, I would like to see the democrats push change of direction

...for the country both now in congress even though not much will happen, but then push hard in 2008 for a clean sweep to regain the White House and majority in both bodies of U.S. Congress. Economic change plus restore constitutional rights.

[BootinUp]

63. I have high hopes

for after the 2008 elections, not too much till then. But the Dems must push their ideals as much as possible, agreed.

[TalkingDog]

35. Your utterly snarky sarcasm was not lost on me.

I chuckled.



My Favorite Master Artist: Karen Parker GhostWoman Studios

[gratuitous]

4. Gee, overrich speculators getting shafted?

Clearly this calls for federal intervention! Rich people aren't supposed to lose money in the free market; that's just for the suckers.

[EVDebs]

30. Newspaper and worthless currency make great insulation eom

[Hydra]

5. This is just the warning bell

All that money "lost" and not replaced by the fed and the bankers is going to strangle most of us.

Expect unemployment in the 10-20% range once the real trouble starts.

[Manifestor_of_Light]

42. I thought REAL unemployment was already that high.

I don't believe guvmint statistics.

[defendandprotect]

43. Right -- basis of the statistics has been changed to such a large degree --

[whistle]

48. Basis changed and falsified or dropped totally

[whistle]

47. Real unemployment rate is at least 2 times the official rate plus

...when under-employment is factored in the country has the equivalent of 25% or more below true labor production potential

[defendandprotect]

58. Didn't they also take the military out of it? And, unemployed now only 6 months -- !!!

[Quantess]

6. The lack of regulations encouraged reckless lending policies.

It was a competition of who could be the greediest, with no thought of the consequences.

[Hydra]

7. Oh, I think this was quite deliberate

Watch "Money as Debt" if you haven't. Loans = money, therefore, the money has basically stopped flowing.

Those loans didn't cost the lenders anything- they spun it out of air.

You don't get a stupid mark to sign away 30 years of his labor to stop just 2 years in.

[whistle]

9. If you have the link for that video, please post it here, I watched that several

...weeks back and it addresses this situation very nicely.

[Hydra]

10. here:

http://video.google.com/url?docid=-9050474362583451279&esrc=sr1&ev=v&len=2827&q=money%2Bas%2Bdebt&srcurl=http%3A%2F%2Fvideo.google.com%2Fvideoplay%3Fdocid%3D-9050474362583451279&vidurl=%2Fvideoplay%3Fdocid%3D-9050474362583451279%26q%3Dmoney%2Bas%2Bdebt%26total%3D1151%26start%3D0%26num%3D10%26so%3D0%26type%3Dsearch%26plindex%3D0&usg=AL29H20Bb5dzie8BYEU53yWGswQHtKmlGA

Must watch for anyone who wanting to know why this mortgage crisis could sink us all.

[whistle]

11. Did you see the number of posts you just had with this link?

...Not a good sign :hurts:

[Hydra]

20. Hahaha!

:evilgrin:

If I have to be evil to beat the evil ones, then just call me EBIL!

[Roland99]

69. wow...well...call me ignorant no longer.

[redqueen]

16. You're damned right it's deliberate.

I wish more people would wake up to this crap.

[Quantess]

21. Do you think they deliberately wanted to casuse market collapse?

Or was it that they just didn't care, and wanted to rake $$$ in while they had their chance?

[redqueen]

23. They want the collapse.

It's like shearing sheep. The sheep lose their investments, and the shearers buy up the spoils at fire-sale prices.

It's happened before. Wish we'd learn from history...

[whistle]

49. LIHOP and MIHOP both on the economy

[formercia]

24. After the market hits bottom

The boys will buy the real property with phoney money for pennies on the phony dollar.

[defendandprotect]

45. Not unlike the S&L theft and embezzlements -- they STEAL/you PAY ---

But, first, they had to remove the regulations --
then the scam begins --

[whistle]

50. Right October 1987 just twenty short years ago, one generation

[formercia]

64. Bush Gang involved too

Silverado.....

Same game, new generation.

[EVDebs]

31. Year of Jubilee as in Leviticus 25 ? Can it happen ? nt

[formercia]

14. Derivatives

playing Russian Roulette with a full cylinder....

http://www.kitco.com/ind/Laird/sep062007.html

Will Derivatives Wipe Out Some Currencies?


By Chris Laird Printer Friendly Version
Sep 6 2007 10:26AM


www.prudentsquirrel.com

Over the last several years, there has been a lot of discussion about the size of the derivatives market, and how much it has grown since 1990. That market was around $20 trillion in size in ‘90, and now is estimated by the BIS to exceed $600 trillion world wide.

Given that amount is 10 or 12 times the entire world GDP of roughly $50 trillion a year, this amount of derivatives is just astounding. The fact is that world currencies are threatened if these go sour. We will get into this in a moment. First, let us discuss some derivative basics.

Derivatives proponents (brokers and bankers) have previously stated that the actual value of derivatives is a fraction of the actual total size, and that all the worry is overblown. The total size is called the ‘notional amount’. For example, if we decided to make a contract on the price of gold for 100 ounces, (a private futures contract between us) the notional amount would be 100 times the price of gold. If the price of gold rose $1, the value of that contract would be $100, but the notional amount is $68,000 (680*100). Derivatives proponents state the cry about the incredible notional amounts is over done, and try to get us to focus on the smaller ‘value’ amounts and not to worry.

Oh yes, we should worry!

Well, the fact is, when we hear of derivatives in $600 trillion amounts, the TRUTH is that this is the actual leverage out, and when values change, the value of the contract varies greatly - according to all that leverage. Notional amount is the actual amount being bet on, pure and simple. The de emphasis of gigantic notional amounts is mere smoke screen.

We have already seen what happened with the US mortgage derivatives, and how trouble in the subprime CDOs, SIVs, etc, spilled into other credit markets and caused panic and threatened systemic banking crises in the EU, US, and Canada. Right now, those central banks are vigorously trying to stem a meltdown in the money markets, as corporate paper (short term money for banks and companies) has pretty much stopped rolling over. The lenders in that market are afraid if they roll the paper over, they will be stuck with loans to companies banks and institutions who are hiding huge derivatives losses. If they roll over the paper (extend) then, if these borrowers go bankrupt, their CP becomes endangered.

--snip--

[whistle]

51. Yes, the brain child of Alan Greenspan and that bastard bailed out

...only two years ago so someone else can take the fall. History will not be kind to Greenspan for saddling the country with these highly speculative financial instruments

[madokie]

15. when it crumbles will I still have a morgage, a home

or will I be forced to leave, now I'm getting scared and I'm pretty much fearless

[whistle]

52. If you have income and a steady job, hopefully yes, but too many Americans are only one or two

...paychecks away from financial disaster and still others can not weather a long term slowdown as savings shrink or get wiped out by a market collapse.

[redqueen]

17. Here's a story about evictions

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2981589


Are you ready for a party, USians?

Hah... four minutes after I put this link here, it shows up on the home page. :blush:

[Robbien]

18. But notice that the media keeps blaming it all on the poor sub-prime householders

Don't look at hedges

Place all the blame and scorn on the people who took out subprime loans.

Nice that the media helps hide the real culprits who have set up over three Trillion of funny money hedge funds.

[Lone_Star_Dem]

19. That's because those subprime loan holders are not uber rich

They have no real clout as far as the media is concerned. Heck, they're not going to have any extra cash for newspapers or cable. Let alone the fact that they won't be able to support the advertisers. They're useless in the grand scheme of things now.

They're lower than scum in the eyes of our modern media.

[SoCalDem]

28. This stuff happens every genberation or so.. Gotta milk the cow

:(

[whistle]

53. Scapegoating the helpless and powerless

[KansDem]

22. Now, I'm not an economic wizard, but...

...tried to sell some of the fund's securities that had been pledged as collateral.

Is this legal? I mean, can you sell something that you put up as collateral to secure a loan? Doesn't that "collateral" essentially belong to the one who loaned the money?

[Lone_Star_Dem]

25. I would imagine you'd have to have the full money to replace the collateral

Just like when you sell a house, business, car or whatever. You'll have to pay it off before it is transfered to a new owner.

[napi21]

44. I don't know what kind of collateral you are referring to , but any

and "secured" loan that I know of, the lender places a lein, or holds the collateral until the loan is repaid. If the lender didn't do that in this case, I would think that was the lender's stupidity, and he better hope you just pay off the loan!

[whistle]

54. That would result in a loan default unless the collateral sale is used

...to buy down the loan

[flyarm]

26. k&r...everyone should read this!

sure am glad hubby and i threw away credit cards years ago and pay cash for everything..and have paid off mortgages!!..wow..

but i am going to start putting money in coffee cans i think!!

fly

[NMDemDist2]

27. i have mine in a fire proof safe, but if the inflation keeps up we'll need

wheelbarrows to carry enough cash for a gallon of milk

:cry:

[flyarm]

32. no sheeet..groceries are going through the roof..

my kids are raised but i really don't know how a family of even 4 is making it today..the groceries for just my hubby and i have gone through the roof..

next year i am scrapping the flowers and planting veggies!

my heart breaks for young families right now..so much is going to the shitter in this country..

but don't worry we have the bogeyman playing on cable 24 /7.........

don't pay attention that the dow is in the crapper..and people are losing homes..the bogeyman is back..


Bloomberg wants Gore..he knows damn well that he is our only chance and choice..

Bloomberg is too smart to not know the current field is a damn joke!..we need a real president with real credentials..Bloomberg knows Gore is going to run..he damn well knows it..and i have said it for a long time..the only way Bloomberg runs is if he can not talk Gore into running..and that $500million that was bantered about that Bloomberg could spend to run..Bloomberg will find a way to get it to Gore..or he will call in all his stock boys to fund Gore..Gore will have not one problem getting the $$$$$$$$

not a problem!


THINK ABOUT IT..AMEX IS WORKING WITH GORE FOR GLOBAL WARMING..SO IS LEXUS..and those are just two off the top of my head..

they know and they know he is the only choice..

we need a real President..this country is broken in every way..financally..our military is broken..our banks are broken..our roads and security are broken , our borders are broken..we are facing deep shit..

and we better get somebody real..who knows what the f to do! and can get the co-operation to get it done..we are all going to have to sacrafice!..and we need someone to rally us all to do it!

just my 2 cents!

fly

[NMDemDist2]

33. flowers vs veggies

that's what I'm doing

my Xmas list has canning equipment on it.....

Gore PleasePleasePleasePleasePleasePleasePleasePleasevPleasePleasePleasePlease

[OrangeCountyDemocrat]

37. October 15 - October 31

This is when Mr. Gore MUST announce he is a candidate.

It will be After the Nobel Peace Prize winner is announced, so he won't have to worry about being any influence on that process.

I find it interesting that he has several appearances scheduled in the first 2 weeks of October, but none after Thursday October 11. He even cancelled a previously scheduled appearance for Friday 10/12, which is the day the NPP winner is announced.

If he's not in the race by November 1, I don't think there is much hope he'll run, and we're going to be stuck with Hillary as our candidate. Whether we like it or not.

[whistle]

55. He might

[defendandprotect]

59. Probably needs separate thread . . .. but Asparagus from Peru, Oranges from South Africa --

and now $1 more on gas for the last two years -- ???
That's a lot of transportation $ --
They've been assessing extra freight rates for gasoline for quite some time --

Of course it's corruption -- and Bushco -- and we should have a WINDFALL profits tax on the oil industry -- Exxon Mobil $36 BILLION last year -- ???

However, we're dragging food from all over the nation -- and outside of it -- !!!
And, Global Warming is already affecting produce --

Stick with veggies/fruits and avoid animals/dairy if you can -- healthier for you and planet --

[EVDebs]

29. So this is why stock markets are now in single-story buildings eom

[LSK]

34. K&R

[whistle]

56. Thanks, this has to get spread so people know what is happening

[stillcool]

36. where is all this money going?

is there even a way to 'follow it'..or is it just an eraser for some accountants?

[kineneb]

40. there was no money... all smoke and mirrors

back in the 1920s they called it buying on margin, now money is "created" by loans

best explanation is the video mentioned above and stuff by Max Keiser

http://www.youtube.com/maxkeiser

[stillcool]

66. thanks.....

[chill_wind]

38. K&R n/t

[whistle]

57. Thanks spread the message

[earth mom]

39. Last month, our mortgage company went bankrupt and transferred our loan to another company.

Of course, they didn't tell us they went bankrupt, they just said they were "closing" the business. So, naturally, I did an internet search and found out the actual truth.

While we don't have an adjustable rate, all the same it makes me VERY uneasy. :(

[TahitiNut]

41. I gotta wonder what's happening in M3 ... Repos

Sorta handy that the Fed stopped reporting M3/Repos in March of last year. I wonder how the whole loan repos are doing.
:eyes:

[defendandprotect]

61. HOW do they get away with this --- ????

You know, like the Bush "signing statements" ---

Congress is supposed to ensure that the legislation they pass is carried out with the spirt and intent which Congress intended . . . .

So much of this couldn't be going on if there was any resistance at all -- !!!

[mitchtv]

60. I don't understand it..

with all the forclosures and all in my county (one of the highest around) real estate prices are still rising, slower but the direction is up. what gives?

[defendandprotect]

62. Some very well to do communities -- and buyers/sellers -- are still able to get mortages . . . ?

Wealthy public continues to be optimistic -- ?????

[shireen]

65. median home prices are rising, just an illusion

Homes in lower tier pricing ranges are not selling. The statistics are based on homes that sold, and right now, mostly mid-level and high-level pricing homes are selling. That skews the median and mean towards higher values, giving the illusion of home prices rising.

Housing prices also vary significantly across the country based on local economic conditions so national stats can be misleading. The really significant indicator of the housing crisis is the ratio of sold vs. active listings for any given time period. I've been house-hunting for more than a year, and been watching the listings. Homes are on the market longer than this time last year. Prices are falling, but still not enough to be affordable.

To keep up with reality realty, check out http://drhousingbubble.blogspot.com/

[mitchtv]

72. Thanks, both these posts answering my query

fit this area to "T", in fact there is little in the lower price categories and more wealthy people and Tourists etc.

[JNelson6563]

67. Great thread DUers!

Lots of info posted along with the OP. It's threads like this that make DU a valuable source of info.

Thanks all! :hi:

Julie

[John Q. Citizen]

70. Could explain the large "puts" on the markets reported a while back.

[flashl]

71. The utterly surreal part in all of this is there is a new cottage industry created

Some of the same people to received commissions locking subprime mortgages into "pre-payment" penalties are now foreclosure or lost specialist who get commissions to "help" distressed homeowners.

Let me say it again. Folks dropped/laid off from places like Countrywide who sold these mortgages are now newly hired lost/foreclosure specialists still getting $$$ in commission to negotiate on behalf of institutions and individuals.

Can you imagine, being twice victimized by the same person?