United States Heading towards a Depression?

What happens when you run your company through the dirt acting like your some sort of hedge fund? Receive a hefty severance package paid for by the US taxpayer.

Your welcome, assholes.

---

Dear Hank Paulson, CEO American Sovereign Wealth Fund:

What the hell are you doing going in at the preferred level? That is absurd you should have stuck to the bond level if anything.

Sincerely,
the fleeced and defrauded taxpayer.

 

The bailout protects the preferred stock?

I thought that would happen. The big banks have billions in preferred stock. It looks like Paulson is a front for the FED. The FED wanted to do this on their own but it was too high profile.

Is LEH next?

 

I would cut those companies off, and let them go the way of the dinosaur.

So what if there's a period of harsh reality? It's ripping a band-aid off. Air out the wound, let it heal, and in ten years we won't be thinking about them anymore.

 

WaMu is down 21.8% today -- $3.35 a share.

Another bailout?

 

Senior preferred to be exact, but yes. There are also warrants to buy up to 79.9% of common stock. FNM and FRE preferred got beat up pretty good today too. Kind of a nutty day.

The press release states:

That is a never ending hole to keep these entities at a positive net worth. Personally I believe it will cost a lot because I see a lot more deterioration coming.

The press release goes on to also state that:

There was nothing ambiguous about the prospectus for the debt, it clearly states in huge, bold font word for word:

From another press release; "STATEMENT OF FHFA DIRECTOR JAMES B. LOCKHART" (http://www.treasury.gov/press/releases/reports/fhfa_statement_090708hp1128.pdf):

While in the other from Paulson (http://www.treasury.gov/press/releases/hp1129.htm) it states:

So modest is $20 billion / month for about 16 months. Could potentially be $320 billion for just some modest growth, lol.

Conservatorship is considered an "event of default" and will trigger something like $1.5 trillion in CDS. With the entities keeping a positive net worth there will be no loses, but this is a huge unwinding for a new structure. Hopefully these idiots can take care of it and not mess it up like they do everything else.

As far as LEH and WM, I am pretty certain they are toast, I have been certain since about January. Toast as far as common shareholders are concerned.

edit: I hope you all think it is safe out there now with the government controlling a massive chunk of the mortgage market. The have an uncanny ability to run things like social security, welfare, budgets, healthcare, etc. This is not good for housing, ugh.

Some stuff I quoted:

Statement by Secretary Henry M. Paulson, Jr. . . .
STATEMENT OF FHFA DIRECTOR JAMES B. LOCKHART
FACT SHEET: GSE MORTGAGE BACKED SECURITIES PURCHASE PROGRAM
FACT SHEET: GOVERNMENT SPONSORED ENTERPRISE CREDIT FACILITY

 

why can't they let them collapse? Then the market will pick up the loans at a bargain price.

 

The market will pick them up at a bargain, because they are nearly if not completely worthless.

Unfortunately, the people who stand to lose on the deal are Wall Street, the Bankers and the Government, which survives on Chinese credit, and those interests supercede the interests of the rank and file citizenry. So the institution that is supposed to protect the individual (government) will be a tool to rape the individual on behalf of corporate financial interests and foreign governments. Nice hunh?

All that this is doing, is prolonging, and delaying the pain, allowing more malinvestment to accumulate. When the bubble bursts, and I mean the debt and credit fiat money bubble, it is going out with a bang, not a whimper.

And now for some depressing commentary....


Jim Rogers: US 'More Communist Than China'

Jim would know, he's been living in Asia for some time now, raising his daughter to speak Chinese.

Conversation between Bill Anderson and Michael Rozeff

Freddie, Fannie, and the Underlying Problem
Posted by Bill Anderson at September 8, 2008 01:16 PM

There is an underlying issue that I have not seen discussed much in the aftermath of the Feddie and Fannie show, and it is this: Why should mortgage securities be backing up much of Wall Street? For that matter, why do securities for student loans continue to appear?

Do not the brokerage houses and investment banks have better investments than mortgages, and especially sub-prime mortgages? Is the U.S. economy so unproductive that the banks and brokers turn to mortgages and student loans? Just wondering.

The demand for MBS
Posted by Michael S. Rozeff at September 8, 2008 01:30 PM

Good question, Bill. Why the big demand for mortgage-backed securities (MBS)? Several reasons for that. (1) There is a huge amount of pension money out there looking for investment vehicles. (2) They tend to go 50-50 stocks and bonds. With stocks high and not doing so well for the past 8 years, they are quite happy to find something that yields 6%, like a mortgage security. (3) F&F made guarantees on many of these securities. (4) The MBS securities were often packaged up in tranches to satisfy different risk appetites of various investors. This broadened the market considerably. (5) The market went international. (6) The pension fund industry has serious agency problems. The management is often removed several steps from the investor, with a company plan in between. Thus, they do not do the due diligence they should. (7) A well-oiled machine developed for placing these issues.


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The US deficit is way up due to the stimilius checks and bailouts. The US has already covered 11 failed banks and an out of control deficit could cause a dollar collapse.

The Freddie/Fannie bailout is going to be a lot worse than the 100 billion predicted.

 

The deficit is also up to pay for the war. The Iraq/Afghan wars, and the foreign debt load and inflation they are creating, will ultimately be the nail in the coffin.

A productive country of savers, might be able to weather war inflation. A debt ridden service economy on the ropes cannot. Not when the wars are no closer to being over than when they started 7 years ago. If the 70s were to pay for Vietnam, then the next decade or two might have to pay for this round of war profiteering and adventurism.

 

Bogart: You see those drops in LEH and WM today? It is laughable the way these guys have driven themselves through the dirt.

It felt like yesterday when I was cursing at LEH and they were worth about $40 / share. They can't raise capital via equity no more, that will be certain death. They are big, but no big enough for the govt to worry about most likely. I don't know if they'll fail or not, it looks 50/50. I stopped concerning myself with them when I got out of my positions around $15.

I kind of hope they do fail because I predicted that 2 big financials would fail and someone on here got on my ass about it. I count Bear as one, they would've failed sans Communism.

 

smatts, check out Bunning's comments on Bloomberg.

http://bloomberg.com/apps/news?pid=20601087&sid=alpUsTv3.upI&refer=home

Lotsa good quotes in that article

~

 

Haha. Bunning is awesome. I'm sure Paulson can't wait to get the hell out of DC, it is probably everything he never suspected.

 

LEHMAN TO ANNOUNCE Q3 RESULTS ON SEPT 10 ; TO DISCLOSE KEY STRATEGIC INITIATIVES AND DISCUSS OUTLOOK ON CONFERENCE CALL
- Lehman will release its earnings at 7:30 AM EDT and the conference call will begin at 8:00 AM

If you want to listen to the call:

- A conference call to discuss the Firm's expected financial results, outlook and strategy will be held at 8:00 a.m. ET that day.
- The call will be open to the public.
- Members of the public who would like to access the conference call should dial 800-369-1721 (domestic) or 517-308-9232 (international) at least ten minutes prior to the start of the conference call.
- The pass code for all callers is 7561430.

I hear Nigerians are almost interested in investing in LEH.

 

BTW, who here is still holding on to their $950 /oz gold?

 

I normally try and not mess with that damn rock.

 

It seemed like there were 3 people on this thread who invested heavily in gold and now where is the talk about gold being the financial savior?

 

Buffett is tightening its insurance for bank deposits back to the FDIC limit. He may see a bunch of bank failures coming soon.

I think people are stupid for investing in something like gold that has no real value. You can't eat it, burn it for energy, etc. These people should just get some BAC CDs and get out of the way before they are blown out of the water investing in some shinny rock.

And:

WaMu's CDS spreads surge to record high-Phoenix

This may be the first time I've seen CDS referred to in percentage terms, it is normally just bp! lol.

 

It looks like MaMU is going to fail. Can't be long before there is a bank run. The stock is down to $2.35 a share

LH is buying some time with selling of it's assests. But soon they will be broke and without assests.

LH is the 4th largest investment bank and WM is the largest US thrift.

Mortagage securities are now selling at a 30% discount. The largest discount sinnce the Great Depression.

 

One has to wonder why WaMu keeps sending me letters daily asking me to spend spend spend on my lines of credit with them, of which I owe ZERO!!!

Strange world.

 

Because YOU pay your bills.

They want many of us bill payers to borrow right now, it will balance out some of the non-payers.