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alstry (35.49)

Alstry's Thesis is Simple

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August 24, 2009 – Comments (9)

Credit Default Swaps incentivized the banks to write bad loans.

The Fed was aware of this...

Between 2002 and 2008...probably 80% of current outstanding debt was issued infecting our nation with a debt load that simply can't be paid back.

The Fed is aware of this.....

As are result of an inability to service debt, America's economy is suffocating and shutting down

The Fed understands this.....

Alstry has written thousands of blogs and comments documenting the shutting down of America and the fallout from credit default swaps

The Fed already had this data

Instead of restructuring the debt to eliminate most of the toxic loans, the Fed chose only to bail out the banks who created the problem in the first place leaving the massive debt load to economically destroy our cities, schools, states, hospitals, families, and business.

It appears this was the Fed's goal either intentionally or recklessly.

After all the lessons learned, banks are starting to underwrite billions of junk loans again further infecting our nation with more toxic debt

The Fed seems to be cheering this on by comission or omission

If nothing is done to stop this behavior, of allowing banks to profit from destroying the American economy, soon there will be no economy.

MAYBE THIS IS THE FED'S GOAL?

9 Comments – Post Your Own

#1) On August 24, 2009 at 8:39 AM, alstry (35.49) wrote:

Reader's Digest Association Inc. said Monday that it has filed for prearranged Chapter 11 bankruptcy protection as part of its restructuring plan.

The privately held publisher of the popular monthly magazine and dozens of other titles said the filing only affects its U.S. operations.

The publisher has struggled with a heavy debt load since Ripplewood Holdings LLC, a New York private equity firm, led a consortium of investors in a $1.6 billion buyout of the company in 2007.

DO YOU THINK MONEY WAS ISSUEING,  SELLING THE LOAN, AND WRITING AND/OR BUYING SWAPS ON THIS ONCE ICONIC COMPANY?

This deal could have gone either way, the banks could have refinanced the debt or let the company go bankrupt, depending which side of the deal was better for the holders of the swaps.

In the end, we infected a company with too much debt and bankrupted it.

In the end, the holders of the debt are left out in the cold....can anyone say pension funds?  and now stories are breaking how people were bribed to place debt like this into our pension funds.

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#2) On August 24, 2009 at 8:42 AM, alstry (35.49) wrote:

NEW YORK (Reuters) - Goldman Sachs Group Inc (NYSE:GS - News) holds a weekly meeting of its research analysts where they offer trading ideas that are given to top clients, the Wall Street Journal reported on its website on Sunday.

But the paper cited Steven Strongin, Goldman's stock research chief, as saying these meetings did not give anyone an unfair advantage and the tips did not contradict research notes that carry predictions over a longer term.

Goldman's analysts talk about short-term developments around specific stocks during the meeting, called a "trading huddle," which is also attended by some of the firm's own traders, the Journal reported.

The practice started some two years ago, and since then the Wall Street firm has given ideas on hundreds of stocks, the Journal reported, citing internal Goldman documents.

DO YOU THINK GS KNOWS WHICH DEBT WILL BE REFINANCED AND WHICH WILL NOT?

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#3) On August 24, 2009 at 8:46 AM, alstry (35.49) wrote:

NEW YORK (MarketWatch) -- Russian oil giant  said Monday that it has raised a $1.2 billion syndicated loan from a group of banks that will be used for "general corporate purposes, the refinancing of the current financial debt and for the funding of oil export operations." The three-year loan is secured by proceeds from oil export contracts. The interest rate is the London interbank offered rate, known as Libor, plus 4% per annum, the company sad in a statement.

If there were SWAPS out on the preexisting debt, they just got wiped out...and a bunch of money was made on the new debt.....who cares if the company ever makes a profit....a ton is being made on the debt.

 

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#4) On August 24, 2009 at 8:52 AM, alstry (35.49) wrote:

From Vermont to California, exhausted but appreciative car dealers watched their lots grow empty as crowds rushed to trade in gas guzzlers during the final weekend of the popular Cash for Clunkers program.

You think a bunch of subprime debt was manufactured on this program just ripe to be packaged and sold to our pension funds....then the fun begins with the swaps.

It is really not important if the debt ever gets paid off...but you know who will get the blame.

Soon you too will realize our entire economy as driven by the creation of debt....not the soundness of business.  And now that we have created so much debt, there will not be much of an economy left.

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#5) On August 24, 2009 at 9:11 AM, alstry (35.49) wrote:

As a result of being infected with too much debt, what used to be profits are now interest payments and tax revenues are evaporating.

Any profits the banks would have made are being offset by defaulting debt allowing the banks to stay open but not earn much.  However, Wall Street banks are quietly being given trillions of dollars of US treasuries offset by all of the assets in America.

What Americans don't realize.....yet.....is America's debt is our debt.  But soon all will when Benny the B wants to be paid on his treasuries as the FED is a private entity owned by its member banks.

The Administration quickly and fairly quietly raised its budget deficit forecast  for the next ten years to $9 trillion from $7.1 trillion, an astonishing 27% increase.

The new estimate is much closer to the number that the Congressional Budget Office posted earlier this year.

$2 trillion HIGHER in a few months?

I WOULD BE VERY QUIET TOO......IMAGINE WHAT HAPPENS WHEN THE RICH FIND OUT THEY ARE GOING TO HAVE TO PAY BACK A $20 TRILLION DOLLAR DEBT?

Nobody is that rich and the banks will want to be paid...one way or another.

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#6) On August 24, 2009 at 9:30 AM, alstry (35.49) wrote:

THE HOMELESS MUST LIVE SOMEWHERE.....

Pedro Hernandez said he's lived in the well-maintained pink Victorian at 13th and C streets for more than half of his 71 years.

This weekend, Sacramento's latest version of tent city bloomed just beyond his backyard fence. About 35 homeless people are now living in a vacant lot owned by Mark Merin, a prominent attorney who has championed their cause.

Hernandez said Sunday that his new neighbors have made him "stressed sick" and kept him up at night with noise, prompting him to file a complaint with police. "I am an old man," he said.

He and his wife have diabetes, high blood pressure and heart problems, he said.

http://www.sacbee.com/topstories/story/2133395.html

As more and more lose their jobs, many will have no place to go....until one day, many of us could be living next to tent cities.

THIS IS WHAT HAPPENS WHEN YOU INCENTIVIZE THE BANKS TO MAKE BAD LOANS AND THE LOANS INFECT OUR ENTIRE ECONOMY.

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#7) On August 24, 2009 at 9:46 AM, biotechmgr (56.07) wrote:

It is hard for most to grasp the underlying decay of the situation, especially as social mood is rising as shown by rebounding stock prices. But the problems have not been unwound. Philly is threatening 3000 public worker layoffs, one of the next waves to come as states and municipalities go broke.

It is going to get bad. I hope not Argentina bad, but the Fed doubling down on the debt problem has raised this risk.

 Mid-Sept top in US stocks with Wave 3 down to follow and extinguish the optimism.

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#8) On August 24, 2009 at 9:50 AM, alstry (35.49) wrote:

DON'T SAY ALSTRY DIDN'T WARN YOU.....

GMU economist Arnold Kling looks down the road and wonders how America is going to deal with its epic mountain of debt:

Other countries that have defaulted have not had the option of enacting wealth taxes. When you are in a banana republic with shaky government finances and you have a lot of wealth, you send that wealth over to the United States, where your government cannot get to it. That "safe haven" motive is what keeps the dollar so strong. Anyway, by the time the banana republic gets around to enacting a wealth tax, all the wealth has fled the country and there is nothing left to tax. So the banana republic defaults.

As the U.S. government's finances deteriorate, it will strengthen its hold on its citizens' wealth. My guess is that you will see tighter laws that restrict your ability to hide wealth overseas and much more enforcement of those laws.

WE AS AMERICANS ARE ALL COLLECTIVELY AND INDIVIDUALLY RESPONSIBLE FOR OUR NATIONS DEBT......AND THE BANKERS WILL WANT TO GET PAID.

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#9) On August 24, 2009 at 10:20 AM, alstry (35.49) wrote:

ALSTRY WAS TOO OPTIMISTIC

“The worst of the fearmongers–once deemed irresponsible and panicked by much of the markets–have been proved to have not been fearful enough.

…

“Except this time the toxic mortgages aren’t fancy at all. They’re regular old prime mortgages. That’s right. Last quarter, prime mortgages accounted for 58% of foreclosures. And among theose prime mortgages in foreclosure, the largest segment–32%–was composed of fixed-rate mortgages.

“… This puts fixed-rate, prime mortgages close to where subprime adjustable rate mortgages were a year ago. Of course, the overall level of prime mortgage foreclosures is still far lower than subprime foreclosures. Just 9% of prime loans are in foreclosure, versus 39.5% of subprime loans. Both rates are still climbing.

“To put this slightly differently, the serious deliquencies on prime mortgages now stand where subprime were back in the third quarter of 2007. By that point we were well into what was then quaintly known as the ‘subprime crisis.’ So it’s fair to say we’re now experiencing a prime crisis.”

http://www.businessinsider.com/its-time-to-stop-calling-it-a-subprime-mortgage-crisis-2009-8

IT APPEARS SUBPRIME WAS NEVER CONTAINED...

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