Current Financial Mess 22

[cjd97]

I thought that a group of Engineers would be the perfect audiance to ask the question......Is this financial crisis being talked about on TV for real? What do you guys think?

A large part of me doesn't feel sorry for people who bit off more than they could chew with their mortgage. I also don't feel sorry for the banks who wrote the bad mortgage. I personally think we should let the banks fail, let the people lose their houses, and get back to the old times of actually sharing risk when lending/borrowing money, ie having 20% down to buy a home.

Kind of a side note, with everyone supposedly losing their homes and the banks not being able to liquedate them, where does the PMI insurance come into play? I would assume these folks are paying PMI if they are "subprime" loan canidates. Isn't PMI designed for situation such as this?

Just wondering your thoughts.

 

[BigInch]

And oil isn't always a victim of politics. During the coldest parts of the cold war, the one thing that kept flowing was oil. As long as the supply stays above the demand, politics hasn't entered into the flowrate equation, the price equation yes, ... well except for the OPEC embargo of the 70's... and when the US decides they don't need oil from Libiya, Iraq or Iran, but that's more of a "reverse political" driver. Even still, the black market takes over in those cases.

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[miningman]

Interesting change in how this thread evolved.... housing prices.... crooked lawyers / bankers..chinese / canadian perspectives.

As a Canadian working in the mining industry, I developed the opinion back in April that the Chinese phenomenon was unsustainable ,probably post olympics , and that recent sky high metal prices would correct, since china seems to be the main demand centre recently. Minor concerns in the USA at the time suggested that if the US consumer did slow down his spending, this would result in less Chinese goods finding their way to Walmart which would contribute to an overall Chinese slow down which would exacerbate the drop in metal prices which would then cause the Canadian $$ to suffer. I liquidated a lot of my stock market nvestments, bought Pounds and Euros.

Turns out I was right but for all the wrong reasons... I never considered housing at all... and some of the bonds I bought might be at risk. AIG ring a bell?? And the Pound has not been a sterling choice either.

Have some knowledge of the Alberta Oil sand business amd cant see that slowing down dramatically if oil is $65+. Some slow down would be welcome anyway to control construction costs and social problems in Fort Mac.

Anyone care to comment further. If I end up being proven correct, what happens when China collapses, metal prices drop to say 50% of present levels... probabably taking oil with them.

 

[TheTick]

U.S. politics does not fully explain the banking crises in Great Britain and France.

 

[BigInch]

Well Tick, it kinda does, since the banks going bust in the EU have been primairly those that were buying up the packaged BS that NYNY was unloading on them. "Buyer beware" is no excuse for not taking the blame though and they deserve much fault of their own for buying those packages without kicking the tires first as NYNY does for packaging them up. Unfortunately the US financial industry is turning out to be about as conscientious as the Chinese milk manufacturers.

Miningman,
I think a good part of the recent FX declines are from US and Russian companies/govs pulling foreign currency reserves and cash assets back to CYA as much as possible in the home countries and the Soverign funds in the mideast increasing their own market liquidities. Just a guess as I've no inside tracks in that business. As a mining man, I'm surprized you didn't buy gold, although that has suffered some recently as well, it might be the best bet in the long run, if you get my drift. I'm about ready to try some of that. Any ideas there?

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[ctopher]

German bank:

http://afp.google.com/article/ALeqM5gnwGl7boOibV72BKczAraZk1KmEg

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[BigInch]

Yes, either directly as in the case of UBS losses(if not mistaken), or indirectly by the resulting credit squeeze in the above case.

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[TheTick]

Hey, the Chinese milk manufacturers are blameless. Cows just aren't that crafty. As always, blame the middlemen.

 

[ctopher]

-John Paul Getty: "If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem."

-Einstein dies and goes to heaven only to be informed that his room is not yet ready. "I hope you will not mind waiting in a dormitory. We are very sorry, but it's the best we can do and you will have to share the room with others" he is told by the doorman.
Einstein says that this is no problem at all and that there is no need to make such a great fuss. So the doorman leads him to the dorm. They enter and Albert is introduced to all of the present inhabitants. "See, Here is your first room mate. He has an IQ of 180!"
"Why that's wonderful!" Says Albert. "We can discuss mathematics!"
"And here is your second room mate. His IQ is 150!"
"Why that's wonderful!" Says Albert. "We can discuss physics!"
"And here is your third room mate. His IQ is 100!"
"That Wonderful! We can discuss the latest plays at the theater!"
Just then another man moves out to capture Albert's hand and shake it. "I'm your last room mate and I'm sorry, but my IQ is only 80."
Albert smiles back at him and says, "So, where do you think interest rates are headed?"

-If you want a guarantee, buy a toaster.
Clint Eastwood

-Yesterday is not ours to recover, but tomorrow is ours to win or lose.
Lyndon B. Johnson

-Economists have forecasted 9 out of the last 5 recessions

-An economist is someone who gets rich explaining others why they are poor.

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[IRstuff]

The Chinese have ALWAYS understood the value of money. There's a Chinese saying that they taught the *** everything the *** know about money.

Nonetheless, the perfectness and egality of Chinese communism is a myth. The poorest city dweller was often substantially better off than the farmers, even though there was much lip-service given to the notion that the farmers were the backbone of the country. The typical city dweller today makes easily 10 times more than the farmer.

The Chinese nouveau riche drive BMWs, MBs, etc., and live the life of the decadent bourgeoisie, while the farmers literally slave for dollars a day, hardly the Marxian communist utopia. Not only that, there are now Chinese working for Western companies stationed in China, making American salaries, and are able to buy mansions, filled with servants, etc.; great stuff for class conflicts, isn't it? Google China was offering a certain person I know $100K+ plus car/driver for a position in Beijing.

TTFN

FAQ731-376

 

[BigInch]

I didn't mean to imply Chinese communism was perfect, only that it was implemented as completely as it was practical to do so.

Value of money. Exactly what I mean. They have always known the value of money, hence that was not the reason they allowed capitalism to infiltrate the system. If they always knew that, they would have rejected communism much earlier. Allowing your example salaries to flourish under the new system and the potential class conflicts that could arise even makes it more dangerous for them to permit even small capitalistic colonies to exist, which only increases my suspicions as to why they do allow its existance.

My question to you and/or other's still remains, do you think that there is a possibility that the Chinese deliberately changed their system to gear up to "wage economic warefare" on the west? If not, what other reason do you think might have encouraged them to change their system in such a radical manner? Especially given their apparent previous disregard for the actual conditions of their working class up to now. Did all of a sudden, that become the impetus? Possibly, but not likely ... IMO.







"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[miningman]

And the thread continues to evolve. Biginch, yes I am a believer in gold and continue to hold positions in senior producers and mutual funds. However bullion prices are most certainly not behaving as they should be in these times of economic turmoil. And I dont know why. What I do know is that the cost of producing an ounce continues to skyrocket. If you think capex costs in the oilsands business are escalating, you aint seen anything untill you look at mining costs. Operational costs are rising due to labour, fuel, transpotation, environmental and regulatory costs and capex is escalating due to all the above plus cement, steel etc etc. Most people... and EPCM contractors / consultants continue to underbudget these costs... $500 million doesnt go very far these days and many of the resouces / reserves are optimistic. Bankers have a right to feel nervous lending to the junior companies.

 

[BigInch]

Quite the contrary. I do believe your cost projections.

It seems nothing is behaving in the classical manner these days. That's what has me really worried. When things don't behave in the manner that they should, I have generally found they eventually tend to whip back in the right direction, then even overshoot the mark they should have been heading towards originally. And that's with physics Mother Nature at the helm. With the lemmings in charge, this overshoot could merit a lunar landing, or a hole in the dirt deeper than either of us has ever seen.

Optimistic? I suppose then you must be talking to the same geologists as I. They used to predict 60 MMSCFD and we would get 10 MM/D for 1 month, then 30,000 SCFD thereafter. Of course that company was in bankruptcy for close to 15 years (a record I believe) before they were finally forced to close. They were the undoing of the Bank of Illinois and had Vatican lawyers that were actually certified in reviving the dead.

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[BigInch]

... gold being lower than expected would indicate that liquidity is being valued even greater than gold ... for the presnt.

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[stanier]

Perhaps the Chinese have realised that now everyone has 1, 2 or 3 each of $10 steaming irons, $20 microwave ovens and other cheap items. So demand will slow. Even if the quality isnt top notch these products do last. I have every power tool there is and they cost 10% or less of a real one. I am not a tradesman so they do a job without blowing up. If they do I can buy another for a few bucks.

All those resources have been converted into household goods and find there way to our scrap heaps.

Technology is losing the race. There is not longer the churn for new products except for mobile phones and plasma TVs. Cars, kitchen electrical goods and tools are built to higher standards and are lasting longer. No need to replace.

Chinese, Indian, Russian and Brazilian tiger economies will suffer. Tighter econominc outlook in the USA will drive down demand as people can accept what they have rather than wanting more and more ematerial possessions.

The saving grace will be population increase, immigration and the desire for a higher standard of living in the countries that manufacture these goods. The challenge is that the USA doesnt have a command at the table of the local economies of the manufacturers that are near to developing there own markets. Being less than democratic these countries can elect to keep the USA out.

Yes I believe there is a conspiracy or two. But which one do you gamble on winning? Hold on to your tiger.

The countries are also too big to go to war with as they have huge populations.

 

[IRstuff]

Being less than democratic these countries can elect to keep the USA out

They could, but they don't. Oddly, the modern Chinese think that Buicks are great cars...

TTFN

FAQ731-376

 

[stanier]

IRstuff,

They do now when they are riding the crest of a wave. But my point is in the future, when the foreign currency dries up, government introduce tariffs and begins to look inwardly. Gas guzzling Buicks will be cheaper than a chook raffle ticket in the public bar.

One thing happens when you have been around for a few decades is that you realise it is true that "everything changes but everything remains the same". We have seen recessions , 19% mortgage interest rates, large oligarchies changing tack in foreign and economic policy, stockmarket corrections/collapses, wars etc etc before.

I liken the current market carryings on to an unstable control loop. The primary element step change is outside the control algorithm designer's parameters. The system is out of control and the controller does not know where it is going to end up. We have reset windup.

 

[dvd]

Fire Bush today. Move the election up to next week and the inauguration to the following week. Don't let the guy screw up anything else!

 

[BigInch]

Do we need an election still? Can't we just go with the odds on this one?

http://www.oddschecker.com/specials...dential-election-2008/to-be-elected-president

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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[zdas04]

Any enlightment on how to read the odds on that page BigInch? Looks like gibberish to me.

David

 

[BigInch]

Current Odd posting at time of this response reads,

Bookie A B C D E
Dem Victory 1/6 1/5 1/5 3/14 2/9
Rep Victory 7/2 3 29/9 4 39/10

Bookie A pays $1 for every $6 you bet on a Democratic victory and/or will pay $7 for every $2 bet on a Rep victory. Bookie A hence would require you to risk a $6000 bet, if you want to try to win $1000 on a Dem victory. In which case he'd pay you back your original 6000 + another 1000, but would keep all your $6000 bet, if you got it wrong and the Republicans won.

Click on the "1/6" under BET365, a new page opens. Enter your bet and see your potential winnings, if the democrats win. Enter $ 1000 for a bet and see your potential winnings are $ 166.67 so total payback would be $1166.67, a $ 166.67 net.

So the money is saying the Republicans are pretty much wasting your time at this point. Before Palin and the Crisis reared their heads, the Democratic odds were only running around 5 to 4.

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
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