american casino

thanks for the link kurt!

who’s he talkin’ bout?

the bureaucrats in washington that created too-big-to-fail or the populist uprising against bailout-pa-looza?

Capitalism in Crisis

Excerpt from wsj article:

Lending borrowed capital — the essence of banking — is risky. That risk is amplified when interest rates are very low, as they were in the early 2000s because of a mistaken decision made by the Federal Reserve under Alan Greenspan to force interest rates down and keep them down. Because houses are bought with debt (for example, an 80% first mortgage on a house), low interest rates spur demand for houses. And because the housing stock is so durable a surge in demand increases not only housing starts but also the prices of existing houses. When people saw house prices rising — and were assured by officials and other experts that they were rising because of favorable “fundamentals” — Americans decided that houses were a great investment, and so demand and prices kept on rising.

http://online.wsj.com/article/SB124165301306893763.html

hedge fund manager bill ackman breaks it down

charlie rose continues to tackle the credit crisis on his show…came across this clip on ‘the big picture’ blog. big take away is that the credit rating agencies that gave Fannie/Freddie/AIG AAA rating we’re one of the central causes of collapse.

more about "hedge fund manager bill ackman breaks…", posted with vodpod

ron paul on aig : even warren buffett didn’t understand these derivatives

ron paul on recent aig collapse. even fox news seems to be taking ron paul seriously.

fannie & freddie mac go down

10 billion dollar tax payer bailout coming….wonder if china will keep covering our debt?

great related article from business week

http://www.businessweek.com/magazine/content/08_37/b4099087568542.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

dr. doom

here’s a video of economist nouriel roubini on cnbc talking about the coming american consumer debt crisis (consumer debt = student loans, credit card debt, pay day loans);whom i wrote about yesterday.

http://www.cnbc.com/id/15840232?video=812261135

sub prime financial system

here’s an interesting ny times article about an economist that predicted the current mortgage/housing crisis. he has a pretty gloomy outlook on the future of the america’s financial system.

excerpt:

“For months Roubini has been arguing that the true cost of the housing crisis will not be a mere $300 billion — the amount allowed for by the housing legislation sponsored by Representative Barney Frank and Senator Christopher Dodd — but something between a trillion and a trillion and a half dollars. But most important, in Roubini’s opinion, is to realize that the problem is deeper than the housing crisis. “Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

Roubini argues that most of the losses from this bad debt have yet to be written off, and the toll from bad commercial real estate loans alone may help send hundreds of local banks into the arms of the Federal Deposit Insurance Corporation. “A good third of the regional banks won’t make it,” he predicted. In turn, these bailouts will add hundreds of billions of dollars to an already gargantuan federal debt, and someone, somewhere, is going to have to finance that debt, along with all the other debt accumulated by consumers and corporations. “Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.”

The United States, Roubini went on, will likely muddle through the crisis but will emerge from it a different nation, with a different place in the world. “Once you run current-account deficits, you depend on the kindness of strangers,” he said, pausing to let out a resigned sigh. “This might be the beginning of the end of the American empire.”
http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=1&scp=1&sq=dr%20doom&st=cse&oref=slogin

nouriel roubini’s blog http://www.rgemonitor.com/blog/roubini

great explanation of fannie mae / freddie mac

done by a friend of mine.

http://mortgagerateupdate.blogspot.com/2008/07/fannie-mae-freddie-mac-who-are-they-and.html