[jficquette]

I hope his girlfriend is good looking.

John

[jficquette]

I hope his girlfriend is good looking.

John

[jficquette]

I hope his girlfriend is good looking.

John

[jficquette]

There is no one to buy it right now. That is why the Fed and European Banks stepped in. Banks were afraid to loan to each other because they were concerned about solvency of the other Bank. I mean they know how messed up their stuff is. The top 5 banks own 97% of this stuff in some way or the other. Either outright or have invested or sold a derivtive associated with this.

I have no idea how it all works nor when or even if anything will happen.

John

[jficquette]

Great post!

His buddies are worried about having to mark the stuff to market. If they had to then a lot of jobs would be lost on Wall Street and of course that is all they are concerned with. The entire market cap of Goldman Sachs is around $90 billion. That’s peanuts compared to trillions of dollars in derivatives tied to the debt.

They were afraid that the debt would be downgraded so that they would have to dump it into a market where 20% is all they could get. It would set off a chain of events that no one can truly predict.

A lot as happened since early August. The main thing is the Fed started taking this stuff as collateral at face value. I think this was done to generate a commerical tranaction that would allow these firms to keep the debt on their books at face value thereby avoiding an event significant enough to bring the house down.

The problem is the downgrade threat. That will only get worst over the next few months do to the ARM resets.

A major downgrade of the debt enough to cause billions to be dumped would probably set it off.

John

[jficquette]

He didn’t know. He said something would have to set it off.

John

[jficquette]

Before I left Atlanta in mid August I was fortunate to meet a young guy in his mid 30’s who is really sharp. He has a MBA and Law degree from Harvard. After a brief stint in Law he when to Goldman Sachs and worked a structured finance desk. That is the desk that does all of these derivatives and other funny bunny deals. After he left Goldman he went to JP Morgan where he also worked a structured finance area but had people under him.

After he left JP Morgan he bought the distributorship rights to some then obscure Rum that is now very popular. He sold the rights for about $30million a few years later.

So here is a super bright guy with more accomplishments in his short life then most would ever accomplish in 10 life times and he is telling me that his buddies on the trading desks at Goldman and JPMorgan are scared to death because the structured finance products they have pushed have no bid and are estimated to be worth maybe 10-20 cents on the dollar.

We are talking trillions of dollars of these products. He told me it was going to be the biggest disaster we have ever seen. He is planning on buying up debt after it implodes for around 10 cents on the dollar. The retail public is not privy to participating in it. He is doing through his contracts on Wall Street.

Its one thing to read, and hear these things from people on TV but to here it from a guy who REALLY knows was unnerving to stay the least.

Bernanke is not stupid. He knows what he did was wrong for the long term. The only conclusion I can make is there is something big and bad out there that no one really understands and Bernanke is afraid enough of the short term to do what he did.

It’s like watching a Hurricane come in off the Gulf.

John

[jficquette]

You need bigger wine glasses! LOL.

John

[jficquette]

I use to have a job in Accounting. I also passed the CPA exam some years ago. For some years I owned a headhunter agency placing accountants.

I have always wanted to get into the Mortgage business because I knew that if someone would do it right that they could make tons of money off of referrals. I would always push the best loan no matter what the commission structure would be. Why put someone in a bad loan?

I never put anyone in a bad job and I never sent a bad candidate out to interview with one of my Clients.

If anyone knows of anyone interested in hiring someone without experience in mortgages then I would love to hear about it. I understand it will be a few years before I could make any money but I don’t care. I think I could do a good job when the market comes back.

John

[jficquette]

Great post!

[jficquette]

After a credit bubble pops there won’t be any more bubbles for a long time.

Can’t have bubbles unless credit is accommodating.

John

[jficquette]

You wouldn’t have as stock market unless the street was guaranteed a profit.

The steet hires the best and brighest and invests billions in infrastructure. You wouldn’t do that unless you knew you would make money. Otherwise you might as well take the money and open a casino.

John

[jficquette]

As we all know, misrepresenting information on a mortgage loan application is a federal offense.

It will not be hard for mortgage companies to figure out that a person calling in for loan modification lied about income etc if they look for it.

This is why any loan bailout is problematic because the vast majority of these people in trouble broke federal law with misrepresentations of income etc.

How can this be overlooked?

John

[jficquette]

Good Luck!!

John

[jficquette]

If you can get a condo or single family home cheap enough then it can work. I think that the people who got into rentals 20 years ago are the ones that are setting pretty because the units were bought so much cheaply.

As far as return on investment is concerned I tend to look at it in terms of revenue vs risk. While you only put down 10% cash you have the $270k additional in debt that you owe.

You will also be paying interest on the debt and probably at a higher rate then 5%.

John

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