[LA_Renter]

My understanding is that the primary reason the Fed stepped in late last week was because, given the amount of bad paper out there, the banks no longer trust each other and are pricing in a risk of bankruptcy when they loan each other money, so the overnight funds rate shot up to 6% where the Fed has it targeted to 5.25%. After the FED injected liquidity the overnight rate came back down to in between 5 and 5.25. They targeted MBS because that is the source of the problem. As we go into Monday if the Asian markets act unsettled and that spreads to Europe and the overnight rates jumps back above 5.25% many people speculate the FED will forgo any additional liquidity injections and call an emergency meeting. The consensus is that if the FED lowers it will more than likely be 50 basis points with another 25 to 50 basis points in Sept. IMO if you see that happen in the face of a structurally weak dollar that means the situation is very grave. Here is a quote from Doug Noland concerning the severe state of the credit markets on a post I made last week

“I apologize for appearing overly dramatic. But this evening I have nagging feelings that for me recall the disturbing emotions following the terrible 9/11 tragedy. I know the world has changed and changed for the worse – yet I recognize that I don’t know how and to what extent”

Interesting that Europe, Japan, and the US all injected liquidity at the same time this week, the last time that happened was after 9/11. IMO everybody should be paying very very close attention to this.

[LA_Renter]

Xbox, I guess “pawn broker” would be the best analogy. After all of this I wonder if these guys are going to come out and say “Subprime is Contained” LOL. In all the chaos something that got overlooked is that the Freddie / Fannie bailout story got the ax today.

“U.S. agency rejects Fannie Mae’s request for larger loan portfolio”

http://www.marketwatch.com/news/story/us-agency-rejects-fannie-maes/story.aspx?guid=%7B4E09B47F%2DBE57%2D438D%2D8673%2D3EC59DAE0DF2%7D&dist=TQP_Mod_mktwN

I would say that overall we are in a huge mess. There is still possibly hundreds of billions of dollars of paper sitting out there that is actually worth zero. You are going to see alot more of FED band aids and gauze and body cast….etc over the next few months. Surprisingly the dollar held up today (well it didn’t fall from its record low level) but don’t count on that continuing. All of this could lead us down the path of a dollar crisis. IMHO.

[LA_Renter]

Xbox, I guess “pawn broker” would be the best analogy. After all of this I wonder if these guys are going to come out and say “Subprime is Contained” LOL. In all the chaos something that got overlooked is that the Freddie / Fannie bailout story got the ax today.

“U.S. agency rejects Fannie Mae’s request for larger loan portfolio”

http://www.marketwatch.com/news/story/us-agency-rejects-fannie-maes/story.aspx?guid=%7B4E09B47F%2DBE57%2D438D%2D8673%2D3EC59DAE0DF2%7D&dist=TQP_Mod_mktwN

I would say that overall we are in a huge mess. There is still possibly hundreds of billions of dollars of paper sitting out there that is actually worth zero. You are going to see alot more of FED band aids and gauze and body cast….etc over the next few months. Surprisingly the dollar held up today (well it didn’t fall from its record low level) but don’t count on that continuing. All of this could lead us down the path of a dollar crisis. IMHO.

[LA_Renter]

Xbox, I guess “pawn broker” would be the best analogy. After all of this I wonder if these guys are going to come out and say “Subprime is Contained” LOL. In all the chaos something that got overlooked is that the Freddie / Fannie bailout story got the ax today.

“U.S. agency rejects Fannie Mae’s request for larger loan portfolio”

http://www.marketwatch.com/news/story/us-agency-rejects-fannie-maes/story.aspx?guid=%7B4E09B47F%2DBE57%2D438D%2D8673%2D3EC59DAE0DF2%7D&dist=TQP_Mod_mktwN

I would say that overall we are in a huge mess. There is still possibly hundreds of billions of dollars of paper sitting out there that is actually worth zero. You are going to see alot more of FED band aids and gauze and body cast….etc over the next few months. Surprisingly the dollar held up today (well it didn’t fall from its record low level) but don’t count on that continuing. All of this could lead us down the path of a dollar crisis. IMHO.

[LA_Renter]

Interesting day wouldn’t you say. So the FED will open the credit window. Two injections today. We have found a buyer for the mortgage backed securities….great! You would think the market would jump for joy but so far that isn’t happening. If you want to know how serious this is, the last time Japan, Europe, and the US all injected liquidity at the same time was after 9/11. From my view the FED is not inspiring confidence. They appear to stumbling along not really knowing what to do. And they also look like they are being bullied by Wall Street. I don’t like it! We are in an environment where there is no margin for error and I have a feeling these guys are going to error. My real worry is a dollar crisis and they are taking baby steps into that scenario right now.

[LA_Renter]

Interesting day wouldn’t you say. So the FED will open the credit window. Two injections today. We have found a buyer for the mortgage backed securities….great! You would think the market would jump for joy but so far that isn’t happening. If you want to know how serious this is, the last time Japan, Europe, and the US all injected liquidity at the same time was after 9/11. From my view the FED is not inspiring confidence. They appear to stumbling along not really knowing what to do. And they also look like they are being bullied by Wall Street. I don’t like it! We are in an environment where there is no margin for error and I have a feeling these guys are going to error. My real worry is a dollar crisis and they are taking baby steps into that scenario right now.

[LA_Renter]

Interesting day wouldn’t you say. So the FED will open the credit window. Two injections today. We have found a buyer for the mortgage backed securities….great! You would think the market would jump for joy but so far that isn’t happening. If you want to know how serious this is, the last time Japan, Europe, and the US all injected liquidity at the same time was after 9/11. From my view the FED is not inspiring confidence. They appear to stumbling along not really knowing what to do. And they also look like they are being bullied by Wall Street. I don’t like it! We are in an environment where there is no margin for error and I have a feeling these guys are going to error. My real worry is a dollar crisis and they are taking baby steps into that scenario right now.

[LA_Renter]

Didn’t these guys just come out and say they have a bunch of cash and could weather the storm??? Now they say their future is uncertain! Sometimes the market will shake these things off but this one is a whopper if they get into real trouble. I don’t know how it will finish but the Nikkei is down over 400 right now. This is getting ugly.

[LA_Renter]

Didn’t these guys just come out and say they have a bunch of cash and could weather the storm??? Now they say their future is uncertain! Sometimes the market will shake these things off but this one is a whopper if they get into real trouble. I don’t know how it will finish but the Nikkei is down over 400 right now. This is getting ugly.

[LA_Renter]

Didn’t these guys just come out and say they have a bunch of cash and could weather the storm??? Now they say their future is uncertain! Sometimes the market will shake these things off but this one is a whopper if they get into real trouble. I don’t know how it will finish but the Nikkei is down over 400 right now. This is getting ugly.

[LA_Renter]

Looks like everything is getting back to normal and the credit crisis is behind us, Boy I’m glad because it looked a little scary there….NOT. This thing ain’t over, there is a whole bunch of bad paper out there that has not been realized. This is a market where you see shorts gather and just get clobbered, did you see HB’s and lenders today….Man there are ouches going there, same thing happened last year about this time with the HBs, this year the financials are included in the mix. I anticipate some wild trading days ahead in the next couple of months. The next downside will be with the midmonth hedge fund marks coming out on Aug. 15. I have a feeling it will be ugly. You have some big players out there looking at big losses and they are going to throw everything and the kitchen sink to minimize those losses.

[LA_Renter]

Looks like everything is getting back to normal and the credit crisis is behind us, Boy I’m glad because it looked a little scary there….NOT. This thing ain’t over, there is a whole bunch of bad paper out there that has not been realized. This is a market where you see shorts gather and just get clobbered, did you see HB’s and lenders today….Man there are ouches going there, same thing happened last year about this time with the HBs, this year the financials are included in the mix. I anticipate some wild trading days ahead in the next couple of months. The next downside will be with the midmonth hedge fund marks coming out on Aug. 15. I have a feeling it will be ugly. You have some big players out there looking at big losses and they are going to throw everything and the kitchen sink to minimize those losses.

[LA_Renter]

Looks like everything is getting back to normal and the credit crisis is behind us, Boy I’m glad because it looked a little scary there….NOT. This thing ain’t over, there is a whole bunch of bad paper out there that has not been realized. This is a market where you see shorts gather and just get clobbered, did you see HB’s and lenders today….Man there are ouches going there, same thing happened last year about this time with the HBs, this year the financials are included in the mix. I anticipate some wild trading days ahead in the next couple of months. The next downside will be with the midmonth hedge fund marks coming out on Aug. 15. I have a feeling it will be ugly. You have some big players out there looking at big losses and they are going to throw everything and the kitchen sink to minimize those losses.

[LA_Renter]

HLS,

I see your point and don’t doubt that but here is what I am paying attention to, it’s the tone of the boards of being shell shocked that was not present before the last few weeks. To me that is a barometer of what is going on out there. Of course loans are not going to dry up completely but from my view it does appear that this is a very very different environment. I mean if you can only give loans to people that can actually afford them it will pretty much tank the California market don’t you think. 🙂

[LA_Renter]

HLS,

I see your point and don’t doubt that but here is what I am paying attention to, it’s the tone of the boards of being shell shocked that was not present before the last few weeks. To me that is a barometer of what is going on out there. Of course loans are not going to dry up completely but from my view it does appear that this is a very very different environment. I mean if you can only give loans to people that can actually afford them it will pretty much tank the California market don’t you think. 🙂

[Author]

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