Batten Down the Hatches, the Financial Hurricane's On Its Way

[El Pinko]

http://seekingalpha.com/article/64588-batten-down-the-hatches-the-financial-hurricane-s-on-its-way?


Batten Down the Hatches, the Financial Hurricane's On Its Way

As in a horror movie , just as you thought things could not get worse.. a more sinister and dangerous situation was brought out this week.

....

A domino effect of defaults will occur up the line on various corporations, universities, county governments or unknown others counting on that claim as part of their hedge.

The problem is based on credibility, counter party risk and liquidity. The current situation we are in is that investors as well as financial institutions do not trust their counterparties. Due to this fear, liquidity is impaired. More so, the next domino falls when counterparties suddenly decide to pull financing due to balance sheet constraints. More of a liquidity squeeze.

....

Batten down the hatches... The winds of an upcoming financial hurricane seem to be picking up.

[BeHereNow]

1. Damn straight "batten down the hatches..." INDEED.

It's gonna get worse before it gets even worse.
BHN

[donheld]

2. Who the hell is that in the picture?

[BeHereNow]

3. ME!

:evilgrin: :rofl: :rofl: :rofl: :rofl:
BHN

[El Pinko]

4. That would be "Bubbles" from the classic Canadian Comedy "Trailer Park Boys"

NT

[Arctic Dave]

5. Stop!

I am just as concerned as the next person about our economical dilemma we seem to have found ourselves in, but what I'm seeing now looks like a bunch of crazed rabbits spooked by every story that comes out. I think we need to take a two second breather and get a hold of our selfs. Yes, things are not ideal, but we don't need to make rash judgments. I say this only because after reading Shock Doctrine; bad decisions can be made "during times of shock, either real or imagined".
Yes, I do believe this is a play to get us to panic and have us fall into their trap. I will agree it does sound a bit tinfoil hatish but I just don't have a lot of faith in the powers that be anymore.

[El Pinko]

6. And what trap would that be?

Like someone might sell their home into this still grossly overvalued market and buy later when prices have reverted to long-term trend lines?

or someone might hold off on buying a home until the market corrects another 20-30%? (which it almost certainly will in the bubble areas)


There are far worse traps to fall into...

[Arctic Dave]

9. ?

I think your missing my overall statement. That is, take a second to think the of big picture. In our media induced panic we are stting our selfs up for a bigger fall financialy and a socially if we freak out at every bad news bite that is thrown out. I am not saying anything about the ridiculous point that the markets were allowed to climb to.

[El Pinko]

11. Nobody should freak out, but they should act in accordance with reality.

The reality is that we won't see 2006 real estate prices again for many, many years.

[Arctic Dave]

15. Yes

You are correct about that.

[mysteryman2]

7. what

Is anybody talking in the debates. I think Hillary and Obama should talk about this. Who can balance the books better. I am Mexican. Many Mexicans are saying USA money looks more like toy money. It feels light and not the quality it used to be.

We know not to give republicans the check book.

[BeHereNow]

8. Welcome to DU- but don't hold your breath on Clinton or Obama fixing it!

Unfortunately, they are part of the machine that
got us where we are...
Again, Welcome.
BHN:hi:

[mysteryman2]

17. All these Rascists

Don't count on Obama winning. All these rascists out there rather vote for McCain. White power I am sure rather support McCain. I am Mexican it's my guess. Most of the Mexicans and Asians won't voter for Obama if given a choice. People were forced to go for Kerry instead of Dean. And everyone says Dean could of took Bush. A little scream changed it all. What if the republicans pay allot of money and pull something dumb like that again.

Not just anybody can beat McCain.

[mysteryman2]

10. Lucky Coin

You know what I would like a lucky coin. It may be superstition but other societies have created a lucky coins. Here is one they say is really lucky. The French Angel coin who an alchemist help create.

http://www.amergold.com/vault/20FrancGoldAngels.php


http://www.angelcoin.com/

http://www.luckymojo.com/goodluckcoins.html

does anybody need luck now. I would like something simular to the lucky pocket piece.

If the USA would create a lucky coin maybe it will help the economy. I know Napoleon belived in it.

[earth mom]

12. OMFG! "there are $45 trillion of credit default swaps out there"!!!

This BLOWS my mind:

The stock market shrugged off this issue possibly at least for now. However, there are $45 trillion of credit default swaps out there.

A default on even a small percentage of this $45 trillion could cause an economic disaster.

It is very hard to believe it can not happen. It is almost rather not if, but when.

45 TRILLION people! We are talking TRILLIONS OF DOLLARS here!

:wow:

[Karenina]

13. Yeah, they been cooking the books

like no tomorrow for decades. I've seen $405T in notional valuations for "derivatives" bandied about. Liquidity is not the issue, INSOLVENCY is the issue. A bloated banking industry, immune to oversight, rife with corruption, fraud and collusion is the issue. It's a total scam and DOES need to crash. Fasten your seatbelts and set phasers to stun! :silly:

[earth mom]

14. Meanwhile, the corporate media says "nothing to see here, move along".

:scared:

[jazzjunkysue]

16. I just dumped Countrywide's mortgage for Wachovia's: 30yr to 20 yr.

The payment is going up a whopping $50/month because I got it at %5.37, instead of the 6.9% I got this summer. Yes, it's fixed, but it's at the adjustable rate! Whe I retire in 8 years, I'll be $43K ahead! Yesss!

I guess it could go lower, but it's already up in the last 2 weeks. I caught it at the low.

It would be really scary if it went into the 4's. Hard to imagine.

So, lower interest rates are working for me. :)

[Yavin4]

18. THE Fundamental Difference Between The Bursting of the Tech Bubble vs. The Housing Bubble Is

Investor expectations. When people were buying up tech stocks in the 90s, there's a certain level of risk tolerance associated with that strategy. When people buy stocks in general, they know that they're taking on a greater risks.

However, when people bought these Asset Backed Securities, they felt that they were not taking on much risk because of the rising asset prices for housing. They did not perceive the same level of risk.

Psychologically, the investor burn from the fall out from the housing bubble is much deeper.