He's advising people to default on their loans, yet he doesn't mention any affect this might have on your credit rating.
The only way I'd think that would be a good idea is if you KNOW that you are likely to have to move soon due to a job transfer, etc. If you are staying put, it doesn't make sense to default and lose your way of life, IMO.
jo
-------------------- "Great Day for Up!"....Dr. Seuss Posts: 3387 | Registered: Mar 2006
| IP: Logged |
posted
Unfortunatley it does make sense. My friend got roped into one of those interest only loans. He put down 80g and to this date has 0 equity in his house and is paying a ridiculous amount on the balooned loan....
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
posted
i'm looking for under 13,000 (at least)....
IMO? nobody has really cacklacked in the cost of diverting corn to ethanol yet, so it could be as low as Rim predicted...
it's a bullet we have to bite, but it'll pay off in the long run... the "problem" is how congress has set up the "welfare" for the big agro-biz's... we'll see further consolidation of "small farms".... this will leave US with no more players in the fuel business than we had before, but we'll hopefully cut our oil imports in half....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
| IP: Logged |
posted
Spend the amount of one month's cost of Iraq on research and development of fuel cells, hydrogen storage, and hydrogen production via renewable energy and it will cut petroleum imports much much more....probably to zero.
We have more than sufficient petroleum and oil reserves to supply the chemical industries without importing any, so we won't suffer any deficiencies of polymers and such.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
| IP: Logged |
Posted on Thursday, August 2, 2007, 12:00AM Here's a fact: The speculators and hedge fund managers who run today's stock market need market volatility in order to make money.
They can't make enough money if the market stays flat or moves only a bit, so they like extreme and unexpected price movements. They especially like sudden, surprise movements down, when they can make money off stocks they borrow and sell -- or, as they say, "sell short."
Money Lust Satisfied
That's what's been happening the past couple of weeks. But it's not interesting to say that the speculators are whipping the market around to satisfy their money lust. So the speculators themselves make up reasons for why the market is fluctuating, flog those reasons to the media, and then profit if some other speculators believe the jive reasons and jump in the way the manipulators want them to.
Supposedly, the market is "correcting" because of worries about the housing slowdown, and also because of fears that the debt markets that support mergers and acquisitions is drying up.
These are interesting theories, and people who don't know a lot about the stock market or the economy might find them beguiling. What follows are a few truths that show how shallow these "reasons" for the stock market moves are.
Housing a Theory
Yes, the housing market has slowed from a spectacular bubble level to a simply pretty good level. Housing sales and starts are now about what they were in 2002, and no one thought we were in a housing depression then.
In any event, housing is only about 5 percent of the economy. If it falls by 15 percent, that would represent a fall-off of about .75 percent. That's not trivial, but it's also not the stuff of which recessions are made.
The fact is that there is no recession. The economy is suffering from a labor shortage, not a surplus of unemployment. The Fed is worried about excess demand, not slack demand.
Corporate profits set new records every day. Whatever's happening in residential sales and building is simply not slowing down the economy. Why should a Boeing or a Merck or a Pfizer have any reaction to housing at all? Because the speculators sell everything they can when nervousness sets in -- and for no other reason.
A Minor Major Mess
Subprime is a mess. But it's a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That's 4 percent of mortgages.
Of these, maybe half, or 2 percent, will go into foreclosure. There will be roughly 50 percent recovery on sale of these. This is a loss of 1 percent in the mortgage market -- a sum the lenders have already made many times over because of the hefty fees on those deals. In the context of the size of the U.S. financial sector, it's nothing.
And why should a crisis in subprime drive down stocks in Mexico and Thailand? Again, because the speculators seek to create panic to make money by selling short, and they sell short everything.
There's simply no connection between subprime and developed or developing nations' stocks. This by itself shows the thin context of the selling wave late last month.
Money's Still Cheap
What about the supposed drying up of loans for mergers and acquisitions by private equity firms? Well, here's a good, simple test of just how valid that explanation is for stock market moves: The majority of private equity takeovers are financed with junk debt.
If there really were a major shortage of funds for these deals, the interest rate on the junk would skyrocket. Instead, while the rate has risen by about 150 basis points in the past month, the spread between junk and investment grade is now about 290 basis points, according to leading junk analyst Martin Fridson.
This is a lot lower than the year-end average of the spread from 2002 to 2006, and far below the almost 800 basis point spread during a true interest-rate crunch like the one after the tech meltdown in 2000-2002.
So that's phony, too. Interest rates have risen, but not anything like what they've done in real crises. And besides, the Dow fell by about 550 points the week before last, yet not one of the Dow stocks is involved as either acquiror or acquiree in a private equity deal.
In short, money is no longer virtually free the way it was for private equity deals in the past year. But it's not expensive by historical standards, either.
Spreading the Fear
In other words, it's all the speculators trying to panic us so their sell programs will make money. And they'll make money as long as they can spread their panic. When they can't do that any longer, they'll work the long side -- and make up reasons for that, too.
In the meantime, the economy is strong. Profits are great, and interest rates are low and will stay that way. Don't sell. With all the shrieking about the market, it only fell to what it was about five weeks ago -- and we didn't think we were poor then.
So let the speculators shout "fire." As of right now, they're not blowing anything but smoke.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
posted
Subprime is a mess. But it's a small mess. Subprime mortgages account for roughly 20 percent of mortgages even in the most heavily exposed states. About 20 percent of them are delinquent in some way. That's 4 percent of mortgages.
they still haven't factored in REAL inflation and the cost of switching to ethanol yet...
all of these bogus inflation numbers are making the problem seem more minor than it really is...
corporate earnings are up, but they come from somewhere... (guess who? the middle class)
before long the mortgage woes will probably also include a significant portion of non-sub-prime mortgages...
and IMO the sub-prime problem will amount to well over 75% of the sub-prime market...
one of the reasons that the job market is not suffering from the construction slow-down is that the illegals fill a large portion of those jobes...
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
| IP: Logged |
posted
Fed Leaves Key Interest Rate Unchanged Tuesday August 7, 2:38 pm ET By Martin Crutsinger, AP Economics Writer Fed Leaves Key Interest Rate Unchanged; Concerns About Inflation Play Into Decision
WASHINGTON (AP) -- The Federal Reserve left a key interest rate unchanged on Tuesday as worries about inflation trumped concerns about turbulent financial markets. Fed Chairman Ben Bernanke and his colleagues voted unanimously to keep their target for the federal funds rate, the interest that banks charge each other, at 5.25 percent, where it has been for more than a year.
The Fed decision came after a volatile couple of weeks on Wall Street as investors have been beset by troubles in global credit markets stemming from a sharp rise in defaults on subprime mortgages.
In a brief statement, the Fed acknowledged the turbulence and said the downside risks to the economy had "increased somewhat."
But the Fed continued to state that the predominant risk remained that inflation "will fail to moderate as expected."
Many analysts believe the Fed will remain on hold through the rest of this year, preferring to watch and make sure that inflation moderates back to an acceptable level.
The Fed's statement was a disappointment to Wall Street, where investors had held out the hope that the ongoing problems in credit markets would prompt the Fed to send a signal that it was prepared to ease rates later this year if conditions worsened. In the first half hour of trading after the mid-afternoon announcement, the Dow Jones industrial average fell by 90 points.
Tuesday marked the ninth consecutive meeting where the Fed has left its key policy lever unchanged. The last rate move was a quarter-point increase, the 17th in a row, on June 29, 2006. That capped a two-year campaign that pushed the funds rate from a 46-year low of 1 percent to its current level in a bid to slow the economy enough to keep inflation under control.
The decision to leave rates unchanged means that banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain where it has been for the past year at 8.25 percent.
As it did at its June meeting, the central bank said that the readings on core inflation have improved modestly in recent months.
A key inflation gauge watched closely by the Fed which excludes food and energy was up 1.9 percent over the 12 months ending in June, putting it back within what is widely perceived as the Fed's comfort zone of 1 percent to 2 percent.
On the overall economy, the Fed noted the recent problems.
"Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing," the statement said.
But with all of these problems, the Fed repeated its belief from past statements that "the economy seems likely to continue to expand at a moderate pace over coming quarters." The statement said the U.S. economy would be supported by solid growth in employment and a "robust global economy."
The overall economy, after having slowed to a barely discernible growth rate of 0.6 percent in the first three months of this year, grew at a solid annual rate of 3.4 percent in the April-June period even though the slumping housing market continued to subtract from growth.
Economists expect continued troubles in housing and spreading problems with subprime mortgages and other loans acting to slow growth to a more moderate pace of around 2.5 percent in the final half of this year.
Growth at that pace would not be fast enough to keep the unemployment rate from rising. The government announced last week that the jobless rate in June rose to 4.6 percent, the highest level in six months, and many economists believe it will end the year up around 5 percent. That would still be relatively low by historical standards.
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
__________________________________________________ Dow Plunges More Than 200 Thursday August 9, 9:39 am ET By Tim Paradis, AP Business Writer Dow Industrials Plunge More Than 200 on Renewed Subprime Mortgage Concerns
NEW YORK (AP) -- Wall Street plunged in early trading today, yanking the Dow Jones industrials down more than 200 points after a French bank said it was freezing three securities funds that struggled to find liquidity in the U.S. subprime mortgage market. ADVERTISEMENT
A few minutes into the session, the Dow is down 217.70 at 13,440.16. The Nasdaq Compsosite is off 37.79 to 2,575.19 and the Standard & Poor's 500 index has falled 26.93 to 12,470.56.
The announcement by BNP Paribas raised the specter of a widening impact of U.S. credit market problems. The idea that anyone -- institutions, investors, companies, individuals -- can't get money when they need it unnerved a stock market that has suffered through weeks of intense volatility triggered by concerns about available credit.
A move by the European Central Bank to provide more cash to money markets intensified Wall Street's angst -- although the bank's loan of more than $130 billion in overnight funds to banks at a bargain rate of 4 percent was intended to calm investors, Wall Street saw the step as confirmation of the credit markets' problems.
Bonds rose sharply as investors again sought the relative safety of Treasurys, with the yield on the benchmark 10-year note falling to 4.78 percent from 4.89 percent late Wednesday. Bond prices move opposite yields.
Thursday's plunge continued an erratic pattern of triple-digit moves in the Dow for several weeks. There has been more panic and gambling in those moves rather than conviction -- even when the Dow has finished up more than 280 points in a session, those gains have evaporated at the first mention of trouble in housing, subprime lending or the credit markets
-------------------- "Simplicity is the ultimate sophistication" Posts: 4005 | From: Shaolin | Registered: Oct 2005
| IP: Logged |
posted
CNBC announced they kicked in, i guess the initial drop was too precipitous...
Whenever CNBC runs a banner on your television screen that says CURBS IN or CURBS IN, we receive a ton of email from investors asking "What are curbs?" Here is the answer for you:
Program Trading "Collars"
Program Trading "Collars" A collar on program trading firms instituted by the NYSE is most commonly referred to on CNBC as "curbs in". The NYSE applies program trading curbs whenever the NYSE Composite Index (NYA) moves 190 points higher, or 190 points lower than the previous day's closing price.
This NYSE restriction on program trades stays in place until the NYA returns to within 90 points of the previous day's closing price; or, until the end of the trading day at 3:00 CT. The restrictions will be re-imposed each time the NYA advances or declines 190 points. NYSE Trading Curbs apply only to our firm's (and other program trading firm's) computer assisted program trades. Contrary to what the public thinks, these collars do not completely stop all program trading, nor do they cancel out today's premium (prem) execution levels.
The NYSE defines a Program Trade as: 1. A basket of 15 or more stocks from the Standard & Poor’s 500 Index. 2. A basket of stocks from the Standard & Poor's 500 Index valued at $1 million or more.
Once the NYSE program trading collar is in place, Program Selling can be executed only on an up-tick. That means that the last trade was executed at a higher price than the trade before it. Program Buying can be executed only on a down-tick. That means that the last trade was executed at a lower price than the trade before it.
Program Trading "Circuit Breakers" If the Dow Jones Industrial Average falls 10%, trading is halted on the New York Stock Exchange for 60 minutes. If the Dow Jones rallies 10%, there is no restriction. Why? Because program buying and the accompany rally is always perceived as "good".
If the Dow Jones Industrial Average falls 20%, trading is halted on the New York Stock Exchange for two hours. There is no trading halt if it rallies 20%, as that would be perceived as "very very good".
If the Dow Jones Industrial Average falls 30%, trading is halted on the New York Stock Exchange for the day. There is no trading halt if it rallies 30%, as that would be perceived as "the best thing that ever happened in the history of the world".
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
![[Eek!]](eek.gif)
![[Cool]](cool.gif)
![[Big Grin]](biggrin.gif)
(not)![[Wink]](wink.gif)
