COUNTRYWIDE FACES "unprecedented disruptions"
Interesting post in the WSJ. I think this is just the start of much worse things to come for Countrywide.
Countrywide Financial Corp. faces "unprecedented disruptions" in debt and mortgage-finance markets that could hurt earnings and the company's financial condition, the Calabasas, Calif., lender said in a regulatory filing.
http://online.wsj.com/article/SB1186700 ... whats_news
Countrywide Financial Corp. faces "unprecedented disruptions" in debt and mortgage-finance markets that could hurt earnings and the company's financial condition, the Calabasas, Calif., lender said in a regulatory filing.
http://online.wsj.com/article/SB1186700 ... whats_news
Comments
Oh, watch out DJ, there goes another black helicopter spying on us conspiracy theorists!
um, who did I call a conspiracy theorist? perhaps you are just paranoid?
That's all.
Especially when I am sooooooo right.
Hey, good tip on a fund for you.
http://www.bloomberg.com/apps/news?pid= ... refer=news
What, EXACTLY, do you think will happen if the FED cuts rates?
That telegraphs two things:
1. We are in deep doo-doo
2. The FED is not in front of the situation.
1+2=massive panic.
The FED cutting rates caused this mess. Go back to October '98. That's when this crap started.
The best thing for the economy is for the FED to hike rates and get it over with.
We passed our best option years ago. This has been forcasted blow-by-blow for years now.
Welcome to the Dark Ages 2.0
Is it actually better if they raise rates? I think a third and probably action is that they might just leave the rate alone for a long time. You don't really want to move rates higher as we are slipping into recession/depression. At the same time, if you lower rates you might devalue our fiat currency. What if it just stays at 5.25% for the next 5 years? Finally, if they leave rates alone, they can continue to sound hawkish while also putting wording in that they are watching the situation for downside. Even if they do nothing, those statements seem to be giving investors a lot of confidence that someone is looking out for them.
The US Peso has been tanking for some time. 5.25% IS too low. Currency stability is essential for sustained, healthy economic growth. If they cut to keep us out of a recession, we face currency devaluation along with more cancerous speculation.
Raising rates kills off speculation, kills bad businesses, purges debt, punishes irresponsible risk, and diverts capital to the best use.
Cheap money got us into this mess, and it won't get us out.
The FED needs to hike rates and put us into recession.
Trust me on this. I'm right on this point.
Eleua is right. This entire stock market and real estate market euphoria is caused by excessive liquidity since 2002. What we see in real estate prices is inflation caused by the loose monetary policy of greenspan the maestro of disaster. The best way to reset prices to a reasonable level is for a recession to take place. Those traders on Wall Street are too accustomed to giddy returns that they expect bailout from the fed as in the days of greenspan. When it comes to losing money all those traders suddenly become Keynesian but when it comes to irresponsible risk taking they want laissez-faire. You can't have your cake and eat it too. By lowering rates the fed will only prolong a needed, healthy reset. IMO, bernanke has already kowtowed to idiots like cramer, Wall Street by injecting capital into the market. bernanke is too worried about his image as compared to greenspan. We need someone like Volker who is not afraid of doing the unpopular thing.
Is the implication here that you may be wrong on other points?
Big E is always right.
http://www.forbes.com/markets/emergingm ... 08508.html
This thing will be over before the FED meets in October. Cutting rates in the next few weeks will only serve to panic the markets, causing them to crater.
The FED is trapped. They know it. I know it. The Street knows it.
We are already in a recession, and probably have been for a few months.
It really doesn't matter what they do. Driving rates down caused this mess in the first place, so I say, 'bring it on.
This is almost comical.
So, picture if you will...
The FED drops a 50bp cut on the markets and the markets tank. Think about that for a minute. Think really hard.
Right now, the Lumpeninvestoriat believes the FED is all powerful and can move markets at will with rate cuts. In fact, they don't know why the FED doesn't drop rates to 0% and we all retire millionaires.
If the Lumps get it through their 3" thick skulls that the FED can't save them, then you get a panic that will be in the history books 300 years from now. It will be an epic unwinding of galactic proportions.
I wonder if the FED is that stupid. They have one bullet left in the gun. They need to use it when it will do the most good.
Now is not that opportunity.
What they will soon realize, is that most of this "global economy" has been relying on the U.S. consumer spending money like there is no tomorrow. But guess what, the US consumer has already tapped out their HELOCs, equity is drying up, and their credit cards are on the verge of being maxed.
All this AAA mortgage paper being shipped overseas is crap. Its going to destroy the world economy and the US economy. The "global economy" is going down the toilet, and very soon.
How much does the USA consumer really truly matter to the global economy? We don't produce jack. We only consume it. A service economy is a synonym for trade deficit. So we buy everything on IOU. How does that actually help the Chinese? They would be better off selling their goods to someone who actually pays them than to us. Now people are going to shout me down, but actually think about this for just a minute.
Let a Chinese worker puts in 12 hours a day, and during the first 3 hours builds TVs going to anyplace but here, but the second 9 hours he builds TVs going to USA. He (or the company he works for) actually gets paid for the first 3 hours, but during the second 9 hours they take worthless USA IOUs. Yes he wants a job, but doesn't he/his company only profit from the first 3 hours of work? He could take the rest of the day off and come out ahead.
When the US consumer fails, it will cause less harm than we like to think. Mostly, the example worker will just get more time with his family, and we'll be getting a lot less free TVs.
Let's localize this.
If your job is to be a high-end wedding photographer, and all the high-end weddings disappear down a black hole, is this a big deal to you?
If you live close to a retirement community, and your job is servicing retirees, but the retirees quit coming here and move to Phoenix, is that a big deal?
Even though we don't produce much, we still spend alot. It is that spending that keeps Asia's lights on at night.
If we had a more balanced trade, it would be easier for Asia to shrug off a North American collapse.
So actually, in that case I am better off if they leave. At least I get my time if not the fake income. Conversely, if we had a balanced trade then our economy faltering would be a big deal to the rest of the world.
I admit to not being anything but an armchair economist, but work is prefaced on being reimbursed and volunteer work is not. A lot of work exported to the great U.S of A might turn out to be the later and not the earlier.
Let's not fool ourselves. It isn't our demand that keeps the lights on in China. They use a lot of that electricity to produce crap for us to consume. And it's not like China doesn't have a population in excess of 1.3 billion people who could use some of the stuff they are producing. They don't ship to us because it's the best thing for them, they do it because it's the quickest way to make a buck (which isn't worth what it used to be). It used to be that we were shipping legitimate wealth accumulated over many years. But if that's what we're spending, why is everyone taking out HELOCs and charging to credit cards? We are spending money we don't have. And I am becoming increasingly certain it's money that may not be worth the slips its written on.
They ARE getting paid, and they are buying MBS' with it. This is 'vendor financing' on a national scale. Eventually, we actually own them.
If I go to Home Depot, open up a HD credit card, and subsequently run up a whopper of a charge, HD has a few options:
Cut me off until I pay.
Roll over the debt and let me keep on going.
Since I am thier biggest customer (by far), they can't afford to cut me off. I'm getting close to exceeding my credit limit, so they raise my limit. I keep giving them IOUs and they keep giving me plywood. Eventually, they have a mountain of IOUs and I have used all the plywood.
Now what? If HD wants to complain about my IOUs, they can. If they want to report me to credit agencies and trash my credit rating, that's their only option. I still have used a bunch of plywood they cant' reposess. Sure, I can't go to Lowes and pull the same trick, but that's not my concern, nor is it HDs.
HD ends up with a big smoking hole on their balance sheet. They have to write off a huge chunk of their receivables. Their creditors notice and pull their lines. HD now has to lay off employees because they are not needed to service my account.
You get the picture?
The ONLY reason China is able to produce for us is due to the slave wages and working conditions over there. They can't buy their own products, because they are making $5/day.
I am fully onboard with the idea that our consumption economy is rapidly becoming a basket-case. No argument there.
I am just saying that China isn't Europe. They can't consume what they make, nor sell it to anyone else. The US-China trade relationship is a captive relationship.
If you want to see fireworks, watch what happens to China when the US slides into a deep recession. Take notes, because your grandkids will be asking about it.
Trust me on this. If the US sneezes, China will catch the flu.
If that happened, any Chinese business relying on US consumption would lose a lot of business. If the government let those companies fail (big assumption), then eventually the work force employed for US consumption would be moved to other sectors. China has a large population, and the younger generation wants the same things we want (more or less). If they can continue to export enough goods to the rest of the world to import any raw supplies they need, and maybe some food, then they will function. Last I checked, the US imports about 1/4 or 1/3 of China's exports. That makes us a significant but perhaps expendable buyer.
In your Home Depot example, when they cut you off, they have to admit to years of losses, and they may layoff the people working for you (being the biggest customer). Those people are hurt, but HD is better off without you even if their income statements look worse by comparison. HD can then use their profits to expand or invest in other business rather than giving it to you. If these expansions pan out, they may rehire back the same employees they laid off when you were cut off.
I mean, the Fed can rain money all over the U.S. consumer any time they want, and this is why we can consume like this, yes?
Well, the Chinese can't print USD, but they do have an economy that's even more centrally managed than ours. And plus, why would they have to print??? They have a freaking trillion dollar surplus of our paper!!
Sure, I know what you are thinking. Unocal? Ports? No WE won't let them buy anything useful with that money, but so long as it is world reserve currency and petro currency the REST of the world will sell for it. And that's where the resources are. Our mines and oil wells done bin pumped dry. But South America? Africa? Venezuela? Russia? China is out there with the checkbook.
So, um, why do they need us again? They have the real demand for goods, they have the real labor, and they have the real access to materials. Their managed economy can distribute goods to simulate the cash that peasants don't have. That part is quite simple for a communist regime. Mix all those up I'd say and you have a nice little economy.
As far as I can tell, the nuclear subs in the yellow sea (and et cetera) are all that stands between that description and reality.
I think what you're missing is that we consume 25% of the world's energy with 4% of the population. The lights stay on a lot easier in China when the debt comes home to roost for Americans and we can't affort to leave the light in the swimming pool on all night anymore.
They don't have money lines in Asia -- they have gas lines.
Our consumption is actually what keeps their lights OFF at night.
Considering the performance of US military in Iraq I wouldn't put too much faith in the war machine. The US is great at blitzkrieg but can't sustain attrition wars. Considering 1.3 billion people I don't think you'll have a blitz scenario. Can always go "nucular" but they also have "nucular" weapons.
You are confusing warfighting with peacekeeping. They are two different animals.
How will China keep its ports open and supply lines intact against the US Navy?
They don't have much in terms of nukes. Their ICBMs are liquid fueled, which gives us about a 36 hour heads-up that they want to launch. Ours are ready to go in 5 minutes.
Even if they all got off the pad, I doubt they all would get through. If they did, thier accuracy is +/- 10 miles, at best.
After that, their numbers are so small, we would be able to complete the bulk of the NFL season if they all hit their targets.
On the other hand, all of China would be destroyed - all of it.
Their weak link is their naval power. We can shut them down within a weekend.
I know it is uber-chic to trash-talk the US military. Have fun, but you do so in blind ignorance of our very real abilities to wage war.
I do not understand what your goal is in the least. Are we going to float the dollar by forcing China to burn all the dollars they hold in stock? We'd have to get Japan as well if that were the plan.
But what if we are going in for natural resources instead? Iraq has proven that we can take down a government, and that once we are in we will probably be less efficient at mining than whoever was running the show before. Iraq harvests less oil now than during the Hussein years.
Besides, do you honestly think we could form a barricade around any country for no reason without starting something akin to WWIII? Our exhausted military is not superior to China's and Russia's and England's and France's and Germany's and India's and Pakistan's and Canada's and Mexico's and Spain's and Ukrain's and Viet Nam's and Australia's and ...
When it comes to naval power, it is. That may be an uncomfortable truth for you, but it is nonetheless true.
I'm not saying we need to start a war. I do not want that. I am saying that if you think that we are just going to sit over here and starve, while the rest of the world lives high on our carcass, you might want to rethink things. Without our current resource consumption, we cannot support 300,000,000 people, of which at least 90,000,000 are blood-sucking parasites. Do you think we are going to roll our population back to 200,000,000 without a fight? Me neither...
Blockading is an act of war, so that would start WW3. Russia will never confront us directly, as we won't confront them. 20K nukes have that kind of neighborly effect on people.
China would lose a war with us in a big way. The only way we would ever invade them is behind a phalanx of nuclear hell-fire. Other than that, our Pac Fleet could shut them down before the next weekend, and there would be nothing they could do about it. What are they going to do? Stand on the beach and wave at us?
Do not confuse peacekeeping (which is a PC byproduct that is designed to make us look good on TV), with warfighting. If we were serious (like 1945 serious), our military would look very different on TV than it does now.