Savers hit by new property fund plunge, freeze on withdrawals, Ambac lose AAA rating

From the original news source:

He added that he is gloomy about prospects for the stock market and thinks London and Wall Street could drop 10 per cent between now and June.

LOL

The DOW is Already down 10% Since Christmas !!

All this talk about Insurance companies having problems has me worrying about my job.....

I work at a large insurance company, and while I know we have lost a lot of money in investments with mortgage and bank firms, I did not think we would be in to much danger with the economy.

reply to post by Rockpuck


Now Rockpuck, you and I know that Mason's will get to join the Reptilian overlords when the economy crashes. You'll be at the top of the New World Order! You should be excited about this "economic armageddon."

reply to post by Rockpuck



Well you already has seen that major financial institution had to let go thousands of their employees nation wide, now that the insurance companies are having their shared of the markets woes, because their links to the mortgage problems, you should be ready to anything that can come as the result of the loses.

I wish you the best and I hope that you can hold to your job.

I am waiting when the financial woes keep falling down the deck of cards and hit my husband's job.

Because when the government starts to cut down I mean major cut downs if it hits the defense department budget my husband job field may very well get affected.

But for now we know that it will be down the line.

I have to say---I have a substantial amount in property holdings.
But I also don't intend to need or want that in cash for 15 years.

I'm taking the long view---prices crash, the regular investment amount buys more shares---when the price goes back up, I make a killing.
I also have these investments spread out among several property types and classes, so even if 1/2 were to crash out totally, I would still end up ahead.

IMHO, anyone who has less than a 5 year horizon should stay out, and anyone who panics easily has no business investing.

looks like they took a screwing oh well

At a cost of say 2%, I can go to an investment bank, or fund, and purchase a CDS to insure a 10MM bond that has a return of 6% face value. So I eliminate my risk, and [in theory] I stand to realize a bullet-proof return of 4% on my investment.

The entity that sold me the $10MM CDS, will need to balance their books against a new 10MM liability, or suffer a whack to their capitol structure. So they will go-into the market and shop for a CDS on the same bond for say 1% of face value. Now their assets/liabilities are balanced, and they pocket a return of 1% on the spread. The firm that sold them the CDS will do the same, and so on down the line until every drop is squeezed. This is how the derivative value associated with my $10MM bond, can end-up being multiples of it's actual face value. It happens.

The problem is that these financial institutions aren't required to hold reserve capitol to protect against losses. So it's the nature of the beast to leverage into the margins.

When the insurer is faced with multiple defaults, there simply isn't enough capitol to cover. If my bond implodes, and I go to collect on my CDS, the firm that sold it to me goes to the firm that sold them coverage, and so on, and so forth, until they get to the party that's naked-long the $10MM CDS. Ultimately, this entire scheme relies on the ability of some unknown counterparty at the end of the leverage-chain to pay-up.

Unwary investors looking to book risk-free returns on what turned-out to be high-risk assets, have spread the exposure worldwide. Individual risk, became collective risk...with the associated momentum when it begins to unwind.

The surface crises began with mortgage defaults, but the real monster is still hiding below the water-line. I believe that the Whitehouse is smart enough to know that their so called stimulus package isn't gonna cut-it...Wall St. wasn't fooled. I think it's simply a short-term, very public attempt to inspire confidence, and prevent all-out panic in the financial sector.

Very possible that the Fed, perhaps in consort with foreign central banks, will create a single entity to deal with the situation. Let's see if the PPT can juice the system until a viable plan is effected....if one even exists.

reply to post by Harlequin


Not the answer to your question, really. But here's some news that lawsuits against banks is now being considered. Apparently it used to be a taboo subject among litigation firms, but since the "credit crunch" and US sub-prime mortgage debacle last year, some UK litigators are at least open to the idea.

business.timesonline.co.uk...

Well, my take on all of this is - the banking system is a scam. Here are a list of UK websites that want something done about it, they all seem to agree on whats wrong and whats right.

Monetary Reform, Moneyreform Party, Prosperity UK

Here is my theory on 'economic cycles':

Dae's Economic Cycle Theory

For many years now learned men have noticed patterns of peaks and troughs within our economy and business life. As is the tendency for some men, these patterns were analysed and the numbers were counted. Let's have a look at Irving Fisher (1907) as he scratches his head pondering the nature of economic cycles. As a young man he believed these cycles were due to man's headstrong belief in future profits resulting from technological improvements. However, this did not sit well with him and as a result he considered different ideas, completely dropping old theories in his wake.

One day Irving, not a young man anymore, proclaims that it is all an illusion, the illusion is but the "dance of the dollar". One can only imagine the frustration. Men like Irving Fisher have for many years tried to describe the obvious changes within our economy as a natural process, something akin to the seasons*. The Kondratiev theory, described in cycles of 50-60 years, is one such misleading idea that tries to compare these patterns to Spring, Summer, Autumn and Winter.

Dae's theory proposes that these patterns, boom-recession-depression-recovery, is nothing but the ouput of a well oiled system of robbery and fraud. The data produced over the years have told us nothing of cycles, only the behaviour of the Central Banks. Men have noticed the pattern in the sand but not the snake that makes it.


*or other naturally occuring, regularly cyclic phenomena. Dae's Economic Theory v2.0 posits that the correct natural cycle is the menstrual cycle; that is, cramp, blotation, deflation, recovery.

Infinite thanks for posting that Cramer video!

i think it is a very SOBERING account of the depths of this potential crisis.

in a nutshell he say's " The gov't need's to Take over mortgage and municipal bond insurers MBIA and AMBAC. Take over their books and pay out say 50 cents on the dollar for all their clients who have insurance backed losses, because both institutions are isolvent, and most importantly if the gov't fails to do this then we can look for a 2000 point decline in the stock market, when it becomes clear the gov't wont step in, and then a panic and collapse of the financial system. and that also this plan will cost a maximum of 250 billion (prob less) and be much more effective than the stimulus championed by Paulson and Bush which is almost the same value.

Makes sense to me, and Paulson is no dummy (he was head of Goldman Sachs) If they don't do this then their is a deliberate reason and i'm afraid it will be the trauma that catipult's us into a restructuring that brings about sweeping change in the country (and world) and possible severe economic seizure's which lay the ground work for an overhaul of the system and standard of living we have been used to, and lastly and this is not certain but a possibility IMO (and i mentioned this after realizing this a year ago and have been studying the financial makets relentlessly since then) after realizing the only thing that would bring about a NWO would be some kind of Crisis that began with the world financial system.

this talks about what happens if the markets can't be calmed

www.jsmineset.com...,1&AR_T=1&GID=&linkid=5662&T_ARID=5717

[edit on 20-1-2008 by cpdaman]

The global markets took a big hit while the US market is closed for the federal holiday. One futures headline had the DOW Ind down nearly 500 points, and this article here discusses the fears of a potential downgrading of the ratings Ambac Financial (ABK) and MBIA (MBI):

Stock Futures Forecast Heavy Losses

If futures contracts traded on a day when U.S. stocks weren't even due to open are anything near accurate, then markets will be in for a major decline on Tuesday, with concerns about bond insurers and the health of financial institutions dragging markets lower.


March contracts on the Dow Jones Industrial Average traded 353 points lower to 11,753.


The S&P 500 futures fell 55 points to 1,270.10 and the Nasdaq 100 futures lost 72.25 points to 1,777.25.

I was thinking about those who say this is a cyclical thing but what is behind this? Bad decisions by greedy financial institutions? So there is a cycle of those entrusted with investors' money, to take and take, until the
well is dry then reposition themselves to make a killing as the market drops like a rock, all the while being propped up by the FED?

It couldn't be that simple, anyways I am happy that President Bush wants to give the taxpayers a rebate, that will certainly take care of any possible long term effects of this recession Thanks GW say Hi to the family for me when you get to Paraguay.....

US markets are just waiting...no one wants to invest...

IF we get bad news today, it will crash. I'm not being paranoid, but it will...investors are just waiting.

We have more bad news to come

Originally posted by OBE1
The surface crises began with mortgage defaults, but the real monster is still hiding below the water-line. I believe that the Whitehouse is smart enough to know that their so called stimulus package isn't gonna cut-it...Wall St. wasn't fooled. I think it's simply a short-term, very public attempt to inspire confidence, and prevent all-out panic in the financial sector.

Got to agree with this assessment.

The biggest ponzie scheme of all time, the whole derivatives complex, is going to eventually come down. Warren Buffet was right to call them financial weapons of mass destruction (Buffet On Derivatives - (2 page PDF)).

BTW, here is the news and commentary on Berkshire starting a new bond insurance company: Warren Buffett is a Genius!!!!
.

It would seem that this is part of some overall strategy to begin the so-called NWO and a totally cashless society and world banking system. If you can't physically move your money around or out, then it still manages to maintain itself in the other realm? I'm reminded of the movie: It's a Wonderful LIfe and rationing. So, were's the EASY BUTTON?

For the first time ever i'm happy not to have any money invested in banks and stocks at all, cause every one is loseing there shirts, 3% was wiped off the irish stock exchange the other day, might not seem like much until you consider that the irish have a net wealth of over 1 trillion euro!
And to "infinite" where are you from?

Originally posted by Harlequin
Question - whats the legality of them saying `no you can`t have your money back` to people?

Actually these firms have language in their prospectuses (at least in the US) which places limits on withdrawals and goes into these situations. Commercial real estate is not a liquid investment so these people are really only getting what they signed up for.

Well, I really don't know what to say anymore about our economies.

I really hope for a rally tomorrow, but seeings the US market is closed, it's not likely...I just hope we don't see a double digit plunge tomorrow (trust me, it's likely).

But, the world is now more sophisticated and prepared to march toward a world government. The super-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries."

The most important sector in the economy is finance, at it is getting hammered.

what problem would result in a "solution" stated above, where people would react and demand something be done?

the only thing i can think about that would bring the truama necessary for a "NWO" to come about would be a World Economic Financial Collapse.

The gov't needs to provide some sort of certainty to the financial sector or we are done.

Infinite i am thinking something along the lines of what Cramer asked for in his video. If this is not announced by 930 tommorrow morning we will be down huge unless the markets are "suspended indefinitely".

Originally posted by infinite
Well, I really don't know what to say anymore about our economies.

I really hope for a rally tomorrow, but seeings the US market is closed, it's not likely...I just hope we don't see a double digit plunge tomorrow (trust me, it's likely).

From seeing the HUGE drops on the futures, I would imagine the markets will fall yet again......

I would say we are lucky the market was closed for this "holiday" (why is it only schools and federal buildings are closed?) else the markets probably would have suffered quite a drop.

Ah the joys of paper trading!!

This is the exact reason why restructuring debt and selling it off was a shot in the foot for US Banks. They were meddling with figures and manipulating arbitrary sums in mid air.

Had any of these companies had a solid business foundation, i doubt we would be in this mess.