Economical Meltdown THIS November

(Didn't know if I should put this in the 2012 or Global Meltdown forum...but I decided to put it here. Mods can feel free to move it if they like.)

NEW YORK (Reuters) - U.S. corporate debt default rates are expected to hit "unprecedented" levels in 2009, even though the economy may be past the halfway mark of the U.S. recession, according to a forecast unveiled on Monday at the Reuters Restructuring Summit.

"There is a lot of pain left -- we are only just half way through the 600 or so defaults in this cycle," said Phil Kleweno, a partner at Bain's corporate renewal group.

Reuters

Let me post an interesting aspect of the issue, and this time I will be very pedagogic and use a picture:


[im][atsimg]http://files.abovetopsecret.com/files/20ad329803a9518d.gif[/atsimg][/im]

And to give this thing a twist in my own personal way to understand what is happening, I will add yet another illustration:


[im][atsimg]http://files.abovetopsecret.com/files/f528d8284669d5e0.gif[/atsimg][/im]


November 7th people... It's soon.

I'll tell you what I am doing: selling my apartment and renting a flat second hand.
Don't want no bank loans when this ship is rolling over and heading for the depths.

What do you think?

Not to say that you are completely incorrect in your analysis, but I think I heard the same thing last November....then again for this September...then again for the upcoming October. Just seems like someone is chasing ghosts, you know?

reply to post by Raud


you are ditching everything for a poorly done up logarithmic chart of the Dow back about 4.5 months ago?

reply to post by Raud


You are right so far the government money give away has kept the markets going but not really booming.

The Real state is still a big problem, Banks are just surviving due to the bailouts and now they are to be targeted with providing loans to the FDIC for future more bailouts, occurs they will not be call that.

Things in this nation are far from stable.

Thank you all for your input!

reply to post by TheOneElectric


I know exactly what you mean, but those "other" dates I either did not care about or they had their specific meaning.

I strongly believe, and my gut feeling has improved greatly over the last year, that we are on the brink, and I mean the brink.
I don't expect you to buy into my ideas, they are merely up for discussion.
This is my theory out of which I make my decisions.

You just have to sort the ghosts from the monsters, you know

No offence taken, so don't worry about that.

I don't know if this is going to happen ka-blam, or if the slide is just going to speed up a whole lot more, or what ever.
All I know is that the situation is going to be a hell lot worse before it gets better...or just done with. But it sure ain't going to be thanks to any bail-outs, that is for sure.

We'll see how things turn out. And soon too!

And no, I am not freaking out. Just observing, analysing from what sources I find credible, and making my moves. That's all.

reply to post by GreenBicMan


No, I am not "giving up everything, I am just making myself ready.
Better stay low and steer clear of collapsing banking complexes.
As they witness how things are starting to fail totally on their behalf, they will start wanting their money back. And by then, they won't have nothing on me.

You are right about that the logarithmic is somewhat old (I beg to differ about the "poor" condition though), but it sure speaks out pretty clearly of just how bad things have really become under such a short time.
Just think about everything becoming twice as bad; twice as many bankruptcies, twice as much inflation, twice as much unemployment, and so on.
It's bad, I tells ya!

My apartment is not all I have, I have a lot more. Most of which are of no economical value.
If this situation, against all odds, becomes stable within the next year, I'll be ready to buy a new, larger home for a much smaller buck.
House prices are said to drop 20% in value in my area during next year. I sure want to have sold what I have today by then.
Just imagine the horror to sell and still owe lots of money.

Besides, my girlfriend is moving in and we need a bigger place


It's called calculated safe play.

reply to post by marg6043


I would like to say that things in this world is far from stable.
I totally follow you though; these bail-outs are just keeping the dying system alive in a respirator. The brain is numb and the heart can not live on its own. As soon as the power is cut, it will all fall like a house of cards.

Castles made of sand, slips into the sea...eventually...

This is nothing new, I am very aware of that.
Just wanted to show that the Mayan "prophecy", or how you would like to call it, applies here.
I think that this is part of the Great Plan. And I am not late to jump on that train.
Can't fight intuition, I don't work that way.
Feels like with this kind of information, which has worked out pretty precise over the course of history, you have some hints in advance of what is to come.

By this, I also feel the need to refer to this thread:
The risks of believing that the Mayan calendar ends December 21, 2012!
(just to confirm that I have a little different view of the whole "2012 thing" than most (other) crazy people out there)

reply to post by Raud


good luck to you

according to the CSI today housing prices got more expensive in most major markets -

no reason to buck the trending market though - it is signaling good things in our future

Also keep in mind that the hedge funds have a GREAT interest in keeping the markets up until the end of the quarter tomorrow as their performance and BONUSES will be based upon September 30 data.

[edit on 29-9-2009 by leo123]

reply to post by GreenBicMan


It is also signaling higher oil prices in our future.

reply to post by GreenBicMan


If they are so good why is the Obama administration working quietly to get another bail out to help morgage holders and to used more tax payer to give the banks another bailout.

You know you should read the news specially those that the media doesn't adverstise.

More Help for Financial Institutions

The Treasury Department has been working behind the scenes with private firms to set up investment funds to buy the toxic assets. The funds would be a combination of public and private money. The private firms would then have the opportunity to buy the assets at a very low price in hopes that they turn a profit down the road.

The Treasury Department will initially contribute $2.5 billion in matching contributions to the fund. The private firms entering the fund would then be allowed to borrow another $5 billion in the form of leverage, The Post reports.

The program could grow to as large as $40 billion, according to The Post.

That, however, may not be nearly enough to solve the problem. According to the TARP Congressional Oversight Panel, there is $657 billion worth of toxic assets circulating in the financial markets currently.

Yes the economy is doing peachy, more gouging for the job less tax payer.

Nothing but deceptions and everybody are falling for it.

www.economyincrisis.org...

The Obama administration is close to rolling out two initiatives aimed at addressing lingering problems from the financial crisis: A long-delayed effort to cleanse financial firms of their toxic assets, and a $35 billion plan to prop up state programs that help lower-income borrowers get affordable mortgages.

Now that the banks are to be protected by the tax payer for their failures there comes the next bubble in the making, more loans for people to get homes they can not afford, I guess the last bubble was so good that everybody can not let it go, including our own governemnt.

www.washingtonpost.com...

October 7th of 2008 was predicted by the web bot guys to be right about where things went bad. If you will go back and look, it's right in the middle of the precipitous fall. Oct 25 and Nov 7th of this year are two other dates that seem to be popping up.




From The Market Ticker (Karl Denninger):

(Note, the "cure rate" from earlier in the article: 0% cure rate of all loans in foreclosure, 0.8% for 90 plus days delinquent, 4.4% for 60 days delinquent and 26.5% for 30-day delinquencies.)

From this we can develop a "cocktail napkin" view of the losses to be taken in home mortgages for single-family homes (remember, this does not include condos, apartment buildings and similar "commercial" paper.)

$200,000 X 40% = $80,000 loss per foreclosure.

87.5 million homes with mortgages X 12.42% = 10,867,500 foreclosures.

10,867,500
x 80,000
=============
$869,400,000,000

or $869 billion in losses remaining in single-family mortgages alone.

What if the average outstanding is higher and negative equity greater than 20% (which is likely)? Losses will almost certainly be well north of a trillion dollars.

The entire banking system and likely The Fed, given the quantity of Fannie and Freddie paper it has been and is "eating", is insolvent. These facts are why the government is lying - they're well-aware of the near-zero cure rates and know that these facts mean that the banking industry has nowhere near sufficient capital to withstand these losses without folding like a paper cup getting stomped on by an elephant.

(Remember that these numbers do not include any commercial real estate losses and we have found that banks are frequently over-stating their claimed values for these loans by 50% or more - as was seen with Colonial.)

It gets better. The FDIC has a negative balance both in its fund balance and the reserve ratio projected for the end of the quarter, which is, big surprise, tomorrow. Oh, and there is this pesky problem that the FDIC has - contrary to its mandate - been issuing bond guarantees for banks, so if and when that banking insolvency is recognized the FDIC will implode into a gravity well also, since it is on the hook for the entire deficiency of those bonds that were issued with its "guarantee" should they default.

Care to argue with the math folks?

market-ticker.denninger.net...


[atsimg]http://files.abovetopsecret.com/images/member/8529ea48bdc6.jpg[/atsimg]

[edit on 29-9-2009 by RoofMonkey]

reply to post by marg6043


That stuff doesnt really matter when the market is running like this - I promise this isnt over by a long way - the market will have pumped itself up for 2010 valuations and I am hearing they will be pretty good, and we are undervalued in those circumstances.

In a few years I am guessing it will be back like the gold ol' days again. (then time to sell haha)

The stock market is funny.... all the liquidity ......and all the big banks have to make big profits somehow when they are Cutting lending and sitting on reserves. The big banks and there trading desks are making a killing but they can't push the market up when EARNINGS aren't there for Q4 2009 and Q1 2010.......(right now projection for those two quarters are pretty ro-bust) perhaps the people who believe these analysis believe that "hey ....they have to be right at least once...right!)

The Fed is printing "money" (FRN's) to BUY THE VERY debt the Treasury is issuing....it's a big circle jerk........the banks are sitting on the excess reserves.........and they are earning RISK FREE interest for their troubles....how long can this continue......while everyone yells about inflation....it is not happening b/c banks are not lending...the fed does NOT want to sacrifice the dollar.....the dollar is what their paper game is denominated in and i don't think they are keen to flushing it down the toilet....they let it fall SURE so long as it is in some sort of range compared with the other paper currency's.....we can keep spending and printing and buying treasury's till the cows come home WITHOUT inflation so long as the fed keeps the banks from lending the money (or the economy and loan default rates keep the banks from lending it out) and so long as (UK economy is in same boat...and the chinese do not wish to let their currecny appreciate that fast) .

Seems to me the banks can only push the market up so much higher with consumption in a down trend....(i.e where will the consumption come from to drive earnings growth???) maybe 11,000.......but don't the bank's have more upside shorting the market now....I mean i'm not saying their will be an economic meltdown november by any means.....and i may just shut up should the market stay at or above 10,000 AFTER 4Q earnings have come out cause they will MISS the Mark!

[edit on 29-9-2009 by cpdaman]

reply to post by cpdaman


RIght now we are valued for the mean sp 500 valuation. This is discounting 2010 - people are screaming to stay away - I am thinking we hit another yearly high this week, prob. tomorrow

Still too many with a bearish outlook - that will continue this higher and higher till they become bullish and quit getting stopped out of their short positions

Ok, I thought it was coming in October. This is getting to be repetitive don't ya think?

Yeah, I don't quite get the OP. The theory is not founded on something reasonable. However there are facts that support a bearish perspective:

• The FDIC is now broke. So far in 2009, 95 banks failed at a cost of $26 Billion to the FDIC (est $62B in reality). Compare that to 14 banks in 2008 at a cost of $8 Billion at the same time this year.
  
• FHA is insolvent, it's cash reserves dropped below the minimum set by Congress. FHA had to cover 23% of all new loans, up from 3% in 2006.
  
• An estimated 150-200 banks will fail this year, 2,000 banks are expected to fail with the next two years
  
• Real estate values are at record lows (see www.dqnews.com...), and defaults are at record highs including prime, subprime, option adjustable, and Alt-A
  
• Two of the three US automakers are government agencies, and all automakers forced hundreds of independent dealers to close
  
• Stocks are at record high price/earnings ratio as volume decrease, indicating market manipulation.
  
• Corporate revenues are at record lows, and corporate defaults are at record highs.
  
• Unemployment continues to increase with no job creation, US employed dropped from 146 Million to 139 Million while population rose to over 305 Million. Less than half of the residents in the US are employed
  
• That 139 Million are being asked to fund Trillions spend on corporate rescues, much of which won't be repaid.
  
• Those 139 Million are being asked to also pay for healthcare of their neighbors
  
• Insider selling is at record highs, reflecting a lack of confidence.
  
• Mainstream media has a blackout on G20 violence and the military presence, increasing number of Obamaville homeless camps, and anti-tax protests
  

I probably left a few major items off, such as international current events, political gyrations, czars being appointed to circumvent Congress, etc.

reply to post by Pappie54


And it's very likely that it will, by 25th October.
And then continue into the 7th November data.

Accordingly to history patterns the next decade will be a very unstable one:
1340s, 1430s, 1520s, 1600s, 1680s, 1760s, 1840s, 1930s, 2010s. Roughly every 80-90 years, comes a time of famine, social devastation or economic crises, and plenty of revolutions, tension, and social unrest.


[edit on 30-9-2009 by segurelha]

[edit on 30-9-2009 by segurelha]

reply to post by GreenBicMan


Actually this morning the news about more bailouts are starting to make analyst question the real health of the markets.

Finally they are admitting that the only reason the markets are doing better or just getting by is due to the bailouts and thanks to the increasing government spending, not just because the overall economy is doing fine, now predictions like the OP mention are very real, stop the bail out and the markets will collapse faster than anybody dare to say.

So actually more expensive bailouts will have to be done to keep supporting the unsupportable.

This was actually mention by a guess in CNBC this morning.



[edit on 30-9-2009 by marg6043]

well the chicago purchasing managers index crapped the bed and the market at first tanked.....the somebody/thing came in an propped it up

i'm not playing this market b/c i BELIEVE it is a casino......

big run up based on 2010 valuations? c'mon Whose valuations based on what earnings?

There is no way around 4'th Q earnings that crap the bed......i think that will start a flow of funds out of the $ ...and get liquidity flowing out of american stock mkt....

recovery is a pipe dream....stabalization with a dead cat bounce (Fueled by gov't spending as well as rosey but unfounded 4'th Q earnings optomism... is what we are seeing.....

The REASON that the Recovery cheerleaders are tooting their horns is that they want to set CONSUMER EXPECTATIONS.......they want consumers to spend....but the difference between reality and forecasted hopes is seriously growing wider than can be maintained for long.

the STK market helps to legitamize the recovery perception in some people's minds but REMEMBER the amount of FED support of the capital markets and infusions of liquidity.......this is artificial.....earnings way below forecast = STK mkt below 2010 forecast.......

[edit on 30-9-2009 by cpdaman]

reply to post by cpdaman


its based on a mean pe ratio of 18 which is actually mid to in the lower range for a bull rally - thats why pe's should run a bit higher, so stall a bit on the earnings while prices move higher

[edit on 30-9-2009 by GreenBicMan]

reply to post by cpdaman


I can tell you how bad is getting for retailers around the nation, that already cities and states around are starting the Christmas decoration and propaganda early than usual by passing Halloween and Thanksgiving, just straight to Christmas holidays to get the people into the holiday spirit and they can start spending.

This is real, very real, desperation at its finest.