Fannie May, Freddie Mac, Indymac, Oil

[quote]jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks? [/quote]

Gold! I put all of my money in gold @ $ 850/ounce back in about 1980. Great rate of return!

[quote]Zap Branigan wrote:
jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks?

Gold! I put all of my money in gold @ $ 850/ounce back in about 1980. Great rate of return![/quote]

Serious or not? I did see two economists on the news claiming that this morning. Apparently, gold is the new black.

Warren Buffett would like to know: Do you guys even know what a ‘derivative’ is? (And I don’t mean the one from Calculus.)

"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear…[They] are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. – Warren Buffett, Chairman and Chief Executive, from his Letter to Shareholders, 2002 Berkshire Hathaway annual report

http://www.safehaven.com/article-4096.htm

[quote]jsbrook wrote:
Zap Branigan wrote:
jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks?

Gold! I put all of my money in gold @ $ 850/ounce back in about 1980. Great rate of return!

Serious or not? I did see two economists on the news claiming that this morning. Apparently, gold is the new black.[/quote]

Not. Buying at the peak 28 years ago would have been a huge mistake. You would have gotten a better return in a christmas club account.

Gold may be good short term while we are still finding our way through this mess. I don’t know if will go a lot higher but it won’t drop until people start seeing light at the end of the tunnel.

As soon as they do see the light people will dump gold and start investing in productive enterprises.

[quote]Zap Branigan wrote:
jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks?

Gold! I put all of my money in gold @ $ 850/ounce back in about 1980. Great rate of return![/quote]

I loaded up at $270. The DJIA typically trades at anywhere from 10 to 30 times the price of gold. (Of course, the price was controlled until 1971.) So, right now, the DJIA is about 12 times the gold price. Too late for this go round.

The Dow will probably be at about 6000 this time next year, so I’d be somewhat out of gold now, and buying a banking mutual fund. Buy when the blood is running in the streets. Average in on the way down, since no one can really call a bottom or top.

[quote]Zap Branigan wrote:

As soon as they do see the light people will dump gold and start investing in productive enterprises.
[/quote]

Producing jewelry, coins, and creating something that can’t be inflated by any government is hardly a non-productive enterprise.

[quote]Headhunter wrote:
Zap Branigan wrote:

As soon as they do see the light people will dump gold and start investing in productive enterprises.

Producing jewelry, coins, and creating something that can’t be inflated by any government is hardly a non-productive enterprise.

[/quote]

The overwhelming majority of gold is not made into jewelry and the like. Producing goods and services is productive. Stacking bricks of gold, not so much.

The S&L crisis was far worse back in the late 80’s and early 90’s. The 90 poorly run banks in trouble need to be managed better or allowed to fail. It’s better for the FDIC to do a work out then to pay off depositers. If it wasn’t an election year the banking issue would be a non story.

Fanny and Freddy have real problems. They have for a long time. They should have nipped the sub prime problem in the bud a long time ago but got greedy. Time to pay the piper now. Too big to fail but management needs to be ousted and a new direction set. I bought it on bad news last week and sold it Monday morning when the Feds talked about getting in. If you want to make money in this market be a contrarian. Buy on bad news, sell on good.

If you have the cash ,and the cajones, buy real estate and stocks now. Short oil. I’ve been a contrarian investor for twenty five years. (12 as a professional) and it has never failed me.

The dollar is also bottoming out. Sell Gold now or short it. You can’t guess the top or bottom of a market but I don’t think now is the time to buy it.

[quote]Headhunter wrote:
Warren Buffett would like to know: Do you guys even know what a ‘derivative’ is? (And I don’t mean the one from Calculus.)

"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear…[They] are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. – Warren Buffett, Chairman and Chief Executive, from his Letter to Shareholders, 2002 Berkshire Hathaway annual report

http://www.safehaven.com/article-4096.htm

[/quote]

Lol

[quote]hedo wrote:
The S&L crisis was far worse back in the late 80’s and early 90’s. The 90 poorly run banks in trouble need to be managed better or allowed to fail. It’s better for the FDIC to do a work out then to pay off depositers. If it wasn’t an election year the banking issue would be a non story.

Fanny and Freddy have real problems. They have for a long time. They should have nipped the sub prime problem in the bud a long time ago but got greedy. Time to pay the piper now. Too big to fail but management needs to be ousted and a new direction set. I bought it on bad news last week and sold it Monday morning when the Feds talked about getting in. If you want to make money in this market be a contrarian. Buy on bad news, sell on good.

If you have the cash ,and the cajones, buy real estate and stocks now. Short oil. I’ve been a contrarian investor for twenty five years. (12 as a professional) and it has never failed me.

The dollar is also bottoming out. Sell Gold now or short it. You can’t guess the top or bottom of a market but I don’t think now is the time to buy it.[/quote]

Everything in this posts sounds right.

[quote]jsbrook wrote:
Headhunter wrote:
Warren Buffett would like to know: Do you guys even know what a ‘derivative’ is? (And I don’t mean the one from Calculus.)

"The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear…[They] are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal. – Warren Buffett, Chairman and Chief Executive, from his Letter to Shareholders, 2002 Berkshire Hathaway annual report

http://www.safehaven.com/article-4096.htm

Lol[/quote]

Listen to Warren B., or ‘Stewie’? LOL.

[quote]jsbrook wrote:
hedo wrote:
The S&L crisis was far worse back in the late 80’s and early 90’s. The 90 poorly run banks in trouble need to be managed better or allowed to fail. It’s better for the FDIC to do a work out then to pay off depositers. If it wasn’t an election year the banking issue would be a non story.

Fanny and Freddy have real problems. They have for a long time. They should have nipped the sub prime problem in the bud a long time ago but got greedy. Time to pay the piper now. Too big to fail but management needs to be ousted and a new direction set. I bought it on bad news last week and sold it Monday morning when the Feds talked about getting in. If you want to make money in this market be a contrarian. Buy on bad news, sell on good.

If you have the cash ,and the cajones, buy real estate and stocks now. Short oil. I’ve been a contrarian investor for twenty five years. (12 as a professional) and it has never failed me.

The dollar is also bottoming out. Sell Gold now or short it. You can’t guess the top or bottom of a market but I don’t think now is the time to buy it.

Everything in this posts sounds right.[/quote]

The obligations in the derivatives market now amount to hundreds of trillions of dollars. I know that’s a hard concept to grasp. Imagine a huge pyramid, being held upside down, by someone like Yakko Warner of ‘Animaniacs’ fame. Or better yet, a house of cards.

“You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.”

  • George Bernard Shaw

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.”

  • Thomas Jefferson

This is what grates me, guys…

A LOT of people, especially Congress, knew that these Institutions were a House of Cards that would eventually fall. Both had even been fined and charged in the past with fraud and/or cooking the books (ala Enron). The penalties amounted to no more than slaps on the wrist.

The problem was that both Fannie Mae and Freddie Mac had a lot in Congress bending over their office chairs while at the some time making them provide the lube.

Both institutions were “hands-off” when it came to reform and regulation; and their very powerful lobbyist made sure that every member of Congress knew that.

Mufasa

[quote]Mufasa wrote:
This is what grates me, guys…

A LOT of people, especially Congress, knew that these Institutions were a House of Cards that would eventually fall. Both had even been fined and charged in the past with fraud and/or cooking the books (ala Enron). The penalties amounted to no more than slaps on the wrist.

The problem was that both Fannie Mae and Freddie Mac had a lot in Congress bending over their office chairs while at the some time making them provide the lube.

Both institutions were “hands-off” when it came to reform and regulation; and their very powerful lobbyist made sure that every member of Congress knew that.

Mufasa[/quote]

This is Warren Buffet’s point as well. We are prepared for a derivatives meltdown about as well as we were prepared for Katrina. Read the link I provided and the case is made quite well.

Fractional reserve banking always results in a collapse. It must by its very nature. If banks are allowed to make $100 million in loans on $10 million assets, what happens if just 5% of those loans go ‘south’? Half of the banks’ equity is gone. 50%!! What if 20% go bad? Can we say ‘Indymac’? The equity is gone and the institution is bankrupt. There is NO equity.

Making up loans out of thin air is exactly what happened with the mortgage meltdown. JPMorgan was being GENEROUS when it paid out $10/share, for a bank that was bankrupt.

This depression is going to be the worst in history, quite possibly worse than the fall of the Roman Empire.

“I am not just bearish. It goes much further than that. The pyramid of debt, the extremity of optimism and the b�??wave label of the advance since 2002 all portend an all�??out collapse of investment prices in wave c. The decline in social mood during that wave will engender a crushing deflation in the galaxy�??sized bubble of outstanding credit and ultimately a disastrous depression. Few of us will be able to side�??step the effects of the depression, but we can all avoid the effects of falling financial prices and the deflation of the debt bubble by following the recommendations in Conquer the Crash.”
— Robert Prechter

[quote]Mufasa wrote:
This is what grates me, guys…

A LOT of people, especially Congress, knew that these Institutions were a House of Cards that would eventually fall. Both had even been fined and charged in the past with fraud and/or cooking the books (ala Enron). The penalties amounted to no more than slaps on the wrist.

The problem was that both Fannie Mae and Freddie Mac had a lot in Congress bending over their office chairs while at the some time making them provide the lube.

Both institutions were “hands-off” when it came to reform and regulation; and their very powerful lobbyist made sure that every member of Congress knew that.

Mufasa[/quote]

For some reason, Congress seems to be against preventing problems. They are only willing to act to pick up the pieces. Same thing with Enron, WorldCom and all the corporate fraud. You are very right. Congress simply ‘bends over’ until the shit hits the fan and they are forced to do something.

Another “burn” of mine…

(JS…you just alluded to this in your post):

I just got this in my mailbox:

“…The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation…”

(I’m sure other “investigations”, at taxpayers expense, will follow…)

Dammitt…

Yep…our Government is always ready to jump in, guns blazing…

AFTER the fact…

Mufasa

[quote]Mufasa wrote:
Another “burn” of mine…

(JS…you just alluded to this in your post):

I just got this in my mailbox:

“…The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation…”

(I’m sure other “investigations”, at taxpayers expense, will follow…)

Dammitt…

Yep…our Government is always ready to jump in, guns blazing…

AFTER the fact…

Mufasa[/quote]

Yup. Where were they 5 years ago?

[quote]Mufasa wrote:
Another “burn” of mine…

(JS…you just alluded to this in your post):

I just got this in my mailbox:

“…The FBI has launched an investigation into possible fraud at now-defunct IndyMac bank corporation…”

(I’m sure other “investigations”, at taxpayers expense, will follow…)

Dammitt…

Yep…our Government is always ready to jump in, guns blazing…

AFTER the fact…

Mufasa[/quote]

Imagine the outrage that would be generated from the proponents of unfettered,uncontrolled capitalism,if the Government was involved in regulating all these companies before anything happened!

It would be a monumental shitstorm…so they have to be content just trying to clean up after the fact.

Because everyone just knows we can ‘trust’ big business…

Horrible web redesign. A lot harder to tell who said what.

[quote]jsbrook wrote:
It’s definitely not moronic to have over $100K in the bank. Bank failure is pretty uncommon. It happened in the depression. It happend in the 70s, and it’s happening now. Despite the Savings and Loans crisis, it was not all that widespread in the 70s. Where do YOU think people who actually have some money and want to take a pretty conservative approach should keep the bulk of it if not banks? [/quote]

uhhhh… more than one account. Think McFly.