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The Sub-Prime Blowout And The Con Man Exodus

111 by B_M_L_Archive
I don't entirely grasp this...is SRM a private company? If so, why are they shoring up another?

I'm sure there is an obvious answer, but I missed it, and I'm definitely not familiar with all the players (and the coffee hasn't kicked in yet...).


SRM are a private company – a hedge fund, as is RAB Capital. They have a large (and increasing) stake in NR. They’re taking a ‘gamble’ on the bid for NR being too low at the moment – they will apply as much pressure as possible and try to get any offers for the company higher. They’ll see how many other investors they can get to join them as well. If they can get a large enough holding, and get others to agree with them then they can threaten to reject any offer that they don’t think values Northern Rock highly enough.

They’re not really shoring up the company, as much as talking it up to make a gain on the share price.

Options are -

A - They really think the company is viable then they’ll hopefully get in a position to just reject any offer.

B - They don’t actually think that the company is viable then they will just be talking any offers as high as possible without causing the bid to fail.

C - They're in it for short term gain. The price stands now at 120p so they have made the share move 35p just today by talking it up.

The Sub-Prime Blowout And The Con Man Exodus

113 by Nico Adie_Archive
Rick Reuben wrote:The matrix of debt and finance is like the atmosphere over our heads.


I agree. My ex's dad is a professor of economics at Napier University. I spent many a night talking to him about hedge funds, venture capitalism etc. He is pretty disgusted by it all.

With regards to RBS, I'm seriously considering closing my account with them and opening one with the Airdrie Savings Bank.

Also, I'd be really interested in reading the report you quoted from seeing as I now have an extra 4 weeks on my hands.
"Why stop now, just when I'm hating it?" - Marvin

The Sub-Prime Blowout And The Con Man Exodus

115 by slincire_Archive
Rick Reuben wrote:Why is it so easy to sell Americans on a hoax like 'muslim terrorist evildoers are plotting to murder us all', and so difficult to get them to understand that a plot that they can see and feel every day ( the pillaging of the economy ) is managed by a small group of elites who actually do hold the power to hurt us all? I guess it's because economic terrorism unfolds over years and decades, so it's easier to deflect blame with effective propaganda.


I think it also has to to with the fact that Americans are taught that it is admirable to strive to become part of the monetary elite. I think more college students are getting into investment, business, accounting, etc. these days. People are aspiring more for wealth for wealth's sake rather than wanting to do something that will benefit society as a whole (sciences, liberal arts, fine arts). So it's hard to villainize those selfish bastards they should want to be. Much easier to villainize poor people from other countries who have legitimate issues with the US who have made bad judgements regarding how to deal with those issues.
Boombats wrote:Any pair of assholes can put their cock and cunt together and make a wee little shit.

The Sub-Prime Blowout And The Con Man Exodus

117 by RFF_Archive
Rick Reuben wrote:
mike whitney 11-28-07 wrote: Surely, the Fed must have known this day would come when they were pumping trillions of dollars into subprime mortgages and complex debt-instruments which served no earthly purpose except to fatten the bottom line for rapacious bankers and hedge-fund managers. The Fed also knew that the nation's wealth was not being "efficiently deployed" for capital improvements on factories, technology or industry. Oh, no. That would have ensured that America would remain competitive in the global marketplace into the new century. Instead, the money was shoveled into the bottomless sinkhole of stucco homes with composition roofing and toxic credit default swaps.



Hey, Rick I'm curious as to what you think about the possibility that the uber-weak dollar might benefit Americans. In so much that foreign capital should start coming in to buy up comparatively cheap assets (much like in the 80s when the Japanese were buying up everything in sight) and that American companies, at least for the time being, should slow down off-shoring of jobs. Maybe the biggest unintended consequence of the Bush years is that we'll start making stuff again and be forced to invest in our infrastructure? I was talking to a friend last week who is rolling out a new European made product line in the US and he's crazy's about getting the production moved here because he's getting slaughtered on the euro/dollar exchange. Obviously, this one person doesn't necessarily represent a trend, but I thought the idea interesting.

The Sub-Prime Blowout And The Con Man Exodus

118 by Tony_Archive
Rick,

I am in the mortgage business, and you are doing an excellent job covering this story. This problem is far from contained, and I expect it will only get worse in the years to come. This is not a subprime problem as much as it was, and still is, a general problem in analyzing credit risk coupled with models that did not, and do not, seem to account for any future chance of home depreciation.

Currently, Fannie Mae and Freddie Mac secure loans where W-2 borrowers can state their income and assets on purchases and rate/term refinances with middle credit scores as low as 680, and the required equity in the property is only 5% for such transactions. Given all that happened and is expected to happen, do you think they are fairly analyzing credit risk with such a program? Stating income and stating assets, as opposed to fully documenting them, should be a program of the past, especially in instances where so little equity lies in the collateral. This is one of their many shortcomings. They have abandoned or cut back on a number of other programs I disagreed with, and yet, somehow this one still remains. I am completely stumped by it.

Fannie and Freddie secure prime loans, and so, how can anyone in the media fairly address this as a "subprime crisis"?

The Sub-Prime Blowout And The Con Man Exodus

120 by clocker bob_Archive
Clocker Bob, July 2006:
clocker bob, july 2006 wrote:The coalescence of the tipping point forms at the peak of the housing bubble. Each extra quarter point premium that the Fed pays foreign creditors adds to the internal debt burden of the American consumer. Spending is redirected to pay rising mortgage rates, to put gas in the car, to heat the home. That leaves less money to absorb the glut of imports. Less money spent on imports means foreign banks refill the supply of dollars they need to import oil by squeezing the Fed to pay them a greater yield on the debt.

And then the cycle begins again. Eventually, our service industry employers slow hiring even further or reduce their payrolls, because the customers don't have the spare cash to fuel that portion of their lifestyles. Unemployment rises, wages stay right where they've been, flat, and at the same time, the dollar weakens and the interest on the debt grows.

The housing bubble is the wrench that turned the nut of of our 'party now and pay later' economic expansion for the past five years. That nut is about to be stripped, and the release of accumulated tension is going to precipitate the worst stagflation in this country's history. By October, steam will be pouring from failed gaskets everywhere. Watch out for the designed computer crash / market and banking freeze.

You have been the victims of a robbery, an unprecedented transfer of wealth to the top 2%. The stick up gun was the distraction of the war on terror.

With the power of uncorrupted thought, I have torn the cage from around my world. The Machine can never blind me again. I am free.

Would you like to know what the future will look like? Ask someone who's been paying attention to the past.
Image

Checkmate.
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