The man who trades freedom for security does not deserve nor will he ever receive either. – Benjamin Franklin
WASHINGTON – More banks are tightening lending standards on home mortgages and other consumer and business loans as a deepening credit crisis exerts a heavier toll on the economy.
Federal Reserve said Monday the percentage of banks reporting tighter lending standards rose across various loan types in its July survey. In April, the central bank had found that the percentage of banks reporting tighter lending standards was already near historic highs.
Aug. 6 (Bloomberg) — Morgan Stanley, the second-biggest U.S. securities firm, told thousands of clients this week that they won’t be allowed to withdraw money on their home-equity credit lines, said a person familiar with the situation.
Read moreMorgan Stanley Said to Freeze Home-Equity Credit Withdrawals
The star analyst tells Fortune magazine that housing woes will force banks to keep taking writedowns.
NEW YORK (Fortune) — The credit crisis is far from over, star analyst Meredith Whitney tells Fortune magazine in its upcoming issue.
Whitney, who audaciously – and correctly – predicted last October that Citigroup (C, Fortune 500) would have to cut its dividend, tells the magazine that banks in general today are still facing much bigger credit losses than what they’ve reported so far.
The Oppenheimer & Co. analyst warned last year – and continues to warn today – that the “incestuous” relationship between the banks and the credit-rating agencies during the real estate bubble will have a long-lasting impact on banks’ ability to recover.
THE Royal Bank of Scotland is poised to unveil the biggest loss in UK banking history after taking a hit of almost £6 billion from the credit crisis.
Britain’s second-largest bank is this week expected to reveal a pre-tax loss of at least £1 billion for the first six months of the year, with analysts warning it could slide to as much as £1.7 billion in the red.
The loss would be roughly five times higher than the deficit racked up by Barclays in 1992 at the height of the last recession.
RBS chairman Sir Tom McKillop is already under pressure from investors after the bank’s recent £12 billion rights issue. His chief executive, Sir Fred Goodwin, who marks 10 years at the bank this weekend, also faces shareholder scrutiny.
Read moreRoyal Bank of Scotland poised for biggest loss in UK banking history
WASHINGTON (Reuters) – Bank regulators closed a small Florida-based bank on Friday, the eighth U.S. bank to fail this year under pressure from a weak economy and a credit crisis precipitated by falling home prices.
The Federal Deposit Insurance Corp said First Priority Bank had $259 million in assets and $227 million in deposits and its failure will cost the federal fund that insures deposits an estimated $72 million.
SunTrust Banks Inc (NYSE:STI – News) has agreed to assume the insured deposits of First Priority, whose six branches will reopen Monday as branches of SunTrust Bank.
And because of this Wall Street is celebrating today, but not for long.
Before: Fed: No more bailouts, except Fannie Mae and Freddie Mac
And now the Fed wants to bailout Wall Street?
The taxpayer will pay for it all.
__________________________________________________________________________________
WASHINGTON (AP) – The Federal Reserve said Wednesday it is extending its emergency borrowing program to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
Drew Greenblatt of Marlin Steel Wire Products is having trouble getting a $300,000 loan to buy a robot for his Baltimore factory. “This is what a bank is supposed to do,” he said.
This bill will probably pass in Senate tomorrow. You, your children and generations to come will pay for this. All taxes will be spent servicing this debt.
Cost of 5 years of Iraq war: $560 billion
Cost of this bill: $800 billion
It will be spent bailing out the same fraudsters who got us into this mess. Call your senator now and demand they vote against this! If you don’t, it will probably pass. If you care for your country and your children’s future, vote this video up.
Video: Current.com
Ron Paul talks about the bailout out of the housing industry and how it really just destroys the dollar and adds enormously to the debt.
Also, slipped into the bill, was the stipulation that ALL credit card transactions must now be reported to the IRS.
Added: July 23, 2008
Source: YouTube
I called the death of Indymac Bancorp on Monday, July 7th. The Federal Deposit Insurance Corporation seized Indymac on Friday, July 11th.
I called the implosion of the two Government Sponsored Entities in the mortgage business, Fannie Mae and Freddie Mac on Wednesday, July 9th. Sunday, July 13th the White House announced a bailout for them.
Related article: Fed: No more bailouts, except Fannie Mae and Freddie Mac
Want to know what happens next? It’s ape ass ugly and it’s going to happen to you, so don’t say I didn’t warn you.
Something is going to break, and soon. Banks are insolvent and failing by the hundreds if not thousands. Hedge funds are on the edge of oblivion. Only a tiny percentage of toxic waste losses in real estate and other asset classes of collateral, which will eventually amount to over $1.4 trillion in the US alone, has to date been recognized by the lying bankster fraudsters. Bonds are producing negative rates of return even based on ludicrously understated official rates of inflation (until this month, when we finally got some data bordering on the truth).
Wall Street investment giant Merrill Lynch on Thursday announced a quarterly loss of 4.6 billion dollars, driven by hefty writedowns from its bets on the US real estate market.
Merrill, which has been roiled by its exposure to the US subprime mortgage crisis, also said it would shore up its capital with the sale of some assets.
It announced the sale of its 20 percent stake in financial news and data group Bloomberg for 4.425 billion dollars.
Related: Fed: No more bailouts, except Fannie Mae and Freddie Mac
Read moreMerill Lynch posts loss of 4.6 bln dlrs, sheds assets
NEW YORK (CNNMoney.com) — Falling stock markets around the globe and the credit crunch are putting the pension funds of some of the largest U.S. companies into deeper financial holes, according to a report released Monday.
Since the credit crunch hit last fall, pension plans funded by S&P 1500 companies have lost about $280 billion in assets, according to an actuary at Mercer, a human resources consulting firm.
On paper, the losses from last October tally $160 billion. However, according to Mercer actuary Adrian Hartshorn, the asset losses are closer to $280 billion when pension plan assets and liabilities are considered together. The losses amount to about 7% of a total $4 trillion in pension plan assets.
Companies should be concerned, he said, because – assuming no change in the market – a typical U.S. company can expect their pension expenses to increase between 20% and 30% in 2009. That’s due to the higher cost of servicing the pension plan’s debt and the smaller return from the plan’s assets.
“I think it’s important for corporations to be aware of what’s going on in their pension plans, as corporations would be concerned when any part of its business is performing badly,” Hartshorn said.
According to the report, the total losses on pension assets and liabilities from the last day of 2007 through the end of June has grown to more than $80 billion.
Part of the loss has been reflected in companies’ current financial statements, but many losses incurred since the end of 2007 have yet to hit company balance sheets.
Geneva – The global financial crisis could lead to losses of 1,600 billion dollars for financial institutes, according a report in the Swiss Sunday newspaper SonntagsZeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.
The hedge fund expressed doubts that the financial institutes would be able to drum up enough funds to cover the losses, something it said could exacerbate the crisis. Bridgewater, one of the world’s biggest hedge funds, based its calculations on the state of risky debt-based US assets, such as mortgages, credit and credit card demands. The value of such risky assets is 26,600 billion dollars, according to the hedge fund. The losses would amount to 1,600 billion dollars if these assets were valued at market rates and not in the form of securitization, the newspaper said.
Sun, 06 Jul 2008
DPA
Source: The Earth Times
Investors are fleeing from the U.S. stock market, Sending the Dow to Worst June Since Depression, looking for places to secure their wealth.
There is an unprecedented cash flow of ‘hot money’, which is usually defined as short-term global speculative funds moving among financial markets in search of the highest short-term return, moving into China:
Is China flooded with ‘hot money’ because of an expected meltdown in the U.S.?
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
We have seen the Dow suffering it’s worst 1st half since ‘70 accompanied by a lot of bad news for the economy like:
– US: Big Trouble for General Motors, Crysler and Ford
– America’s Aviation System About To Collapse
– Starbucks to cut as many as 12,000 positions
And now the corporations are cheating you at the supermarkets: America’s Shrinking Groceries
The Dollar is being destroyed by the Federal Reserve, which has created in the last three years 4 Trillion Dollars of new money out of thin air: Ron Paul on Iran and Energy June 26, 2008
Ron Paul is further warning that: This coming crisis is bigger than the world has ever experienced
and that: We are at the beginning of a huge Dollar bubble.
The US Federal Reserve intentionally created inflation and that is why its credibility has fallen “below zero” and that is why Barclays warns of a financial storm as Federal Reserve’s credibility crumbles.
More dire warnings:
– RBS issues global stock and credit crash alert
– Morgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve
– Central bank body warns of Great Depression
– Credit crisis expands, hitting all kinds of consumer loans
– How Low Can The Dollar Go? Zero Value
Investors like Jim Rogers are telling us to “Avoid The Dollar At All Costs” and have told us that the Federal Reserve will fail and that Bernanke should be fired (alhough that isn’t possible because of his contract), because he has created the worst recession in the end and thats why he said: “Abolish the FED” on CNBC 2008.03.12.
The Fed is only doing good for the big corporations on Wall Street. If you would continuously come close to bankruptcy, because you have irresponsibly wasted your money, who will continuously give you billions of Dollars and bail you out, because you might fail? So I agree totally with Marc Faber: ‘Misleading’ Fed Should Let Banks Fail.
Well those corporations are said to be to “Big to Fail”, but they eventually will fail, because the entire system will fail and the Dollar is being destroyed in the process and so the people will end up with nothing, because their life savings are worthless paper. You are already paying the price for this policy, but maybe you haven’t looked at it that way:
The Price Of Food: 2007 – 2008
What inflation really is, is a taxation on monetary assets. And guess who is paying for all of that?
I just love this video. A must see:
The Stock Market and the Monetary System are on the verge of collapse!
Read moreUS: Total Crash of the Entire Financial System Expected, Say Experts
New York City officials are bracing for increased pressure on the budget as the city’s pension funds are reeling from the credit crisis and posting billions of dollars in losses. In the nine months leading up to March 31, the city’s five pension funds lost a total of nearly $5 billion, or 4.4%, according to data from the city comptroller’s office. This is a far cry from projections published as recently as last month, when budget planners assumed the pension system would post no losses.
If those losses are not recovered by the end of the fiscal year, which ends Monday, the city will have to pay out several billion dollars through 2015, with the first payment of $190 million set for 2010.
The government will have to make up the shortfall from the poor performance of the pension funds at a time when it is already suffering from tax revenue losses due to a souring economy.
“In itself, it’s manageable,” the research director for the Citizens Budget Commission, Charles Brecher, said of the pension fund losses. “The fact that it’s going to be combined with revenue shortfalls means that we’ve got serious problems.”
The Teachers’ Retirement System of the City of New York, which has lost 5.06% of its value in the nine months ending March 31, has been the worst performer so far this year. The New York City Employees’ Retirement System, which lost 3.98% in the same period, performed the best. Other pension funds include the New York City Police Pension Fund, the New York City Fire Department Pension Fund, and the Board of Education Retirement System of the City of New York. Numbers for the state pension system are not yet available, a spokesman for the state comptroller said.
Homeless people living in cars and motorhomes across the US are being joined by a new breed: the middle class.
As mortgage foreclosures continue to rise, growing numbers of middle-class professionals are losing their homes and downsizing from four bedrooms to four wheels.
With numbers rising, New Beginnings, a homeless agency in Santa Barbara, California, has launched a safe parking scheme, whose aim is to provide a refuge of sorts for those who have nowhere to go other than their vehicle.
Guy Trevor lost his job as an interior designer when the sector contracted thanks to the foreclosure crisis. With his furniture sold and his belongings in storage, he now lives in his car, spending the nights in one of the 12 gated car parks in Santa Barbara run by New Beginnings.
“I see myself as a casualty of a perfect storm,” he said. “The people sleeping at the [car parks] are … just like me. They come from normal, everyday homes. I think a lot of people in this country don’t realise that they, too, are a couple of pay cheques away from destitution.”
In normally affluent Santa Barbara there were 150 foreclosures last month, with a total of 800 for the year ending in May, according to the county assessor’s office, which assesses property for tax purposes.
Each month, an auction of foreclosed properties is held on the steps of the Santa Barbara courthouse.
“The way the economy is going, it’s amazing the people who are becoming homeless. It’s hit the middle class,” Nancy Kapp, of New Beginnings, told CNN.
Another of Kapp’s clients, Barbara Harvey, 67, also lost her job and subsequently her home thanks to the foreclosure crisis. As with Trevor, her job as a loans processor was connected to the housing market.
Harvey now lives with her three dogs in her car, parking at night in a women-only car park run by the agency. “I didn’t think this would happen to me,” she said. “It’s just something that I don’t think that people think is going to happen to them.”
Read moreCredit crunch forcing US middle classes to live in their cars
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, the bank’s credit strategist.
(Got Gold and Silver? More under “Solution” – The Infinite Unknown)
A report by the bank’s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the “Crossover” index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.
“I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.
“Cash is the key safe haven. (No way!!! Yet it is still good to have some cash. – The Infinite Unknown)
This is about not losing your money, and not losing your job,” said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
RBS expects Wall Street to rally a little further into early July before short-lived momentum from America’s fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.
“Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point,” he said.
US Federal Reserve and the European Central Bank both face a Hobson’s choice as workers start to lose their jobs in earnest and lenders cut off credit.
The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. “The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation,” he said.
“The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets,” he said.
The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
WASHINGTON – The credit crisis triggered by bad home loans is spreading to other areas, forcing banks to tighten credit and probably extending the credit crisis that’s dragging down the economy well into next year, and perhaps beyond.
That means consumers are going to have an increasingly difficult time getting bank loans for car purchases, credit cards, home equity credit lines, student loans and even commercial real estate, experts say.
When financial analyst Meredith Whitney wrote in a report last October that the nation’s largest bank, Citigroup, lacked sufficient capital for the risks it had assumed, she was considered a heretic.
However, Whitney was proved correct: Citigroup pushed out its CEO, sought foreign investors and slashed its dividend. Her comments now carry added weight on Wall Street, and she has a new warning for ordinary Americans: The crisis in credit markets is far from over, and it increasingly will affect consumers.
“In fact, we believe that what lies ahead will be worse than what is behind us,” Whitney and colleagues at Oppenheimer & Co. wrote in a lengthy report last month about threats faced by big national banks, including Bank of America, Wachovia and others.
The warning is scary considering what’s already behind us in the credit crisis – the resignation or firing since last August of CEOs at almost every large commercial or investment bank; the Federal Reserve lowering its benchmark lending rate by 3.25 percentage points; a Fed-brokered deal to sell investment bank Bear Stearns; and weekly auctions of short-term loans from the Fed worth billions of dollars to keep credit markets functioning.
(Got Gold and Silver? – The Infinite Unknown)
Read moreCredit crisis expands, hitting all kinds of consumer loans
Fed auctions $75 billion to banks to ease credit woes, total is $435 billion since December
WASHINGTON (AP) — Battling to relieve stressed credit markets, the Federal Reserve said Tuesday it has provided a total of $435 billion in short-term loans to squeezed banks since December to help them overcome credit problems.
The central bank announced the results of its most recent auction — $75 billion in short-term loans — the 11th such auction since the program started in December.
It’s part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March.
The housing, credit and financial crises have weakened the economy and threaten to push it into recession.
In the latest auction, commercial banks paid an interest rate of 2.220 percent for the loans.
There were 71 bidders for the slice of the $75 billion in 28-day loans. The Fed received bids for $96.62 billion worth of the loans. The auction was conducted on Monday with the results released Tuesday.
In mid-December the Fed announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and to help them over the credit hump. A global credit crisis has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.
Read moreFed auctions $75 billion to banks to ease credit stresses
The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.
The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.
Credit default swaps (CDS) on Lehman debt have risen from around 130 in late April to 247, while Merrill debt has spiked to 196. Most analysts had thought the coast was clear for such broker dealers after the US Federal Reserve invoked an emergency clause in March to let them borrow directly from its lending window.
But there are now concerns that the Fed itself may be exhausting its $800bn (£399bn) stock of assets. It has swapped almost $300bn of 10-year Treasuries for questionable mortgage debt, and provided Term Auction Credit of $130bn.
“The steep rise in swap spreads this week is ominous,” said John Hussman, head of the Hussman Funds. “The deterioration is in stark contrast to what investors have come to hope since March.”
Lehman Brothers took writedowns of just $200m on its $6.5bn portfolio of sub-prime debt in the first quarter even though a quarter of the securities had “junk” ratings, typically worth a fraction of face value.
Willem Sels, a credit analyst at Dresdner Kleinwort, said the banks are beginning to face waves of defaults on credit cards, car loans, and now corporate loans. “We believe we’re entering Phase II. The liquidity crisis has eased a little, but the real credit losses are accelerating. The worst is yet to come,” he said.
Read moreUS and European debt markets flash new warning signals
Gold’s precipitous tumble from its record-high of $1,038 set on March 17 down to the recent $850 level has lots of people asking, “Is gold’s bull market over?”
My answer: No! Not by a long shot!
I know you’ve been getting an earful from the talking-head ninnies about how the long-running commodity bull is getting short of breath and is about to be put out to pasture. Ignore them.
Other than a pullback here and there, gold — and virtually all natural resource prices — are headed much higher in the months and years ahead.
My next target for gold: $1,250 an ounce. Then, its inflation-adjusted high of at least $2,270.
Those numbers should come as no surprise. I’ve mentioned them several times before. Why I am I so bullish?
I’m not going to get into all the arguments that clearly spell higher prices for gold. You’ve heard them from me time-and-time again.
Instead, I’m going to point out something you’ve probably never thought about when it comes to gold. Heck, even the smartest guys on Wall Street haven’t figured it out yet …
Gold Is In A “Win-Win” Situation!
Consider the following two possible macroeconomic background scenarios for gold:
WASHINGTON (AP) — The Federal Reserve announced Friday that it will expand a series of efforts to deal with the global credit crisis, in coordination with European central banks.The Fed said it was boosting the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, from the $100 billion it supplied in April. The Fed took this action and several other moves to boost credit in coordination with the European Central Bank and the Swiss National Bank.
The latest moves are part of a series of actions the Fed has made since the credit crisis struck in August.
The efforts are designed to increase reserves so that banks don’t become hesitant about lending to consumers and businesses, which would make the current economic slowdown even more severe.
(The continuing bailouts are destroying the dollar and will create a total crash very soon. – The Infinite Unknown)
Read moreFed joins with European banks to battle credit crisis
Ben Bernanke, chairman of the U.S. Federal Reserve, arrives at the Federal Reserve building for a Federal Reserve Open Market Committee meeting in Washington, April 29, 2008. Photographer: Brendan Smialowski/Bloomberg News
May 2 (Bloomberg) — A month after the Federal Reserve rescued Bear Stearns Cos. from bankruptcy, Chairman Ben S. Bernanke got an S.O.S. from Congress.
There is “a potential crisis in the student-loan market” requiring “similar bold action,” Chairman Christopher Dodd of Connecticut and six other Democrats wrote Bernanke. They want the Fed to swap Treasury notes for bonds backed by student loans. In a separate letter, Pennsylvania Democratic Representative Paul Kanjorski and 31 House members said they want Bernanke to channel money directly to education-finance firms.
Student loans are just the start. Former Fed officials and other Fed-watchers say that Bernanke’s actions in saving Bear Stearns will expose the central bank to continuing pressure to use its $889 billion balance sheet to prop up companies or entire industries deemed important by politicians. The Fed satisfied Dodd’s request today, expanding the swaps to include securities backed by student debt.
“It is appalling where we are right now,” former St. Louis Fed President William Poole, who retired in March, said in an interview. The Fed has introduced “a backstop for the entire financial system.”
Critics argue that the result will be to foster greater risk-taking among investors emboldened by the belief that the government will bail them out of bad decisions.
The Fed’s loans to Bear Stearns were “a rogue operation,” said Anna Schwartz, who co-wrote “A Monetary History of the United States” with the late Nobel laureate Milton Friedman.
`No Business’
“To me, it is an open and shut case,” she said in an interview from her office in New York. “The Fed had no business intervening there.”
