Vetteman once said there's no need to panic over the subprime market

[Le Jacquelope]

http://www.republicanvoices.org/eating_crow.jpg
How's that crow taste? Damned feathers.

I guess that in Vetteman's corner of the US Marine Corps, "I was wrong" was stricken from their vocabulary, LOL.

http://biz.yahoo.com/ap/080111/wall_street.html

AP
Stocks Slammed by Bad Credit Fears
Friday January 11, 2:18 pm ET
By Tim Paradis, AP Business Writer
Stocks Cave on Worries Over Investment Bank Writedowns, Anxiety About Upcoming Earnings

NEW YORK (AP) -- Wall Street plunged again Friday amid renewed fears that the financial sector's troubles with bad credit won't soon end and that some consumers are buckling under signs of a slowing economy. The Dow Jones industrials fell more than 240 points.

The arrival of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. The nation's biggest financial institutions will report results next week, including Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co.

Adding to investors' unease, Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to The New York Times. The nation's largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.

Investors also grew nervous after American Express Corp. warned late Thursday that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008. A profit warning from Tiffany & Co. added to Wall Street's unease about the fortitude of the consumer.

Friday's session revealed the extent of investors' misgivings about the financial sector's efforts to sew up its troubles. Bank of America Corp. agreed Friday to buy Countrywide Financial Corp. for $4 billion, a deal that rescues the country's largest mortgage lender but pays less than the company's market value.

The agreement comes after word of the move Thursday and just months after BofA invested $2 billion in Countrywide. Some investors apparently hoped Countrywide would fetch a premium, though some observers said a tie-up was a better alternative for the beleaguered company.

Michael Church, portfolio manager at Church Capital Management in Philadelphia, said news from the financials is weighing on Wall Street, although he said few investors should be surprised that troubles in the sector remain.

"The financials are going to continue to be a problem," he said. "I think people are maybe still trying to get their bearings."

In afternoon trading, the Dow fell 241.42, or 1.88 percent, to 12,611.67, wiping out a 117-point advance on Thursday.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 17.11, or 1.20 percent, to 1,403.22, and the Nasdaq composite index fell 43.26, or 1.74 percent, to 2,445.26.

Stocks have skidded lower in the new year, with the Dow often falling by triple digits in a single session amid anxiety about a possible recession as well as the still-unfolding fallout from the mortgage crisis.

Bond prices rose as stocks retreated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82 percent from 3.88 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose to a fresh record.

Oil prices were pressured by gains for the dollar against the euro and pound. Crude oil is a dollar-denominated commodity and tends to decline in value when the dollar rises.This is because it takes less money to but the same amount. A barrel of light, sweet crude for February falling $1.35 to $92.39 on the New York Mercantile Exchange.

Washington Mutual Inc. jumped 76 cents, or 5.4 percent, to $14.93 after CNBC reported JP Morgan is in talks to acquire the nation's largest savings and loan. JP Morgan rose 29 cents, or 0.3 percent, to $41.19.

Bank of America fell 42 cents, or 0.8 percent, to $38.88, while Countrywide fell $1.12, or 14.4 percent, to $6.63.

American Express fell $5.32, or 10.9 percent, to $44.60 and was among the biggest decliner among the 30 stocks that comprise the Dow industrials. McDonald's Corp., also in the Dow, fell $4.03, or 6.9 percent, to $54.14 after Friedman Billings Ramsay analyst Howard Penney expressed doubt about the company's future earnings. He also said McDonald's stock is fully valued, indicating there may be little room for price gains.

Traders showed little reaction to a Commerce Department report that higher energy prices drove the nation's trade deficit in November to its highest level in more than a year. The government said the gap shot up 9.3 percent to $63.1 billion, the widest since September 2006 and up from $57.8 billion in October. Economists surveyed by Thomson/IFR Markets forecast a trade gap of $58.6 billion.

Separately, there was good news on inflation in December, when import prices were unchanged, the Labor Department said.

Federal Reserve Governor Frederic Mishkin said the Fed will act decisively to counter risks to the economy and added that swift rate cuts can hasten the economy's return to normal. But Mishkin also said the financial markets are overly focused on the central bank's actions.

Boston Fed President Eric Rosengren said housing price declines could accelerate this year if the economy is not strong. Mishkin and Rosengren follow Fed Chairman Ben Bernanke, who on Thursday made clear in a speech that the central bank is poised to cut interest rates later this month.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 968.9 2 million shares.

The Russell 2000 index of smaller companies fell 7.25, or 1.01 percent, to 712.96.

Overseas, Japan's Nikkei stock average closed up 1.93 percent. Britain's FTSE 100 closed down 0.33 percent, Germany's DAX index rose 0.06 percent, and France's CAC-40 fell 0.54.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

 

[phrodeau]

You claim that there is now a need to panic?

 

[TurdFergeson]

Wait until the extensive rate cuts.

Remember the asian financial crisis?

They cut their rates to ZERO.

 

[Ulaven_Demorte]

Panic always helps, Panic and violence.

 

[sufisaint]

I would say when it all said and done...another 2 years...in all those once hot markets..your looking at a 20% correction..and could be worse if the fed does not drop rates down to almost nothin...throw in oil prices of $130 a barrell, a weaken dollar, an unwinable war racking about record debt and unemployment rising with millions of illegal immigrants..interesting times ahead...

 

[TurdFergeson]

I would say when it all said and done...another 2 years...in all those once hot markets..your looking at a 20% correction..and could be worse if the fed does not drop rates down to almost nothin...throw in oil prices of $130 a barrell, a weaken dollar, an unwinable war racking about record debt and unemployment rising with millions of illegal immigrants..interesting times ahead...

ALL Neocons deserve to get fired and have to get minimum wage jobs.

 

[hobbit.]

Panic always helps, Panic and violence.

I find panic does not help fiancial crises that much. I agree with your other suggestion though.

 

[sufisaint]

ALL Neocons deserve to get fired and have to get minimum wage jobs.

But I do not hear one democratic solution..only rhetoric and the same old change promise...republicans put us in the coffin..democrats are going to nail it shut...

 

[Moanique]

The market always bounces back. If you own a home, have various financial assets invested you are affected, just as you are affected when the pendulum swings back.
If you rent your home, own nothing and do not work in finance you are not affected unless your boss goes bankrupt.
But the days of the 1929 crash are long gone and we have learned a few things from it.

 

[ltnsfr007]

The market always bounces back. If you own a home, have various financial assets invested you are affected, just as you are affected when the pendulum swings back.
If you rent your home, own nothing and do not work in finance you are not affected unless your boss goes bankrupt.
But the days of the 1929 crash are long gone and we have learned a few things from it.

WOW somebody knows what they are talking about, I'm impressed

 

[unregistered]

 

[islandman]

Wait until the extensive rate cuts.

Remember the asian financial crisis?

They cut their rates to ZERO.

Incorrect analogy. Americans spend rather than save, and any upcoming recession will be consumer-driven. The Japanese save rather than spend, and their decade-long recession was both consumer- and corporate-driven.

 

[Sean]

Incorrect analogy. Americans spend rather than save, and any upcoming recession will be consumer-driven. The Japanese save rather than spend, and their decade-long recession was both consumer- and corporate-driven.

I think I remember reading somewhere that 70% of the US economy is consumer spending. The Japanese were actually in deflation at one point. Given the Fed's likely interest rate cuts coming up, the US could have exactly the opposite problem, an inflationary cycle could fuck US consumer spending and then the economy is gone.

 

[renard_ruse]

All the Democrat candidates have pledged to bail out the stupid home owners. They call them "victims of predatory lenders." How can anyone be so stupid to think that they can take out a loan and not have to pay it back. Money is free, houses are free? Democrats want to speak for these people? They should be embarassed. They deserve to loose these homes, because they couldn't afford them in the first place. The rest of us couldn't afford homes either, but we didn't try to get free money and a house. We continued to rent.

 

[Moist_Mary]

All the Democrat candidates have pledged to bail out the stupid home owners. They call them "victims of predatory lenders." How can anyone be so stupid to think that they can take out a loan and not have to pay it back. Money is free, houses are free? Democrats want to speak for these people? They should be embarassed. They deserve to loose these homes, because they couldn't afford them in the first place. The rest of us couldn't afford homes either, but we didn't try to get free money and a house. We continued to rent.

I wonder some of the same things. These "victims of predatory lenders" could never qualify for a traditional mortgage. So they should never have been allowed. We weren't when we first got married. We had to be frugile, and save until we could justly afford to buy a house. Just as I do not understand the rush to bail out the mortgage companies that willingly engaged in this risky practice to begin with. No one told them to give mortgages to people who could not afford them. They are victims of of their own bad business practices. Just as the airlines are in their price wars and then they all cry because they are losing money.

 

[islandman]

I think I remember reading somewhere that 70% of the US economy is consumer spending. The Japanese were actually in deflation at one point. Given the Fed's likely interest rate cuts coming up, the US could have exactly the opposite problem, an inflationary cycle could fuck US consumer spending and then the economy is gone.

Not quite that, but yes, it is greater than 50%. You're forgetting, however, the weak dollar. Inflation isn't an issue when the Germans and the French (and Canadians!) are lining up outside Coach. The ROW is buying all our crap because it's on the cheap. And, if rates are cut substantially, Americans will spend their way out of any recession.

BTW, we go into a recession and the price of oil takes a haircut.

 

[cjh]

All the Democrat candidates have pledged to bail out the stupid home owners. They call them "victims of predatory lenders." How can anyone be so stupid to think that they can take out a loan and not have to pay it back. Money is free, houses are free? Democrats want to speak for these people? They should be embarassed. They deserve to loose these homes, because they couldn't afford them in the first place. The rest of us couldn't afford homes either, but we didn't try to get free money and a house. We continued to rent.

and the lenders should have to take a bath, too. it's a shame the taxpayers are going to eat the cost of the country wide debacle.

but tell me, those borrowers who paid timely until the rates in their subprimes ratcheted up and they could no longer tote the note--those people had been paying their notes with monopoly money before then or something? is that what you are saying?

 

[Moist_Mary]

and the lenders should have to take a bath, too. it's a shame the taxpayers are going to eat the cost of the country wide debacle.

Agreed.

 

[islandman]

and the lenders should have to take a bath, too. it's a shame the taxpayers are going to eat the cost of the country wide debacle.

but tell me, those borrowers who paid timely until the rates in their subprimes ratcheted up and they could no longer tote the note--those people had been paying their notes with monopoly money before then or something? is that what you are saying?

Let's not forget the growing default rates among prime borrowers.

 

[TurdFergeson]

Incorrect analogy. Americans spend rather than save, and any upcoming recession will be consumer-driven. The Japanese save rather than spend, and their decade-long recession was both consumer- and corporate-driven.

I'm not saying the rate cuts resulted in the financial crisis.

Just that rate cuts seem to historically mean one thing, a weak economy, for whatever reasons.

 

[islandman]

I'm not saying the rate cuts resulted in the financial crisis.

Just that rate cuts seem to historically mean one thing, a weak economy, for whatever reasons.

Errr....okay...

 

[Sean]

Not quite that, but yes, it is greater than 50%. You're forgetting, however, the weak dollar. Inflation isn't an issue when the Germans and the French (and Canadians!) are lining up outside Coach. The ROW is buying all our crap because it's on the cheap. And, if rates are cut substantially, Americans will spend their way out of any recession.

BTW, we go into a recession and the price of oil takes a haircut.

You seen your balance of payments recently, dude? You import a hell of a lot more than you export. As for the oil price, a US recession would affect it, true, but Opec would cut production to keep the price up, they kinda like $100 a barrel.

 

[Le Jacquelope]

The market always bounces back. If you own a home, have various financial assets invested you are affected, just as you are affected when the pendulum swings back.
If you rent your home, own nothing and do not work in finance you are not affected unless your boss goes bankrupt.
But the days of the 1929 crash are long gone and we have learned a few things from it.

Uhm, that's not correct. Here are a few tangential industries hurt directly by the subprime crisis:

If you work in retail, you're affected because consumers may be buying less - as evidenced by this last Christmas which was a major downer for retailers.

If you work in construction, which is not finance either, your job is in jeopardy. Fewer homes will be constructed.


If you rent your home, rent is probably going up for you dramatically now that people are being foreclosed upon and others REALLY and truly cannot afford a home now because of stricter lending policies. On the other hand, if you rent OUT a home you own, you may be making better money.

Only the most extreme hubris would convince someone that 1929 cannot happen again.

 

[Le Jacquelope]

I wonder some of the same things. These "victims of predatory lenders" could never qualify for a traditional mortgage. So they should never have been allowed.

You know, about 3-4 years ago, here on Lit, I said housing prices were unaffordable and that there was a crisis underway.

I was basically told I was an idiot and that housing sales were through the roof.

It was because of those damned subprime nontraditional mortgages.

Well, that subprime shit really has backfired in the whole country's collective face, now hasn't it? I warned people, and they said I was dead wrong and clueless. LOL. Who's clueless now? Haahahah! People get shot for being less wrong than that.

 

[TurdFergeson]

You know, about 3-4 years ago, here on Lit, I said housing prices were unaffordable and that there was a crisis underway.

I was basically told I was an idiot and that housing sales were through the roof.

It was because of those damned subprime nontraditional mortgages.

Well, that subprime shit really has backfired in the whole country's collective face, now hasn't it? I warned people, and they said I was dead wrong and clueless. LOL. Who's clueless now? Haahahah! People get shot for being less wrong than that.

BUT, just admit, IF they would have denied all those "nontraditional" loans to poor people, you would have been screaming about racism or something.