9/26/08
Our national Treasury Chief Paulson's TARP ( Troubled Asset Relief Program ) has been viewed as TRAP to Americans since both parties are still working on the agreement. I personally reject this non-sense plan. Why post taxpayers in deep debt position to save their mistakes.
Speaking of bank failure, next victims list is following: WB, NCC, C,....etc. Although we have smooth transition of asset from WM to JPM. But it may still post risk on next huge national bank run soon.
Here I would like to point out that McDonald's 5 year Credit Default Swaps are trading around 25bps to 29bps. But US government is trading 30bps. This means McDonald's financial stability is safer than Uncle Sam. This is the fact, folks. Here you know what this mess bring us into...
Despite we have the rescue plan or not, Wall Street has already pretty much fallen, and it will never be the same again. So far, the failure lists are BSC, FNM, FRE, LEH, MER, AIG, WM. The list is growing, folks. Yes, I am very extreme bearish.
Friday, September 26, 2008
Thursday, September 25, 2008
Crisis of CDOs
9/25/08
I am going to write the following article which also going to post in local chinese newspaper this friday.
CDOs, Collateralized Debt Obligation is a special investment vehicle which packed by different kind of bonds, mortgages, and other class of assets. It has vary tier and rating but has less flexsability to trade around. One the banking hearing committee, one Wall street investment banking firm executive expressed " The current form of rescue package is like throwing a rock into big ocean". What make him saying this? It is the potential crisis of CDOs.
From my research, there are about over $80 Trillions CDOs stored in all large world banks and financial institutions. Merrill Lynch once had about $11 Billions of CDOs, but less than 2 weeks, it marked down 40% the CDOs asset. Afterward, Merrill Lynch has successfully sold large scale of the CDOs into market. However, the value of sale is only 22% of the original cost. It is a loss of 78% reckless investment. Now, do anyone seeing the problem??
If the total value of CDOs adjust downward to barely 10% not like Merrill Lynch the lost of 78%, the whole banking firms have to suffer 8 Trillion loss. But, the crisis of CDOs still has not reaching the critical time. It will be expired to recall about 2 years later. All the financial institutions still have time to unload these huge toxic assets out of their books. But, I am wondering how they going to do so with such credit crunch time in progress and who would buy these garbage from them? Anyway, no one knows what would be the outcome.
Questions: How 700 Billions rescue plan would bring back alive the financial system and help the amazing 80 Trillions of CDOs of those financial firms??
My Answer: It will not. 700 Billions is nothing to help, it has only delay the time America getting into the greatest depression of all time. Be well prepared yourself into this crisis.
I am going to write the following article which also going to post in local chinese newspaper this friday.
CDOs, Collateralized Debt Obligation is a special investment vehicle which packed by different kind of bonds, mortgages, and other class of assets. It has vary tier and rating but has less flexsability to trade around. One the banking hearing committee, one Wall street investment banking firm executive expressed " The current form of rescue package is like throwing a rock into big ocean". What make him saying this? It is the potential crisis of CDOs.
From my research, there are about over $80 Trillions CDOs stored in all large world banks and financial institutions. Merrill Lynch once had about $11 Billions of CDOs, but less than 2 weeks, it marked down 40% the CDOs asset. Afterward, Merrill Lynch has successfully sold large scale of the CDOs into market. However, the value of sale is only 22% of the original cost. It is a loss of 78% reckless investment. Now, do anyone seeing the problem??
If the total value of CDOs adjust downward to barely 10% not like Merrill Lynch the lost of 78%, the whole banking firms have to suffer 8 Trillion loss. But, the crisis of CDOs still has not reaching the critical time. It will be expired to recall about 2 years later. All the financial institutions still have time to unload these huge toxic assets out of their books. But, I am wondering how they going to do so with such credit crunch time in progress and who would buy these garbage from them? Anyway, no one knows what would be the outcome.
Questions: How 700 Billions rescue plan would bring back alive the financial system and help the amazing 80 Trillions of CDOs of those financial firms??
My Answer: It will not. 700 Billions is nothing to help, it has only delay the time America getting into the greatest depression of all time. Be well prepared yourself into this crisis.
Washington Mutual Fail
9/25/08
Ha Ha Ha!! Washington Mutual Bank is finally reaching the end as I expected more than 6 months ago. I hope none of my readers or my friends has invested in this mess. JP Morgan is getting the best deal ever than Bear Stearn. Merely $1.9 billions ...(WM) is only worth fire sale price tap $1.9 billions. What a deal!! The debate is still on going with no agreement yet for the rescue plan. Tomorrow, it is very assure market will tank with WM's fail and bad earning forecast from RIMM. BEARS RULE. Too bad no one could sell short those stocks.
Ha Ha Ha!! Washington Mutual Bank is finally reaching the end as I expected more than 6 months ago. I hope none of my readers or my friends has invested in this mess. JP Morgan is getting the best deal ever than Bear Stearn. Merely $1.9 billions ...(WM) is only worth fire sale price tap $1.9 billions. What a deal!! The debate is still on going with no agreement yet for the rescue plan. Tomorrow, it is very assure market will tank with WM's fail and bad earning forecast from RIMM. BEARS RULE. Too bad no one could sell short those stocks.
Tuesday, September 23, 2008
No one buy financial stocks
9/23/08
After last 2 days huge short covering rebound, major stock indexes are back dropping more than half of those gains. With SEC's banning short sell rules on more than 800 stocks, I see no one has any desire to buy any stocks, especially financial stocks. The hearing of bailout plan today has no clear direction that Congress is going to pass this over coming weekend. Yes, Treasury may not need to use all $700 billion as Fed Chairman Ben said. However, I still do not see any good benefit that it helps our economy as well as each of us living in America. I also know if there is no action to rescue the financial system, the credit market is stuck and no company can ever borrow any money to run their business. Let all fail or bail out that both are no good to us. All in all, US is doomed anyway. They are trying to gamble this bailout would work and reduce the damage to broader economy. In fact, the damage has already been realized in some degree. Maybe, US Uncle Sam next to bailout each American personal credit card debt.
Technically, if tomorrow market fail to post strong rebound, it surely will see the lows of last Thursday.
After last 2 days huge short covering rebound, major stock indexes are back dropping more than half of those gains. With SEC's banning short sell rules on more than 800 stocks, I see no one has any desire to buy any stocks, especially financial stocks. The hearing of bailout plan today has no clear direction that Congress is going to pass this over coming weekend. Yes, Treasury may not need to use all $700 billion as Fed Chairman Ben said. However, I still do not see any good benefit that it helps our economy as well as each of us living in America. I also know if there is no action to rescue the financial system, the credit market is stuck and no company can ever borrow any money to run their business. Let all fail or bail out that both are no good to us. All in all, US is doomed anyway. They are trying to gamble this bailout would work and reduce the damage to broader economy. In fact, the damage has already been realized in some degree. Maybe, US Uncle Sam next to bailout each American personal credit card debt.
Technically, if tomorrow market fail to post strong rebound, it surely will see the lows of last Thursday.
Sunday, September 21, 2008
$700 billion resuce
9/21/08
As every American knows that each of us is going to be in debt $2000 US dollar more very soon to playing a game called " Main street is bailing out Wall street". I feel very disappointed that our Fed Chairman, Treasury Chief both keep failing to solve the financial crisis early. I do not mean I see this crisis is coming earlier than they honestly admit right now. But, I am sure every my blog reader knew that I have said this recession is the worst since great depression of 1929 about 6 months ago. And I have been successfully warn each of you all the fade rally of 13000 at May and ongoing keep making lower lows on our major stock indexes. Now, I personally did not think the propose $700 billion is enough to take all bad loans from all financial firms. This is the least but sure not the final of the amount. I would say $2 trillion ( my gut guess only ) at the end. Why?! There are still lots of "not in the books bad loans" that each financial entity has been putting away from their balance sheet. US accounting rules are totally screw up since US government allowed remove of M3 asset in balance sheet in 2006. No uptick rule sell shorts in 2007. Look at what (!?@#$) has happened since!? It is all their faults. It is so ridiculous how the hell the hall of fame investment management companies ( BSC, LEH, MER...) been doing their risk management?! All of those high-paying financial experts in the firms are showing no ability on how to manage their companies but keep telling lies to their employees, bondholders, stockholders, medias, publics.....etc. Apparently, lots of people has already lost confidence on US financial system and the credibility of US banking and financial services firms. US has always be the top, the sharpest, the most superior over the rest of the world. Now, US is pulling itself into shallow big black holes(it is sinking) and it may never has the power to re-generate itself to become the strongest player in term of economic power. I am still remain extreme bearish about stock markets and economy in long term. And I strongly believe US stock market will make new lows in the near future ( very possible after new year of 2009 ). Do not let the 1000 points recovery in Dow Jones stock indexes tricks you. It is just giant short covering rally. It may solve the worst financial banking crisis only. The economic fundamental has not change a bit. US is still in very bad shape. Housing is still going down. Mortgage is getting harder to get. Gasoline is still above $4.00 despite oil future has drop lots since 2 months ago. Inflation risk still exist. There are still lots of unhealthy uncertainties above water. Wall street is no longer the free market or the old well-known financial hubs. Now, welcome to new era of Wall street. Hope this is not getting us to follow the path of ........
As every American knows that each of us is going to be in debt $2000 US dollar more very soon to playing a game called " Main street is bailing out Wall street". I feel very disappointed that our Fed Chairman, Treasury Chief both keep failing to solve the financial crisis early. I do not mean I see this crisis is coming earlier than they honestly admit right now. But, I am sure every my blog reader knew that I have said this recession is the worst since great depression of 1929 about 6 months ago. And I have been successfully warn each of you all the fade rally of 13000 at May and ongoing keep making lower lows on our major stock indexes. Now, I personally did not think the propose $700 billion is enough to take all bad loans from all financial firms. This is the least but sure not the final of the amount. I would say $2 trillion ( my gut guess only ) at the end. Why?! There are still lots of "not in the books bad loans" that each financial entity has been putting away from their balance sheet. US accounting rules are totally screw up since US government allowed remove of M3 asset in balance sheet in 2006. No uptick rule sell shorts in 2007. Look at what (!?@#$) has happened since!? It is all their faults. It is so ridiculous how the hell the hall of fame investment management companies ( BSC, LEH, MER...) been doing their risk management?! All of those high-paying financial experts in the firms are showing no ability on how to manage their companies but keep telling lies to their employees, bondholders, stockholders, medias, publics.....etc. Apparently, lots of people has already lost confidence on US financial system and the credibility of US banking and financial services firms. US has always be the top, the sharpest, the most superior over the rest of the world. Now, US is pulling itself into shallow big black holes(it is sinking) and it may never has the power to re-generate itself to become the strongest player in term of economic power. I am still remain extreme bearish about stock markets and economy in long term. And I strongly believe US stock market will make new lows in the near future ( very possible after new year of 2009 ). Do not let the 1000 points recovery in Dow Jones stock indexes tricks you. It is just giant short covering rally. It may solve the worst financial banking crisis only. The economic fundamental has not change a bit. US is still in very bad shape. Housing is still going down. Mortgage is getting harder to get. Gasoline is still above $4.00 despite oil future has drop lots since 2 months ago. Inflation risk still exist. There are still lots of unhealthy uncertainties above water. Wall street is no longer the free market or the old well-known financial hubs. Now, welcome to new era of Wall street. Hope this is not getting us to follow the path of ........
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