Credit Default Swaps - They just might bring down the House of Cards - Page 4 - Mercedes-Benz Forum

View Poll Results: Credit Default Swaps
I understand them fully. Scary huh. 2 20.00%
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post #31 of 54 (permalink) Old 02-17-2008, 09:07 PM
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Actually no. The Fed is bailing out borrowers and lenders.

Earners and savers, it's punishing.
HARD. The next Treasury Notes I have to reinvest will be in the well under 4% range from the looks of it.

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Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
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post #32 of 54 (permalink) Old 02-17-2008, 09:18 PM
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Actually no. The Fed is bailing out borrowers and lenders.

Earners and savers, it's punishing.
Depends on what the savings are for. If buying a house, the savers
are benefiting from the drop.
Retirees on fixed income suffer with lower interest but on the other
hand retirees like mcbear are enjoying life. When the dems take over,
seniors will be helped with universal care.
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post #33 of 54 (permalink) Old 02-17-2008, 09:38 PM Thread Starter
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Not so much, because it's propping up prices, preventing them from finding their natural level. And anyway, only the borrowing part of their purchase is being assisted. The 'savings' part is being devalued.

Seniors already have Medicare btw. Universal coverage might help a lot of people, but that's definitely a separate issue.
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post #34 of 54 (permalink) Old 02-17-2008, 09:41 PM Thread Starter
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HARD. The next Treasury Notes I have to reinvest will be in the well under 4% range from the looks of it.
And so the 'traditional virtues' are devalued along with the dollar. That, along with the constant intervention in the marketplace (from those who forever decry intervention in the marketplace) never ceases to amaze.
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post #35 of 54 (permalink) Old 02-17-2008, 09:44 PM
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All of this further reinforces my assertion that the health of our economy is merely a figment of our collective imagination. A dream, if you will. If we were to wake up or find lucidity and take count of what we really had and what it's really worth, our world would come crashing down around us at every corner.
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post #36 of 54 (permalink) Old 02-17-2008, 09:52 PM
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... Universal coverage might help a lot of people, but that's definitely a separate issue.
It's another bailout for the cash strapped.
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post #37 of 54 (permalink) Old 02-17-2008, 10:02 PM Thread Starter
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All of this further reinforces my assertion that the health of our economy is merely a figment of our collective imagination. A dream, if you will. If we were to wake up or find lucidity and take count of what we really had and what it's really worth, our world would come crashing down around us at every corner.
This, about the health of our economy, is also true of our fiat currency, alas.
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post #38 of 54 (permalink) Old 02-17-2008, 10:06 PM
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Unemployment is low, historically speaking. I don't see why you have
to question a statistic which has been around for ages.

Hedge funds are for the wealthy (by law). Endowment funds are
in the well to do category as well. The last time I checked, Harvard
was not laying off professors. Municipal funds will be bailed out.

The national debt "problem" is a separate issue.

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You might be surprised to see how may mutual funds, retirement funds and institutional funds are intrinsically tied to Hedge Funds. It is well over 2/3.

Housing bubble is still in burst mode. Until housing starts to come up and supplies of houses on the market drop to under 50% of their current levels, this thing is still popping.

Unemployment numbers, as we went over prior show a large gap between the three elements. 1)Number of potential workforce 2)people on unemployment 3)off the books. That second number is growing slightly and the third number is growing quickly.

"Bottomline, the fed is going to bail everyone out". It would be best to rephrase that to be "The Federal Government will increase its National Debt to bail out the Financial Sector, passing the principle and interest on that added debt to the next two or three generations". That covers the tax increase and perpetuation of debt issues in that "bailout".
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post #39 of 54 (permalink) Old 02-17-2008, 10:41 PM
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Not so much, because it's propping up prices, preventing them from finding their natural level. And anyway, only the borrowing part of their purchase is being assisted. The 'savings' part is being devalued.
...
Sure, down 50% is better than down 20% for a prospective buyer
but both are "good things".
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post #40 of 54 (permalink) Old 02-18-2008, 08:19 AM
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Auction-Rate Bonds Lure Investors With 20% Interest

Auction-Rate Bonds Lure Investors With 20% Interest

Feb. 18 (Bloomberg) -- The U.S. market for auction-rate securities that failed to draw enough buyers last week is luring new investors as interest rates soar to as much as 20 percent, Bank of America Corp. analysts said.

Less than a quarter of auctions failed that offered interest above 10 percent, analysts led by Jeffrey Rosenberg in New York wrote. The failure rate was as high as 98 percent at auctions offering 4 percent interest.

Banks including Citigroup Inc. and Goldman Sachs Group Inc. allowed hundreds of sales in the $330 billion market for the securities to fail last week after they couldn't attract bidders and didn't step in to buy unwanted debt. An unsuccessful auction of $100 million of notes sold by the Port Authority of New York & New Jersey raised the rate to 20 percent from 4.3 percent.

``Penalty rates as high as 20 percent making for very attractive investments'' helped bring new investors to the market, Rosenberg and Hans Mikkelsen wrote in the Feb. 15 note.

Auction-rate securities are long-term bonds where the interest is reset at auctions held every seven, 28 or 35 days.

Banks stopped buying the securities for their own accounts to prevent failures after disclosing at least $146 billion of credit losses and writedowns stemming from subprime mortgages.

As banks backed away from the market, failed auctions have left holders unable to sell the securities and boosted interest costs for borrowers from cities to hospitals. An unsuccessful auction almost doubled seven-day borrowing costs on $15 million of bonds sold by Harrisburg International Airport in Pennsylvania to 14 percent.

AllianceBernstein Holding LP, the New York-based investment firm, BlackRock Inc. in New York and Boston-based Eaton Vance Corp. said last week that investors shunned debt auctions by some of their funds.

Banks' efforts to preserve their balance sheets by not buying auction-rate bonds may be an ``ineffective band-aid'' because borrowers may draw on credit lines provided by banks, the analysts for the Charlotte, North Carolina-based bank wrote.

Bloomberg.com: Worldwide
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