you have hit the nail on the head they are sittig on the losses and / or aren't making provisions for future losses
however when the auditors get in next month they will ask them to price their securities- AT MARKET VALUE, rather than at the last sale price.
then the real proof in the pudding comes out, which can be as bad as banks having to eat their dividends.
forget last night. what a con job. how can a private consortium of private banks say it will lend the banks $200b against their trip A rated (and thats another discussion in itself) securities. surely they could only lend against Fannie and Freddie? they were slightly sluggish anyway- the rest of the market is totally illiquid. and no one was going to sell fannie or freddie anyway. what are you gonna buy? AMBAC? MBIA? Countrywide? Orange Country? what a con job.
So they drop another $200b into the system - rather SAY they will do it- and bang, up she goes 4%.
One of 2 things will happen. either they were selling into the system that they know is going down, or they will take that $200b and leverage it 10 times. And you don't think they'd do this? Huh. this is the same criminals who got us into this mess. One or the other
Now, lets not forget the reality of whats going on.
The credit crisis up to now has basically been a result of bad loans written in 2004. note, these loans weren't that bad. Its the utter cr@p that they wrote in 2005 and 2006 that has the market spooked. and never mind AMBAC going under, or MBIA being rerated by Fitch Moodys & S&P, and the resultant sell of off the collatoralised packages of rubbish that these things are, or that 10% of US homes have negative equity. Never mind that its a slowing economy and jobs are shed and interest rates have reset and continue to reset higher meaning MORE loans will default, because this is just the start of it. Behind the houses come th eautos, then the credit cards, then the student loans
ODnt mix up Australian fundamentals of healthy balance sheets, full employment and superannuation contributions to the US credit markets
The US market put off its recession from the tech boom by the housing expansion. lower interest rates, borrow, spend, consume, growth. and when that was out of puff we had the Leverage Buy out M&A boom, which packaged up this rubbish and re-sold it.
as hard as the system will try, there are bad loans out there that cannot be paid back , and someone has to take the pain on that. so far we're what...$125b in. this is going to go to $400b, if not $600b. thats serious money. $133b took 250 points off the S&P. $433b will take 500 points off the US S&P.
So what do you do? well, remember its harder to be out of the market while its still getting cheaper.
also, the average UP days in a bear market are in ratio of 2:1 of the average of up days in a bull market.
this is either a suckers rally, or they are gonna take this $200b, leverage it, then sell into it, then wind it back.
actually, as my friend who manages about $25b in real money says, what we are facing righ tnow is unthinkable. i can't see how it can't happen, but because its to unthinkable, it won't happen. somehow the system will find a solution.
that solution is the US fed ( a private bank) printing and lending money to private banks, against the securities that they already own. now if thats not a con job, nothing is.
what did Stalin say? "permit me to issue the money in a country and i care not who makes its laws". hang on, that was mayer rothschild. Stalin said "its not who votes who counts, its who counts the votes."
