De Lening van het huis

Van: Bloomberg.com

National City Corp., Viel de grootste bank van Ohio, het meest in 24 jaar in New York handel drijvend, terwijl Washington Mutual Inc., de grootste V.S. de besparingen - en - lening, vielen aan zijn het laagst sinds 1995 op afnemende vooruitzichten voor overnames.

De nationale Stad viel zo zoals veel 47 percenten en verkocht voor $7.38 vanaf 1:41 p.m., onderaan $5.77 in de samengestelde handel van de Beurs van New York. Wederzijds Washington daalde 17 percenten tot $8.78. Het was de tweede rechte zitting waarin zij de lijst van slechtste uitvoerders in lid 24 leidden De Index van de Bank KBW.

De Jacht van JPMorgan & $240 miljoen van Co. aankoop van Cos. van Stearns van de Beer. verwijderde één van de grootste potentiële kopers van de markt. Analisten met inbegrip van Richard Bove van PunkZiegel & Co. verliezen op huisleningen gemaakt tot Washington Wederzijdse en Nationale de overnamedoelstellingen van de Stad hebben gezegd. De prijs voor Beer Stearns - 90 percenten minder dan de de marktwaarde van de firma vorige week - goot twijfel op de waarde van andere bedrijven die aan hypotheek het lenen worden gebonden.

„Morgan is uit het beeld in termen van meer overeenkomsten tot het eind van het jaar bij zeer het vroegst,“ gezegd Gerard Cassidy, een analist bij HoofdMarkten RBC, die tarieven Nationale Stad „underperform.“ Hij schreef vandaag de duik van de in Cleveland-Gebaseerde Nationale Stad toe „vrezen dat er strengere problemen in zijn lening en effectenportefeuilles.“ zijn

Japan’s central bank injected about 4.1 billion dollars’ worth of funds into the domestic banking system Monday to bring down market interest rates amid growing global credit problems.
The Bank of Japan pumped 400 billion yen of extra funds into the money market, according to its website.

The move came just hours after the US Federal Reserve announced an emergency cut to one of its lending rates following the near collapse of Wall Street giant Bear Stearns (nyse: BSC - news - people ) due to problems with mortgage-backed securities gone sour.
The Bank of Japan said that it had not acted in coordination with the Fed or any other central banks.

‘We acted because rates were on an uptrend in money markets,’ said a BoJ official in charge of market operations who asked not to be named.
He said the US financial environment might have been a factor behind the rise in money market rates here.

‘There also were developments on stocks and foreign exchange markets,’ the official said, as the yen hit a 12-year high against the dollar and Tokyo share prices tumbled to a 31-month low.
Japan’s benchmark interest rate stands at just 0.5 percent, the lowest among the major economies — a legacy of the country’s long struggle to recover from a deflationary slump.

More bad news for Canadian Imperial Bank of Commerce from the monoline insurance industry. This time, it’s Financial Guaranty Insurance Co, the bond insurer known as FGIC that’s in trouble, having reported a net loss of US$1.89-billion in the fourth quarter of 2007.

Shareholders should be interested because FGIC is the counterparty to $566-million of the bank’s exposure to subprime mortgages. CIBC has already written down part of this exposure, but could now be facing a further writedown of $362-million related to FGIC, according to Blackmont Capital analyst Brad Smith.

In addition, FGIC is likely a “sizeable” counterparty to CIBC’s more than $20-billion in non-subprime monoline hedges, Mr. Smith said.
Just last week, Mr. Smith also pointed out that CIBC could face another $1-billion in writedowns related to its exposure to another struggling monoline, Security Capital Assurance Ltd.

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The broker has been forced to reiterate its financial strength as credit concerns infected the wider financial industry.

Fears over the global financial markets today began to spread from banks into other areas of the industry after MF Global, the futures and options broker, saw its shares slump 78 per cent and its former parent, Man Group, reported a 10.1 per cent fall.

Shares in MF Global, which was spun off from Man Group last year, appeared to have been infected by overall market panic that all areas of the financial community could face significant funding problems.

At the weekend, Bear Stearns was acquired for just $240 million (£120 million) by JP Morgan Chase after investors started a run on the US investment bank late last week, adding to already heightened concern about the state of the global financial system.

MF’s countered today’s speculation that customers were pulling funds by stating it has no exposure to sub-prime mortgage-backed assets, that it had $1.4 billion in committed, undrawn facilities and that it does not count billionaire investor, Joe Lewis, as a shareholder.

Of all the nightmares dreamt by finance boffins, this has to rank among their worst. One of the biggest investment banks in the world is now only a fingernail’s grip away from going bust.

The very firmament of global finance has just ruptured, and while one can only guess at the probable effects, they won’t be pretty.

In the coming few weeks, financial markets face their biggest test since the 1930s. This is not hyperbole. The experts and traders who populate Wall Street and the City of London are now realising that this crisis, which only a few months ago they thought might be over by Christmas, is here to stay for quite some time.

But so what? How much difference can the problems of an American investment bank really make to our lives here? True, a few thousand Bear Stearns employees in Britain may lose their jobs, but given their bumper bonuses in recent years, they are hardly likely to join the bread-line.

Step out on to the high street today and does it really feel as though we are facing economic disaster? Hardly. The great British habit of shopping is still as strong as ever. Families are still borrowing and spending, albeit at a slower rate than in previous years. The vast majority of us still have our jobs - indeed, unemployment is at its lowest level in some decades. If this is what an economic crisis is like, you might well say, bring it on.

The scene could hardly have been more different six months ago, to the day, when Britain’s high streets were lined with queues of worried savers waiting to withdraw their cash from Northern Rock. The bank has been nationalised; shareholders are likely to lose a lot of money, but has the world stopped spinning? Hardly.

These are quite reasonable sentiments - indeed, from his maiden Budget speech this week, it seems they are shared by Alistair Darling.
I am sorry to say he is wrong. The events on Wall Street yesterday, where the Federal Reserve has had to bail out Bear Stearns, will have severe implications for the economy. This tale be played out thousands of miles away, but as sure as night follows day it will contribute to a serious economic slowdown on these shores.

House prices will fall further, unemployment will rise sharply, profits will tumble and a recession is a real possibility.

Shocked Bear Stearns (NYSE:BSC - News) employees trudged into work Monday morning desperately seeking clarity on their futures.

The fact that the first person they met on entering their headquarters in midtown Manhattan was a salesman hawking cheaper apartments did little to lift their mood — an ironic twist, perhaps, given that it was risky speculation in the housing market that got the bank into trouble in the first place.

“I’ve been at Bear for 11 years and I want to vomit,” said a Bear Stearns employee, who described himself as a partner, as he entered the striking seven-year-old octagonal building two blocks from Grand Central Terminal.

To add insult to injury, someone had taped a $2 bill to the revolving glass doors at the 46th and Vanderbilt Avenue entrance — some gallows humor on the bargain-basement $2-a share price JPMorgan Chase (NYSE:JPM - News) paid for Bear Stearns.
“Where is the $2 bill?” joked one employee, “I might need that tomorrow!”

At the Madison Avenue entrance, Ray Schmitz, a Realtor with Coldwell Banker, was betting that with the value of their stock options in tatters, Bear’s employees might soon be looking to trade their luxury homes for something a little easier on the budget.

“You have to go where the business is,” Schmitz said as he handed out business cards. “A lot of these people are going to lose their jobs, and most of their wealth will have been in share options. They’re soon going to be looking for a cheaper place to live.”

FEAR

But generally, the mood was somber as employees arrived at work. The fear of job losses among bankers, traders and other staff comes as Wall Street grapples with a deepening credit crisis and the threat of recession in the United States grips financial institutions.

“It’s an awful day, everyone is really upset,” one employee said.
Street vendor Hassan El Ashkar, who sells coffee and bagels outside the bank’s Manhattan headquarters, had his morning rush at 6 a.m., much earlier than usual.

“Of course I am worried,” he said. “These are my customers. My customers came earlier than usual today, to see what’s going on. They’re all worried about their jobs.”
Bear Stearns, roughly 30 percent-owned by its staff and proud of its above-average level of inside ownership, employs 14,000 people.

JPMorgan is paying just $2 a share for the 85-year-old Bear, valuing the fifth-biggest U.S. investment bank at $236 million — just 1/15th of its market value on Friday and way below its record share price of more than $172 last year.

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Editor: I respect many writers and analysts - but none more than Nouriel Roubini :

What’s happening?

Since the onset of the liquidity and credit crunch last summer this column has been arguing that monetary policy would be impotent to address such a crunch because, in part, of the existence of a non-bank “shadow financial system”. This system is composed of conduits, SIVs, investment banks/broker dealers, money market funds, hedge funds and other non bank financial institutions.

All these institutions look similar to banks because they are highly leveraged and borrow short and in liquid ways and invest or lend long and in illiquid ways.

This shadow financial system is, like banks, subject not only to credit and market risk but also to rollover or liquidity risk, i.e. the risk deriving from having a large stock of short term liabilities (relative to liquid assets) that may not roll over if creditors decide to withdraw their credits to these institutions.
Unlike banks this shadow financial system does not have access to the lender of last resort support of the central bank as these are not depository institutions regulated by the central banks.

What we are now observing – with the case of Bear Stearns and the recent disaster among SIVs, conduits, run on a number of hedge funds and money market funds is a generalized liquidity run on this shadow financial system.

The response of the Fed to this run has been radical and in the form of the extension of the lender of last resort support to non bank financial institutions. Specifically, the new $200 bn term facility allows primary dealers – many of which are non banks – to swap their toxic mortgage backed securities for US Treasuries; second, the Fed provided emergency support to Bear Stearns and following the purchase of Bear Stearns by JPMorgan, is now providing a $30 bn plus support to JPMorgan to help the rescue of Bear Stearns; finally, now the Fed is allowing primary dealers to access the Fed discount window at the same terms as banks.

This is the most radical change and expansions of Fed powers and functions since the Great Depression: essentially the Fed now can lend unlimited amounts to non bank highly leveraged institutions that it does not regulate.

The Fed is treating this run on the shadow financial system as a liquidity run but the Fed has no idea of whether such institutions are insolvent. As JPMorgan paid only about $200 million for Bear Stearns – and only after the Fed promised a $30 billlion loan – this was a clear case where this non bank financial institution was insolvent.

The sudden collapse of the US Dollar midday today is sparking new speculations on whether the recent rapid movements in the FX markets will prompt central banks to intervene.

In recent news the collapse of the Dollar today and the fear of a global economical collapse prompted world stock markets to decline even further.

Muscat SM -1.24%
Kuwait SE -1.08%
Abu Dhabi SM -1.72%
Dubai FM -1.65%
Vietnam Index -4.36%
Sensex (Bombay SE) -6.03%
Nikkei 225 -3.71%

Commerz Bank believes that for central bank intervention to become a real threat the Dollar’s Index would need to fall by another 4% within the next 2-3 weeks.

Further, the Euro should rise to $1.62

By: Bob Moriarty at 321gold.com

I wrote a piece 10 days ago suggesting caution on the part of my readers. Gold and silver are at bullish extremes; the dollar is at a bearish extreme.

In any normal time, we would expect to see a correction, probably violent.

I still believe we will have a correction shortly but we may no longer control anything. While the metals and the dollar are showing extremes of emotion, the shares of mining companies still seem to be very bullish based on my read of the XAU over gold.

My readers are smart enough to realize we are not in normal times.

We are in a Domino Depression where we can expect two or three hedge funds to collapse every day, banks to go under on a regular basis.

Northern Rock collapsed last fall, I for one, cannot understand how the rest of the banking system has not failed.

By : Ambrose Evans-Pritchard

Big American finance houses have collapsed before. Continental Illinois required a $4.5b(£2.25bn) bail-out in 1984 after coming to grief in Texas as the oil boom deflated.

The giant hedge fund Long Term Capital Management was saved by a club of banks in 1998 under the guidance New York Federal Reserve. The fund blew up after Russia’s default, which ravaged its portfolio of Danish, Italian and Spanish bonds.

On both occasions the US economy was in rude good health. The damage was quickly contained.
The implosion of Bear Stearns is more dangerous.

A host of other banks, broker dealers, and hedge funds have played the same game, deploying massive leverage at the top of the credit bubble to eke out extra yield.

Dozens of them are saddled with the same toxic debt - sub-prime property, credit cards, auto loans, and mountains of unsold paper from the merger boom.

This time the market for default insurance is flashing bright red warning signals across the entire spectrum of US finance.