Archive for March, 2008

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Masters of Wall Street Universe Exposed

These days the masters of the Wall Street universe are exposed for what they really are, grossly overpaid overly aggressive master salesmen who usually make bad managers.

But never worry for their future. The top people who brought to the world the securitization of mortgages and all sorts of wild derivative instruments may be out of work for the moment, or barely hanging on, but most will go on to other positions taking a considerable amount of their plunder with them. One thing that they know very well is how to take care of themselves.

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30Mar2008 | taipan | 2 comments | Continued
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How Bad Will the Mortgage Crisis Get?

If you are like most investors you are probably beginning to wonder just how bad will the mortgage and financial crisis get?

I’ve been saying for some time that the developing financial crisis that started in the mortgage market has been underestimated by many people, including most certainly those who are supposed to have some good ideas about such matters — the economists.

The problem with many economists these days is that they are working for people who order forecasts that must in some way fit in with their hopes and expectations. For example, an economist who is working for say the NAHB, National Association of Home Builders, doesn’t want to lose his job or contract over some dang economic forecast that is a bit too pessimistic. The poor fellow must try to balance out what his own research shows against what his bosses wants to hear.

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30Mar2008 | taipan | 0 comments | Continued
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Borrowing From 401k Plans

The following chart shows that the poor practice of borrowing from 401K plans is in an uptrend.

This is worrying in that this means that people considered to be well off are having a difficult time in the current economic environment. If relatively rich people are struggling to make ends meet then the vast majority of the middle class and certainly poor people must be under a lot of financial pressure and stress.

In taking money out of a 401K plan you are basically stealing money from yourself. Not only are there unfavorable tax consequences but you have tapped into funds that were meant for retirement. The decision to try and maintain your current lifestyle by taking money out of a 401K instead of cutting back on expenditures may well haunt you in later years.

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29Mar2008 | taipan | 0 comments | Continued
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Beware the Bear Market Ebb Tide

Investors would be wise to beware the Bear Market ebb tide that is currently just getting underway.

The old Wall Street saying that a rising tide lifts all boats is even more true in reverse. Once the tide starts flowing out it becomes a dangerous self reinforcing force.

Those investors who still think that the government and Federal Reserve Bank will still somehow save the economy from a severe recession are just not aware as to how severe and dangerous the challenges overhanging this market are. They also underestimate the speed at which unpleasant events unfold to the downside. Many years of price appreciation can be wiped out within just a few months.

This is a preview of Beware the Bear Market Ebb Tide. Read the full post (426 words, 0 images, estimated 1:42 mins reading time)

27Mar2008 | taipan | 0 comments | Continued
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March Consumer Confidence Index Decline Grim

The March Consumer Confidence Index makes for grim reading for those Bernanke cheerleaders who still think that Ben and the Fed can keep the economy from experiencing a recession. A recession that we are probably already in. Actually, it makes grim reading for anyone who is concerned about the future path of the American economy.

The Conference Board Consumer Confidence Index, as reported by the Confidence Board, which had declined sharply in February, fell further in March. The fall was all of 12 points which is like falling over a cliff.

The Index now stands at 64.5 (1985=100), down sharply from 76.4 in February. The Expectations Index declined to 47.9 from 58.0. The Present Situation Index decreased to 89.2 from 104.0 in February.

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25Mar2008 | taipan | 0 comments | Continued
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Financial Stocks to Remain Under Pressure in 2008

Look for current rally to fizzle and for financial stocks to remain under pressure in 2008.

While the perhaps heroic, certainly desperate actions of Ben Bernanke and the Federal Reserve bank have brought some relief to the Wall Street investment banks, commercial banks, and mortgage companies look for the relief to be very short lived.

In my opinion, the problems with the world’s financial system, with the United States in the lead position, are just far greater than the solutions. In the end we will be lucky to avoid a financial meltdown.

The desperate nature of the Fed’s recent actions should give us an idea as how close to the financial abyss we truly are. Exchanging government treasuries for toxic waste mostly worthless subprime mortgage and CDO paper and the like seems to be a bad exchange to me.

This is a preview of Financial Stocks to Remain Under Pressure in 2008. Read the full post (313 words, 0 images, estimated 1:15 mins reading time)

24Mar2008 | taipan | 0 comments | Continued
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