US - Subprime

US - Subprime

Postby kennynah » Wed May 07, 2008 5:59 pm

ECB puts worldwide losses due to market crisis at 320 bln euros so far - report

FRANKFURT (Thomson Financial) - The European Central Bank estimates that worldwide losses from the financial market turmoil have so far reached about 320 billion euros, Die Zeit reported.

The newspaper cited an internal overview produced by European Central bankers, which is based on different sources, it said.

The International Monetary Fund previously said that total losses from the market crisis may reach up to 945 billion euros, it added.
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MBIA says it doesn't need more capital 7may08

Postby kennynah » Wed May 07, 2008 8:54 pm

can be interpreted as problems being resolved gradually in the financial sector...

******************

07 May 2008 12:49 GMT
MBIA says it doesn't need more capital, is writing business
ARMONK, N.Y. (AP) - Bond insurer MBIA Inc. says it has the liquidity it needs in its insurance and asset management segments and won't spend the $1.1 billion it raised until it boosts capital in the insurance unit and decides how it will run the business long-term.

In a letter to investors late Tuesday, MBIA Chairman and Chief Executive Jay Brown said the company has enough assets to meet maturing liabilities and to post collateral in the event of downgrade from credit rating agencies. He continues to believe the company does not need to raise more capital.

In February the company raised $1.1 billion, selling a 40 percent equity stake in itself to stave off downgrades from credit ratings agencies concerned about its ability to pay claims on the bonds it insures. Bond insurers without top-caliber financial-strength ratings from all three agencies will have trouble winning new business. Moody's and Standard & Poor's affirmed its "AAA" rating, with a negative outlook.

The company also said that comments made by billionaire investor Warren Buffett, that the equity and debt markets aren't viewing bond insurers like MBIA as triple-A, are accurate. However, it has written new business in insurance and asset management in the first quarter. Buffett launched bond insurer Berkshire Hathaway Assurance after the credit crisis impaired the ability of other bond insurers to do business.

Brown said he expects there to be a wide range of opinions about the fair value of its credit derivative liabilities when it reports first-quarter results next week, and that it will provide information about how it derives its assessment.

"I continue to believe that investors in MBIA should understand that this number is nothing more than a barometer of credit market sentiment and market liquidity or illiquidity and does not accurately reflect the actual losses that would be expected at MBIA," Brown said in the letter.

MBIA is scheduled to report first-quarter earnings on May 12.
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Re: Subprime Issues

Postby winston » Thu May 08, 2008 9:34 am

Sub-prime crisis inflicts more pain at German banks

BERLIN : Results from two German banks on Wednesday showed that the knock-on effects of the US sub-prime home loan crisis are still being felt around the world.

Commerzbank, Germany's second biggest private bank, warned after announcing a sharp fall in first-quarter profits that "it could be very difficult" for 2008 earnings to match the level of 2007.

It said that "while the immediate detrimental effects of sub-prime engagements appear to have passed their peak, there is evidence that the crisis is now making itself felt in other problem areas, among them leveraged buyouts (LBOs), collateralised debt obligations (CDOs) or consumer loans in the USA."

First-quarter net profit at Commerzbank slumped 54 percent from the year-earlier period to 280 million euros (434 million dollars) while operating profit fell 52 percent to 435 million euros.

Net profit for 2007 was 1.9 billion euros.

Meanwhile on Wednesday BayernLB, Germany's second largest regional bank, unveiled a first-quarter loss of 770 million euros because of 1.1 billion euros in write-downs linked to sub-prime or higher-risk US mortgages.

The Munich-based lender has already announced plans to place its risky subprime-related investments in this area into a separate structure guaranteed by the state of Bavaria.

Large numbers of US homeowners defaulted last year on risky mortgages that had been repackaged into various investment instruments and then traded by banks around the world.

BayernLB is not the only one of Germany's public banks to have had its fingers burned by the sub-prime crisis.

Two others, WestLB in the state of North Rhine-Westphalia and SachsenLB in Saxony, have also had to be rescued to the tune of several billion euros in public guarantees. - AFP/de
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Credit defaults in 2008 already exceeds last 2 years - 8may

Postby kennynah » Thu May 08, 2008 4:45 pm

perhaps when the pain is at its height, the wound will start healing..

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08 May 2008 08:20 GMT
Credit defaults in 2008 already exceeds last two full-year totals - S&P
MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services said credit defaults so far in 2008 have reached 28 entities, affecting debt worth $18.4 billion, which already exceeds the 22 defaults in all of 2007, affecting debt worth $8.1 billion and just a couple shy of the 30 defaults in 2006, affecting debt worth $7.1 billion.

Of the 28 defaulters so far in 2008, 27 are from the U.S., and one is from Canada, the ratings agency said.

There were only 17 defaulters in the U.S. in full-year 2007 and 22 in 2006, S&P added.

However, it also said the trend of mounting defaults in 2008 is hardly surprising.

S&P pointed out that years of an accommodative economic and financial environment have emboldened many entities to adopt more aggressive financial policies to spur growth amid increased domestic and global competition.

However, as economic conditions deteriorated, and volatility in the financial markets protracted, corporate casualties began to emerge at a rate unseen in years, S&P said.
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Re: Subprime Issues

Postby winston » Thu May 08, 2008 5:28 pm

Paulson: Credit crisis may be easing

WASHINGTON (AP) -- The worst of the nation's credit crisis may have passed, U.S. Treasury Secretary Henry Paulson said Wednesday, though he acknowledged rising gas prices will blunt the effect of 130 million economic stimulus checks.

Paulson: "I think we're closer to the end of this."

He ruled out a second stimulus package for now.

In an interview with The Associated Press, Paulson said the turmoil that has gripped Wall Street and that took a turn for the worse again in March has eased somewhat. "There's progress," he said. "I think we're closer to the end of this" than to the beginning.

A prolonged housing slump, a severe credit crisis and soaring energy costs have pushed the economy to the edge of a recession. To help cushion the blow, the Bush administration and Congress speedily enacted a $168 billion stimulus package of tax rebates for people and tax breaks for businesses.

With oil costs surging to record levels and gasoline prices hovering around all-time highs above $3.60 a gallon, Paulson acknowledged that pain at the pump would diminish the impact of the stimulus payments that are designed to give the economy a jump-start.

"Obviously, the high price of gasoline is unwelcome and is a challenge and is a headwind," he said.

The first batch of rebate payments started hitting bank accounts last week through direct deposits. Paulson, Vice President d**k Cheney and other Bush administration officials will head to government check printing centers around the country on Thursday for events highlighting the fact that millions of rebate checks are in the mail.
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"We will get some help from the stimulus," Paulson said in the interview. "Later this year, I expect growth will pick up." Still, he acknowledged that the country was facing "tough times" as people struggle with soaring gasoline prices, higher medical costs and a weak jobs market.

Paulson said the steep slump in housing, which has depressed home sales and prices, remained "the biggest risk to the economy." Although he said he didn't know when the worst of housing's problems will pass, he suggested there will still be strains in the months ahead.

"Even the optimists here believe that you're going to continue to see in the next several months" newspaper headlines that will say prices have declined even further and foreclosures have increased, he said. "That's what happens during a correction."

However, Paulson said he believes the turmoil that began last August in credit markets has calmed since mid-March when the crisis claimed its largest victim with the forced sale of Bear Stearns, the nation's fifth largest investment firm, to JP Morgan Chase & Co. "Again, I think we're on the right path," he said.

Even though the markets are "somewhat calmer now," Paulson said large portions of the credit markets -- ranging from mortgages to student loans to loans that banks make to each other -- still are not functioning in a normal way. "I wouldn't be surprised at all to see more bumps in the road," he said.

Paulson rejected for now the notion of a second stimulus bill, including such things as extending unemployment benefits, an idea pushed by Democrats in Congress. He said it would be unprecedented to extend unemployment benefits from the current 26 weeks with unemployment at the relatively low level of 5 percent.

He said the administration's focus at the moment is on getting the current 130 million stimulus payments into the people's hands. The administration believes the rebates will energize overall economic growth and will create an additional 500,000 jobs later this year.

"Some families will use them to help fill up their gas tank, for a family vacation, or to help (buy) back-to-school clothes and a lot of other things that people are going to like to get done," Paulson predicted.

The Treasury chief spoke on a day when President Bush threatened to veto a broad housing rescue package being considered by Congress. Paulson said the measure being pushed by House Financial Services Committee Chairman Barney Frank, D-Mass., was too broad in its effort to insure up to $300 billion in new mortgages for homeowners facing the threat of default.

Paulson said the administration would continue negotiating with Congress to come up with an acceptable bill, but he did not offer any details of what type of mortgage relief the administration would support.

"Housing is an important area and there are certain things that we need to get done there from Congress," he said. "I view my job as to work to get something that is acceptable and that the president can sign."

The administration favors a narrower legislative housing fix -- including strengthening oversight of mortgage giants Fannie Mae and Freddie Mac, which play a major role in financing mortgages, and modernizing the Federal Housing Administration, which insures mortgages.

In addition, the administration has been promoting a voluntary effort by the mortgage industry to modify current loans to keep distressed borrowers in their homes. Treasury officials met for six hours with industry executives on Tuesday, and Paulson said he was encouraged by the progress, although he did not give details.

On other subjects, Paulson said it made sense to re-examine the government's mandate to boost production of ethanol in light of high food costs. However, he argued that the demand for ethanol was being pushed up because oil prices have risen sharply, not because of the government's order to increase ethanol production.

"I think it always makes sense to rethink everything as conditions change," Paulson said. "But I would just say to you that we looked at this and let's recognize that the ethanol mandate is not what is driving this right now."

Among Paulson's duties is making sure that the U.S. financial system isn't used to bankroll terrorist activities. "A significant portion of our time spent in this area has to deal with Iran," Paulson said.

The department has warned U.S. banks that Iran is using an array of deceptive practices to hide involvement in nuclear proliferation and terrorist activities. Iran's central bank, also known as Bank Markazi, is involved in these deceptive acts, according to the government's warning. Paulson, however, wouldn't say whether or not the department is considering imposing financial sanctions against Bank Markazi.

"We are continuing to watch what the central bank of Iran does carefully," he said.
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Re: Subprime Issues

Postby fclim » Thu May 08, 2008 10:30 pm

so, is it solved or not?
my take? although my idol (mr. buffett) said solved, i'm starting to doubt him... :o

my gut feel say not yet... why?

coz logically, if the bubble was built over the last 3 years, wouldn't it take another 3 years to unwind it? or perhaps even longer than 3 years...

so what say you all leh? :D

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Re: Subprime Issues

Postby winston » Fri May 09, 2008 9:00 am

Credit crunch tipped to bite harder

Investment guru Jim Rogers said yesterday the world has not yet seen the worst of the credit crisis, while Hong Kong Monetary Authority chief Joseph Yam Chi-kwong warned the threat to financial stability remains.

"I doubt that we're halfway through the financial crisis," Rogers said. "This sort of bubble doesn't just clear in a year or two.

"We certainly haven't hit the bottom as far as I'm concerned."

Yam said he "hopes" that improvements in the credit markets will continue, but he warned there were still plenty of risks, and only time would tell. There was no lack of risks in other areas, he added, noting that the securities market in developed economies remained "pretty sick."

Meanwhile, the International Monetary Fund expects further turbulence in financial markets.

Global losses caused by the US subprime crisis will balloon to US$1 trillion (HK$7.8 trillion) within two years, said the IMF's Hong Kong representative, Olaf Unteroberdoerster.

"Asia is not immune to real and financial spillovers," he said.

The US recession may last 12 to 18 months, said Nouriel Roubini, professor of economics at New York University's Stern School of Business and a former economic advisor to the White House.

"The worst is ahead of us rather than behind us," Roubini said, adding that Hong Kong would also be hit because of the peg to the US dollar.
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Re: Subprime Issues

Postby millionairemind » Fri May 09, 2008 9:10 am

We probably need to take what George Soros or Jim R. says with a BIG PINCH of salt..

Jim has a huge short position for US stocks... these are speculators..

They know they are influential and will say anything to make the market believe so that they can gain from it.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Subprime Issues

Postby LenaHuat » Fri May 09, 2008 2:25 pm

These 2 chaps create self-fulfilling prophesies so as to line their own pockets.

The sames goes with what Goldman Sachs said abt oil hitting US$200 in year's time.
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Re: Subprime Issues

Postby fclim » Fri May 09, 2008 11:01 pm

Hi MM and LH,

Agree with both of you about the clash of interest and the "gurus" likelyness to influence the market. :)

What are your opinions about the subprime sillyness then?
Do you think it has bottomed out? :?

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