Saturday, August 11, 2007

The hypocrisy of Western World Finance

HYPOCRISY.


When there is a financial crisis in Europe and American, it is all "Save them! Save them! Or else there will be SYSTEMIC RISKS!!!"

When there is a financial crisis in Asia and Mexico, it is all "Let them die, Let them die, Or else there will be MORAL HAZARD!!!"

Hypocrites.

Hypocrites imbued with hubris.This is Vengeance...



8 comments:

  1. I think the following is more stunning.

    www.cnbc.com/id/20213352/for/cnbc/

    Pay attention to this. "The Fed said all of the collateral accepted in the 3-day repos on Friday was mortgage-backed debt."

    Wow! mortgage-backed debt can serve as collateral. My goodness! Let me rush to Bear Stearns and get some. See if Fed is gonna do this kind of repo with me.

    ReplyDelete
  2. Two days ago, the Fed statement didn't mention about a word of subprime, so the world think that is fine.....

    Until the ECB inject 95B first, then people sense a total different picture, may the central banks really realize what they face now.

    ReplyDelete
  3. mortgage-backed debt doesnt necessarily mean subprime, you just dont know what grade of MBS it accepts.

    ReplyDelete
  4. That's right, but take a look at this.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ.cxsJa71xg

    "The Fed typically only accepts so-called agency mortgage- backed securities, such as those guaranteed by government- chartered Fannie Mae or Freddie Mac, rather than non-agency home- loan bonds from other financial institutions. Issuance and trading of non-agency bonds, including securities backed by subprime mortgages, has ground to a near-halt the past month."

    And this
    http://www.nytimes.com/2007/08/10/business/fed-wires.html?_r=1&adxnnl=1

    "The Fed accepted all mortgage-backed debt as collateral for this morning's repurchase agreement."

    ReplyDelete
  5. Something interesting here.

    http://www.bloomberg.com/apps/news?pid=20601080&sid=ay1Ry.YsHsDw&refer=asia

    "U.S. Urges China to Buy Mortgage Securities Amid Subprime Woes"

    Well, they're talking about government-backed mortgage here, but the smell isn't right.

    ReplyDelete
  6. 哪,分析員,這些才叫全面及整體的分析,學吓野啦,你仲未入流,儒家的升堂入室,你門檻都唔到丫.

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    ReplyDelete
  7. 3-day repos from the fed.

    4 day bridge loans from the ECB.

    That means, within that time period, the banks better sort out their balance sheets.

    Which means they have to re value ALL of their bonds.

    They will have to take a conservative approach. If they are as nonchalant as HSBC was on the 30th July and BNP was on the 1st of Aug... The death spiral will kick in.

    Because paper money system is nothing but confidence and credibility.

    If banks don't solve it in the next few days...

    Confidence will evaporate.

    Finally, on the appreciation of commodities... Their price rise will not lead to inflation. Their price rise is the result of inflation.

    "Cost push" inflation is (one of) the biggest crock of Keynesian economics.

    ReplyDelete
  8. Hey 會計仔...

    Also, I agree that MBS does not equal to subprime.

    But there are a lot of credit crunch right now because the entire mortgage securitization breakdown.

    People with high income, down payment of 35% but applying for a Jumbo Loan are being turned down right now.

    You might call that irrational. But imagine the buyer who is desperate to sell to avoid foreclosure and bankruptcy. Because of this crunch, just might be foreclosed.

    And the death spiral continues...

    ReplyDelete