What will the Fed do ?

[SHELLY]

Finally, I get it

Good! Now that you've got an "overview" of the subprime mortgage meltdown problem....here's a good explanation of how these subprime mortgages were transformed into AAA-grade (highest grade) paper that was bought by entities (pension funds, money market funds, etc.) who demand/require "safe investments" for their customers (and is the reason why the subprime mess is extending far beyond the housing market.)

"The Axis of Easel: Subprime Derivatives

YouTube - subprime derivatives

In the video, you will hear him mention that the securities are divided into "tranches."

TRANCHE: A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". (The tranches in this case are divided by risk.)


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[Babyblue]

Discount rate, Fed's fund rate have been cut, I bet 50 basis points. Oil, housing, credit and GM & Ford all tanking. This company, I mean country is slowing down. Also Atlanta is running out of water!

 

[SHELLY]

Also Atlanta is running out of water!

Have no fear, help is on the way! FEMA has ordered all states north of Georgia to flush twice.




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[Babyblue]

Have no fear, help is on the way! FEMA has ordered all states north of Georgia to flush twice.




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I think I saw that on the FEMA press conference the other day about Atlanta. It was right after the director talked about the fires in CA.

 

[Pirate]

Good! Now that you've got an "overview" of the subprime mortgage meltdown problem....here's a good explanation of how these subprime mortgages were transformed into AAA-grade (highest grade) paper that was bought by entities (pension funds, money market funds, etc.) who demand/require "safe investments" for their customers (and is the reason why the subprime mess is extending far beyond the housing market.)

"The Axis of Easel: Subprime Derivatives

http://www.youtube.com/watch?v=0YNyn1XGyWg

In the video, you will hear him mention that the securities are divided into "tranches."

TRANCHE: A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". (The tranches in this case are divided by risk.)


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That junk paper also piggybacks on clean paper in many collateralized instuments that are highly rated, making an investor unsure of the quality. Most investors only ask "is it aaa?". Unless someone regulates these more tightly it will be impossible for laypeople, and in many cases experts, to know what exactly they are buying.

 

[jlweathers]

Dude said; "trouble is: how do value something that is not very liquid?"

This is exactly why it will get worse before it gets better. When Merrill and other institutions recently wrote down the value of their securitized portfolios, they did so by estimating what they thought the market value could be at that time. Problem is... they have no way of knowing whether or not they were even close to projecting accurate estimates of value. Why is this? This is because no one is purchasing these portfolios. There is no market for these securities. Hedge fund managers are all playing the "wait and see" game. No manager wants to be the first one to offer 70 cents on the dollar, when the market may really turn out to be 50 cents. This is probably why we won't see the real extent of losses on FI's until the first quarter of next year.

There will be money to be made on the purchase of these portfolios. You can bet Hedge fund managers are interested in this market, but they won't step up until they have a greater sense on confidence in pricing. They need a little more information and then... one by one they'll be stepping up to the plate and bidding on these assets. Then we'll know the true extent of the losses in the market.

Little Fish

this is when you reach that ahhah moment & realize that cash truly is king! their are sooo many opportunities to buy some of this garbage & make big money...just like real estate in the panhandle. if only i had some cash

 

[SHELLY]

Goofer,

T-minus-45 and counting to the Fed decision.

I've got the beer and hot wings, the plasma is tuned into CNBC--come on over!

PS: Watch out for the falling dollars on your way here.

 

[kathydwells]

Goofer,

T-minus-45 and counting to the Fed decision.

I've got the beer and hot wings, the plasma is tuned into CNBC--come on over!

PS: Watch out for the falling dollars on your way here.

Are the snacks sitting on your granite countertops?

 

[trying2makeabuc]

If Ben does cut by 50 bps and the stock market jumps 200 -300 points, I plan to completely hedge my entire portfolio by buying S&P puts.

OK Gofer, Did ya buy the puts?

 

[goofer]

sold some of my dogs today.......I am surprised that the mkt actually rallied 140 pts. Probably because of the end of the mutual fund fiscal year. I will ride a few more days to see how the mkt behaves before hedging fully.