According to numbers compiled by Inside Mortgage Finance, combined jumbo, subprime, and Alt A originations accounted for just 8 percent of total mortgage activity in the most recent three-month period. The jumbo share of new loans made plummeted to only 6 percent in the quarter, while the subprime share fell to 0.5 percent and the Alt A share slipped to 1.6 percent. The conforming mortgage sector – Fannie Mae/Freddie Mac and FHA/VA – has become the only game in town for many borrowers. FHA posted the biggest market share gains of any sector in 2Q08.

Dilaporkan tiga orang tewas sementara puluhan lainnya menderita luka-luka. Menurut Delvi (29) seorang saksi mata, ambruknya jembatan itu terjadi ketika puluhan orang berada di atas jembatan saat perjalanan pulang usai melakukan ziarah.

Jembatan yang sudah karatan itu ambrol dan menumpahkan semua yang berada di atasnya ke dasar sungai, yang berada di bawahnya.

Korban tewas disebutkan menderita luka parah karena jatuh menghantam batu kali.

Saat ini warga masih melakukan evakuasi. Korban langsung dilarikan ke RSUD Sijunjung Sumatra Barat. Belum ada keterangan resmi dari pihak kepolisian atas peristiwa ini.

Robyn Hitchcock and the Egyptians

Robyn Hitchcock

The Octopus Project

Higher

Tim Hardin

Weakling

Yves Simon

Keny Rogers and The First Edition

Rico Rodriguez

Viceroys

Willie Nelson Merle Haggard

Scout Niblett

DJ Mouss

BMX Bandits

Stacey Kent

Mark Knight Feat. Luciana From Portobella

Pylon

Sick City

Aqua Velvets

Dj Lhasa

Mystik Journeymen

Orion Too Feat. Caitlin

Peter Grant

Shocking Pinks

St. Vincent

Still Nameless Blues Band

Soulsavers

Tommy Roe and Friends

Willie Nelson and Friends

DJ Mitsu the Beats

Dannii Minogue And The Soul Seekers

Kasey Taylor and Chris Meehan

Les Baxter

Serj Tankian

Taint

Talamyus

Tudor Lodge

Tokiko Kato

Miyu Nagase

Nights Like These

JMFH

Andre Harris

Cocteu Twins

DJ Bomba

DJ Spen and Ultra Nate Pres.Jada

Dave Grusin and GRP All Star Big Band

Dj Lhasa Vs. Gabry Ponte

Johnny Shines

Lisa Lashes

Los Campesinos

Maeder

Manuel Tur

Mel Torme, Gerry Mulligan and George Shearing

Paths of Possession

Stacy Lattisaw

The Exploding Hearts

The Changes

Tim Hardin Trio

Tom Baxter

Tresor 029 Dream Sequence Feat Blake Baxter

Vicente One More Time

Willie Nelson and Emmylou Harris

The Free Design

Maritime

Prophet Posse

Rameses III

Russ Freeman and Craig Chaquico

Craig Chaquico and Russ Freeman

Dj Drama and Gorilla Zoe

Frog Pocket

Danny Wynn and Bass Collective

Dj Reflex

Russ Freeman

Forever Like Red

Frank Sinatra and Quincy Jones

Garland Jeffreys

Gerald Albright

Hil St. Soul

Manuel Tur and Dplay

Manuel Gottsching

Merle Haggard and the Strangers

Pentacle

Praful

Free Design

Beverly Kenney

Christian Scott

Love Sculpture

Martha Argerich

Outta Nowhere

General Echo

Baby Bash Ft. T Pain

Long John Baldry

Starfire

Sarah Vaughan and Clifford Brown

The Yellowjackets

Vast Aire

Dave Grusin with Lee Ritenour

Los Temerarios

Man

Sex Pistols

Fattburger

Gilles Vigneault

Yukmouth and Killa Klump

Freescha

Laurence Jalbert

Sid Vicious and the Vicious White Kids

Flanders and Swann

Leroy Hutson

Mari Wilson

Sarah Vaughan; Lena Horn; Shirley Horn

Sarah Vaughan With Clifford Brown

Wynton Kelly Trio and Wes Montgomery

Camiel

Conway Twitty and Loretta Lynn

Loretta Lynn and Conway Twitty

Gist

Westbound Train

Bill Evans and Jeremy Steig

Mezzoforte

Mika Newton

A Natural Wonder

Aldo

Andrew Johnson

Anuna and The Ulster Orchestra

Asana

Asturias

Australis

Benko Lazslo

Big River Cree

Boko Susuki

Bonten

Carlos Guirao and J.A. Lopez

Celluloid

Centrinity

Coen Bais and Jons Pistoor

Colors Of The Land

Corporation

Cyscape

D.W.B.

Damian

David Ison/Therasound

David Kuhn

Deca

Deep Imagination

Delerium and Jael

Desert Wind

Diane Arkenstone and David Arkenstone (Earth Trybe)

Diciplines De L'ame Reiki 2 Vincent Bruley

Dionne Bregent

E=motion

Earth and Fire Orchestra

El Bosco

Aidan Mason

Alessandro Safina

Jean Paul Trombert and Claude Lapouge

Andre Garceau

Jean Paul Trombert

Aruna; Michael Reimann; Christian Bollmann

Between

Baked Beans

Final Fantasy

HyperSax

Sarah Vaughan and Billy Eckstine

Shakatak and Friends

Beaver and Krause

Cock Robin

Company B

Danny Keith

Data

Dolly Dots

Eliah`s Mantle

Halloween

L'ahka Muza

Peter Kent and Luisa Fernandez

Ukrainian Gothic

While Heavens Wept

Chris Standring

Doc Powell

Earl Klugh and Bob James

Luis Salinas

Marc Antoine

Najee Plays

Shane McGowan

Skylark

Gal Costa e Caetano Veloso

9th wonder and Smif N Wessun

Antonio Adolfo and No em Pingo d'Agua

Brad Gillis

Ghastly City Sleep

Martha Argerich Schumann

Martha Argerich Rabinovitch

The Rippingtons With Russ Freeman

Sarah Vaughan and Her Trio

Streetwize

The Braxton Brothers

Ernst Reijseger With Louis Sclavis

Cornel Fugaru

SUMMER DONNA

Belfegor

Capella Academica Wien

Ponto número 1: Será que uma crise de subprimes está em gestação no Brasil, com veículos no lugar de imóveis?

Quando o Brasil começar a contabilizar a queda das commodities (provavelmente no início de 2009), pode ser que haja uma explosão de inadimplência nas prestações de leasing/CDC de veículos, que as instituições financeiras retomem uma quantidade imensa de carros dos inadimplentes, e que essa tsunami de carros usados não encontre mercado fácil. Mas isso ainda estaria longe da crise das hipotecas dos EUA, em que os mutuários nunca pagaram, de fato, suas hipotecas, que eram quitadas por sucessivas renegociações via "aumento de valor de mercado" dos imóveis. Ou seja: pode ser que a crise dos automóveis doa, mas não vai ser fatal como a das hipotecas.
Ponto número 2: A propaganda de veículos está sendo responsável por um endividamente excessivo e tóxico para o público em geral?

Quanto a isso, não tenho dúvidas. o consumidor continua preocupado somente com o valor da prestação do bem financiado, e não tem a menor idéia do que paga de juros. Pior que isso, no caso de veículos, é o fato do comprador não levar em conta o custo do IPVA, do seguro, da manutenção, dos imprevistos (batidas, multas, pneus furados etc.), o que acaba levando famílias à insolvência financeira.

 Bloomberg reports JP Morgan analysts have released an estimated Q3-08 writedown of $4 Billion for wounded fish Lehman Brothers.

 "Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, the analysts wrote. The company may have already been selling some commercial mortgage assets, they added."

 "Lehman continues to have significant exposure to mortgages and asset backed securities, JPMorgan's Worthington said in the report. We believe management wants to leave its mortgage troubles behind and restore confidence."

 Once again, I am feeling we will hear something dramatic from the top at Lehman any time now - there is no reason to believe they would allow themselves to be battered like this on Wall Street and in the press if they were not extremely close to cementing a deal for the sale of part or most of their holdings.

 What will be left, aside from the Lehman Brothers name, which has now become a damaged franchise in the eyes of analysts and the public in general? Will Lehman's fate make us forget all about Bear Stearns? Will analysts and pundits alike wonder aloud - " Will so-and-so be the next Lehman Brothers?"

 The resolution of Lehman's problems will have far reaching effects through out the duration of credit crisis, and the financial industry knows this is a bigger deal than Bear Stearns. The Bear / JP Morgan deal happened so fast, and with a great deal of government intervention and money behind it - and the salaried guys had to work a Saturday and Sunday to get it done - all of this completely the opposite of what we are seeing with the Lehman case.

 So is Lehman Brothers ‘big enough' to fail in the Feds eyes?? Or is the feds apparent lack of concern just another sign that points to the fact that a deal is close to being completed.

 Let's hope it's enough.

This morning SKF broke through some resistance we had at $130, I will be watching whether we close above this mark. If we do then we should continue on upward with very little resistance. I usually watch Citibank and Bank of America when holding skf. Both charts look extremely bearish as does the DJIA and the S&P.

What gives me much confidence in SKF is the Philidelphia Bank Index chart. We are now trading below the 50-day moving average after falling off a double-top at $72.50 that also coincides with resistance that was previously support at the Bear Stearns lows in March. Since we couldn't trade beyond this level it is a good indication that despite some short squeeze rallies, we should be going down in the bank index which will send SKF further upwards in the short to midterm.

]]> http://chemtrailsevilla.wordpress.com/?p=211 Tue, 19 Aug 2008 12:27:03 +0000 zass7 http://chemtrailsevilla.wordpress.com/?p=211 España está enladrillada y Europa lo sabe

Paloma ha comprado un apartamento minúsculo y no demasiado bonito, tras el pago de cuya hipoteca dispone mensualmente, pese al contrato laboral de jornada completa, de algo más de 200 euros que aseguran su dependencia de las croquetas de mamá; Miriam y David han adquirido un piso en una ciudad fantasma, o mejor dicho, todavía inexistente, a medio construir, carente de todo tipo de servicios y a muchos kilómetros de atasco de sus lugares de trabajo; en Villacañas, muchos hogares viven pendientes de que la policía localice y detenga al propietario de la fábrica de puertas que, ante el inminente colapso del sector, “salió a por tabaco y no ha vuelto”, olvidándose, por supuesto, del salario de sus empleados.

Estas historias, familiares para la mayoría de los españoles, empiezan a serlo ya también para los europeos que se despiden, al evocar nuestro país, de la imagen del pueblo blanco adormilado en una ladera, pero también del paraíso vacacional incentivado por la compra-venta de bienes inmuebles con fines especulativos. En Alemania, el canal de televisión Phoenix ha emitido recientemente el reportaje de Thomas Schneider “Die Betonfalle - Wie Spanien sich die Zukunft verbaut” (literalmente: “La trampa de hormigón: cómo España obstruye su futuro”, el juego de palabras entre construir y obstruir funciona con mayor o menor eficacia en ambos idiomas), producido para el estudio madrileño de la primera cadena alemana ARD, para la que Schneider trabaja como corresponsal, y repetido al menos cuatro veces en diferentes franjas horarias.

El documental tematiza las dificultades de los jóvenes españoles para acceder a una vivienda en propiedad, como marca el deseo y la presión social, o de alquiler, a fuer de la necesidad, explora los primeros impactos del temido estallido de la burbuja inmobiliaria (inflada por una sobrevaloración de los precios reales de la vivienda que The Economist tasa en un 52%) y muestra en todo su patetismo el drama de una generación atrapada entre la deuda al banco, la dependencia de sus mayores y la inestabilidad laboral. El diagnóstico de Schneider, expresado ya en el subtítulo de su crónica, es taxativo: dejándose llevar por el canto de sirenas de una prosperidad económica impulsada durante muchos años por el incontrolable frenesí del mercado inmobiliario y la facilidad de crédito, la pujante y dinámica España de la democracia, que sigue siendo, como cabe añadir, el país empozado de la recalificación, el chanchullo y el pelotazo urbanístico, ha encerrado su futuro detrás de un muro de ladrillo paradójicamente sólido y bien construido.

Ahora que, según titulaba el diario francés La Tribune, la fiesta se ha acabado, la mayoría de los que en ella participaron y, a fin de cuentas, todos los ciudadanos españoles, excepción hecha de ventajistas, pícaros, delicuentes y demás espabilados, empiezan a sufrir en sus bolsillos los efectos de la devastadora borrachera: el endeudamiento, la disminución de las rentas y del valor patrimonial, la pérdida de la inversión con la consiguiente destrucción de riqueza, el aumento del desempleo y la caída del consumo privado. Con una demanda incapaz de absorber el exceso delirante de oferta, la sintomatología era tan evidente que no hacía falta ser un experto en mercados finacieros para vaticinar el advenimiento de esa crisis violenta que hoy sólo los promotores se empeñan obstinadamente en negar, en el intento desesperado por deshacerse de algunas más de esas cientos de miles de viviendas edificadas y vacías que nadie necesita y que no valen ni la mitad de lo que cuestan.

Y sin embargo es innegable que la avaricia del sector ha matado a “la gallina de las casas de oro”, la fábula de la economía española según la concebían las periodistas Ruth Ugalde y Carmen Canfrán en la edición digital de El Economista, ese cuento que todos hemos escuchado de niños y cuya sencilla moraleja empresarios y políticos parecen no haber comprendido. Ahora tendrán una buena oportunidad para hacerlo. Las compañías que se declaren en bancarrota difícilmente hallarán excusa en la crisis coyuntural o en un precipitado cambio de ciclo. En los foros de wallstreetnline, por citar un ejemplo, hay más de 790 páginas dedicadas a la cuestión del colapso inmobiliario en España, con alrededor de 7.930 contribuciones de los lectores; teniendo en cuenta que el tema de discusión se abrió en 2004, no hay duda de que el batacazo de la construcción era todo menos imprevisible.

Los sucesivos gobiernos, temerosos de la mala publicidad que suscita entre los votantes la presentación de unas cifras macroeconómicas negativas, y para no dar argumentos a la siempre beligerante oposición, no han mostrado, pese a ello, una voluntad decidida de atajar el problema, ni desde el Ministerio de Economía, ni desde el de Fomento ni desde ninguna otra instancia (las ayudas a la promoción del alquiler y a la emancipación llegan tarde y son insuficientes, los millones destinados a impulsar la vivienda protegida parecen más bien un salvavidas lanzado a las empresas constructoras). La cortedad de vista de los representantes políticos no les impide asombrarse luego del descrédito en que ha caído su actividad, la sospecha permanente de cohecho, la desidia y falta de integridad que les atribuye el ciudadano y la desconfianza total en su capacidad de intervenir en defensa de lo común frente a grupos de presión o intereses mercantiles.

Esta pérdida de credibilidad de la política y, en general, de lo público, es uno más de los daños colaterales de un crecimiento engañoso, fraudulento no por ilegal —o no sólo por eso—, sino por los desmesurados costes sociales, culturales, medioambientales y, en definitiva, económicos, que ha conllevado y que hacen que su debe empiece a pesar ya considerablemente más que su haber. No cabe, no obstante, culpar unicamente a políticos y especuladores de tan desfavorable balance; como acertadamente titulara Luis Fernández-Galiano su magistral artículo, Marbella somos todos. El nuevo modelo urbanístico, la proliferación del ladrillo y del asfalto, la destrucción del entorno natural son, no me resisto a citar literalmente sus palabras, “producto de la vitalidad y el dinamismo de una sociedad próspera y hedonista, que multiplica sus exigencias con impaciencia abrupta. El territorio es siempre un retrato físico de la cultura que lo ha modelado y, nos guste o no, los nuevos paisajes españoles reflejan con exactitud lo que hoy somos: acomodados, vulgares y satisfechos”.

Miriam y David no tienen más que asomarse a la ventana para ver el rostro mal encarado de esa nueva realidad española. El apartamento que han comprado o siguen comprando es parte de una urbe artificial, surgida de la nada para albergar a más de 30.000 habitantes y en la que hoy día perviven ciento y pico familias aisladas, sin transporte público, infraestructura educativa o sanitaria suficiente, comercios, restaurantes u otros locales de ocio y encomendados a la protección de vigilantes privados. Curiosamente, para construir Ciudad Valdeluz, ejemplo paradigmático de ese crecimiento aberrante producto del afán de enriquecimiento más cerril, fue necesaria la decisión política de levantar la estación del AVE Madrid-Barcelona no en Guadalajara, capital de provincia de 67.000 habitantes, sino en un páramo desierto situado a 13 kilómetros de su casco urbano. No es el único caso en que por misteriosas razonas una pomposa estación del trazado de alta velocidad se construye en terreno rústico baldío, como ha ocurrido en las cercanías de Antequera, pero esa es otra —y la misma— historia…

El reventón de la burbuja significa para Miriam y David que las calles de su ciudad nunca se llenarán de niños, como anhelan pensando en los que desearían tener, y posiblemente ni siquiera lleguen a verla terminada, porque las promociones no van a venderse y únicamente hay completada una de las cuatro fases previstas del proyecto; si ellos mismos quisieran deshacerse ahora de su vivienda, sólo podrían hacerlo afrontando enormes pérdidas. De manera que son prisioneros entre sus propias cuatro paredes.

¿En qué consiste, pues, la trampa de la que habla Schneider, el cepo de ladrillo y cemento en que ha caído, como mínimo, toda una generación? Es la trampa del endeudamiento perpetuo, sin lugar a dudas, pero también la condena a la fealdad, a habitar espacios urbanos devaluados, a la estrechez de viviendas pagadas a precio de oro pero construidas a precios de saldo (el presupuesto se ha diezmado en los bolsillos del promotor, del intermediario, del concejal o el consejero), en ciudades-dormitorio o en urbanizaciones inhabitables florecidas en la autopista y muchas veces carentes de los más elementales servicios; es la trampa del juego especulativo estimulado por políticos, economistas y expertos, del dudoso festín a cuya mesa se han sentado tantos ciudadanos; es la trampa que impide emanciparse a los jóvenes, que los obliga a trabajar por sueldos de miseria y a renunciar a sus derechos por miedo a perder ese salario que los más afortunados destinan casi íntegramente a cubrir la hipoteca; es la trampa, por tanto, de cuyas víctimas se alimenta la precariedad laboral y que hace de tener hijos un lujo que muy pocas parejas pueden permitirse. Es, para concluir, la trampa en la que agonizan costas y paisajes naturales, que modifica para siempre, y siempre para mal, la fisonomia de nuestra tierra, la trampa de la falta de escrúpulos o de perspectiva, de una mentalidad de nuevo rico tan ambiciosa como limitada.

No quiere, sin embargo, el corresponsal alemán, excluir del documental todo atisbo de esperanza y relata la historia del emprendedor Álvaro, que ocupando junto a otros jóvenes un antiguo hospicio para leprosos cerca de Barcelona, disfruta por primera vez del gustazo de un vivienda acondicionada a su antojo y con su esfuerzo, con jardín y ventana con vistas al skyline de la ciudad condal. La autogestión de espacios ocupados no representa, lamentablemente, una opción factible, imaginable para el grueso de la población, de sortear la penuria inmobiliaria, de manera que los bancos y las administraciones de lotería siguen frotándose las manos… Que Dios y el Euribor nos guarden.

By Anthony M. Freed 

Faux Biz News aired an exclusive interview Monday afternoon with the former U.S Secretary of Housing and Urban Development Henry Cisneros, currently Executive Chairman to CityView. 

 Cisneros stated that he agrees there is a need for Federal intervention at Fannie Mae and Freddie Mac, but does not believe the government will have to bail out or nationalize the troubled GSE‘s. Cisneros insisted that the GSE's are an essential part of of the economy.

 "If they didn't exist we would have to invent them,"  waxed Cisneros.

 When asked if he thought the situation was as DIRE at the quasi-government entities as many analysts are implying, such as the need for a complete take over by the Feds, Cisneros replied that was an "overstatement" and that he was confident "they can recapitalize."

When questioned about whether there was a need for fresh blood at the top of the GSE‘s, Cisneros expressed only tentative support.

"They are working through it and I basically support them," he said of the GSE chiefs.

Oh, and don't forget the fact that as the credit crisis was beginning to fully reveal itself last August, Countrywide CEO Angelo Mozilo was Dumping His Shares as fast as legally possible - perhaps even faster.

On the subject of his old buddies at mortgage sweatshop Countrywide, particularly Angelo Mozilo, Cisneros seemed to be a little defensive. He began with some gratuitous compliments for Faux Biz "fair and balanced" approach to the news, and thanked them for giving him a forum to clear the air on the issue.

"Angelo Mozilo is not a bad man, he is a very good man,"  he managed to muster regarding his former colleague and founder of Countrywide. Quite a testimony from a close friend.

He then went on to explain that Angelo Mozilo "hasn't been perfect" and that it was Mozilo's managerial mistakes that had ultimately "cost him the company he built."

I really like this line about the cost to Mozilo personally. Give me a break. The guy drove up originations and Countrywide's stock price at the peak of the housing bubble, changed his stock option plan to a more accelerated and personally advantageous pace, cashed in for about $500MM dollars and then retired to his tanning bed, leaving the company on the verge of total collapse.

Poor, poor Angelo, all that hard work and nothing to show for it? It's an American Tragedy if you ask me.

Even worse, Mozilo was still telling investors and employees - who were heavily invested in Countrywide through retirement and profit sharing plans - that the company had access to more than enough capital to and credit to maintain current operating levels, and that there was no threat to the company's solvency.  

The SEC and FBI both opened an investigations into Mozilo‘s sweetheart stock option deal, but neither agency seem too interested in getting right to the bottom of it any time soon.

It is a pretty straight forward case of insider trading: One day Mozilo says Countrywide is well capitalized and has access to more than enough credit. Days later Mozilo cashes in stock options worth millions of dollars, and at price well above Countrywide's trading price that day.

 Then within days, Mozilo announces that Countrywide was not in as good a shape as he thought, and that they did not have access to as much capital as he had thought. The stock tumbled and Bank of America made their first installment in the form of a clever multi-billion dollar option deal that ended up being a losing gamble, and was perhaps the major factor behind B of A's decision to follow through with the purchase of ravaged Countrywide Financial. 

Cisneros was then somewhat surprised when asked about the ‘VIP' mortgage loans he and other policy heavy-hitters like Christopher Dodd, Chairman of the uber-powerful Senate Banking Committee received from pal Angelo in the not-quite-ever-a-scandal laughably termed the "Friends of Mozillo."

"I did get a mortgage under the VIP program," Cisneros stated, "but it was at market...I think the record will show that is the case,"  he said resolutely.

Since leaving public service and the Board of Directors of Countrywide Financial, Cisneros founded CityView (2003), a private investment company that seeks to direct capital towards funding "homes for working families," particularly for those who hold positions that directly benefit their community, such as teachers, healthcare workers, police and fire personnel. I applaud his civic minded efforts, and I am sure St. Peter has made a note, too.

On the success of CityView‘s efforts, Cisneros remarked that the "present market has made it tougher"  to get the job done.

© Anthony M. Freed - All Rights Reserved

A continuación podréis ver el trailer.

Freddie Mac- now called Federal Home Loan Mortgage Corp. since the government bailed it out - said the law, which makes lenders adhere to 20 requirements if they wish to issue subprime mortgages, would make it easy for buyers to contest foreclosures if one or a few requirements are not followed.

Freddie Mac essentially said the risk isn't worth it.

Subprime lending has dropped in the state since the beginning of the mortgage crisis, and Freddie Mac picks up few New York subprime loans already. But, according to LoHud.com, the move could prompt other lenders to pass on New York, making it even harder for many buyers to find financing.

From the article:

Most mortgages, prime and subprime, are resold in what is known as a secondary market, where Freddie Mac operates, and if other buyers in that market also decide to stop buying the New York mortgages, it could dampen the supply of money available to buyers.

But there was no indication last week of whether other lenders might follow Freddie Mac.

"It remains to be seen what the impact is," said Michael Smith, head of the state Bankers' Association, who sees the Freddie Mac move as part of a trend toward tighter credit.

Smith said many banks don't make subprime loans and are not affected. Those that do could sell them to another buyer or hold them themselves, he said.

The new law actually makes Freddie Mac's investments in New York safer, said Morgan Hook, a spokesman for Paterson.

"The law will bring strength and sanity to the market and help prevent a future crisis," he said. "We see the protections we've put in place as being good both for both the borrower and the lender."

An official of a consumer group said she thought Freddie Mac might reconsider its decision not to buy New York subprime loans.

In its most rudimentary form, an asset swap is an exchange of the cash flow or risk profile of one asset for another, for a given, pre-determined period of time. Assets swaps are undertaken for a variety of reasons but, fundamentally, they are driven by an investor’s need to improve or rationalize the character of an underlying asset (debt paper or equity) on specific terms.

For example, an investor might desire to switch from a floating interest rate profile into a fixed rate interest stream for a period of two years. Another investor might want to exchange a Euro risk for Yen for five years. Or, an investor might consider that the time is appropriate to switch from equity volatility to relatively stable debt paper. Briefly, the opportunities afforded by asset swaps are limited only by the numerous, virtually unlimited, opportunities available in the marketplace today.

Why asset swaps today?

The sub-prime crisis demands that virtually every investment portfolio be scrutinized from the twin prisms of re-pricing and reallocation; re-pricing because the risks embedded in any investment instrument have multiplied in recent weeks, reallocation because the quality of an overwhelming portion of the currently outstanding debt instruments is now being questioned.

The transition in asset valuations (and related valuation techniques) could well continue through the next 12-18 months. This transition is likely to cause serious damage to investment portfolios, given that higher oil and food prices are adding to the questions surrounding the core fundamentals of the debt market. The global economy, which is in the midst of significant re-alignment, will inevitably force wider spreads and lower liquidity in the months ahead.

In brief, failure to take decisive measures to protect and, quite possibly, enhance your investment portfolio today is likely to degrade overall risk-reward profiles; a dormant portfolio is, quite simply, a disaster waiting to happen.

Furthermore, it should be pointed out, that traditional hedges like futures, forwards and options are no longer workable in the current environment; either the costs are prohibitive, or hedge contracts are simply not on offer pursuant to the dramatic market shifts in recent weeks. An asset swap, as a consequence, is the only instrument which fills the void; asset swap structures are undeniably based on shares, bonds or convertibles; but they go beyond the scope of traditional investment vehicles by providing an extremely high degree of flexibility with respect to investment strategy, short or long term.

Significant Pointers

From the perspective of the junior markets, the most challenging asset swaps will be being influenced by the need to swap equity into debt, primarily due to the fear of renewed (and unprecedented) potential downside in hundreds of junior (growth-oriented) share listings; asset swap specialists already report a seemingly unending stream of inquiries seeking to cover downside risk in this area.  The other subject of immediate relevance is the interplay between resource-based operations on one hand and debt or hybrid prices on the other. Given the founding premises of the collapse in the sub-prime market, real estate real will become another focus for asset swap traders.

Most importantly, the asset swap is a structured product. While there are standard currency and interest rate swaps which are commonly used in the asset swap segment of the capital markets, incorporating risk transfers (e.g. equity to bonds, debt-quality exchanges and commodity-linked mechanisms) into an asset swap format requires a degree of innovation and engineering.

For junior companies, the exponential rise in precious metals and energy prices has created a powerful window of opportunity in the asset swap arena. To take one particular example, there is now a growing demand, from the corporate sector, to swap out of equity or debt risk into gold and oil futures, based on production schedules. Resource-based companies must exploit this window now.

Conclusion

For over two decades, managements have struggled to precisely identify the relative costs between debt and equity. The lack of making that determination has been the root cause of the impairment in the hybrid marketplace, for convertible debt and warrant-driven instruments. The asset swap process needs to incorporate the relative valuations with a high degree of exactness. In fact, the recognition of the true cost of capital itself lays the foundations for asset swaps which significantly enhance investment portfolios.

Give this a look to know more about the history and geography of the crisis which shook half of the world, and threatening nations with the worst economic nightmare of the 20th Century[The Great Depression]

Click here to view

And if you still would like to read something more about the Sub Prime crisis, read the profile of Nouriel Roubini in NYT. An Iranian Jew brought up in Italy and migrated to US, he predicted 'once-in-a-lifetime' crunch right back in 2006 at a talk delivered in IMF.

Without using any mathematical models in his works and by studying the various transnational recessions in the past two decades around the world, he came to a conclusion about the next target. Surprisingly it was US. That was when everything was hunky dory!

Read about him here

The Tribune reports today that Aaron Krowne and the Implode/Explode Meter and Forum crew are tuning their astute and insightful Implode-O-Meter towards the signals being put out by the European finacial giants now.

Watch out Europe, they like to shine a bright light!

Congratulations to my friends at Implode/Explode. Keep up the great work!

-Anthony

"We think that the markets could decline 50-60%.  We hate to say some hing so somber, but it's not time to optimistic or pessimistic, it's time to be realistic."

This is kind of over the top, which always makes me cringe a little - especially when I agree.

But this is definately Worth A Watch... 

Obrigado ao Felipe e abraços a todos, Fernando

Realmente o crescente aumento do crédito no Brasil vem ocupando destaque nas discussões econômicas, com relação às medidas a serem tomadas para evitar uma crise. Um ponto importante sobre a utilização do crédito se refere ao financiamento de carros, pelo fato de que o valor do automóvel começa a decrescer a partir do momento em que sai da loja. Esse financiamento levaria o Brasil a uma característica de crise de subprime. Em se tratando de uma nação sem a cultura de crédito, onde o dinheiro aqui é o mais caro do mundo, seria indispensável ao Estado ficar em alerta sobre os riscos de um crescimento descontrolado do crédito.
Segue um trecho do artigo desenvolvido por Márcia Pinheiro à Carta Capital.

“De acordo com Donizete Piton, presidente da Associação Nacional de Defesa dos Consumidores do Sistema Financeiro (Andif), a classe média, que ganha acima de três salários mínimos, é a maior vítima da propaganda de massa das revendedoras. Prestações fixas atraem o consumidor, que se sente compelido ao apelo do status de ter um carro novo na garagem.

‘Um Palio, por exemplo, de 25 mil reais, vai ter custado 70 mil reais ao fim de um financiamento de 60 meses’, diz o economista. Fora, evidentemente, os custos de manutenção e dos impostos. ‘Na revenda, o consumidor terá 9 mil reais e entrará em outra espiral de dívidas’, afirma. O automóvel é totalmente diferente da casa ou do apartamento, que se valorizam e não têm os preços corroídos, se bem cuidados.
Por ora, não soou o alarme da inadimplência no segmento de veículos. De acordo com a LCA Consultores, em dezembro (2007), no cômputo geral, os consumidores que atrasaram mais de 90 dias as prestações já correspondiam a 12,4% do total de compradores de bens menos caros, como eletrodomésticos e móveis.

Na média, segundo a Associação Nacional das Empresas Financeiras das Montadoras (Anef), de janeiro a novembro de 2007, os empréstimos foram contratados por três anos e meio à taxa de juro média de 1,49% ao mês (ou 19,4% ao ano). No sistema financeiro não vinculado às fabricantes, o juro foi de 2,41% mensais (28,5% anuais).”

Um abraço!
Felipe.