The ongoing financial turmoil and financial discussion thread

[Nancy]

Wow, this thread has been busy today... but no one has made mention of oil falling into the $50's today. What happened, last I heard the price was making a recovery and then today it's $59.

As for GM, I don't really buy that it's the line workers who are responsible for its demise. Their entire product line looks like it was inspired by the SUX 6000 from Robocop...

[Nancy]

$56.80/bbl now.

[Azure]

Frack, it better not drop too much.

[arsenal]

Article on time.com on why Canadian banks have not needed bailouts like all other major banks of other G8 countries.

http://www.time.com/time/business/ar...855317,00.html

In the midst of the worst financial crisis since the Great Depression, Canada has joined the ranks of governments that in recent weeks stepped up to help banks cope with more fallout from bad U.S. subprime mortgages. In Canada's case, however, the reason for the assistance is a little different from some of its G-7 partners. Unlike banks in the U.S., Britain and Germany, which needed to be bailed out with hundreds of billions of dollars in new capital, Canada's major banks are solid and solvent. They don't need any help to work through their subprime exposure.

[troutman]

Why doesn't the Herald Business section (page 2) show what's happening with the TSX and Dow anymore? Too depressing?

[Azure]

Well, everyone and their dog in the US wants a bailout now.

Any guesses as to what the final number will be?

I'll say a bit over $7 trillion.

[MoneyGuy]

Originally Posted by troutman

Why doesn't the Herald Business section (page 2) show what's happening with the TSX and Dow anymore? Too depressing?

You kidding me? They love bad news. Last night the late TV news led with the market going down. When the market goes up, it gets buried or isn't even reported. Not sure what, but there would be another reason.

[metal_geek]

Originally Posted by arsenal

Article on time.com on why Canadian banks have not needed bailouts like all other major banks of other G8 countries.

http://www.time.com/time/business/ar...855317,00.html

The Canadian banks didn't need a bail out like they did in the US because the backstop(insurance) for canadian mortgages come from the Government (CHMC). In the US AIG was the "BACKSTOP" for their mortgages and the gov had to give public money to the backstop, when the housing market dropped and they were on the hook for more then they could pay back.

There is NO mistaking there has been a canadian BAILOUT to the tune of 75 billion so far. The canadian government is able to spin this like crazy. CHMC is "buying back" the mortgages they insured anyway from canadaian banks, to free up money for the banks to loan. This is complete spin.

First, any mortgage that has CMHC insurance had a MAX downpayment of 20-25 percent, depending on when it was taken out. I'd argue that most of thoes mortgages were easy less then 10 and more likely 5%. Either way, assume they were all at 10% downpayment, and now with the housing market accross the country having realized MINIMUM 10% losses in most areas, the bank is holding billions of negative position mortgages. That means that when the bank goes to get a loan, the other lender says "humm... you owe more then you have assets to cover" Just like anyone else they have a hard time borrowing money, and are "tapped out".

The solution.. Why not swing a deal with the insurance company to "buy" back the houses they are gonna have to take back anyway at some point, at least now people are still paying the mortgage on thier negative position home. Better then taking back empty house, in the future which they are gonna be required to do anyway. Bank gets their insurance money now, gets rid of their negative position assests, and the Canadian government has a much larger appitite to hold onto negative assests then the banks do.


However you want to spin this, this is COMPLETELY a bail out. Only because it's the gov and not a private company like AIG like in the US, they were on the hook for the houses anyway, at least this way you can argue it was a "proactive" move to help out canadian borrowers and the public gets Assets back in return... As opposed to taking on 75 billion worth of mortages whos homes were less then the ammount owing..

[RougeUnderoos]

Laugh. And the Dow closes up 550 points.

What a circus.

[Cowboy89]

Originally Posted by RougeUnderoos

Laugh. And the Dow closes up 550 points.

What a circus.

Proves that there's still a crap load of money sitting on the sidelines waiting for a percieved bottom to plough into. Today 8,000 was a psyhcological barrier for a lot of investors.

[Table 5]

It's not just today. Everytime the DOW comes close to going under 8000 there's a massive rally. Unfortunately, the opposite keeps happening everytime it approaches 9500.

what a weird time.

[Phanuthier]

Originally Posted by Table 5

It's not just today. Everytime the DOW comes close to going under 8000 there's a massive rally. Unfortunately, the opposite keeps happening everytime it approaches 9500.

what a weird time.

Think it could be the feds Table?

[MoneyGuy]

Originally Posted by Cowboy89

Proves that there's still a crap load of money sitting on the sidelines waiting for a percieved bottom to plough into. Today 8,000 was a psyhcological barrier for a lot of investors.

There are lots of craploads of cash sitting on the sidelines. Even ignoring retail investors and mutual funds, the huge pension plans are sitting on tonnes of cash, just waiting. When that money enters the market, stand back. This thing is spring loaded.

[transplant99]

More carnage announced today...

Citigroup to cut another 53,000 jobs


http://news.yahoo.com/s/ap/20081117/...citigroup_jobs

[Displaced Flames fan]

Originally Posted by transplant99

More carnage announced today...

Citigroup to cut another 53,000 jobs


http://news.yahoo.com/s/ap/20081117/...citigroup_jobs

Yeah, I'm not sure I get that.

Massive bailout of their industry passed and they NOW decide they need to cut these jobs? Where was this action 3 months ago?

Just screams of thanks for the cash, now we can move on with our original plans.

[Jason14h]

Massive bailout of their industry passed and they NOW decide they need to cut these jobs? Where was this action 3 months ago?

Just screams of thanks for the cash, now we can move on with our original plans

Unfortunently they can't just wake up one morning and unilaterally decide, "Hey, lets cut 50,000 from the company!"

The last 3 months has been spent deciding exactly what staff is needed and what can be cut. Thats no small job

[Displaced Flames fan]

Originally Posted by Jason14h

Unfortunently they can't just wake up one morning and unilaterally decide, "Hey, lets cut 50,000 from the company!"

The last 3 months has been spent deciding exactly what staff is needed and what can be cut. Thats no small job

Unilaterally? Who outside of the company do they have to get permission from?

I'm familiar with mass layoffs, believe me. I know how they work. (and it sure as heck doesn't take 3 months to make those kinds of determinations) It just seems a bit convenient in the timing, that's all.

[Phanuthier]

I guess on that note, BoA is using some of its bailout money to buy a larger stake in China Construction Bank Corp.

http://www.bloomberg.com/apps/news?p...dIU&refer=asia

[Phanuthier]

Originally Posted by fotze

Talking to more savvy investors than I, I guess the phenomena of the market hitting a seemingly invisible line is the investors that have some algorithms that are programmed to buy shares once a minimum price is reached. I guess there is a name for those types of investors, can;t remember it but Rich, or Loaded comes to mind.

Yeah, aren't they something to do with P/E ratios dropping to a certain low, and when the market cap drops below some threshold of the net equity?

BoA and a few other banks sure have acquired alot of assets in the bad debt, with the fed's footing the bill.

(I don't really take into consideration the P/E ratio's, but I do take notice; I do look at the MC vs net equity to get an eye for if and how much a healthy company might be undervalued; personally, I look at ROE, OM and PE's when I take a stab at this, but I am sort of just a beginner here)

[Slava]

^ You guys basically understand how this operates. When the prices drop to certain levels the computer makes a buy for you...it can be based on a number of factors, but that is the general idea.