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PrimeX - The Time For The Next "Subprime Trade" Has Come
Several years ago Paolo Pellegrini, Kyle Bass, Michael Burry and several other visionaries were well ahead of the conventional wisdom groupthink curve by not only sensing that the housing market was massively overvalued and riding on the crest of a huge leverage bubble (many others agreed) but by finding a ridiculously cheap, low theta way of expressing an uber-bearish long-term outlook with negligible downside and virtually unlimited upside by purchasing billions in ABX index notional at a cost of a few basis points, and watching it explode as one after another asset manager figured out just what "subprime" means and why it may not be conducive to a healthy career in finance. Virtually all of them ended up being very, very rich in just a few short years having had the foresight and, more importantly, the way to express that vision. Lightning may be about to strike twice as the Subprime implosion of 2007 becomes the Prime implosion of 2011. Back in December 2009, when musing on the very interesting topic of the advent of a new ABX-like index, this time tracking Prime mortgages, we asked, rhetorically as so often happens, "Will The New ABX Prime Index Be The Reason For The Next RMBS (And Thus, FHA/GSE) Collapse?" (for more on this index which MarkIt now markets as PrimeX see here). And while the rest of the world is fretting about Europe, Morgan Stanley, lack of decisive political decision-making in a pseudo union of 17 different countries, lack of decisive monetary intervention, a Chinese hard landing and everything else that makes front pages these days, slowly our prediction is starting to come true. But you won't hear about it anywhere else, because if the market understands that in addition to a global solvency crisis, America has another Subprime contagion on its hands actually being expressed in the markets as we type, and potentially costing banks, pension funds and various asset managers billions in losses behind the scenes, that may well be the last straw.
The symptom
Yesterday a blast Bloomberg message from a Barclays trader had this to say (emphasis ours):
PRIMEX - OVER THE LAST 2 DAYS PRIMEX HAS REALLY SOLD OFF AND IGNORED THE RALLY IN STOX, CREDIT, AND CMBX. HARD FOR ME TO PINPOINT A REASON WHY ALL THE SUDDEN HATE FOR THE SECTOR BUT I THINK THAT AT THESE LEVELS WITH A 442BP AND 458BP COUPON AND 4-6 YR DURATION ITS WORTH DIPPING YOUR TOE IN THE WATER. IF YOU HAVE ANYTHING TO DO PLS LET US KNOW.
In addition to telegraphing to the world that Barclays, and incidentally virtually every other dealer, is very much wrong way in the trade confirming that history does in fact repeat, the fact that Barclays was not able to "pinpoint the reason", doesn't mean others were also unable to do so.
The underlying cause
What happened a day prior is that Fitch came out with an eagerly anticipated report titled, "U.S. Prime RMBS Performance Declines Continue- Negative Equity Drives Weak Performance" (linked here) which may just have been the nail in the RMBS Prime coffin. The report prompted real estate expert Mark Hanson to release a note to clients in which he said, among many other things, that "Digging a little deeper into yesterday's Fitch jumbo sweep (initially thinking it would not be too significant), Barry points out that the PrimeX ARM1 took a much bigger hit than he expected...the biggest hit by a decent margin in term of notches in a long time." He then followed up by saying, 'This morning I profiled ARM 1 and Fixed 1, as the hardest hit by Fitch. This was big. BUT we just discovered this on ARM 2 had it's recovery ratings torn apart. This is not as big as the downgrades on the 1's but it means ARM 2 -- already the weaker of the two ARMs -- is just am Alt-A disaster."
Digging into the actual Prime constituency, it appears that the bulk of holdings are California private label jumbos, which are ~50% third party originated, ~55% based on "stated" income and ~60% with second liens subordinated to the firsts. Translated, this means that forecasts that just one in three homeowners being upside down are woefully wrong, and the real number is far higher. When Fitch catches up to this particular reality, the bottom out of the Prime market will fall out and go practically bidless... Just like ABX did back in 2007.
Bottom line, the Prime market, just as we suspected back in December 2009, just got its inflection point catalyst, courtesy of the dealer community waking up to the reality that Prime is really Subprime in sheep's clothing, and that Dealers are now scrambling to find a justification to mark their PrimeX positions higher... or else. Which, naturally means, getting buyers. The problem, however, is that the biggest potential marginal buyers are already quite pregnant with exposure and as of a few days ago just became net sellers, as instead of liquidating precious metals during the second part of the market rout, they turned to PrimeX.
The evidence
As always, one chart is worth a thousands words. In this case, we present a few charts via Bloomberg.
Needless to say we will have much more to say on this topic in the coming days, as we watch the imminent devastation in this latest index quietly from the sidelines. If we are correct that the inflection point has finally come, then everyone who missed the sheer panic associated with unwinding the Subprime trade back in the lofty days of 2007 will have the pleasure of observing it all over again... and with it the arrival of the next black swan that nobody could have possibly foreseen...
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Reeks of Strategic Default.
Got to keep the 401K and pension brigades placated and not selling while the western world defaults.
HFT's provide the illusion of an up market, while the insiders sell!
So 401K/Pension funds are invested in the fraudulent municpal and Federal bond market, fiat-injected equities markets, and collateralized debt olbigations of over-valued homes. Hmmmmmmm.....sounds good. Where do I sign up to be a bag holder? Plus, my employer matches all of the contributions I make. This is a no-brainer. I can't wait to retire in the lap of luxury.
And those pensions/401ks are invested in the US Banking System, which funds the Military Industrial Complex. Don't be a bag holder, free yourself, rise up against the tyranny. Free the World from the chains of the Complex. Invest in yourself. Burn your dollars before Bernanke does. Change the system before the New World Order starts WWIII.
Obama Nation- Lowkey f/Dead Prez:
http://www.youtube.com/watch?v=bB-vYuYhdSE&feature=related
Mr Lennon H - you are correct - and shouldn't Tyler be careful with the anti-EU rhetoric?
How "pseudo" is the U.S.-Union?
Melting Pot? Not! Rather crumbling conglomerate.
U.S. disintegrates before next summer.
Mr. Lennon H is right - free yourself of all allegiance to U.S. Federation and Empire - for it is going down - withdraw all your support from it - in every form - free yourself.
I thought my post was laden with enough sarcasm to drown a horse, but I guess I needed a sarc tag. No 401K or equity "investments" long or short here. No government bonds in my portfolio too and I don't live on government handouts. Plenty of real money though.
I imagine 60 minutes will be doing an update on the mortgage industry on Prime X in a few months.
Be vewy, vewy, ca'ful making posts like this Mr. Head, or your kids will come home to live with you. There truly are worse things than having bucky become the peso.
The second tsunami wave of mid-prime and prime foreclosures bitches. I've been waiting a while for reports on this topic. Thanks ZH.
Anybody know where retail investors can get CDS?
'and with it the arrival of the next black swan that nobody could have possibly foreseen...'
Thats not really a black swan then. Nobody is keeping an eye this though, at least from my perspective. Great article though.
yup...i thought cmbx was doing badly, but this is great stuff to know
how to profit from this is the question.
My question, too,and it was asked above as well. How do you trade this? Is there an ETF? What good id the knowledge if you can't use it?
Van Jones is busy spray painting all the black swans pure white.
the next sub-prime will be in agricultural land. Massive speculative buying in that market. And if China has a hard landing, and argi-commodities go bust. Owners will be underwater.
buy your cds now.
Any evidence Agricultural Land is being financed with debt?
Here in the UK it practically unheard of. In fact some of the smartest farmers I know are renting in land from their less efficient neighbours rather than buying - partly because decent sized blocks dont come up too often and partly because in commercial agriculture `it aint about how much you own, its about how much you farm`
I purchased another 40 acres from profits on paper gold last november. However, our operations have expanded as emerging markets demand more America soybean, wheat and corn. With local cities and states getting ready to levy big taxes on land, you better make damn sure it is productive, I don't see any smart money buying land with debt. That 0.1 % has the cash friend, and they can afford the taxes, they rent the land to peasants who think they are rich and who are productive. Ag. land stays with the elite families, hard to break into this crowd, especially in europe were these families have controlled things for centuries.
Did you get the mule too?
+ 1
Nice Gone With The Wind reference there MKKBY
mainly heresy. farmland in Iowa is going for ~10000 USD/acre in auctions, depending on corn prices. Seems like mania during a bubble.
I heard it here:
http://www.npr.org/blogs/money/2011/10/04/141053761/the-tuesday-podcast-the-land-boom
Worse, corn prices, like most commodities is maninuplated in the futures market. So once again, price distortions, followed by misallocation of capital.
All commodity longs (ex PM) are going to get hosed. The more illiquid the asset, the greater the hosing.
Dorm Room, I completely disagree with you.....demand for raw food components and clean water will continue to rise in eastern emerging economies, and maybe in developed nations as well. To even compare agricultural land as a bubble-like speculative rise similar to subprime mortgages is under the wrong assumptions. Here is why you are wrong
1. Agri land can actually produce commodities, while housing consumes inputs. Therefore agri land has much more intrinsic value
2. Subprime housing demand was driven by excessively low interest rates chasing high returns, where agri land is driven by infinite demand for food{assuming that global population is constantly increasing}.
Additional point----Govt. intervention: Govts will always subsidize farmers. They will continue to even pay producers not to grow, in order to keep the prices of inputs high(low supply)(increasing demand). In essence, the govt intervention will ensure the price of agri land rises.
In the end, investors will always seek returns in "real assets", of which include those that can consistently add value through input production to an economy, ie agri land.
"...where agri land is driven by infinite demand for food{assuming that global population is constantly increasing}." As long as we have concentrated wealth a sudden decline in population (for any number of "unforeseen" reasons) cannot be ruled out.
How many "do overs" can be done before the cost of global debt becomes discussed only by theorectical mathmaticians?
I see a bullish future in the field of Infinite Debt Time Positioning. The role of this job is to predict when and where the debt will be by fucking around with the given bank leverage (50 to 1 now or something isn't it) and current interest (1%) versus outstanding debt and future liabilities.
less than < 4?
this is another seminal article for tyler, building on his piece from december, '09, when this market product was just "originating" as a fun future short...
somehow, with quadrillion$ of bet$ on this $hit, nobody who is properly politically connected to the corpo-fascism will lose a fuking dime!
again
Tyler, many thanks for posting this. Is it the "usual suspect banks" (BAC, C, JPM, GS, MS) that have exposure to this sector and risk losing the most?
Not a Tyler,
Not just the US "banks", all of them. This is a world wide problem now.
So of it's a worldwide problem what's the problem? So we blow up France? Big deal. We didn't make them by the crap...let alone the English. Moreover isn't the lesson of 2008 that trading against the government is in fact suicidal? Anyho I hope you're not long on all that other crap because like that fat Phuck Ilene you'd be nothing but wrong three years running. As they say in baseball "three strikes and you're out."
more ariticles about the fed please.
http://covert3.wordpress.com
silver just fell off the cliff again.......margin hike???????? front running the announcement? again
World decided Silver is a dumb idea after all...not backed by anything.
Now the dollar on the other hand....hmmmm.
Just an average Comex close bash on the head. But it keeps getting up off the floor and climbing up...
A good majority of these loans were 5-1 IO hybrids, since LIBOR is so low the rate reset is actually beneficial, but most of the bubble vintage loans went amortizing after 5 years in addition to floating, so the lower rate is offset by the addition of the 25 year amortization payment. Meaning: payment shock.
Later loans decoupled the IO period (set at 10 years) and the fixed rate period (still at five), but that wasn't until 2007 and onward when that really started happening.
And yes, most of these were stated income with a piggyback, especially purchase money loans.
Then you gotta ask yourself, who is holding the second...here's looking at you JPM, WFC, etc.
I love this site...news you can't get anywhere else.
Not just news you cant get elswhere. News and explanation you cant get anywhere else. If they didnt explain so well what we are looking at and why it is significant I wouldnt get half the stuff here.
Thanks ZeroHedge.
Yeah...more like financial crack. USE AT YOUR OWN RISK!
Oh, say can you see by the loss of our rights
While the Congress was bought with our wealth slowly bleeding
Whose Wall Street and bank fraud paying Congress at night
For the bailouts opposed though the ponzi kept thieving
And the printing press there, debt bombs busting in air,
On the backs of the serfs while the debt was still there
Oh say does that corporate bought Congress makes pay
O’er the land of the thief and the home of the slave.
- Dr. Richard Head 2011
Oh you can get it somewhere else, it just costs $750 for an annual subscription. I've already told Mrs. Smiddy to put it on the Christmas list. If you like the material enough, go stand on his porch.
maiden lane 3
Exactly. The process of exchanging defaulted securities for fresh new Benjamins, @ par of course, will continue unabated. Even better, as interest rates drop to absolute zero across the curve, the Fed/ECB/BoJ, et al can hold quadrillions with virtually no cash flow requirements.
The only fly in the ointment, of course, is what happens to inflation as the new FunBux enter the system. The first round saw various levels of commodity speculation, but this was encouraged by central planners as a way to manipulate/induce positive sentiment.
Now that the bloom is off the rose, fresh cash is simply being used to cover short-term expenses & transfer payments to keep the powder keg from blowing. This is the deflationary easing the Fed has been anticipating all along a la Japan.
There really isn't going to be any crash per se, there is just going to be this long, drawn out process where we all become collectively poorer. The name of the game is to outlast the current Boomer generation & others who have living memories of what "it used to be like".
If the central governments can survive for another 10-20 years, then the new generation of poor Latinos in the US, and poor Muzzies in Europe, will be imminently more malleable and subject to control. When the USA looks like Mexico, and Europe looks like Egypt, then society and governments will have completed their transformations.
This is the ultimate end-game, which is really the same old game all along throughout history: the 1% ruling the 99%.
PURE speculation. PULL OUT PULL OUT RED LEADER!
you got it: vision 20/20!
No crash will imply some serious central control. Police state coming soon. Too many folks living at the margins that are not going to go quietly into a new career of pushing up daiseys. Cause and effect will be reserved in the MSM.
Crash or not, the likely mid-term direction is the same. By fall or slow-grind, life is going to get more difficult in many ways. Staying ahead of the curve (staying aware) is the key to doing better than the average Joe.
For those who openly & foolishly agitate/advocate (including OWS & 2A 'Net warriors), a visit from the local ATF/SWAT will be in your future. If you pursue a more organized, yet potentially more effective, form of insurrection, a drone with the name of al-Awlaki will be heading your way.
Actually, that being said, the death panels - and I ain't talking about O-care - might decide even those stupid enough to fly Gadsden flags and practice other forms of "silent protest" might constitute a threat deserving of the same treatment. I mean, who's to say you're not a terrorist? Your family & friends? LOL - what is their word vs the gov't/ MSM?
My advice has been consistent: since we are all serfs, and have always been serfs, we should start acting that way. That means employing time tested techniques that have allowed peasants to survive thousands of years & hundreds of regimes. Keep your head down; go about your business; know how to farm; know how to build/repair; keep close family/clan ties; etc.
Our only chance of survival is to survive the end of the regime itself. No one thought the USSR would collapse, but collapse it did. Time is on our side, so use it wisely.
Police state was put in place by Bush. Alive and well with the continued existence of "Homeland Security". The very name is an oxymoron.
B9K9, what you are sketching here is part of the Prison Planet / Slaveship Earth scenario.
Another facet of this lovely trend is complete control of all vital commodities by TPTB.
At least, they are going to try to get there; from their standpoint it is about SURVIVAL; which means they must take more & more CONTROL.
This is the context of all contexts; and this is what your friends at the barbeque don't want to discuss.
+1. Most folks I know can't get below the tip of the iceberg. Flat Earth sort of thinking. I really am at a loss for what seems like a collective desire to discredit history and bury head in the sand. Of course, it is this behavior which suggests to me that such outcome is actually more plausible than anyone who does know what is going on wants to admit.
Great post.
ghostfaceinvestah--In the comments to the 2009 piece Tyler mentioned, you said that PMT and other distressed investors were overpaying for assets. Do you think the recent weakness in PMT is that finally playing out, or is there some other dynamic at work here? Thanks in advance for any response.
So then, what is the trade? Any specifics would be helpful.
I guess front run the fed as surely they will snap it all up.
Go find a really undervalued small cap and go for a 8 months holiday...
simple...
Short : entire Western World
Long: Gold and Silver
you can't get easier than this
I dont know, IF there isnt a currency/sovereign default, and the economy implodes, Gold and silver going down a bit. Silver I think can not go lower than 22 but thats a guess. IF a currency crisis/default then gold with silver following to the moon.
I agree just a technical correction ...Gold and Silver are going precisely nowhere ...it's the Fiat that's changing price against these stores of wealth... and not "going to the moon" but going down the toilet
But, but, but....BusinessInsider said the upcoming Alt-A and Option-Only Arms resets were a myth back in 2009 - From the article -
Read more: http://articles.businessinsider.com/2009-08-28/markets/29970477_1_alt-a-loans-reset-option-arm#ixzz1a6grUg44
You see? Everything is fine. The lenders will just extend and pretend, mark the over-valued assets on their balance sheet as such and we are fine.
Here, have a beer. We will turn on the TV for you and tuck you into your easy chair, while your NetFlix cue is set to play. All is well. Mommy is here.
Very funny - laughed out loud actually.....why won't my Mom bring me beer?
"MA!, HOW BOUT THAT MEATLOAF!"
I almost nunchucked you...
I am pretty sure this is not bullish.
Please print out post, light some candles, and read it again using a mirror and you'll see you are mistaken. No worries, I too thought this was bearish the first time! Onwart and upwart.
Wait, I thought rents were going up?
Checked out a short sale yesterday, Chase is making the sale, ranch style 2000 sqft, SoCa market. they want 295, have an offer of 290. Agent tells me the home should rent for 2000. Assuming an interest free loan (the kind Bernanke gets) and no expenses, or taxes. that's twelve years just to pay the principle. It doesn't add up. (Which is why the buyers are dithering, or it could be the bids are planted to meet some regulatory hurdle).
one of the big myths about the housing crash was that empty homes would be turned into rentals and that would keep rents down (and CPI) there are several reasons why it isn't happening. the apartment market is tight, and the costs of maintaining property are going up.
however if the Agents are surveyed they are going to list likely rent at some inflated number, but apartments are high as well. CPI is going to spike even while home asset prices are dropping, the banks don't want to move, its extend and pretend, and that includes equivalent rents.
i'm looking to rent a Condo in Miami in March next year and i can confirm the rents are neither cheap (nor the hotels) nor going down in price much... bring on the next Great Deflation in property prices... before March please!
Prime South Beach condos and hotels are selling and renting for big bucks.
However, across the street or two blocks in you can buy condos for $200psf. Rich people still have money but the market is thin.
A lot of the reason rents aren't going down is due to shortages of available decent rentals. A large percentage of those foreclosed homes are empty and not available to the rental market thanks to the banks being unwilling to mark down their assets and sell them.
Most of the Calif. Central Valley have similar numbers to what you quote. Typical 10 year old tract homes in decent areas go for $80 more or less per sq ft. One that would sell for around $150K will typically rent for $1,000 to $1,200/mo. There's plenty of demand for these rentals by tenants that can and will pay the rent, since they have families with school age children and really don't want to live in the growing slums or an apartment complex. Their credit and cash is gone thanks to foreclosures. Maintenance costs are low on these homes due to their age. It's one of the best income opportunities available.
in phoenix high end - use to be $1 million plus:
recently i am aware of chase short sales at 9 cents on the dollar for second lien position with first at 65 cents
another property at 62% of face value for wamu loans
chase has over $100 billion in seconds on the books
Lots of those mythical low-rent vacant homes will soon be unliveable. Many already are. Lacking climate control and upkeep, mold and other problems take over almost immediately. Especially in humid environments.
Considering the standard of living of a good chunk of the population, I'd say the word "unlivable" is really not appropriate here.
Some people are in tents, you know.
$290? F them... try offering $200-225. They already have hemmoroids... you gotta make them bleed.
Agreed. While they are down and desperate, kick them in the nutz.
Blackouts on 401k's incoming in 5, 4, 3, ....
How oh great leader? May a person profit from this Tyler.....short AIG? again buy SRS?
you can try DRV (Direxion ETF 3x Short Real Estate Bear) ..i'm in it waiting for (another) 60% spike
Sorry for my ignorance but what is the trade here? Is this just for super sofisticated traders? I am heavily short stock and have been burned to death by options so I don't touch hi theta decay anything.
This is a CDS index - youre basically taking a position on prime MBSs. And unless you have a contact at a bank's credit trading desk and are willing to put up at least $1mm, retail can't touch this.
But a proxy by way of stocks would seem decent only *if* SHTF.
Thanks ZP! My current strategy of dollar cost averaging short stock seems to be doing well. I short small increments every time the stock goes up 10%. I actually make out better if the market moves sideways then one drop down.
What a total crock of s***. After this morning's Ag volatility, I'm ready to join the occupy bankers' asses with my foot!
Man, and you posted before the noon EDT cleanout...dropped $1 in three seconds...
Hold your shorts...
Imploding jumbo primes in California? My dream of living in Sausalito is that much closer to reality!
Nah, but your nightmares of selling in El Segundo are here with a vengeance.
Millions of people been stuck in underwater homes for 3+ years now with no way to sell and move for new jobs, new opportunity, marriage, life shit, etc. Only so long people can hold off on that before they say F it and dump their home and move where they need to go. Frankly I'm surprised the second leg down in RE hasn't come sooner.
why move if you pay no mortgage, no rent? rent out rooms for that xtra cash flow, ask for title proof from banks! why work, it just doesn't pay!
Yes, there are a lot of trapped people who can only sell at a massive loss. Underwater people are reaching the breaking point, many are seeing reality "it ain't coming back". Without it coming back the defaulters will finally increase in large numbers as they give up.
Not sure I buy the pace of the predicted disaster, it may come in a long drawn out disaster. Either way, this is bad news for the housing markets and those who provide the loans to the housing markets. Losses will be massive and home owners will never think the same again when an RE agent gives them the hard sell.
Not sure I buy the pace of the predicted disaster, it may come in a long drawn out disaster.
Yeah, that's my take too. Unless there is a shift in political will, there's nothing to force changes here. Eventually home residents will die and their estates will collapse into the debt-hole.
Folks who are above water may pass their houses onto their offspring, who'll either finally have a place to live or will liquidate, and we'll finally see some price discovery. In theory, there could be decades of this. But I'm thinking international finance collapses first.
very true i know a family - parents died - high end neigherborhood - cherry creek - value was 2.2 million - went into estate tried to sell at 1.5 - 18 months ago - down to 825k ask and the note - first lien at 1.2 million - so the eventual short sale will impact the estate's other assets
i think the strategic defaults are now coming with a vengence - if they let the banks collapse in 08' the mortgages would have been written down and sold to hedge fund at 20-25 cents and they would take 32-25 cents on high volume and the market would be clearing by now - instead the implosion now will be catastrophic - the vortex is sucking everything into it
people are not going to pay with all the cash flow future demands (retirement) and no value to support the reason for continuing to pay the mortgage - so the banks played the game to destroy themselves
obama is the biggest snake in all of this - no prosecutions
Yeah, can't get financing for big mortgages because there's no way for the lender to dump all the risk on MBS investors anymore.
Obama's not important enough to be "the biggest snake," though. He's just doing what his constituents want and trying to keep the banks operating. They never would've financed his campaign if he'd threatened to prosecute the financiers.
As soon as he said "too big too fail" everyone knew he'd come down on their preferred side.
Great post.
What about the commercial side of MBS? Back in 2009 this site and many others were saying that the CMBS were the next shoe to drop. I figured that would be the case too.
Can someone throw me a link to some decent research materials about this?
Black Swan Commercial MBS
Black Swan Residential ALt-A/Option Only MBA
Black Swan Municpal Bond Market
Black Swan Euro Crisis
Black Swan Equity Market Spams
Black Swan Ciliv Unrest
Sounds like I need to max my contribution for my 401K then right?
Just keep stacking, just keep stacking, just keep stacking.
The Fed keeps stepping in and propping everything up...except the consumer side. I guess the moral hazard behind a big refi is too great compared to loaning trillions to banks at 0%. So if the consumer side looks grim, I would expect that to play out correctly. The Fed might actually induce a flat yield curve to make sure consumers get double-fkd with a super depression within a depression. Can't have all that locked up bank money leaking out.
History doesn´t repeat itself, but it does rhyme.
In other news
Could you post the link, please?
Sorry, couldn´t find one, yet. Maybe available in the print edition only, or online for subscribers ?
--> Handelsblatt Nr. 193, Oct 6th 2011, p.12, article: "Es brodelt in der Gerüchteküche", author: Thomas Jahn, jahn@handelsblatt.com
Rebuilding from nuclear detonations on Wall St next week will be highly bullish...just think of all the new jobs in corpse disposal and rebuilding Manhattan Island!
Beck Has 'Verified ... An Attack On Wall Street Next Week' Tells Listeners To Have Cash And Food Rea - YouTube
broken window economics? Come now.
'Total Destruction Cleanup-Crew Economic Model' If we can just break everything hard enough, we can run the Western World economies on cleaning up the rubble....I'm pretty sure anyway.
Broken window breakers economics. It should work quite well.
Of course, Wall Street is not the correct target. They only RECEIVE stolen goods. Need to target the Fed.
Sheepdog get back on your meds.
A nuclear detonation on wall street?
Glenn Beck needs some haldol too.
Oh I get it.
You just forgot to push cntrl sarc
Oh ok now I need meds, yea whatever.
Well SheepDog, It seems TopTroll replies to his own posts alot, so you don't need to worry about meds.
I checked the Beck website and did not find that clip. If you watch the end of the clip you will see it is produced by Media Matters (Soros) and is most likely phony. The voice does not sound like Beck and does say it was verified but NOT by him. I have to call BULLSHIT on this until it gets verified on one of the Beck websites.
http://www.glennbeck.com/content/radio/
Agree. I sounds like an impersonator - the way his voice goes up in tone at the end of every sentence, and the amount of "uhs." I've never heard Beck talk like that.
Agreed. The voice is similar but the way he speaks a put on. Beck doesn't end every sentence like that. That's somebody who thinks Beck does.
if you're trying to say, that SD1 has posted a phony youtube of fuking Beck proclaiming the new plan for post-nuclear detonations coming to a gotham near you "next week"...,?,...
...well, wtf, that is outstanding!
++self-medicate w/ slewie, SD1!++
you, too, Smiddy_w!
tyler? don't stop drinking, now! tarbender! another round of primeXXX! wheeee!!!
It's a program that picks up words from old shows and puts them together to say anything you like...The supporting cast on the Howard Stern show came up with this 5 or 6 years ago maybe longer as a way to goof on their targets.
BTW, Beck is an asswipe, he has said some things that are right on the money, but overall...a very big asswipe.
"Beck Verified."
lol
The rats take care of the bodies. At least, that's what happened when the WTC buildings collapsed.
and yet still the public pensions believe they will get everything promised to them........
What happens when you sell ten pieces of pie but only have eight, yet you already spent your customer's money?
What happens when the remaining eight pieces were based on being able to get the eight out of only four that exist now on the basis that over time new baking materials will continue to come in at a greater pace than they are leaving?
ooooooohhhhh. Thought I would add another...
What happens if suddenly everyone had to reconcile liabilities and assets, and your one piece of pie was weighted against a public debt which effictively says you owe 2 pieces of pie?
Sounds like the current "economic system".
Anybody have any ideas on how to trade this more directly than just a "Black Swan" event?
Buy spam? If prime goes, it's overs Johnny.
Not until it's marked to market and/or sold, and it appears that's not going to happen until the last bankster leaves with his loot.
We wont know when that occurs. They chain the doors on the casino very quiet-like.
Spam stores well, and if you have chickens, goes lovely with eggs.
Can someone explain what this means?
"....by purchasing billions in ABX index notional at a cost of a few basis points".
Yet another step on the long road of trying to learn this stuff.
http://en.wikipedia.org/wiki/Asset-backed_securities_index
ABX = basket of CDSs tied to Subprime mortages. These smart guys/HFs purchased literally millions and millions of this stuff at super low spreads (bps) since 'everything was fine' and protection was cheap.
What ZH here is claiming is that this newly created index of PRIME CDSs will inevitably follow the same path.
These indices, whether better on Prime, subrime, or commercial (CMBX) basically allow the professional community to synthetically bet on the direction of mortages - not rates outright, but defaults.
Thanks ZP. I always appreciate when you share your knowledge about these things.
Ditto.....
Housingbubble 2.0? Didnt understand a word..
I think most of the artical was written in tradereess, I have trouble ebonics.
How many hits can these markets take before they finally give up the ghost?
Aren't the underlying component loans of the index illiquid and doesn't that mean that their prices might not always reflect reality? Also, if you can't really trade the underlying doesn't that imply that there could be significant dispersion between what the index reflects and the reality of the residential mortgage market?
To be sure (as the WSJ likes to say) this is interesting stuff but I think it underscores that physical PM remains the ultimate low theta SHTF hedge...
Yes. In other news trading the ES should not influence the price of Widgets, Inc. (NASDAQ: CRAP)
But trading the ES and other equity index derivatives does affect the price of NASDAQ: CRAP (and other componants) as exposure risk to one is hedged with the other. It seems that this PrimeX thing would behave differently to the extent that the ability to execute an arb is harder although I suppose that doesn't make it unique from any other index of less liquid securities. But derivivative on indexes of less liquid securities tend to be less liquid themselves too.
I guess I'm searching for a (perhaps obvious) example where liquidity is begat from illiquidity via securitization that also remains accurate to what it's supposed to reference.
Good question. If you find the answer let us know.
options on commodity "contracts"?
We all know from reading Dr Housing Bubble and others(Shiller, et al) that the next down leg of housing will be bloody, what do you recommend as an investment for the Average Joe other then, of course, not buying a house?
Keeping cash, learning how solar power works, experiments in organic farming; there are many ways to counteract the pervasive decay of a plastic civilization entering drawn-out death throes.
"History doesn't repeat itself, but it does rhyme." - -- Mark Twain
Spanish Inquisitions' corollary - "Sometimes the present rhymes so close, it could be sued for plagiarism"
I don`t understand.
The genius that is Jim Cramer, (the same one who TWO DAYS AGO admitted that the MSM has a self imposed GAG ORDER as regards Morgan Stanley) called the bottom in housing a mere 2 years ago. Well 3 years ago, and then again 2 years ago. How is it possible that he was WRONG!
Cramer is a bloody fool of the first order. Those who take his advice can be found in homeless shelters across America!
Yes and those of us who bet against his calls are pretty happy campers.
He called the bottom twice.
I put half back in at the false bottom, but thanks to him and adam hamilton i put the rest back in near the final bottom. That is the most scared i have ever been. I was seeing how hard it was to double dig a garden. Thats how scared I was.
Damn hard. I managed 64 square feet before I decided I would take my chances on starvation.
You guys knew it had to be a bottom. The vix was what? 70? Nonetheless it was a shit in the pants moment for everyone, no matter how contrarian.
Shit he kept calling the bottom all the way down. Not to mention recommending to people to buy Bear Sterns. I shorted that pig with puts and made a killing.
Regarding it as a tool of misinformation, I banned my TV set to the attic years ago.
But now, I sometimes miss my daily dose of Cramer.
Is he still wearing this toilet seat-shaped beard ?
Explains why BAC and MS are down in an up market. Exposure there?
Looks like a crapper day....finish all well red? That is barring another 3:45 FT rumor release.
Are the lifeboats loaded yet....?
I absolutely LOVE this site!!! I love all of the sarcasm, but especially all of the GREAT articles and links. But some of us are not as smart as the rest of you..... I have read at least 2 people on this post ask, pointedly "So. what is the trade?" No one seems to have any answers except for sarcastic remarks. I get it....this gov't is absurd, THE FED SUCKS and needs to be taken to the woodshed and shot, and we need MAJOR changes...
But I thought we, on this site, work together to defeat the Military Industrial Complex... so when the lesser educated ask important questions, could some of you who are more experienced PLEASE help us out.????
So, what is the trade????
I don't know the trade, but the investment is PMs