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Thread: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

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    Default Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion.

    http://bankimplode.com/viewnews/2008...mingWeeks.html

    Still not sure what to make of Fortis' capital raising and dividend withholding last week. Maybe they're just talking up their position or maybe it's time to sell USD.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    No question that the ongoing US bank writeoffs due to bankruptcies and loan defaults are destroying capital. No question there is a problem finding replacement capital ... since Americans in general don't have any savings, and since American investors potentially face much higher capital gains tax rates should they make their capital available to US banks. As to the probability of a capital crunch causing the US banking system to 'sieze up' in the coming weeks / months, I really don't have any clue what Fortis may know that the rest of us don't !

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    It's a credit tsunami! And now the wave returns back out to the sea...

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    I've heard predictions of the stuff hitting the fan come August '08. I'm glad I got out of the stock market last year. I think I'll start making and selling solar hot water heaters soon. Should be good money in that soon.


    Promote yourself and earn more money! This is a business that is owned by strippers for strippers. Let's make that money!


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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    It's a credit tsunami! And now the wave returns back out to the sea
    Actually your analogy is 180 degrees out of phase ! We have already had the devastating 'flood' of a tsunami of Japanese Yen being carry traded into the US markets over the past decade. But we will get the 'extremely low tide' as an aftermath instead of as a precursor !

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    Quote Originally Posted by Melonie View Post
    As to the probability of a capital crunch causing the US banking system to 'sieze up' in the coming weeks / months, I really don't have any clue what Fortis may know that the rest of us don't !
    They took a big hit last week (http://money.cnn.com/2008/06/26/news...s.ap/index.htm) so a cynic might guess they are covering themselves in public ("Oh yes, that was totally planned... honest").

    Quote Originally Posted by Melonie View Post
    No question there is a problem finding replacement capital ... since Americans in general don't have any savings
    Not your grandma's depression:
    What's happening is that American society is sliding into a greater depression than the one Grandma lived through.
    http://jameshowardkunstler.typepad.c...epression.html

    Quote Originally Posted by Paris View Post
    I've heard predictions of the stuff hitting the fan come August '08.
    A year ago, someone losing a billion dollars was big news. Now I sort of filter it out because something like that's in the news every few days
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    There's something that always struck us as odd about this never-officially-translated "prediction". Looks like it was probably a hoax. Unfortunately, the ones from Barclay's, BRS, Bill Fleckenstein, James Turk, and a smorgasbord of others are very real.

    Our position at ML-Implode is that we don't need a sudden "collapse" to be in hot water. We all know the powers-that-be are working behind and in front of the scenes frantically to keep things from rapidly falling apart (the Fed/Bear Stearns incident being a prominent example). But certainly, growing financial and economic distress looks to be a feature we will have to reckon with for the forseeable future.
    http://implode-explode.com/viewnews/...tionAHoax.html
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    Autos, finance, housing, manufacturing, and tech are all in depression.
    Thank goodness the US is not even in a recession.
    Oh Canada, we stand on cars and freeze...

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    Quote Originally Posted by XxAmber89xX View Post
    Autos, finance, housing, manufacturing, and tech are all in depression.
    Thank goodness the US is not even in a recession.
    Isn't it lucky that so many areas can be suffering but that suffering does not pass on to the economy as a whole? That can only be because of great financial management and economic planning. Nothing else could explain it...

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    ^^^ yeah right, and the US really does have 5.5% unemployment and a 2% 'core' inflation rate !


    It would also appear that the 'subprime' crisis was only the first wave, and may be exceeded by an 'Alt-A' crisis which is rapidly building ...

    (snip)"In summary, Alt-A delinquencies and defaults are growing at an astounding pace. The highlights are as follows:

    -60+ day delinquency percentages and roll rates increased in every vintage during May among Alt-A loans, while cure rates have declined only for 2003 and 2007 vintages.

    - Alt-A is increasingly beginning to look a whole lot like subprime

    - peak resets in the loan class aren’t expected until the middle of next year. In particular

    - loss severity continues to ratchet upward — a trend that portends some likely further reassessment of rating models at each of the major credit rating agencies

    - Loss severity reached 41.4 percent for all Alt-A first liens in REO during the most recent rolling six month period through May, Clayton said; that was up from a 37.6 percent rolling average one month earlier

    - Loss severity compares to a similar 49 percent loss severity average for subprime first liens liquidated in REO through May.

    - The latest Alt-A assumption of 35 percent loss severity on Alt-A loans, only one month old, already start to look a little too conservative

    - The Ratings agency’s updated loss severity assumption was one key reason the agency cut ratings of 1,326 Alt-A residential mortgage-backed securities in late May — and put another 567 AAA-rated tranches on negative ratings watch

    - 2006 vintage saw 60+ day borrower delinquencies among Alt-A first liens reached 21.22 percent in May, up 10.5 percent in a single month; 2007 fared even worse, with 60+ day delinquencies ratcheting up 22 percent to 18.55 percent

    - Even the 2004 Alt-A vintage is defaulting at a fast pace: 60+ day delinquencies in the vintage shot up by nearly 24 percent in just one month

    - The problem is rapidly falling home prices and a weakening economy are the chief culprits here.

    - Out of all the active delinquent ARM loans in Clayton’s portfolio, approximately 70 percent were already delinquent prior to the first rate change date,” analysts at the firm noted in their report"(snip) from


    ... and in case anybody is unclear about Alt-A, this is the generic term assigned to borrowers who DO have (or had at any rate) fairly respectable earnings potentials, but whose incomes are unable to pass full documentation and verification regulations. This group consists of the self-employed, those who work at jobs where a significant fraction of their paycheck is derived from tips, contractors etc. Unfortunately, this group also consists of a certain percentage of LIARS.

    In the way of fallout, unlike many 'subprime' borrowers, banks loaned horrendous amounts of money to Alt-A borrowers for much more expensive homes (and cars and boats and credit card limits) which they would never have extended to 'subprime' borrowers (whose lower incomes limited their total credit). As a result, the per-capita write-offs by banks on delinqent Alt-A loans will probably involve a whole lot more dollars than 'subprime' did ... and this will occur at a time when the banks have yet to fully acknowledge and write off their previous 'subprime' losses !

    Also, Secondary Mortgage Market investors who shied away from buying into too many 'subprime' backed mortgage bonds are 'knee deep' in supposedly higher rated and less risky 'Alt-A' backed mortgage bonds. I'm talking about institutional investors, hedge fund investors, retirement funds, foreign banks, individual foreign investors, individual retirees etc. Thus if these Alt-A bonds take a rating downgrade, the 'pain' is going to affect a wider segment than 'subprime' did.

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    Quote Originally Posted by Melonie View Post

    Also, Secondary Mortgage Market investors who shied away from buying into too many 'subprime' backed mortgage bonds are 'knee deep' in supposedly higher rated and less risky 'Alt-A' backed mortgage bonds. I'm talking about institutional investors, hedge fund investors, retirement funds, foreign banks, individual foreign investors, individual retirees etc. Thus if these Alt-A bonds take a rating downgrade, the 'pain' is going to affect a wider segment than 'subprime' did.

    They will make up the loss in the futures market. Look at the run up in prices they've already caused.

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    It's not just subprime and Alt-A mortgages. In our community there are 2 forclosures in our Cul-de-Sac and I don't believe these Jumbo loans would fall into either category.

    Also, the beach homes we were looking at a while back... We keep getting notices of slashed prices and when asked were told that many of these homes are now bank-owned. These homes are ranging from about 800,000 - 1.3 mil and are being forclosed on.... The whole thing scares the spit out of me.

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    Default Re: Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks

    ^^^ and the worries get even larger given that Fannie Mae and Freddy Mac are now spooking investors ... which will translate into higher bond yield spreads being paid in order for FNM and FRE to continue selling mortgage backed bonds ... and in turn higher mortgage interest rates for new FNM and FRE backed mortgage loans ... which in turn means higher monthly payments, fewer qualified buyers, fewer home sales, and lower real estate prices ! Of course this also means mounting losses for those banks which are already sitting on huge numbers of bank-owned repo properties which have now become even more difficult to sell -



    The 'shortage of capital' (or perhaps more correctly put, the destruction of capital) has now spread to every corner of American financial institutions ... including the GSE's !!!

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