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  #101  
Old 18.01.2008, 16:57
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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There's another credit-crunch related crisis about to hit. A number of 'monoline' insurers of AAA bonds (much of this subprime shite got AAA ratings somehow) are teetering on the brink of solvency.

Certain funds are only allowed to buy AAA bonds - like pension funds etc. As part of the AAA status, they must be insured.

If the monoline insurers fold, then the bonds which they insure will lose their AAA rating - meaning that the holders will be forced to dump them onto the market: Which entails huge losses and markdowns for them as they will be worth less than what they are currently valued at on the books.

I'm glad to see that finally the Credit Rating agencies are also under scrutiny.

Rating these instruments as AAA gave the green light to a huge number of investments which we all know have now gone south.

Just something to bear in mind for those who point the fingers of blame at the "managers" without taking the whole market into account.

I would be happy to understand what S&P's credit analysts (and all the others) were thinking when they bestowed the holy triple A ratings on the derivatives in question.
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  #102  
Old 18.01.2008, 17:00
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Has there been one set up? Should be some fireworks.....
Yes, February 27th to get existing shareholders to approve 11B from Singapore & 2B from Middle East rumoured to be Oman govt. I think maybe difficult....

As for saying nothing is 100% guaranteed, what about Northern Rock, they seem the least concerned about the losses. More has been spent here than on the total UK education budget. Good one Gordon.
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  #103  
Old 18.01.2008, 17:03
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Re: Yet more sub-prime UBS woes another $10bn writedown....

For anybody who's interested, read carefully.......it's funny !

http://www.ubs.com/1/e/investors/egm/letter.html
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  #104  
Old 18.01.2008, 17:13
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Re: Yet more sub-prime UBS woes another $10bn writedown....


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What about Post Finance? I heard they are fully guaranteed....




There is no such thing.
Please read this link which says The Swiss postal is an exception since all deposits are fully guaranteed by the Swiss Government.

http://swiss-bank-accounts.com/e/faq...insurance.html

Your views please.
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  #105  
Old 18.01.2008, 17:36
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Please read this link which says The Swiss postal is an exception since all deposits are fully guaranteed by the Swiss Government.

http://swiss-bank-accounts.com/e/faq...insurance.html

Your views please.
My views are that anyone who sells Swiss bank accounts over the internet might as well sell Viagra knock-offs.

Nevertheless, the Post sofar doesn't operate as a real bank does and is not governed by the Federal Banking Commission (which imposes great limitations in terms of authorised activities). However that is set to change very soon and once it will be implemented the State guarantee will be removed.
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  #106  
Old 18.01.2008, 17:47
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Lots of questions in this thread. Here are a few observations:
1. This is bad and there is more to come. Banks are stuck with toxic positions they can’t offload since there are no buyers so all they can do is sit on them and mark them down in price.
2. When this problem broke in Auntumn 2007 stocks took a dive because no one knew how big the problem was. Stock markets hate uncertainty. After third quarter 2007 losses many of the big players fired senior management. The new guys wanted get as much of the bad news out in the fourth quarter so they couldn’t be tainted with the sins of their predecessors. Hence big write downs in Q4 and predictions of more to come in 2008.
3. In Q3 some banks like had not disclosed sub prime positions they had sold to investors since technically they were not the banks’ positions. In Q4 they started bringing these off balance sheet positions on balance sheet, thereby increasing write downs. Why? Not altruistism. If they had washed their hands and left investors to carry the can they would not be able to attract new investors in the future.
4. Perverse at it seems stocks often rebound when the bad news is out if investors think the management has come clean. It makes it easier to start accurately valuing the stock. Markets fall on rumour and rise on news. Banks have also announced new overseas investments at the same time as reporting losses which also gives confidence that despite the losses they can continue to raise new money to plug the holes. This is not selling the business. It is raising capital and it gives confidence as long as they can raise money, they can weather the storm. As far as I can see no-one has sold a part of their business yet. The time they can’t raise new capital is the time to run for the exit but I doubt it will come to that.
5. The buck for this mess lies squarely with senior managment. Oversight, risk management and governance at some of the biggest names in the industry has been lamentable. It’s good that regulators are starting to ask questions and that the guys at the top have been fired. If the board doesn’t have the guts to fire the CEO then someone needs to change the board.
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  #107  
Old 18.01.2008, 17:55
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Nev,

I agree totally. In some cases the whole board should be fired, and certainly the CEO's should be brought before a court of law. How many BILLIONS between all the various banks and financial companies, in total so far???

Cloud cuckoo land.
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  #108  
Old 18.01.2008, 18:33
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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My views are that anyone who sells Swiss bank accounts over the internet might as well sell Viagra knock-offs.

Nevertheless, the Post sofar doesn't operate as a real bank does and is not governed by the Federal Banking Commission (which imposes great limitations in terms of authorised activities). However that is set to change very soon and once it will be implemented the State guarantee will be removed.
What sort of 'guarantees' exist for Swiss banks anyway - anything similar to the FSCS in the UK?

Mind you, it should be pretty clear to anyone who reads the T&Cs of it that your money is nothing like guaranteed, <35k or not...
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  #109  
Old 18.01.2008, 18:39
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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I'm no financial type here, most of this thread is beyond me....

Approx how many people are going to lose their homes? I understand the subprime market collapsed when someone realised a significant number of the subprime mortgages and loans sold were going to default. With the ammount of money lost it sounds like millions of poor suckers are going to get visits from the baillifs and their houses repossesed.
That's the bit I don't get.

How many sub-prime mortgages can there be? With the figures we are hearing it seems that half the US will be turfed out of their homes...
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  #110  
Old 18.01.2008, 18:49
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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That's the bit I don't get.

How many sub-prime mortgages can there be? With the figures we are hearing it seems that half the US will be turfed out of their homes...
According to the BBC, about 2 million families in the US will get turfed out over the next 2 years:

http://news.bbc.co.uk/2/hi/business/7070935.stm

The problem is compounded by the drop in house values as whole suburbs become ghost towns of vacant vandalised lots. Those who are able to hang on to their mortgages could be owning something worth only 50% what they bought it for.
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  #111  
Old 18.01.2008, 19:29
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Re: Yet more sub-prime UBS woes another $10bn writedown....

I've read that there are 1.3trillion dls of sub prime mortgages in the US. Predicting the likely losses is not easy. Obviously the 1.3 trillion will not go to zero since not all of them will default. Also they are backed by real estate which can be sold to recoup losses on the loan. So say 25% default on 1.3 trillion that's 325 billion worth of loans which go belly up. Let's say 60% of that is recovered from the sale of the underlying homes held as collateral that gives a loss of 130 billion. The problem is who knows how many will actually default and what the recovery rate will be. However, so far total write downs by the major banks total 75billion so there is still plenty room for more downside. Remember many of the write downs for non US banks are not against actual mortgages lent by them. The write downs are vs collateralised debt obligations their traders bought from other banks secured on the mortgages created by other banks and assigned on. No one knows how many collaterlaised debt obligations there are out there and there is no way of knowing since they are not public traansactions. Again that old uncertainty again.
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  #112  
Old 18.01.2008, 22:49
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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I'm no financial type here, most of this thread is beyond me....

Approx how many people are going to lose their homes? I understand the subprime market collapsed when someone realised a significant number of the subprime mortgages and loans sold were going to default. With the ammount of money lost it sounds like millions of poor suckers are going to get visits from the baillifs and their houses repossesed.
I wouldn't feel so bad about the poor suckers if I was you ... they come out rather ahead in all this. Most of the subprime borrowers put in little or no capital, either lied or acquiesced to lying on their loan applications, and in normal circumstances, would not be able to afford the homes they are in anyway. The only ones who got relatively more screwed, and the ones you should feel sorry for, are the shareholders of the banks whose savings were gambled away, and the many thousands who are going to lose their jobs ..
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  #113  
Old 19.01.2008, 00:00
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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That's the bit I don't get.

How many sub-prime mortgages can there be? With the figures we are hearing it seems that half the US will be turfed out of their homes...
well... there seems to be a feeling out there that somehow people are defaulting because they had a subprime loan... thousands of people are defaulting simply because the crooks who sold them the loans did not make sure they had any equity in their homes.

if you put no money down, borrow $100 and buy a house with it .. and the market falls 10%, you have $10 negative equity - i.e you can sell the house and you would still owe $10 to the bank. you are $10 ahead by declaring bankruptcy and letting the bank repossess the house (ok I know I am oversimplifying, but you get the idea)

now I may be a super prime borrower, but if some idiot loaned me $95 to buy a $100 home, and house prices fall 20%, I am ready to walk away and let the bank keep the house.

then because so many repossessed homes are for sale down your street, house prices fall 30% and there's another few families ready to walk ...

now, of course, subprime borrowers are statistically more likely to default - as they always have, and always will. but if rational minds prevail, the higher interest charged to them will compensate for their higher propensity to default and all is well.

borrowers that do not have a stake in keeping their loans serviced will walk away ... subprime or not
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  #114  
Old 19.01.2008, 11:12
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Tempting as it may seem, you can't just walk away and leave the bank with problem if your mortgage is foreclosed. If the house is auctioned off for less than the loan value then the debt doesn't just go away. The bank can continue to pursue you for recovery of the balance of the debt (plus legal fees associated with the foreclosure) and interest keeps accruing on any debts outstanding. So if you have any other assets they can be at risk. On top of that, if you are foreclosed, your credit rating will be severely affected and will stay on your record, frustrating your abilitly to get future loans.
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  #115  
Old 19.01.2008, 22:26
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Tempting as it may seem, you can't just walk away and leave the bank with problem if your mortgage is foreclosed. If the house is auctioned off for less than the loan value then the debt doesn't just go away. The bank can continue to pursue you for recovery of the balance of the debt (plus legal fees associated with the foreclosure) and interest keeps accruing on any debts outstanding. So if you have any other assets they can be at risk. On top of that, if you are foreclosed, your credit rating will be severely affected and will stay on your record, frustrating your abilitly to get future loans.
of course you can't just 'walk away', but filing for bankruptcy is not all that hard in the US. more important, there isn't as much of a stigma attached to it, as there is in other parts of the world... and if you are a subprime borrower, I doubt you can worry too much about your credit score

and what do you mean "IF the house is auctioned off for less than the loan value .."?? Of course every single foreclosed home will be auctioned off for less than the loan value.. to begin with, the mortgage companies inflated the valuation estimates, then the housing market as a whole swooned, and then there are dozens of forclosed homes down the street - meaning there isn't a chance in hell that any of those homes will sell for even close to the loan value !!!
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  #116  
Old 24.01.2008, 12:33
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Re: Yet more sub-prime UBS woes another $10bn writedown....

as usual, the French are fashionalbly late to the party .... oh but how :

$7 Billion trader fraud

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  #117  
Old 24.01.2008, 12:38
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Re: Yet more sub-prime UBS woes another $10bn writedown....

My God and I struggle to get a job, whilst these "people" lose money hand over fist and bring the entire financial system to its knees. Does the human race learn nothing. It seems to me that you can slap all the controls you like on these banks and other financial institutions and additionally make loads of new laws, to no avail.

It sickens me this whole saga.
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  #118  
Old 24.01.2008, 13:52
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Tempting as it may seem, you can't just walk away and leave the bank with problem if your mortgage is foreclosed. If the house is auctioned off for less than the loan value then the debt doesn't just go away. The bank can continue to pursue you for recovery of the balance of the debt (plus legal fees associated with the foreclosure) and interest keeps accruing on any debts outstanding. So if you have any other assets they can be at risk. On top of that, if you are foreclosed, your credit rating will be severely affected and will stay on your record, frustrating your abilitly to get future loans.
From a US perspective it depends where you live. Many states have "non-recourse" statutes that do infact allow you to in effect walk away for home finance.

Regarding stigma, sure it's easier to say you defaulted on your home through interest hikes rather than credit debt for frivolent purchases.
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  #119  
Old 24.01.2008, 14:05
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Re: Yet more sub-prime UBS woes another $10bn writedown....

how do you say Sarbanes Oxley and Basel II in French?

answer is - you can't as they don't exist
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  #120  
Old 27.01.2008, 08:08
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Re: Yet more sub-prime UBS woes another $10bn writedown....

now its starting to get really interesting :

Banks May Need $143B Of New Capital If Bond Insurer Ratings Fall

the "colonies" will have a field day.
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