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  1. #1
    What's the word? Rhia7's Avatar
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    People from other countries hurt by Lehman collapse
    Everything that has happened has serious ramifications because people from other countries were involved in the (what is seen now as) shaky investments/deals:

    Singapore investors decry losses from Lehman bonds

    We are facing serious global problems especially since our economy is interconnected with the economies of other countries.

    Oct. 11 (Bloomberg) -- Group of Seven finance chiefs, meeting after stocks plunged and as a global recession looms, vowed to prevent the collapse of major banks while failing to unveil new initiatives for thawing credit markets.

    [snip]
    Signaling they would intervene to avoid a repeat of last month's collapse of Lehman Brothers Holdings Inc., the officials promised to ensure major banks have access to cash and are able to tap public funds for capital.
    [snip]

    `Global Crisis'

    ``This is a serious global crisis and therefore requires a serious global response,'' Bush said at the White House. Bush also met with finance officials from the Group of 20, which includes emerging markets such as Russia and China. The G-20 said in a statement that it was committed to beating the crisis.

    http://www.bloomberg.com/apps/news?p...TfM&refer=home
    Last edited by Rhia7; October 12th, 2008 at 12:25 AM.
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  2. #2
    What's the word? Rhia7's Avatar
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    More articles about problems from the collapse of Lehman Brothers:

    Lehman's Europe clients face delay
    http://www.ft.com/cms/s/0/188e1762-9...nclick_check=1

    Lehman protection sellers face biggest ever losses
    http://www.independent.ie/business/w...s-1496346.html

    Failing Lehman in $100m payout plan
    http://business.timesonline.co.uk/to...cle4926278.ece

    Barclays-Lehman deal, Germany loses a bundle
    http://www.neurope.eu/articles/89810.php

    Financial companies to pay $600 bn as claims on Lehman's debts
    http://timesofindia.indiatimes.com/B...ow/3584228.cms
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  3. #3
    MasterMike HardwareGeek's Avatar
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    Should be no surprise after all when you invest you have to remember there are risk. but hey on a good note the DOLLAR Is soaring and oil is under 85 bucks a barrel

  4. #4
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    No, it is not as simple as that. In Hong Kong as in Singapore, the customers were told that the bonds were virtually 100% safe. In a similar situation in the US, banks who sold similar bonds to customers were required to compensate them 100% for providing misleading information. The issue is whether the authorities in Hong Kong and Singapore will have the guts to force the banks to make compensation.

    Morover in Hong Kong a few years back, as Lehman minibonds started appearing on the market. A question was raised in the Legislative council of Hong Kong as to whether these bonds should be regulated. Joseph Yam, the head of our monetary authority replied that they are regulated, Hong Kong would lose competitive edge to Singapore. So now of course, Singapore and Hong Kong are now in the same boat. Joseph Yam also promised that these type of bonds will NOT be available to ordinary bank customers and it is this pledge that has been blatanly broken. There are very high feeling about this issue in Hong Kong right now.
    Last edited by pdaden; October 13th, 2008 at 12:36 AM.

  5. #5
    MasterMike HardwareGeek's Avatar
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    If you fall for the bond is 100% safe routine then you're an idiot, and sometimes the greatest lessons in life are the one sthat hurt the most.

  6. #6
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    The US SEC does not think so

    http://www.bizjournals.com/philadelp...6/daily33.html

    A lot of the buyers here are small businesses, why would they be less informed than the buyers in Hong Kong and Singapore who are mainly retired pensioners?

  7. #7

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    Why is it everyone one of MY BANKS are involved in some sort of issue? I should have stuck with my local credit union.

  8. #8
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    http://www.iht.com/articles/2008/10/...ess/lehman.php

    It seems that the banks have agreed to buy the bonds back at "market price"

    It was disgraceful how they marketed these toxic products to poor people, pensioners, and uneducated people who did not know a single word of English.

    They were also heavily marketing "equity-linked investments" whereby ordinary customers were paid 1-2% extra interest rates but had to take a huge amount of risks should the stockmarket falls. A lot of pensioners have lost much of their life savings with these.

  9. #9
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    On a larger scale, as production halts due to the global slowdown, more and more people are affected.

    Just imagine the factory production worker in Brazil who might be producing shirts and living from hand to mouth and earning US$ 2 per day.

    If production slows down, the factory would cut production. That production worker will be out of a job and looking for ways to sustain herself and/or her family.

    I m sure there are lots of these people who are affected but due to the remoteness of thier living area, those stories are never printer or published any where...

  10. #10
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    Of course the poor in developing countries are even more affected.

    http://www.time.com/time/magazine/ar...850973,00.html

    Just today, a Chinese factory suddenly closed with 7000 workers losing their jobs. In fact, half of China's toy factories have closed already.

    I can tell you that people here are hoping mad at the US for sucking everybody else into this mess. We do not remember the Great Depression but the Asian Financial Crisis is still fresh in our minds.

  11. #11
    ABW Ambassador jodyq's Avatar
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    I just wanted to say that nothing is a 100% never. When investing in anything you are taking a risk.

  12. #12
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    As if the World needs one more reason to hate America ... this will make those Asians and Europeans who invested in EXOTIC instruments created by failed investment banks to run away from anything American. Sadly, this is one more hit to America's already low standing in the World

  13. #13
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    I think investors are blaming their local banks more than Lehman itself for promoting these products and promising them that there were 100% safe. There is a criminal investigation by the SFC here into those banks right now and I hope they will get some redress.

    The reaon why people are really angry at America is for sucking them into a recession again. We have had our financial crisis and depression 10 years ago and many just could not believe that this would happen again. Within one week of the stockmarket crash, the asking prices of most properties here have been reduced by 15-20%.

    Many just could not comprehend how a relatively tiny housing bubble and tiny price crash in the US can lead to all this.

  14. #14
    Full Member Greywolf's Avatar
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    We have had our financial crisis and depression 10 years ago and many just could not believe that this would happen again.
    Not sure what you are talking about. There has not been a depression since the big one in the 1930s, and recessions happen quite frequently. Ten of them since 1945. Fiat money supply and Fed policy are the primary causes of the boom and bust cycle. Low interest rates now are setting us up for growth, as well as the next economic downturn.

    relatively tiny housing bubble
    Not that tiny. When you compare the rise in housing prices to that of income growth, the price rise is quite significant.
    http://en.wikipedia.org/wiki/Housing_bubble

    But the real problem was WHY the prices were rising. The Community Redevelopment Act, and other meddling by our politicians in the free market are the primary culprit in this mess, but don't expect any of them to accept blame.

    GW

  15. #15
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    The US and Europe may not have a Depression since the 30's but many Asian countries had a depression i.e. big contraction in 1997 to 1998. In any case, a Depression is not as severe as an economic collapse as what they are experiencing now in Zimbabwe. Other countries that have experinced economic collapse include Russia, Latin America, and Indonesia.

    Around $200,000 for a median house is very cheap compared to other countries, especially in relation to the median US income. It is much cheaper than the UK, much cheaper than Hong Kong in 1997 (highest in the world then), and certainly much much cheaper than Japan in the nineties. If you remember, land beneath the Imperial Palace in Tokyo was worth more than the entire state of California.

    When the bubble burst, property prices in Japan fell up to 90%, and in Hong Kong by 70%. In Hong Kong, the banking system remained completely intact despite this. The reason was that everybody knew there was a bubble and the banks were requied to take a 30% deposit.

    I cannot comment on your Community Redevelopment but I would say that almost all developed countries try to provide cheap housing for those are poor. In fact in Singapore, the vast majority of housing is public housing. As fas as the politicians are concerned, many were under the wing of Fannie or Freddie. But the person who the financial community thinks is probably most culpable is Greenspan for failire to regulate the most dangerous of derivatives: the credit default swap,

    http://www.propublica.org/article/po...greenspan-109/

  16. #16
    Full Member Greywolf's Avatar
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    almost all developed countries try to provide cheap housing for those are poor. In fact in Singapore, the vast majority of housing is public housing.
    CRA didn't provide "cheap" housing for the poor. It encouraged mortgage lenders to lend money to people who otherwise would not have qualified for a mortgage. No down payment...no problem; poor credit... no problem.

    Certain groups want to blast the free market as having failed us, but had the market truly been free, sub prime mortgage would not be part of our vocabulary. There is no shame in renting until you have saved for a down payment and are financially secure enough to buy a house.

    Thanks for giving me yet another reason to not move to Singapore.

  17. #17
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    Alan Greenspan knowingly well shifted the risk from Commercial Banks to those he was supposed to protect "American Tax Payer". He was primarily working and controlled by Banks. Remember, he conspired(?) with banks and assured Americans that the ARMs are great!. By supporting ARMs, he shifted the risk to taxpayers from banks.

    What he did not "perhaps" realize was, what is bad for the tax payer will ultimately come to haunt the banks!

  18. #18
    Full Member Greywolf's Avatar
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    Greenspan certainly contributed to the problem, as even he admits: the housing bubble was “fundamentally engendered by the decline in real long-term interest rates”, but I'm still waiting for someone in congress to step up and accept their role in this mess. The Fed chairman did encourage people to take out ARMs, but the CRA created an environment where lenders were viewed as discriminatory if they didn't issue sub prime (read risky) loans.

    The only politician I've heard step up and accept at least partial blame is Bill Clinton, go figure.

  19. #19
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  20. #20
    Full Member Greywolf's Avatar
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    Hopefully somewhere on that list will be "home buyers"

    Don't expect the mortgage company to know what you can afford. Take responsibility for your own situation.

  21. #21
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    "Home Buyers" who bought homes that they could not afford should be the #1 Culprit for this mess. There should be a stronger punishment (like jail time) for those who are foreclosing homes so they don't repeat this kind of mess

  22. #22
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by redtagdeals
    "Home Buyers" who bought homes that they could not afford should be the #1 Culprit for this mess. There should be a stronger punishment (like jail time) for those who are foreclosing homes so they don't repeat this kind of mess
    No, it's the greedy CEOs who talked people into the adjustable rates.
    Then they sold bundled junk mortgages along with "good" mortgages in packages as mortgage-backed securities.
    I know my own mortgage was sold to 3 banks.

    The way things were handled are reminiscent of the way things were handled during the "reign" of Drexel Burnam Lambert.

    I agree with the blog post "Bernake and Paulson Have Done A Lousy Job" written by a Member of the NYSE -- it is not an affiliate blog:
    http://www.gfn.com/fromthefloorblog/?p=53
    Last edited by Rhia7; October 19th, 2008 at 06:12 PM.
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  23. #23
    ABW Ambassador Boom or Bust's Avatar
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    Quote Originally Posted by Rhia7
    No, it's the greedy CEOs who talked people into the adjustable rates.
    Unless the purchaser was made to sign at gunpoint, they are the ones ultimately responsible. I mean duh! You shouldn't buy what you can't afford...



    X

  24. #24
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by Ed Byerly
    Unless the purchaser was made to sign at gunpoint, they are the ones ultimately responsible. I mean duh! You shouldn't buy what you can't afford...
    They might have been fooled into believing (through advertising/terms written in language with the aim to dupe) that they could afford it -- and there were some who could until the adjustable rates became too high or due to some unforeseen circumstance.

    ON its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. “I want to be sure you are getting the best loan possible,” the sales representatives would say.

    But providing “the best loan possible” to customers wasn’t always the bank’s main goal, say some former employees. Instead, potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.

    Inside the Countrywide Lending Spree
    The "seductive pitch ..." who is to blame? The Wolf or Little Red Riding Hood who is duped by the Wolf? And who are the wolves to blame on Wall Street for this crisis? Also Greenspan (who I dislike intensely) is to blame with his policies.
    http://themessthatgreenspanmade.blogspot.com/

    The Federal Reserve Chairman position is an appointment, it's not political.
    It's okay to grumble about people at the Fed.
    Last edited by Rhia7; October 19th, 2008 at 06:42 PM.
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  25. #25
    What's the word? Rhia7's Avatar
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    The next big scam will involve Reverse Mortgages -- the elderly will be the target of this upcoming scam.
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