All Posts Tagged With: "subprime crisis"

8 Reasons Why the Bailout Bill Will Fail

The buzz on Capitol Hill is that Congress could pass an updated version of the bailout bill before the end of the week. But Shah Gilani in Money Morning says taxpayers are being “force-fed a political solution, instead of a sound economic market-based solution to a financial crisis.” He says the the bailout bill has eight key failings.

Bet on the Housing Recovery with This Dividend-Paying REIT

Remember how this whole financial mess started? Here’s a clue: house prices fell by a record 16.3% y-o-y in July.

Investors have fled the real estate market over the last year. But Andrew Snyder says the best time to invest in a sector is when it’s beaten down and oversold.

REIT Associated Estates Realty (NYSE:AEC) allows investors to bet on the housing recovery without the need to buy and sell property. It also pays healthy dividends in the meantime.

Prison Business Means Eleco Has Recession-Proof Profit Stream

Building suppliers aren’t popular with investors. Today, US housing market data revealed existing home prices fell by a record 9.5% in August. In Britain property sales are at their lowest for 50 years. Nevertheless, Tom Bulford says  Eleco (LON:ELCO) is a great contrarian play. The company has diverse profit stream from prison- and school-building programs, which should protect it from a recession.  With a P/E of over six and a yield of over 4%, Tom says this is a stock to watch.

Legislation Is the Disease, Not the Cure, for Market Crisis

Barack Obama and John McCain are scrambling to respond to the financial crisis on Wall Street. Both are calling for greater oversight and regulation of the banking sector. But neither is inspiring confidence in his ability to deal with the crisis. Few will admit it - and fewer still in Washington - but the answer to the current crisis does not lie in greater regulation. In fact, as Frank Holmes argues in The Daily Reckoning, legislation such as Sarbenes-Oxley is making matters worse…

Treasury Plan Must Tackle CDOs and CDS or Fail

Former professional trader and hedge-fund manager Shah Gilani says the very complexity of the global financial system brought us to the brink of a total meltdown. Asset-backed securities such as structured collateralized debt obligations, credit default swaps and the horrific offspring of the two, credit default swaps on structured collateralized debt obligations, are the main culprits, says Shah:

Collapse of AIG: The Inside Story

There’s nothing fundamentally wrong with the core insurance business units of AIG (NYSE:AIG). The company’s downfall was an accumulation of misplaced bets on credit default swaps.

Early Indicators: $1,164 Billion in Bailouts and Stocks Head Lower

Just how much of your money has the government flung at Wall Street? $1,164 billion so far: $700 billion bailout package for Wall Street; $200 billion for Fannie Mae and Freddie Mac; $150 billion in “stimulus”checks; $85 billion for AIG; $29 billion for Bear Stearns.

– Despite the vast sums involved to prop up Wall Street Europan stocks followed Asia and New York lower this morning.

US futures are down.

Ron Paul Takes Federal Reserve to Task on CNBC

“The creature that destroys value.” This is how Republican Congressman Ron Paul described the Federal Reserve on CNBC’s Kudlow & Company.

Paul also calls the Fed and “illegal institution” and “an immoral institution.”

For the most part, the mainstream press seems to have decided that the Fed- and Treasury-led bailouts of Wall Street finest are scary but necessary. But the big picture, says Paul, is that the dollar, once backed by gold and then by Treasury bonds, is now backed by junk mortgage securities that nobody wants. And this is a nightmare scenario for the dollar…

New Total Fed Credit Down By $5.5bn

New Total Fed Credit (”the magical fount from whence spews new credit, which becomes new money and a new debt when somebody borrows this new credit”) is down, surprisingly, down by $5.5 billion this week. This is theoretically bad news, says The Mogambo Guru.

Government Bailout May Only Be a Short-Term Fix

Yesterday, central banks launched a coordinated effort to flood global money markets with U.S. dollars in hopes of easing strained financial systems in danger of freezing up entirely. However, many analysts see this as only a short-term solution that will lower overnight lending rates but fail to assist financial institutions with longer-term cash needs, says Jason Simpkins  in Money Morning.

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