Making money and helping banks

[elwapo]

BOYD ERMAN

Globe and Mail Update

October 16, 2008 at 2:28 PM EDT

Canadian banks sold $5-billion of mortgages to Canada Mortgage and Housing Corp. at a price that indicates the government will indeed make a big profit on its program to help banks jump-start lending.

CMHC will earn an average yield of 4.24 per cent on the mortgages it bought from banks Thursday. At the same time, the government sold $3-billion of five-year bonds to finance the purchase at a yield of 3.24 per cent. The 1 percentage point spread means the government will make $50-million a year in profit from the interest-rate differential on this batch of loans.

The federal government designed the program to help banks raise money for new loans, by taking old home loans off the balance sheet. The government plans more purchases totalling $20-billion, though many bankers would like Ottawa to ratchet up the program.

The loans the federal government is purchasing are insured, meaning the government shouldn't be putting taxpayer money at risk.

For the banks, getting funds at an interest rate of 4.24 per cent will be a big relief, given that interest rates from other methods of raising money are much higher in the credit squeeze.

 

[Tex]

What I want to know is where is the real money? Where is the money that traditionally goes to banks from depositors? This is where banks get their money to loan traditionally, not from governments.

Did all that money just get lost in the sub prime mortgage mess? Is it sitting on the sidelines?

We can't depend on government to provide everything. We must have a real underlying economy that creates wealth and then allocates it efficiently. This includes real people making money, putting it in the bank, and then allowing all that money to be lent out to people who are a good risk for investment so that money can make a return.

The problem with the sub prime mess is that a whole lot of that money was lost because Wall Street sold mortgage backed securities that had more risk than they wanted people to know about. Now no one wants to buy those securities. They need to get all of those portfolios valued with real loan loss experience based on the underwriting criteria.

The unknown sub prime investment risk froze up the trust investors had with securities Wall Street sold. Now the governments are stepping in and trying to provide liquidity where the trust was lost.

 

[Denny]

What I want to know is where is the real money? Where is the money that traditionally goes to banks from depositors? This is where banks get their money to loan traditionally, not from governments.

Did all that money just get lost in the sub prime mortgage mess? Is it sitting on the sidelines?

We can't depend on government to provide everything. We must have a real underlying economy that creates wealth and then allocates it efficiently. This includes real people making money, putting it in the bank, and then allowing all that money to be lent out to people who are a good risk for investment so that money can make a return.

The problem with the sub prime mess is that a whole lot of that money was lost because Wall Street sold mortgage backed securities that had more risk than they wanted people to know about. Now no one wants to buy those securities. They need to get all of those portfolios valued with real loan loss experience based on the underwriting criteria.

The unknown sub prime investment risk froze up the trust investors had with securities Wall Street sold. Now the governments are stepping in and trying to provide liquidity where the trust was lost.

OPEC has gotten most of the money.

 

[cowzilla]

I don't think many people realize how much hardship $140 a barrel Oil caused North America this summer.

 

[Tex]

I don't think many people realize how much hardship $140 a barrel Oil caused North America this summer.

I sure do and I am mad as heck. I won't forget it either. My memory will be like an elephant's memory on this one.

 

[Anonymous]

I don't think many people realize how much hardship $140 a barrel Oil caused North America this summer.

I sure do and I am mad as heck. I won't forget it either. My memory will be like an elephant's memory on this one.

Yep- mine too....I just got polled for a telephone poll by the Montana State University- Billings-- questions about who you were voting for in National and Montana races...When I answered Independent for party preference he asked which party I normally leaned toward-- and when I answered "prior to the last 8 years of George Bush I had strongly leaned Republican, but wasn't sure if I could believe or trust anything another Repub said anymore"- the young college student taking the poll started laughing and said "forgive me- but you really wouldn't believe how many people are giving the identical answer"....

 

[elwapo]

I am sure opes will get us back in line to pay again when they cut production again. I cant think of a better way to tame the middle east than a sub $80 barrel of oil. Iran needs $90 + to balance its budget.

 

[cowzilla]

Went to drive my friends truck for a few days hauling grain to a terminal. He usually leaves the tanks empty when he parks it but they where full when I jumped in :shock: He got worried that they where going to start rationing diesel at the pumps. I thought he was joking but the next day I heard on the news that they did just that at some of the pumps. They said they had to cut some production to so maintiance :???:

 

[elwapo]

UFA is rationing diesel here in Alberta. On another note. I have a neighbour that works for the railway. He is about to be laid off. Usually this time of year is the busiest but he said that the rail traffic has just stopped dead. Sounds like all of us will be feeling this recession soon!

 

[RobertMac]

I don't think many people realize how much hardship $140 a barrel Oil caused North America this summer.

I sure do and I am mad as heck. I won't forget it either. My memory will be like an elephant's memory on this one.

Yep- mine too....I just got polled for a telephone poll by the Montana State University- Billings-- questions about who you were voting for in National and Montana races...When I answered Independent for party preference he asked which party I normally leaned toward-- and when I answered "prior to the last 8 years of George Bush I had strongly leaned Republican, but wasn't sure if I could believe or trust anything another Repub said anymore"- the young college student taking the poll started laughing and said "forgive me- but you really wouldn't believe how many people are giving the identical answer"....

And who was responsible for the $140/barrel crude prices and all that money going to OPEC???? Could it be the party that has stopped all USA energy industry development for the past thirty years...no new refineries, no nuclear power plants, shutting down the use of coal, no drilling where we know the oil is???? If Obama is elected, the price of oil will go back to $140 and more because the Democrats will again stop all oil energy development...speculators will be all over this!!!!!!!!!!!!!

Again, OT shows his hypocrisy!!!

 

[Anonymous]

I sure do and I am mad as heck. I won't forget it either. My memory will be like an elephant's memory on this one.

Yep- mine too....I just got polled for a telephone poll by the Montana State University- Billings-- questions about who you were voting for in National and Montana races...When I answered Independent for party preference he asked which party I normally leaned toward-- and when I answered "prior to the last 8 years of George Bush I had strongly leaned Republican, but wasn't sure if I could believe or trust anything another Repub said anymore"- the young college student taking the poll started laughing and said "forgive me- but you really wouldn't believe how many people are giving the identical answer"....

And who was responsible for the $140/barrel crude prices and all that money going to OPEC???? Could it be the party that has stopped all USA energy industry development for the past thirty years...no new refineries, no nuclear power plants, shutting down the use of coal, no drilling where we know the oil is???? If Obama is elected, the price of oil will go back to $140 and more because the Democrats will again stop all oil energy development...speculators will be all over this!!!!!!!!!!!!!

Again, OT shows his hypocrisy!!!

How do we know? Our energy policy and direction was developed in a back room super secret deal with Cheney- so super secret the participanting oil men have denied even being involved after being proven they were there.. :roll: And now the courts have had to intervene and order none of the material and records destroyed, so at least down the line posterity will get to know....
So much for open and transparent government :roll:

 

[RobertMac]

Yep- mine too....I just got polled for a telephone poll by the Montana State University- Billings-- questions about who you were voting for in National and Montana races...When I answered Independent for party preference he asked which party I normally leaned toward-- and when I answered "prior to the last 8 years of George Bush I had strongly leaned Republican, but wasn't sure if I could believe or trust anything another Repub said anymore"- the young college student taking the poll started laughing and said "forgive me- but you really wouldn't believe how many people are giving the identical answer"....

And who was responsible for the $140/barrel crude prices and all that money going to OPEC???? Could it be the party that has stopped all USA energy industry development for the past thirty years...no new refineries, no nuclear power plants, shutting down the use of coal, no drilling where we know the oil is???? If Obama is elected, the price of oil will go back to $140 and more because the Democrats will again stop all oil energy development...speculators will be all over this!!!!!!!!!!!!!

Again, OT shows his hypocrisy!!!

How do we know? Our energy policy and direction was developed in a back room super secret deal with Cheney- so super secret the participanting oil men have denied even being involved after being proven they were there.. :roll: And now the courts have had to intervene and order none of the material and records destroyed, so at least down the line posterity will get to know....
So much for open and transparent government :roll:

OT, cut and paste any oil energy industry policy this super secret meeting caused to get passed by the evil Republicans.

 

[Anonymous]

And who was responsible for the $140/barrel crude prices and all that money going to OPEC???? Could it be the party that has stopped all USA energy industry development for the past thirty years...no new refineries, no nuclear power plants, shutting down the use of coal, no drilling where we know the oil is???? If Obama is elected, the price of oil will go back to $140 and more because the Democrats will again stop all oil energy development...speculators will be all over this!!!!!!!!!!!!!

Again, OT shows his hypocrisy!!!

How do we know? Our energy policy and direction was developed in a back room super secret deal with Cheney- so super secret the participanting oil men have denied even being involved after being proven they were there.. :roll: And now the courts have had to intervene and order none of the material and records destroyed, so at least down the line posterity will get to know....
So much for open and transparent government :roll:

OT, cut and paste any oil energy industry policy this super secret meeting caused to get passed by the evil Republicans.

How do we know what legislation they decided to pass or NOT to pass when we have NO idea what took place in the meetings :???:

I always have to wonder about the oil company subsidy tax cuts tho .. :???:

 

[Tex]

The dollar has slid off of its high 40%. Oil is priced in dollars but it is a foreign or global product. When the dollar drops by 40% compared to the exchange rates of other currencies, the cost of products from the global market go up by a coinciding amount, all other things equal.


This would mean that a barrel of oil that cost $84 on the world market would now cost $140.00 just based on the drop in the value of the dollar in relation to other currencies. The fed controls the value of the dollar and interest rates.

Figure it out.

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/13/AR2008031303620.html

http://useconomy.about.com/od/tradepolicy/p/Dollar_Value.htm

 

[Anonymous]

Tighter credit for ranchers
By Drovers news staff | Wednesday, October 22, 2008

The growing financial crisis is beginning to affect the availability of credit for agricultural production, particularly in the livestock sector, according to an Associated Press article last week. Strong grain prices and crop insurance help buffer the effects somewhat for farmers, but beef producers, particularly cattle feeders who rely on credit, are finding it more difficult. The article quotes Texas A&M University economist Carl Anderson, who says banks are losing confidence in borrowers' ability to repay loans and are requiring more collateral and higher interest rates. "The bankers are turning conservative," he says. The article notes, however, that the agricultural sector won't be completely frozen out of credit markets. The industry's traditional lenders are independent commercial banks that are on more solid financial footing than the large investment banks and commercial banks that have suffered most from mortgage-related losses. Also, federal assistance programs developed in response to the 1919 farm crisis are still active, and provisions in the farm bill give the farmers and ranchers special access to government-backed loans.
http://www.drovers.com/directories.asp?pgID=675&ed_id=4906&ts=nl1

 

[Anonymous]

Spent the afternoon at the local sale- almost make you cry....Didn't matter if they weighed 550 or 650- preconditioned or not- good calves were selling in the $80 range for heifers and high $80 or low $90 range for steers- all around $450-$480 for heifers- $530 to $560 for steers....Top steers I saw sold were the apparent cull steers from a registered red angus ranch- Jan/Feb born calves at 640 weight that sold for $94 for $601, which were the only + $600 calves I saw sold at $601.....

Only 5-6 calf buyers on the seats- and none were willing to put up any money- all sitting on their hands...I talked with one buyer/feedlot owner about his lot sitting empty-and he said he may start buying about Thanksgiving when he sees what this Bushenomics does to us...Says he has no doubt there will be lots of cattle to choose from as few have sold...

 

[elwapo]

Dropping dollar has sure affected calf prices to the positive in Southern Alberta. We are seeing the same as you OT in the price relationships between heavy and light calves. Big steers seem to be priced the same as the lighter ones ($1.00-$1.10).Heifers are week all around. Its not a good year for those that have moved to later calving dates resulting in lighter calves.

 

[cowzilla]

Dropping dollar has sure affected calf prices to the positive in Southern Alberta. We are seeing the same as you OT in the price relationships between heavy and light calves. Big steers seem to be priced the same as the lighter ones ($1.00-$1.10).Heifers are week all around. Its not a good year for those that have moved to later calving dates resulting in lighter calves.

Thats the way calves should be priced. Never saw the logic in 4wht calves worth $600 and 6wht worth $650 or when it really gets silly 450lbs @ $1.80 for grass the same day 900lbs@ $.96. These markets always send many mixed messages leaving producers scatching there heads :?

 

[elwapo]

With the large number of operators moving to grassing yearlings and selling the cows it makes you wounder who will be raising all the calves. Every time the grassers make a buck around here the re are a couple of cow herds that get dispersed. Maybe it is the optimist in me, but I believe that we will wake up to a severe shortage of calves one day.

 

[rkaiser]

If you really love the cattle biz and want to make it part of your life, hang on. Elwapo is right, this thing will turn and it will be sheer numbers that turn it. A lack of money will not turn people away from food, and will not cause North Americans to start eating rice. World demand is increasing while fear is turning people away from cows.

I have to take Oldtimers side on the Republican things as well. The VP and his gang had a lot to do with the price of oil this past summer. They could see the writing on the wall as far as returning to the power position and made hay while the sun shone. Does anyone really think that these top republicans invested in unwise stocks that lost millions for others?

Still smilin
Randy