Catástrofes Naturales y Provocadas – Natural and Man Made Catastrophes
Juan Chamero 10 Marzo 2009
Two faces of the same tragedy
Victims versus Victimizers
In the figures we depict two images that dramatically show the two faces of the World “Genocide” we all are somehow involved with two visible corpuses, the Victims, the poorest of the World and the Victimizers the Financial World. One is real and visble meanwhile the other is virtual and not easy to focus.
At one side: No Food and No Water
Source: TIME Magazine
Las dos caras de la misma tragedia
Víctimas versus Victimarios
En las figuras se muestran dos imágenes que describen en forma dramática las dos caras de Genocidio Mundial en el que de una u otra forma estamos todos involucrados, en dos escenarios: en uno las Víctimas, los más pobres del mundo, y en el otro los Victimarios del Mundo Financiero. Una es real y visible mientras que la otra virtual y huidiza.
At one side: help to keep alive
En un lado: ayuda para mantenerse vivoWater is becoming another crucial “commodity”. The figure above belongs to TIME. Two Sudanese boys drink with specially fitted plastic tubes provided by the Carter Center to keep sane from water borne larvae responsible for “guinea worm” disease.
El agua se está convirtiendo en otro crucial “commodity”. En la figura de la Revista TIME se ve a dos chicos sudaneses sedientos absorbiendo agua mediante unos tubos especiales de plástico provisto por el Centro Carter para evitar que se contaminen con las larvas del “gusano de Guinea” presente en las cada vez más escasas fuentes de agua semi potable.
At the other side: How to rescue Victimizers
En el otro lado: Cómo ayudar a los Victimarios
Source: MarketOracle, from London catastrophe
They unveiled as early as of June 26th 2008 the core of the Crisis. They textually expressed: “The G7 financial regulators and central banks are engaged in the mother of all reflations to underpin the solvency of their financial systems. We are going to look at what lies directly ahead and look at the condition of their balance sheets and what’s going to be required over the next several years to preserve them. Sub-prime was just the first round of the credit crisis. Enormous new black holes of liquidity lie directly ahead and we are going to detail them now. First, let’s just look at the mortgage industry with a chart from a recent daily reckoning.
As you can see, this part of the collapse is still in its beginnings as option arms (also known as EXPLODING arms, as when they do reset they explode higher in payment requirements) and Alt A loans are due to reset. These categories are still borrowers of dubious borrowing qualifications, and have NO INCENTIVE to stay in their homes when negative equity SWAMPS the future prospects of their purchases. Housing prices are declining at a year over year rate of 24% in the US and are now declining throughout the real estate markets in Europe as well.
Most of these loans were combined with numerous other types of lending such as credit card receivables, home equity loans and car loans, and securitized into CLO’s, CDO’s, MBS’s, etc (collateralized loan, debt obligations and mortgage-backed securities) and sold to investors with investment and money center banks holding some of the more highly rated tranches. These backs believed their own BS about the quality of the underlying paper mortgages. They were fully aware of the poor lending requirements which were used to make these loans as they securitized them. But once they had the Moody’s, S&P or Fitch ratings, they believed they could hold them long-term and borrow short-term and make the spread.
As these over the counter securities lose investor interest, they become less and less valuable as bidders disappear. Thus they move from liquid level one investment to illiquid level two and three and as they do so bank balance sheets become more and more ILLIQUID as a result. As they fall from level one to level three, regulators require more and more capital set aside to cover losses. Let’s take a look at level 2 and 3 assets, and look how the crisis is now spreading to the insurance sectors……….