(a) They made a lot money from credit derivatives. I take this to mean they have been raking in the premiums for effectively insuring securities with credit swaps.
(b) The securities values are likely to collapse soon, meaning their income streams are going to reverse in a big way when the banks have to continue paying the hedge funds while their collateral's value has tanked and the revenue stream from the loans dries up for a few years.
(c) Most do not have any near the reserves or indeed value themselves to weather the years with the reversed revenue stream.
(d) Despite OCC-induced selling of the loans, these banks have managed to get themselves exposed to the mortgage meltdown.
I don't know, AZ_Cowboy, I'm thinking it's more a "boat-load." Certain large boats come to mind. Deck chairs. Icebergs. Weepy movies.
Wasn't someone telling me just the other day that the depositories aren't implicated in any of this, because they don't have big whole-loan portfolios?
Now what do you think is buried in that pile of rubbish. There's got be a problem smoldering in that pile of trash. Can the accountants really account for all this garbage?
Of course the accountants can account for this garbage. Don't you remember Enron? That's what accountants are for. They'll conceal the losses with incredible skill -- at least long enough for the right people to exercise their options and sell their stock.
Personal income and spending still strong...huh...am I first?
Those numbers are not strong.
Real consumer spending rose 0.2% and continues a downtrend that began late last year. Given that consumer spending is something like 70% of the economy, if that trend continues it's going to start getting ugly later this year.
Can you tell me why this has been posted? There really isn't much here. The markets are bigger (no surprise) trading profits up (no surprise), exposure to lots of long and short positions in a huge variety of securities including credit and other kinds of derivatives (nothing new there). Without knowing the net positions by type of security or derivative, other than taking the woman's word for it that this isn't a problem, what are we to make of it?
Think about the cross default problem- most these contracts have cash settlement provisions- right? So the derivatives have large notational numbers, but the excuse is the VAR is small. I borrow $10 billion in yen for 10 years at 2% at 117 yen. Now say you have $10 billion in 10 years yielding 4.7% and you reach for yield by selling the coupons for a big A tranch of 6% yielding gse bonds. Now, say your counterparty has a big problem with paying you the point of yield because they are insolvent this week and the receivership guys have locked up the transfers. Further, your interest rate on the tens is now 7% and your collateral for the JPN bonds is now 80% of the covenants. How much pain can you stand?
Now, multiply this by 131 trillion, and offset it by 18 billion.....nervous yet?
OK,I read the report this time. We seem to have overwhelmingly investment grade derivatives of moderate maturity and duration with a net exposure of $185 billion. Interest rate swaps dominate by type etc. Now interest rate swaps, while one does have notional; exposure, one's risk of loss just isn't the amount of the loan but making good on a rate etc.
Doesn't Graph 5C for example make a case that these sophisticated providers of these products have improved their risk analysis in this area?
Seriously, I am trying to figure out what you think the issue here is?
Um, no. Your example is like saying a rock falls from 100 feet and lands on your head. Nervous?
No because again, there are risk analysts at each of these institutions (we're talking five places in reality) constantly making sure "the book" is reasonably balanced. Will defaults happen? Yup. Is there anyhting here to argue the system is somehow at risk? I can't see it.
I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that.
I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that.
Now imagine if that happened when the real US economy wasn't doing so hot or had some fundamental structural weakness.
Oh, yes I agree that today we are nowhere near that- but the problem comes when we do enter that territory of nonfunctioning markets. Nobody ever goes broke when the sun is shining, but when a big counterparty gets into trouble the large institutions have a habit of cutting their risk fast and letting the devil take the hindmost.
Now, how happy would you be knowing that xyz bank or brokerage might go bk because of some essentially random event handing them the old maid?
Remember, if you have more than those absurdly low limits in any financial institution that is full-service you own a stake in this circus too...
Bank trading revenues have been strong the past few years due in large part to robust client demand, especially from large institutional investors such as hedge funds, said Deputy Comptroller for Credit and Market Risk Kathryn E. Dick.
Hedge funds whose solvency is a day to day question because of gearing and opaque financial structures?
Ummm, I like my risks calculated, not from some black box thank you.
No matter how you slice it, this is getting dicey.
Yes, the notional amounts are astounding (~order of magnitude higher than the GDP of the entire economy) [Worse: growing at a 50% clip] but my take is that the banks lending to consumers and how that is our gauge of how the Fed ought to behave wrt "tightening/loosening" in response to (negligible as the BEA link above attests) consumption oriented view of inflation is looking at the mouse, not the elephant.
Even if we look at the profits generated/manufactured by the banks in lending to these investment agencies, the HFs...it becomes very clear that the FF rate moves in response to other measures than CPI.
Banker, I posted this for my own reference. I admit I was puzzled by this comment from Kathryn Dick:
The continued strong growth of credit derivatives reflects their importance as a source of managing and dispersing risk and we do not foresee any decline in the significance of this class of derivatives in future time periods."
Why would a regulator make this kind of comment? It sounds like she is cheerleading a particular product, as opposed to reporting the facts. The data itself is about what I expect, and I'm curious to see if there is a hit in Q1.
"Meanwhile, late last week, rumors were circulating that at least one large Wall Street correspondent buyer might be exiting the business. This rumor could not be confirmed at press time. We're told that some Wall Street trading desks have tightened up their underwriting guidelines so much that purchase volumes have trickled to a crawl..."
New World Odor...nice one 'dot' and that is what they say at the stockyards too, referring to the levels of antibiotics used to "finish" off the stock before it is rendered for our excessively protein based diet.
Thanks for pointing us back to those CDOs on subprimes CR. Maybe they are giving some of the investment banks a few problems...would we be able to detect this next month/quarter or will it be a Fannie postponement play?
Thanks four your thought. I agree the commentary is a bit odd.
AC,
The vast majority of investing institutions do an excellent job of due diligence. One of the issues they face is that investors have given them money for a reason. To invest it in whatever area that fund focuses on. If investors wished to stay in cash? Theyd stay in cash. As a result, institutions frequently invest in things at prices theyd rather avoid, because the investor who gave them money has already made the decision to buy.
Arbogast,
I have never been accused of panache before. Is that a good thing?
I believe the yen (Japanese) floats and is subject to ordinary market developments. Of course the BOJ has an unusual degree of influence. Do you disagree?
You may be asking about the yuan (China). I do not believe that currency floats.
I also believe that is not sustainable and that it will begin to float in the next few years. It may do so in fits and starts. When that happens, I think what happened with the yen is instructive. Two decades ago when the yen began to more or less float freely, Jaopanese cars (for example) became far more expensive for US consumers. So rather than lose share, what did the Japanese do? They began to build plants here to revamp their cost structure. I suspect well see some of that. Of course the assumption is that China can go through this wrenching cultural and economic change they are trying in a smooth manner. It wont happen is my guess.
I hope I addressed your point. If I didnt tell em. Im not trying a dodge.
I think I know a fair bit about a number of things. But international capital flows are so hard for me they make my hair hurt. So I may well be talking through multiple hats.
You are either in denial or something else is happening to produce your answers. I am an investor and right now i am beginning to really worry about the integrity of the banking system. The system is telling us things which make no sense eg "unlikely to be subprime contagion", "The Us has a strong and robust economy". The system will collapse when people dont believe these responses and frankly who does believe them anymore??
"I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that."
IMHO were a lot closer than you think, yeah sure everything is functioning fine today, but somewhere down the road there will be a blow up. It could be rogue trader like Nick Leeson, by the way hes making a comeback.
Or it could be a bunch of really, really smart guys who thought they had it all figured. Yes, Im sure their risk analysis has improved, but Im willing to bet not enough to prevent a financial crisis.
NEW YORK (Reuters) - Sheriff Leo McGuire presides over foreclosure auctions in Bergen County, New Jersey, where the bidding for a home reached $1.2 million last June -- a record for one of the wealthiest counties in the nation.
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
In the last three months, the percentage of foreclosures for U.S. homes valued at more than $750,000 has climbed to 2.5 percent, the highest since early 2005, when RealtyTrac, a online marketplace for foreclosed properties, began tracking data. The overall rate of foreclosures also is on pace to increase by a third this year.
"Everyone's looking at subprime. The rock they aren't looking under are the adjustable rate mortgages and teaser rates and low money-down loans," said Mark Kiesel, a portfolio manager for Pacific Investment Management Co., the world's biggest bond manager. "It's going to affect prime as well."
Just as more expensive homes are beginning to fall through the cracks, the fear is higher-rated bonds within CDO structures may be vulnerable.
It appears that the same practices that doomed subprime threaten other ratings.
Yup, I am in denial or I'm a liar, is that what you are saying? You have a revealed truth perhaps? LOL
That sort of certainty is just dumb.
Bubbles,
Yup, lots of leverage. Ever see a bank that wasn't heavily leveraged? As for whether a financial crisis is coming, you'll pardon me, but I have been hearing that the sky is about to fall since the early 1980's. Since then we've had two three recessions, numerous bank failures, the S&L crisis, stock market crashes (2), LTCM, Soros cleaning out the Bank of England, Japan's market crash, LBO's going bad, the steel industry getting crushed, mainframe computer companies getting crushed, airlines getting crushed (nothing new there) and I could go on and on. Guess what? Since 1980, the economy is more than twice as big, the DJIA is up 15 times, productivity is better than ever, life expectancies are longer etc.
The cries that the sky is falling leave me cold. We will have ups and downs like we always have. I expect over any reasonable time frame the ups to dramatically outweigh the downs.
my point which you have chosen to avoid is that statements such as 'subprime is likely to be contained' are already demonstrably false, and were false at the time they were made.
By your latest reasoning which i am calling denial/untruth the great depression was no big deal and something easily solved if only they had know?
Only a person who can believe that each of the crisis that you have listed had no human consequence could be a party to creating the current bubble mentality where the enormous debt is ignored in order to proclaim a mighty economy where those most deep in the pile of excrement make the most money.
Laugth if you want, it will not make any difference.
I do read what you write, but there are times you dont make any sense.
Here is your quote:
"I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that."
Then you come back saying this not sounding the least bit scared:
"As for whether a financial crisis is coming, you'll pardon me, but I have been hearing that the sky is about to fall since the early 1980's. Since then we've had two three recessions, numerous bank failures, the S&L crisis, stock market crashes (2), LTCM, Soros cleaning out the Bank of England, Japan's market crash, LBO's going bad, the steel industry getting crushed, mainframe computer companies getting crushed, airlines getting crushed (nothing new there) and I could go on and on. Guess what? Since 1980, the economy is more than twice as big, the DJIA is up 15 times, productivity is better than ever, life expectancies are longer etc."
So what is it, are you scared and running or are you standing your ground and buying.
Maybe were arguing about semantics. Im not predicting the end of capitalism or financial Armageddon, just a financial event only slightly more severe than any you listed only because the leverage is so much greater. Believe me, while Im a net seller now Ill be a maximum bullish AFTER the blow up its only a matter of time.
Personal income and spending still strong...huh...am I first?
News Release: Personal Income and Outlays, October 2009
othing to see here, move along.
Let's see now:
(a) They made a lot money from credit derivatives. I take this to mean they have been raking in the premiums for effectively insuring securities with credit swaps.
(b) The securities values are likely to collapse soon, meaning their income streams are going to reverse in a big way when the banks have to continue paying the hedge funds while their collateral's value has tanked and the revenue stream from the loans dries up for a few years.
(c) Most do not have any near the reserves or indeed value themselves to weather the years with the reversed revenue stream.
(d) Despite OCC-induced selling of the loans, these banks have managed to get themselves exposed to the mortgage meltdown.
(e) History really does rhyme.
$131 trillion notional. Does that qualify as a "plethora"?
I don't know, AZ_Cowboy, I'm thinking it's more a "boat-load." Certain large boats come to mind. Deck chairs. Icebergs. Weepy movies.
Wasn't someone telling me just the other day that the depositories aren't implicated in any of this, because they don't have big whole-loan portfolios?
131 trillion in derivative contracts.
Now what do you think is buried in that pile of rubbish. There's got be a problem smoldering in that pile of trash. Can the accountants really account for all this garbage?
Of course the accountants can account for this garbage. Don't you remember Enron? That's what accountants are for. They'll conceal the losses with incredible skill -- at least long enough for the right people to exercise their options and sell their stock.
Personal income and spending still strong...huh...am I first?
Those numbers are not strong.
Real consumer spending rose 0.2% and continues a downtrend that began late last year. Given that consumer spending is something like 70% of the economy, if that trend continues it's going to start getting ugly later this year.
Is anybody starting to wonder at the razor thin margins that seem to be s.o.p. for this ridiculous market?
$131 trillion yields $18.8 billion?
Isn't that a small margin? 1.39 E-4?
Ummmmmmm 0.0139%?!?
Is this insane? Or the end of the financial system as we know it?
Just sort of asking the obvious question- the OCC thinks this is fine?
Herstatt risk is beyond the pale here- we have truly gone where no financial system has gone before.
CR,
Can you tell me why this has been posted? There really isn't much here. The markets are bigger (no surprise) trading profits up (no surprise), exposure to lots of long and short positions in a huge variety of securities including credit and other kinds of derivatives (nothing new there). Without knowing the net positions by type of security or derivative, other than taking the woman's word for it that this isn't a problem, what are we to make of it?
What do you see as the news?
Banker,
Think about the cross default problem- most these contracts have cash settlement provisions- right? So the derivatives have large notational numbers, but the excuse is the VAR is small. I borrow $10 billion in yen for 10 years at 2% at 117 yen. Now say you have $10 billion in 10 years yielding 4.7% and you reach for yield by selling the coupons for a big A tranch of 6% yielding gse bonds. Now, say your counterparty has a big problem with paying you the point of yield because they are insolvent this week and the receivership guys have locked up the transfers. Further, your interest rate on the tens is now 7% and your collateral for the JPN bonds is now 80% of the covenants. How much pain can you stand?
Now, multiply this by 131 trillion, and offset it by 18 billion.....nervous yet?
CR,
OK,I read the report this time. We seem to have overwhelmingly investment grade derivatives of moderate maturity and duration with a net exposure of $185 billion. Interest rate swaps dominate by type etc. Now interest rate swaps, while one does have notional; exposure, one's risk of loss just isn't the amount of the loan but making good on a rate etc.
Doesn't Graph 5C for example make a case that these sophisticated providers of these products have improved their risk analysis in this area?
Seriously, I am trying to figure out what you think the issue here is?
Little Help?
AllenM
Um, no. Your example is like saying a rock falls from 100 feet and lands on your head. Nervous?
No because again, there are risk analysts at each of these institutions (we're talking five places in reality) constantly making sure "the book" is reasonably balanced. Will defaults happen? Yup. Is there anyhting here to argue the system is somehow at risk? I can't see it.
I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that.
I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that.
Now imagine if that happened when the real US economy wasn't doing so hot or had some fundamental structural weakness.
Could have been nasty...
Oh, yes I agree that today we are nowhere near that- but the problem comes when we do enter that territory of nonfunctioning markets. Nobody ever goes broke when the sun is shining, but when a big counterparty gets into trouble the large institutions have a habit of cutting their risk fast and letting the devil take the hindmost.
Now, how happy would you be knowing that xyz bank or brokerage might go bk because of some essentially random event handing them the old maid?
Remember, if you have more than those absurdly low limits in any financial institution that is full-service you own a stake in this circus too...
And here is where some of the revenues come from
GS Static Pool Information
Bank trading revenues have been strong the past few years due in large part to robust client demand, especially from large institutional investors such as hedge funds, said Deputy Comptroller for Credit and Market Risk Kathryn E. Dick.
Hedge funds whose solvency is a day to day question because of gearing and opaque financial structures?
Ummm, I like my risks calculated, not from some black box thank you.
No matter how you slice it, this is getting dicey.
AC,
That comment reminds me of a question I once got about steel company bonds:
"What happens if soemone comes up with a low cost plastic substitute for steel?"
My answer? You're screwed. But that should be concern 127 for you.
AllenM,
When we get to "nonfunctioning markets," ANY leverage is too much. In other words, when the markets cease to function, we have bigger problems.
Yes, the notional amounts are astounding (~order of magnitude higher than the GDP of the entire economy) [Worse: growing at a 50% clip] but my take is that the banks lending to consumers and how that is our gauge of how the Fed ought to behave wrt "tightening/loosening" in response to (negligible as the BEA link above attests) consumption oriented view of inflation is looking at the mouse, not the elephant.
Even if we look at the profits generated/manufactured by the banks in lending to these investment agencies, the HFs...it becomes very clear that the FF rate moves in response to other measures than CPI.
Banker, I posted this for my own reference. I admit I was puzzled by this comment from Kathryn Dick:
The continued strong growth of credit derivatives reflects their importance as a source of managing and dispersing risk and we do not foresee any decline in the significance of this class of derivatives in future time periods."
Why would a regulator make this kind of comment? It sounds like she is cheerleading a particular product, as opposed to reporting the facts. The data itself is about what I expect, and I'm curious to see if there is a hit in Q1.
Best Wishes.
National Mortgage News - What We're Hearing
"Meanwhile, late last week, rumors were circulating that at least one large Wall Street correspondent buyer might be exiting the business. This rumor could not be confirmed at press time. We're told that some Wall Street trading desks have tightened up their underwriting guidelines so much that purchase volumes have trickled to a crawl..."
That comment reminds me of a question I once got about steel company bonds:
"What happens if soemone comes up with a low cost plastic substitute for steel?"
My answer? You're screwed. But that should be concern 127 for you.
It's amazing to think there was a time when people actually cared about who was issuing the debt and whether they were creditworthy.
Banker,
I like your panache, I really do.
What happens to all this if the yen floats?
I know that it won't happen, but what would happen if it did?
Do you have an opinion?
If your position is that the yen is floating now, please explain.
My "please's" are sincere. I want to know.
That awful stench...the one nauseating us all...I guess that must be the New World Odor.
Like a cowpoke at the cattle ranch, are we going to just get use to it? (oh, that's just another hemorrhaged hedgie...)
Things have to change, but we've got several really stinky years in front of us.
Get out your noseplugs, comrades, New World Odor ahead!!
New World Odor...nice one 'dot' and that is what they say at the stockyards too, referring to the levels of antibiotics used to "finish" off the stock before it is rendered for our excessively protein based diet.
Thanks for pointing us back to those CDOs on subprimes CR. Maybe they are giving some of the investment banks a few problems...would we be able to detect this next month/quarter or will it be a Fannie postponement play?
CR,
Thanks four your thought. I agree the commentary is a bit odd.
AC,
The vast majority of investing institutions do an excellent job of due diligence. One of the issues they face is that investors have given them money for a reason. To invest it in whatever area that fund focuses on. If investors wished to stay in cash? Theyd stay in cash. As a result, institutions frequently invest in things at prices theyd rather avoid, because the investor who gave them money has already made the decision to buy.
Arbogast,
I have never been accused of panache before. Is that a good thing?
I believe the yen (Japanese) floats and is subject to ordinary market developments. Of course the BOJ has an unusual degree of influence. Do you disagree?
You may be asking about the yuan (China). I do not believe that currency floats.
I also believe that is not sustainable and that it will begin to float in the next few years. It may do so in fits and starts. When that happens, I think what happened with the yen is instructive. Two decades ago when the yen began to more or less float freely, Jaopanese cars (for example) became far more expensive for US consumers. So rather than lose share, what did the Japanese do? They began to build plants here to revamp their cost structure. I suspect well see some of that. Of course the assumption is that China can go through this wrenching cultural and economic change they are trying in a smooth manner. It wont happen is my guess.
I hope I addressed your point. If I didnt tell em. Im not trying a dodge.
Sorry, that last was me
One more thing Arbogast,
I think I know a fair bit about a number of things. But international capital flows are so hard for me they make my hair hurt. So I may well be talking through multiple hats.
In your face Glass and Stegall!
BODACIOUS!!!!
and
... a source of ... dispersing risk ...
... like aerosolized anthrax at 5000 feet.
Getting paid the big bucks to dispose of toxic waste... down in the community swimming hole...
Here comes reality... let the stress-testing begin!
Let us remind them of their good times when they are asking for handouts from the taxpayers.
Record profits from trading insurance contracts.... hmmmmm... sounds like efficient allocation of capital alright!
Banker
You are either in denial or something else is happening to produce your answers. I am an investor and right now i am beginning to really worry about the integrity of the banking system. The system is telling us things which make no sense eg "unlikely to be subprime contagion", "The Us has a strong and robust economy". The system will collapse when people dont believe these responses and frankly who does believe them anymore??
Banker,
What I took from the report as significant was the amount of leverage.
IMHO great gearing causes "nonfunctioning" markets, someone welch on a big bet setting off a chain reaction with leverage amplifying it.
Banker,
"I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that."
IMHO were a lot closer than you think, yeah sure everything is functioning fine today, but somewhere down the road there will be a blow up. It could be rogue trader like Nick Leeson, by the way hes making a comeback.
Nick Leeson - Official Website
Or it could be a bunch of really, really smart guys who thought they had it all figured. Yes, Im sure their risk analysis has improved, but Im willing to bet not enough to prevent a financial crisis.
Mortgage crisis hits million-dollar homes
NEW YORK (Reuters) - Sheriff Leo McGuire presides over foreclosure auctions in Bergen County, New Jersey, where the bidding for a home reached $1.2 million last June -- a record for one of the wealthiest counties in the nation.
"Because of the financing that was possible, so many people bought the bigger house, the million-dollar house with the bowling alley or the tennis court outside," says Guzek, who works for GreenPath Debt Solutions, a nonprofit service based in Farmington Hills, Michigan. "People across all income brackets are having financial hardship."
In the last three months, the percentage of foreclosures for U.S. homes valued at more than $750,000 has climbed to 2.5 percent, the highest since early 2005, when RealtyTrac, a online marketplace for foreclosed properties, began tracking data. The overall rate of foreclosures also is on pace to increase by a third this year.
"Everyone's looking at subprime. The rock they aren't looking under are the adjustable rate mortgages and teaser rates and low money-down loans," said Mark Kiesel, a portfolio manager for Pacific Investment Management Co., the world's biggest bond manager. "It's going to affect prime as well."
Just as more expensive homes are beginning to fall through the cracks, the fear is higher-rated bonds within CDO structures may be vulnerable.
It appears that the same practices that doomed subprime threaten other ratings.
Gobsmacked,
Yup, I am in denial or I'm a liar, is that what you are saying? You have a revealed truth perhaps? LOL
That sort of certainty is just dumb.
Bubbles,
Yup, lots of leverage. Ever see a bank that wasn't heavily leveraged? As for whether a financial crisis is coming, you'll pardon me, but I have been hearing that the sky is about to fall since the early 1980's. Since then we've had two three recessions, numerous bank failures, the S&L crisis, stock market crashes (2), LTCM, Soros cleaning out the Bank of England, Japan's market crash, LBO's going bad, the steel industry getting crushed, mainframe computer companies getting crushed, airlines getting crushed (nothing new there) and I could go on and on. Guess what? Since 1980, the economy is more than twice as big, the DJIA is up 15 times, productivity is better than ever, life expectancies are longer etc.
The cries that the sky is falling leave me cold. We will have ups and downs like we always have. I expect over any reasonable time frame the ups to dramatically outweigh the downs.
Banker
my point which you have chosen to avoid is that statements such as 'subprime is likely to be contained' are already demonstrably false, and were false at the time they were made.
By your latest reasoning which i am calling denial/untruth the great depression was no big deal and something easily solved if only they had know?
Only a person who can believe that each of the crisis that you have listed had no human consequence could be a party to creating the current bubble mentality where the enormous debt is ignored in order to proclaim a mighty economy where those most deep in the pile of excrement make the most money.
Laugth if you want, it will not make any difference.
Re: Nick Leeson
And Brian Hunter, the trader that sank Amaranth has already raised $700 million for his new hedge fund...didja all see that?
I thought on Wall Street you were only as good as your last call?!
Gobsmacked,
LOL again.
You gotta read the stuff I write. Really, try it.
Banker,
I do read what you write, but there are times you dont make any sense.
Here is your quote:
"I lived through the summer and fall of 1998 when the markets really just stopped functioning in many areas for 90 days or so after LTCM got into trouble. That was scary. We are nowhere close to anything like that."
Then you come back saying this not sounding the least bit scared:
"As for whether a financial crisis is coming, you'll pardon me, but I have been hearing that the sky is about to fall since the early 1980's. Since then we've had two three recessions, numerous bank failures, the S&L crisis, stock market crashes (2), LTCM, Soros cleaning out the Bank of England, Japan's market crash, LBO's going bad, the steel industry getting crushed, mainframe computer companies getting crushed, airlines getting crushed (nothing new there) and I could go on and on. Guess what? Since 1980, the economy is more than twice as big, the DJIA is up 15 times, productivity is better than ever, life expectancies are longer etc."
So what is it, are you scared and running or are you standing your ground and buying.
Maybe were arguing about semantics. Im not predicting the end of capitalism or financial Armageddon, just a financial event only slightly more severe than any you listed only because the leverage is so much greater. Believe me, while Im a net seller now Ill be a maximum bullish AFTER the blow up its only a matter of time.
Banker, I've been through most of the events you mention too, though I was a newbie in the early 80's.