It is not real until the FDIC puts it in a report. Never mind.

Incredible. Talk about shutting the barn doors now that the horses have been turned into bologna.

Citi shores up SIV - !

I say it is a tough time being a banker...how close are they?

Citigroup SIVs Draw $7.6 Billion of Emergency Funds (Update2) - Bloomberg.com

James the question is what the heck is the timing on all the stuff? Lets see that is 7.6B minus a pool of 43B that leaves another oh, 35B to go...

I do think this is interesting:

Citigroup named Richard Stuckey, 51, to manage most of its $43 billion of subprime mortgage assets, the same executive who helped unwind hedge fund Long-Term Capital Management LP's bad bets nine years ago

Is history repeating itself?

Sorry, the page you requested could not be found

Greenspan called the bottom in housing quite some time ago...

For those who want to read more on LTCM and the role of Hedge funds here is a good link. I must say the coincidence of the timing of the events is uncanny:

The hedge fund dilemma. | Banking & Finance > Financial Markets & Investing from AllBusiness.com

Way OT, sorry for the thread hijack folks - Say dryfly, a couple of threads ago (in the Citi downgrade thread?) you were mentioning that the coming financial crisis/fall in the dollar is due to the imbalance between a global glut of production and local domestic demand and that, like Argentina, the imbalance will be a b*tch to correct once the rest of the world stops taking dollars for payment. You also reveled us with a story of cutting wood with a friend to partially heat your house for the winter.

So, any other tips for reducing one's personal exposure to the falling dollar and coming price increases? I'm not talking about maintaining current wealth/savings (which can be dealt with by following the words of historian Will Durant, "History is inflationary, wise men buy assets and rarely hoard cash"), but managing that all important "cash flow" aspect of day to day living expenses you talk about. Besides doing anything one can to reduce one's day to day cash burn rate (cheaper/more efficient car, housing downsizing, paying off consumer debt, eating at home, etc.), the one thing I can think of is to modify Durant's observation and buy assets that produce things, particularly things that are non-discretionary expenses.

Any lessons from the Argentina contacts you mentioned?

"WHERE THE HECK IS THE DEPT OF JUSTICE???? CRIME IN PROGRESS."

The good news is that there are a lot of eyes on this one. So far from my vantage point the Super Cesspool is to establish a vehicle to bypass banking regs. Citi apparently dumped almost $8B in their SIVs.

The regulators need to force these institutions to determine the real values on the questionable paper. And it's not a model!

BSR, in the recent Paul Krugman update of his Wile E. Coyote Dollar drop article he seems to assume anywhere from a 20% to a 35% drop, and implies it will probably have to start sometime in the near future.

Modeling the falling dollar - Paul Krugman Blog - NYTimes.com
http://www.economic-policy.org/article1.asp?src=bpl&aid=183&iid=51&vid=22&id=

"But how large a depreciation would be needed to bring US trade in goods and services into balance? A simple model assumes that the United States and the rest of the world each produce a single composite good, that preferences are Cobb–Douglas, and that the current situation can be viewed as one in which the rest of the world is making a transfer to the United States equal to the US goods and services deficit. If we assume that the rest of the world has a combined GDP equal to three times US GDP, and calibrate the model to US data from the second quarter of 2006, we find that eliminating the transfer would lead to a 42.6% rise in the relative price of rest of world products, or a 35% logarithmic real depreciation of the dollar. This is close to the estimate of required dollar depreciation by Obstfeld and Rogoff. Both estimates of required depreciation are considerably less than those indicated by fitted trade equations, which suggest that the dollar might have to fall by as much as 20% to reduce the external deficit by 1% of GDP. For current purposes I will assume that: ln x0 − ln = = 0.35 that is, that the dollar must eventually experience a logarithmic 35% real depreciation; it is unlikely that this is a serious overestimate, and quite possible that it is a serious underestimate."

Hovnanian: The company said on Tuesday that the October sales pace in most of its markets "significantly deteriorated" when compared with recent months and that set by its September promotional sale. Hovnanian's problems reflect the U.S. housing industry's protracted decline, as it was the first major builder to include October results in its preliminary accountshttp:

biz.yahoo.com/rb/071106/hovnanian_contracts.html?.v=2

Krugman doesn't seem to consider the effects of a weak dollar on the global economy. When the dollar buys less foreign goods, those foreign countries share the pain by either cutting production or matching the dollar's decline with a devaluation of their own currency. A dollar decline is an economically global event. And some countries and/or currencies may experience an amplified reaction to a declining USD. The fear of such a negative response is one of the reasons why the European Central Bank is reluctant to release more euros to match the glut of USD.

speed, Euro money supply is nothing to sneeze at..Yes euroland deficit is not there. but speculative frenzy in many member states will come home to roost..

But how large a depreciation would be needed to bring US trade in goods and services into balance? ...

Well, the current account deficit seems to be declining of its own accord now, so my tendency is to think this isn't behind the current dollar decline - I believe it is due to speculative capital flows out of the country.

If it weren't for the fact that Bernanke appears to be supportive of the development of future bubbles I would consider becoming more bullish on the dollar.

The increase in exports and decline in the current account deficit are the first legitimately good bits of economic news we've had IMO (even though this probably portends a near-term slowdown).

Whats in your wallet as you approach the confessional:

Capital One Financial Corp. said Tuesday it could record several hundred million dollars more in charge-offs in 2008 than previously forecast, due to persistent loan delinquencies and the troubled housing market. Its shares tumbled more than 2 percent.

The McLean, Va.-based company, a credit card issuer that is expanding into retail banking, said last month it expected to see $1.2 billion in charge-offs in the fourth quarter and $4.9 billion in 2008. The losses were based on the delinquency trends in Capital One's loan portfolio.

In a filing Tuesday with the Securities and Exchange Commission, the company said it now expects the charge-off amount for 2008 to range from $4.9 billion to as much as the mid-$5 billions

Andrew, buying junk silver (pre-1965 US coins) is a pretty safe bet. Silver hasn't yet experienced gains like recent gold. But at $15+/ounce, silver is poised for HUGE increases. It should be at $50/oz now, and could easily go to $100+/oz. as more and more people try to convert greenbacks to real money. Try a coin shop or a pawn shop, avoid the numismatically valued silver coins in favor of the junk bullion. But don't delay, as silver is starting up now.

thoth said: "Sebastian! Where are you, bubba? We need some reassuring words."

You kidders. Look at an SP500 chart from the time of the LTCM blow-up, along with a GDP chart, then get back to me and we'll kick it around about how awful things are going to be next year.))

Sebastian