I'm with Vikram- what if they are scared and pull back 10%?
The unlevering that we have seen in some heavily shorted stocks and growth stocks has been tremendous- what about the yen carry trade? At 104 it looks like it should be wrapping up soon, but still- geez...
One trillion, two trillion, four?
How many more?
The truth seems to be that unlevering is driving the markets and the last ones out will suffer the devil takes the hindmost fate.
Cash?
I don't know- inflation for anything that is exportable, and deflation for onshore assets.
Credit turmoil losses set to top $600 billion - UBS
Losses from the global credit market crisis will likely top $600 billion, with banks and brokers responsible for more than half of that, UBS said in a note published on Friday.
"Our global banks team estimates total industry losses in this financial crisis should reach north of $600 billion, of which listed banks and brokers should account for 'only' $350 billion," said Geraud Charpin, a credit strategist at UBS in a note entitled: "Wide Spreads - Here To Stay".
Misean,
I had not noticed. Ah, well, more downhill for the dollar. Doesn't seem to matter to our MSM.
But hey, dinner is a pizza!
And beer!
No pony. I can hardly imagine how the fools are going to continue spoofing buffett buyouts when he made it apparent that he only buys profitable companies.
Well, inevitable conclusions seem to be sure death for most of the homebuilders. A bunch of small banks, and a couple of larger ones. Chrysler most likely.
The biggest part of this is the MSM failures. Why do I have to read the economist for decent coverage of a US event?
Punch My Ticket writes:
And in yet other news, yields on seven US Treasury issues fall below zero, an event last seen in 1933.
um, are you really under the impression that the treasury was selling TIPS in 1933? I get the feeling many people posting here lately don't even attempt to understand things before posting them.
There are plenty of real gloom stories out there without adding all the hyperbolic nonsense.
Regarding the TIPS yielding below zero, that is not at all inconsistent with the yields on regular treasuries being below inflation ... still, it is a bit weird when faced with the direct evidence ... how long before the money buying those treasuries goes to safer havens?
are you really under the impression that the treasury was selling TIPS in 1933?
Not that dumb, Bob.
There are plenty of real gloom stories out there without adding all the hyperbolic nonsense.
Not that hyperbolic, Bob. Stepping up to buy a security to take an absolutely guaranteed real loss is unprecedented. It happens all the time to the lazy and stupid, but that's not the average TIPS buyer. It also happens all the time if there is some distribution of returns where there is something on the right hand side of the zero line.
But this is seven issues of AAA full faith and credit, guaranteed to lose purchasing power in all circumstances at maturity. No J6P does that. It has to be the Mensables that run big money.
CR, thanks for pointing us to an informative read about how the loses can multipy (Greenlaw, Hatzius, Kashyap, Shin.
the panels remarks:
Charles Evans, Federal Reserve Bank of Chicago SEEMED to have talking points worked out long before he read the paper. his remarks, i found his remarks relatively unresponsive.
Frederic Mishkin, Federal Reserve Board of Governors nailed it, spoke directly to the findings and methodology of the authors paper. He seemed to agree that due to leverage the credit crisis and solvency issues appearing small, could multiply to a large problem.
William Poole, Federal Reserve Bank of St. Louis provided some insightful analysis and then decided not to take a side on the position of the paper!!
Eric Rosengren, Federal Reserve Bank of Boston makes observations that say the problems presented by the subprime meltdown are not going to be resolved by monetary policy...but these observations are buried and muted. He seemed to talk all around the issues.
Miskin's and then Pooles remarks seemed most responsive.
from AllenM:
"No pony. I can hardly imagine how the fools are going to continue spoofing buffett buyouts when he made it apparent that he only buys profitable companies."
Yep, he buys companies that are profitable, undervalued, AND that come with competent management. Three strikes for CFC, MBI, and ABK.
Mishkin's critique of the study seemed mostly to point out just one thing, that being that the assumed contraction in credit assumes that other lenders would not step in ... no real attempt to estimate how much this sort of activity would alleviate the crunch ... wouldn't it depend on how broadly distributed the malaise is? And don't lenders behave rather sheep-like?
So the housing drag has been posited elsewhere at something like a 0.5% - 1% hit to GDP, add the unwind effect for another 1% - 1.5% and we have a 1.5% - 2.5% hit combined...before any labor or MEW effects...sounds like the makings for a b!tch kitty of a recession.
This kind of gets lost in the turmoil but still pretty breathtaking: <a href="http://seattletimes.nwsource.com/html/businesstechnology/2004249887_sprintnextel29.html>"Sprint piles up $29 billion loss"
They wrote off $30 billion in goodwill from acquiring Nextel...ouch!
I've heard of black swan events but conjure bag actually posting - this is the surest indicator i've had that things were in the tank since Bush told us yesterday that there wouldn't be a recession.
Anyway, as a conjure bag disciple, I made a lot of money today.
Re negative yields on Treasuries: doesn't that mean that bond bidders are in a sense paying the US government for the privilege of lending the government money? All US taxpayers should be happy!
Re negative yields on Treasuries: doesn't that mean that bond bidders are in a sense paying the US government for the privilege of lending the government money? All US taxpayers should be happy!
It's sort of like keeping cash in a safe deposit box. You pay a fee for the box and the money doesn't grow, but you figure it will be there later.
SAN FRANCISCO (MarketWatch) - Moody's Investors Service Friday downgraded the ratings of Fremont General Corp. (senior to Ca from Caa3) and its subsidiary, Fremont Investment and Loan (deposits to Caa2 from B3 and issuer rating to Ca from Caa1). The outlook on Fremont General and Fremont Investment & Loan remains negative. The downgrades were in response to Fremont General's announcing that it will defer dividends on its trust preferred securities and poor liquidity at the holding company, according to Moody's. Separately, Standard & Poor's said Fremont General will be removed from the S&P SmallCap 600 index after close of trading on Monday.
Okay. Sure, if inflation is high, a TIPS with negative rates can still leave you with more money than you'd have if you sticked it under a mattress. Still, is there any way to read this that isn't a really bad sign?
My brain is tired. Could somebody take one of those TIPS that have a negative yield and show me exactly how the calculation is done?
I'm guessing that the price, reflecting the market's prediction of the amount added due to the CPI, exceeds some other number based only on the coupon yield.
Ever since Bush spoke yesterday and said that he sees no recession, I thought it necessary to revise my prolonged recession outlook to a robust growth trajectory beginning in the morning.
Some here have expressed concern about restricted access to banking deposits (eg, Citibank daily ATM withdrawal limits).
Many, many (many^2) years ago, when I worked in a depository institution I asked that question..
The way it was explained to me, was that different types of deposits would be assigned to classes (or pigeonholes) and the limit/holdback had to be consistent per class. The deposits that were non-interest bearing would have the most liquidity in a bank liquidity crisis situation.
Keep in mind that this was pre-Now accounts, so virtually all checking accounts were non-interest bearing in those days. I'm sure that this has been tinkered to death since then (and only the true uber-nerds know how the present rules work.
I'm guessing that the price, reflecting the market's prediction of the amount added due to the CPI, exceeds some other number based only on the coupon yield.
That was my impression too, but I've never actually purchased TIPS. Anyone?
This was a few weeks ago, but did ben change his numbers?
G7 Ministers and central bankers at the meeting are expecting losses from subprimer-related securites to reach 400 bln usd, far more than the 100-150 bln usd that the Federal Reserve has predicted, according to a media report Monday.
Yes, that was my main interest, i.e, Kirk was a screw up and when Scotty was at the helm, things always were spot on, you could always depend on scotty, but Kirk...always trouble
Moved into TIPS over a year ago when the jury was out about inflation vs deflation...I'm still trying to get a handle of the logic of the neg yield on TIPS since reading it a few minutes ago.
Yield is inverse to price...negative yield would mean that price bid on the TIPS was really, really, like really high ---- going out to about 2012. Why would someone bid that high on TIPS unless sense of violent inflation in the wind. As someone said, it's like putting the money in the lockbox so that it's still there in several years.
THINK that that's the way to read it. But will have to review a bit more after reviewing the Star Trek trivia.
Moved into TIPS over a year ago when the jury was out about inflation vs deflation...I'm still trying to get a handle of the logic of the neg yield on TIPS since reading it a few minutes ago.
Yield is inverse to price...negative yield would mean that price bid on the TIPS was really, really, like really high ---- going out to about 2012. Why would someone bid that high on TIPS unless sense of violent inflation in the wind. As someone said, it's like putting the money in the lockbox so that it's still there in several years.
THINK that that's the way to read it. But will have to review a bit more after reviewing the Star Trek trivia.
I have to come to the confessional and confess: I am scotty_at_the_helm (yahoo), doc holiday, wheat engineer and untold vast numbers of posting maniacs; please forgive me!
It's time to move on and stop worrying about how bad things are going to get and start asking how can we make things right.
Specifically, which is the better alternative to fend off the ravages of a century of self-determination and free market economics... socialism or fascism?
Personally, I think the illusion of free will is essential to complete subjugation.
Maybe I'm missing something subtle here, but the authors explanation of the shock, with cartoonish figures and examples (pp. 28-30), focused on the amplifying effect of losses when they hit leveraged entities such as banks. Well, how has THAT changed? If anything, securitization should have put some of the hit in less-leveraged hands. Still, I enjoyed the simple, SWAG, math. Economists should do more of this stuff. Save the second derivatives for the appendices.
(Exhibit 3.8/pg. 25 is interesting to readers here, where they try to identify where much of the dreck has landed. I.B.'s are pretty clean (!); so are pension funds (phew). Commercial banks , US hedge funds, and insurance companies are in a world of hurt.)
As for the Mishkin response, I liked the intro to the conclusion: "I very much enjoyed reading this paper.". Translated: I completely disagree with your conclusions. Please stop scaring the markets.
TIPS is NOT signaling high inflation. the yield on a 10 year TIPS is 1.08%, a 10 year treasury yields 3.53%. the TIPS market is therefore forecasting 2.45% inflation over the next decade. hardly hyper-inflation.
on the short end, a 2 year TIPS yields -0.43%, whereas a 2 year treasury yields 1.68%, indicating 2.1% inflation over the next 2 years.
If you got some spare time and need a laugh, Countrywide filed it's 10-K today.
I loved this gem under risk factors:
We depend on the accuracy and completeness of information about customers and counterparties
In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to borrowers under certain loan programs, we assume that the information provided by a customer is accurate and complete and we do not independently verify that information. Our financial condition and results of operations could be negatively impacted to the extent we rely on customer information that is not complete or accurate.
Reckoning for a Real Estate Mogul
Bids are due Friday for the GM Building, the prize piece of Harry Macklowe's unraveling New York real estate empire. Error - AOL Money & Finance
I think that the biggest potential error in the mortgage meltdown piece is the methodology used to predict loss.
The three methods used to get ball park loss numbers are extrapolation of existing default rates, ABX indexes which can be converted to implied default rates, and comparison to other historical housing breaks like california and texas.
The driving force for default among subprime holders beyond the fraud stuff, has been the resets on variable rate date which is usually at the 24 month period. The paper states that the total dollar volume of subprime that is in play is about 1.4 trillion of which they estimate 80% to be variable rate and tied to 6 month libor. 80% works out to about 1.12 trillion. Forgetting for a moment about teaser rates and the like, libor over the last 6 months has dropped from about 5.5 to 3. This means that if every subprime continually reset then in the aggregate the borrowers just had their payments decline by is about 25 billion a year. I don't know what the average spread is in subprime loans but as a guess lets say it is 300 basis points over libor, so that when the loans were written, without teasers etc they would be at about 8.5 percent with libor at 5. Dropping libor to 3, gets the interest part of the payment down from 8.5 to 6.0. On a 250k i/0 this takes the monthly payment from 250k * .085 / 12 = 1770 to 250k * .06 / 12 = 1250. It is hard for me to believe that this is not going to have a material effect on peoples ability to pay. Nowhere is this dramatically lower carrying cost showing up in the estimations of default.
This 'missing the point' on carrying costs is what caused a lot of the models to fail in the first place, when the Fed raised rates from 1 to 5.50. It was the increase in carrying costs which sunk the marginal home owner even though at the top everyone said real estate would be fine because mortgage rates were historically low. Just as it sunk them on the way up it is going to buoy them on the way down. Perhaps the big takeaway is that by driving a huge portion of the mortgage market into variable rate stuff by their post 9/11 madness, the Fed has now gained a tremendous amount of leverage over the cash flows of a huge number of the citizenry.
first?
1 or 1.5 points? You must be kidding.
Assuming that these institutions will aim to lower their leverage by 5%
What is the leverage fraction for these institutions ?
Regards,
I'm with Vikram- what if they are scared and pull back 10%?
The unlevering that we have seen in some heavily shorted stocks and growth stocks has been tremendous- what about the yen carry trade? At 104 it looks like it should be wrapping up soon, but still- geez...
One trillion, two trillion, four?
How many more?
The truth seems to be that unlevering is driving the markets and the last ones out will suffer the devil takes the hindmost fate.
Cash?
I don't know- inflation for anything that is exportable, and deflation for onshore assets.
A grim fate.
Someday this war's gonna end...
See also Federal Reserve Governor Frederic S. Mishkin's critique of the study here.
FRB: Speech--Mishkin, Leveraged Losses: Lessons from the Mortgage Meltdown--February 29, 2008
Shnapstafarian, the 1% to 1.5% is "over and above" several other drags on the economy (like less MEW, less home building, less CRE, etc.).
Also, this was a group paper. I don't know about the others, but Hatzius thinks the economy is in recesssion already.
From GS: "we at GS ... see a recession as well as a very sizable nominal home price decline of 20-25% from peak to trough."
Best to all.
AllenM,
Currently y/$
Bid\t103.76\tAsk\t103.79
Been below 104 since ~3PM PST. Low 103.65.
INO Foreign Exchange - US Dollar/Japanese Yen (FOREX:USDJPY) Price Chart and Quote
Cheers,
In other news, US bankruptcy trustees ask for sanctions against CFC.
BofA Inherits Countrywide's Baggage - WSJ.com
Credit turmoil losses set to top $600 billion - UBS
Losses from the global credit market crisis will likely top $600 billion, with banks and brokers responsible for more than half of that, UBS said in a note published on Friday.
"Our global banks team estimates total industry losses in this financial crisis should reach north of $600 billion, of which listed banks and brokers should account for 'only' $350 billion," said Geraud Charpin, a credit strategist at UBS in a note entitled: "Wide Spreads - Here To Stay".
Credit turmoil losses set to top $600 billion - UBS
| Reuters
What's a couple hundred billion among friends anyway. Let's just call it a trillion that's a nice round number.
And in yet other news, yields on seven US Treasury issues fall below zero, an event last seen in 1933.
Treasury Inflation-Protected Securities (TIPS) - Markets Data Center - WSJ.com
From GS: "we at GS ... see a recession as well as a very sizable nominal home price decline of 20-25% from peak to trough."
CR,
Since that's nominal and it will take 3-4 years while inflation is 3-4%/yr, we'd be talking 30-35% in real terms.
Does that jive with your assumptions in the post of the other day (about inflations effects on the degree of price decline)?
He (Jan) emailed you directly? Wow! I dont know what you did in your past life but the blog has made you some impressive friends!
Good stuff!
Matt CArter writes: -- Great link, thanks!
Misean,
I had not noticed. Ah, well, more downhill for the dollar. Doesn't seem to matter to our MSM.
But hey, dinner is a pizza!
And beer!
No pony. I can hardly imagine how the fools are going to continue spoofing buffett buyouts when he made it apparent that he only buys profitable companies.
Well, inevitable conclusions seem to be sure death for most of the homebuilders. A bunch of small banks, and a couple of larger ones. Chrysler most likely.
The biggest part of this is the MSM failures. Why do I have to read the economist for decent coverage of a US event?
Ah well, dinner is almost here.
Someday this war's gonna end...
Punch My Ticket writes:
And in yet other news, yields on seven US Treasury issues fall below zero, an event last seen in 1933.
um, are you really under the impression that the treasury was selling TIPS in 1933? I get the feeling many people posting here lately don't even attempt to understand things before posting them.
There are plenty of real gloom stories out there without adding all the hyperbolic nonsense.
So basically a $440B write down of M1 and a $2T write down of M3.
Nothing to see hear...move along.
Cheers,
There is no M3! Move along!
AllenM,
Enjoy dinner.
Gotta keep an eye on Asian markets opening Sunday evening. Could be interesting.
Cheers,
Gary,
Oh yeah I forgot. Our masters have ordered us to ignore the elephant in the living room.
Don't hitme, don't hit me, don't hit me.
Cheers,
Regarding the TIPS yielding below zero, that is not at all inconsistent with the yields on regular treasuries being below inflation ... still, it is a bit weird when faced with the direct evidence ... how long before the money buying those treasuries goes to safer havens?
are you really under the impression that the treasury was selling TIPS in 1933?
Not that dumb, Bob.
There are plenty of real gloom stories out there without adding all the hyperbolic nonsense.
Not that hyperbolic, Bob. Stepping up to buy a security to take an absolutely guaranteed real loss is unprecedented. It happens all the time to the lazy and stupid, but that's not the average TIPS buyer. It also happens all the time if there is some distribution of returns where there is something on the right hand side of the zero line.
But this is seven issues of AAA full faith and credit, guaranteed to lose purchasing power in all circumstances at maturity. No J6P does that. It has to be the Mensables that run big money.
CR, thanks for pointing us to an informative read about how the loses can multipy (Greenlaw, Hatzius, Kashyap, Shin.
the panels remarks:
Charles Evans, Federal Reserve Bank of Chicago SEEMED to have talking points worked out long before he read the paper. his remarks, i found his remarks relatively unresponsive.
Frederic Mishkin, Federal Reserve Board of Governors nailed it, spoke directly to the findings and methodology of the authors paper. He seemed to agree that due to leverage the credit crisis and solvency issues appearing small, could multiply to a large problem.
William Poole, Federal Reserve Bank of St. Louis provided some insightful analysis and then decided not to take a side on the position of the paper!!
Eric Rosengren, Federal Reserve Bank of Boston makes observations that say the problems presented by the subprime meltdown are not going to be resolved by monetary policy...but these observations are buried and muted. He seemed to talk all around the issues.
Miskin's and then Pooles remarks seemed most responsive.
from AllenM:
"No pony. I can hardly imagine how the fools are going to continue spoofing buffett buyouts when he made it apparent that he only buys profitable companies."
Yep, he buys companies that are profitable, undervalued, AND that come with competent management. Three strikes for CFC, MBI, and ABK.
Mishkin's critique of the study seemed mostly to point out just one thing, that being that the assumed contraction in credit assumes that other lenders would not step in ... no real attempt to estimate how much this sort of activity would alleviate the crunch ... wouldn't it depend on how broadly distributed the malaise is? And don't lenders behave rather sheep-like?
OFF-TOPIC CONJURECAST
ISM-PMI
43.0
Have a nice day.
So the housing drag has been posited elsewhere at something like a 0.5% - 1% hit to GDP, add the unwind effect for another 1% - 1.5% and we have a 1.5% - 2.5% hit combined...before any labor or MEW effects...sounds like the makings for a b!tch kitty of a recession.
Somebody alert mp. Conjure Bag has escaped! Protect your pets!
energyecon,
Sort of a Wolf 359 event.
Cheers,
Stepping up to buy a security to take an absolutely guaranteed real loss is unprecedented.
You got that right. Un-frickin'-believable. Thanks for the post.
Interesting stuff here:
Seniority of Bankers Acceptances
This is a question that has bothered me for a long time - and Ive never been able to get a satisfactory answer.
What is the seniority of Bankers Acceptances?
PrefBlog » Blog Archive » Seniority of Bankers’ Acceptances
This kind of gets lost in the turmoil but still pretty breathtaking: <a href="http://seattletimes.nwsource.com/html/businesstechnology/2004249887_sprintnextel29.html>"Sprint piles up $29 billion loss"
They wrote off $30 billion in goodwill from acquiring Nextel...ouch!
I've heard of black swan events but conjure bag actually posting - this is the surest indicator i've had that things were in the tank since Bush told us yesterday that there wouldn't be a recession.
Anyway, as a conjure bag disciple, I made a lot of money today.
misean,
Yikes - resistance is futile!
Double Yikes:
BAs (Bankers Acceptances) are parri passu with deposit notes
It seems like only yesterday that I was worried about wheat future.....whew!
Re negative yields on Treasuries: doesn't that mean that bond bidders are in a sense paying the US government for the privilege of lending the government money?
All US taxpayers should be happy!
Gary,
I fear you are correct.
Conjure Bag has seized control.
mp may well be cuffed , stuffed , and gagged in "Conjure Dome"
IT
Re negative yields on Treasuries: doesn't that mean that bond bidders are in a sense paying the US government for the privilege of lending the government money?
All US taxpayers should be happy!
It's sort of like keeping cash in a safe deposit box. You pay a fee for the box and the money doesn't grow, but you figure it will be there later.
Misean, energyecon:
Can we hold out long enough for some support from the Klingons . . . or is this it?
Credit cycles begin and end. The challenge here is that nobody seems to know the size/scale unlike other shocks.
Simply put, and I will agree with the CEO of UBS - we are in unchartered waters.
What we do know is that there is hesitation to lend, some resistance to buy, and a lack of trust based on no transparentcy.
Given the economic forecast for GDP and some reasonable thinking on the drag in the credit markets, we are headed for negative growth.
I am not sure another 60B this month (March) will provide the lubrication to ease the frictio
Perhaps it is the guarantee to make the bond inflation-proof that is worth the hit. Useful if one suspects a period of bad inflation ?
sportsfan,
I'm afraid we'll have to hope the seizure of Locutus succeeds. Otherwise sector 001 is toast.
$@&*#()!! We wasted all this time building needless houses instead of equiping Star Ships with quantum torpedoes....GRRRR!
Cheers,
TIPS going neg.
Unless someone is expecting deflation.
A $2T hit to M3 might be a (ouch...stop hitting me!) problem.
Cheers,
Misean,
Turning Locutus against his hosts will be the key. Learn what he knows of them and use that against them.
Weapons will be useless. They have more of them and bigger ones at that.
Some here have expressed concern about restricted access to banking deposits (eg, Citibank daily ATM withdrawal limits).
Here are two alternative measures I hope not to see in the near future:
Increased Difficulty
4shzl writes:
"Stepping up to buy a security to take an absolutely guaranteed real loss is unprecedented."
Think of it as a fee paid to have the buyers' cash stored more safely than a bank or a mattress might be able to store that asset.
sportsfan,
I hear the Romulans have started a SWF lol
So who in the Fed gets to play TOS Scotty:
"Captain she kinna hold - the dilithium crystals are about to implode!"
Moody's downgrades Fremont General Corp.
SAN FRANCISCO (MarketWatch) - Moody's Investors Service Friday downgraded the ratings of Fremont General Corp. (senior to Ca from Caa3) and its subsidiary, Fremont Investment and Loan (deposits to Caa2 from B3 and issuer rating to Ca from Caa1). The outlook on Fremont General and Fremont Investment & Loan remains negative. The downgrades were in response to Fremont General's announcing that it will defer dividends on its trust preferred securities and poor liquidity at the holding company, according to Moody's. Separately, Standard & Poor's said Fremont General will be removed from the S&P SmallCap 600 index after close of trading on Monday.
[snip]
Okay. Sure, if inflation is high, a TIPS with negative rates can still leave you with more money than you'd have if you sticked it under a mattress. Still, is there any way to read this that isn't a really bad sign?
My brain is tired. Could somebody take one of those TIPS that have a negative yield and show me exactly how the calculation is done?
I'm guessing that the price, reflecting the market's prediction of the amount added due to the CPI, exceeds some other number based only on the coupon yield.
Ever since Bush spoke yesterday and said that he sees no recession, I thought it necessary to revise my prolonged recession outlook to a robust growth trajectory beginning in the morning.
trillion, scmillion, ain't nothing but a thing.
A $2T hit to M3 might be a (ouch...stop hitting me!) problem.
Is that alot of money?
or was it the day before when Dubya was alarmed by the $4 gas projections and battled with the word "embrace"??
EE
Simon Pegg. Not exactly Scottish...nor was Irish James Doohan.
YouTube - Simon Pegg - Jimmy Kimmell Show [Breakdancing]
As to Freemont:
Wow they actually downgraded a bankrupt company.
hoocoodanode.
Cheers,
energy,
I always played Scotty when we played star trek as kids.
A wee clip. not:
The engines are losin' power, my bearin's my poor bearin's
YouTube - Drunk Scotty
Cheers,
ron,
"Is that alot of money?"
Kinda.
Cheers,
ISM-PMI
Dow-Jones Consensus 48.0
Conjure Bag 43.0
If Conjure is correct, this will be the lowest PMI reading since 2001, and the largest monthly drop on record.
Some here have expressed concern about restricted access to banking deposits (eg, Citibank daily ATM withdrawal limits).
Many, many (many^2) years ago, when I worked in a depository institution I asked that question..
The way it was explained to me, was that different types of deposits would be assigned to classes (or pigeonholes) and the limit/holdback had to be consistent per class. The deposits that were non-interest bearing would have the most liquidity in a bank liquidity crisis situation.
Keep in mind that this was pre-Now accounts, so virtually all checking accounts were non-interest bearing in those days. I'm sure that this has been tinkered to death since then (and only the true uber-nerds know how the present rules work.
Bernanke says US slowdown will eclipse dotcom bust
Bernanke says US slowdown will eclipse dotcom bust - Telegraph
Misean,
But I'm Scotty @ The Helm and the reason being, is that Kirk is off The bridge!
I'm guessing that the price, reflecting the market's prediction of the amount added due to the CPI, exceeds some other number based only on the coupon yield.
That was my impression too, but I've never actually purchased TIPS. Anyone?
Anonymous | 03.01.08 - 12:11 am |
Scotty only took the bridge when Kirk and Spock were gone.
Cheers,
This was a few weeks ago, but did ben change his numbers?
G7 Ministers and central bankers at the meeting are expecting losses from subprimer-related securites to reach 400 bln usd, far more than the 100-150 bln usd that the Federal Reserve has predicted, according to a media report Monday.
Misean,
Yes, that was my main interest, i.e, Kirk was a screw up and when Scotty was at the helm, things always were spot on, you could always depend on scotty, but Kirk...always trouble
Tranchefoot @ 12:17 -
Moved into TIPS over a year ago when the jury was out about inflation vs deflation...I'm still trying to get a handle of the logic of the neg yield on TIPS since reading it a few minutes ago.
Yield is inverse to price...negative yield would mean that price bid on the TIPS was really, really, like really high ---- going out to about 2012. Why would someone bid that high on TIPS unless sense of violent inflation in the wind. As someone said, it's like putting the money in the lockbox so that it's still there in several years.
THINK that that's the way to read it. But will have to review a bit more after reviewing the Star Trek trivia.
Tranchefoot @ 12:17 -
Moved into TIPS over a year ago when the jury was out about inflation vs deflation...I'm still trying to get a handle of the logic of the neg yield on TIPS since reading it a few minutes ago.
Yield is inverse to price...negative yield would mean that price bid on the TIPS was really, really, like really high ---- going out to about 2012. Why would someone bid that high on TIPS unless sense of violent inflation in the wind. As someone said, it's like putting the money in the lockbox so that it's still there in several years.
THINK that that's the way to read it. But will have to review a bit more after reviewing the Star Trek trivia.
Misean,
I have to come to the confessional and confess: I am scotty_at_the_helm (yahoo), doc holiday, wheat engineer and untold vast numbers of posting maniacs; please forgive me!
Anonymous | 03.01.08 - 12:23 am
Scotty cared about the ship. He bought gold.
Kirk was a swashbuckler. I can work for Kirk. But I'm always going to be saying:
The engines are burnin' up we're losing power. The Dilithium Crystals are just burning up. I can give you a few shots from the Phasers sir.
Kirk took risks, and in a Hollywood way, always won. Scotty was alwys the one warning that it was dangerous, but it could be done.
Cheers,
Cheers,
wheat engineer,
"I am scotty_at_the_helm (yahoo), doc holiday, wheat engineer and untold vast numbers of posting maniacs; please forgive me!"
I raise the right eyebrow like spock...Hmmm?
End of the day...we're in deep poop.
Cheers,
Yah, maybe it is too late, I felt it was the right time and somewhat pointless; you can rest your eyebrow now.
One last thing.
Re: ... new meaning to the term thinking outside the box.
Is he taking about a confessional?
I don't know about you, but I started buying today again. A great day for buying, maybe only Monday is going to be better.
As expected bank stocks took a hit this week. Next week will be much better.
It's also pretty clear that we will avoid a recession this time around. Shipping volume picked up and the leasing indicators have bottomed.
O-Joe
Holy heeebajeebus,
And O-Joe buys into the decline.
Hoocoodanode.
Cheers,
1.5%? And that's with optimistic assumptions. Who's going to be the first mainstream economist to use the "D" word? Roubini doesn't count.
The blue-light special on SMN is almost over. Buy now before you're priced out forever!
over and above the traditional hit
Add up all the "traditional" hits and the GDP will be subterranean.
OK, so we all know what's coming.
It's time to move on and stop worrying about how bad things are going to get and start asking how can we make things right.
Specifically, which is the better alternative to fend off the ravages of a century of self-determination and free market economics... socialism or fascism?
Personally, I think the illusion of free will is essential to complete subjugation.
So I'd have to go with the fascism route.
I think Ben would agree.
Do we get uniforms? I would prefer something dark, not khaki.
Maybe I'm missing something subtle here, but the authors explanation of the shock, with cartoonish figures and examples (pp. 28-30), focused on the amplifying effect of losses when they hit leveraged entities such as banks. Well, how has THAT changed? If anything, securitization should have put some of the hit in less-leveraged hands. Still, I enjoyed the simple, SWAG, math. Economists should do more of this stuff. Save the second derivatives for the appendices.
(Exhibit 3.8/pg. 25 is interesting to readers here, where they try to identify where much of the dreck has landed. I.B.'s are pretty clean (!); so are pension funds (phew). Commercial banks , US hedge funds, and insurance companies are in a world of hurt.)
As for the Mishkin response, I liked the intro to the conclusion: "I very much enjoyed reading this paper.". Translated: I completely disagree with your conclusions. Please stop scaring the markets.
TIPS is NOT signaling high inflation. the yield on a 10 year TIPS is 1.08%, a 10 year treasury yields 3.53%. the TIPS market is therefore forecasting 2.45% inflation over the next decade. hardly hyper-inflation.
on the short end, a 2 year TIPS yields -0.43%, whereas a 2 year treasury yields 1.68%, indicating 2.1% inflation over the next 2 years.
for more info check out:
TIPS Expected Inflation Estimates ::
Federal Reserve Bank of Cleveland
Do we get uniforms? I would prefer something dark, not khaki.
Totalitarians don't wear khaki. Unless they're in the desert. I mean, who ever heard of the Tanshirts.
If you got some spare time and need a laugh, Countrywide filed it's 10-K today.
I loved this gem under risk factors:
We depend on the accuracy and completeness of information about customers and counterparties
In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to borrowers under certain loan programs, we assume that the information provided by a customer is accurate and complete and we do not independently verify that information. Our financial condition and results of operations could be negatively impacted to the extent we rely on customer information that is not complete or accurate.
I've heard Harvard and MIT give PHD's for proving 1+1=3
and Harvard gives away MBA's if you can create a Rosy picture with poo paint.
Holy Macklowe:
Reckoning for a Real Estate Mogul
Bids are due Friday for the GM Building, the prize piece of Harry Macklowe's unraveling New York real estate empire.
Error - AOL Money & Finance
"It's time to move on and stop worrying about how bad things are going to get and start asking how can we make things right."
Step 1. Fire all foxes from their henhouse guarding duties
mp-
Does Conjure have out the ConjureSign, like the BatSign? The spotlight high in the sky? That is what I am imagining.
MarkM
I think that the biggest potential error in the mortgage meltdown piece is the methodology used to predict loss.
The three methods used to get ball park loss numbers are extrapolation of existing default rates, ABX indexes which can be converted to implied default rates, and comparison to other historical housing breaks like california and texas.
The driving force for default among subprime holders beyond the fraud stuff, has been the resets on variable rate date which is usually at the 24 month period. The paper states that the total dollar volume of subprime that is in play is about 1.4 trillion of which they estimate 80% to be variable rate and tied to 6 month libor. 80% works out to about 1.12 trillion. Forgetting for a moment about teaser rates and the like, libor over the last 6 months has dropped from about 5.5 to 3. This means that if every subprime continually reset then in the aggregate the borrowers just had their payments decline by is about 25 billion a year. I don't know what the average spread is in subprime loans but as a guess lets say it is 300 basis points over libor, so that when the loans were written, without teasers etc they would be at about 8.5 percent with libor at 5. Dropping libor to 3, gets the interest part of the payment down from 8.5 to 6.0. On a 250k i/0 this takes the monthly payment from 250k * .085 / 12 = 1770 to 250k * .06 / 12 = 1250. It is hard for me to believe that this is not going to have a material effect on peoples ability to pay. Nowhere is this dramatically lower carrying cost showing up in the estimations of default.
This 'missing the point' on carrying costs is what caused a lot of the models to fail in the first place, when the Fed raised rates from 1 to 5.50. It was the increase in carrying costs which sunk the marginal home owner even though at the top everyone said real estate would be fine because mortgage rates were historically low. Just as it sunk them on the way up it is going to buoy them on the way down. Perhaps the big takeaway is that by driving a huge portion of the mortgage market into variable rate stuff by their post 9/11 madness, the Fed has now gained a tremendous amount of leverage over the cash flows of a huge number of the citizenry.
What we do know is that there is hesitation to lend, some resistance to buy, and a lack of trust based on no transparentcy.
rc helicopter
Tactical Flashlights
video game