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Are we there yet?
drip drip drip...
Do these downgrades literally reduce the supply of money? Or are they so far 'off the books' that they have real effect?
The 'Super Duper Senior' proposal earlier showed the market isn't paying a lot of attention when rating agencies call something AAA - remember, that is supposed to be more secure than governments that are legally allowed to take money off people at gunpoint.
So, me, I'm going 'meh' to this.
$6.75 Billion??? Why, that's less than one Kerviel
unit (CGS system)
But I thought Warren Buffett was bailing everybody out?
Downgraded from "Super Duper Senior" to "Treasury".
What's below Level 3?
MBIA Raises 1.1 Billion
MBIA raises $1.1 billion as share sale closes - MarketWatch
S&P downgrades something? I thought they didn't know how to do that. I guess they're getting some practice in.
Honestly, who gives a cr*p?
. . . what AOTC thinks?
"what AOTC thinks?"
WWJCD?
What Would Jim Cramer Do?
unfreakinbelievable-
"MBIA's testimony suggests financial guaranty companies should have a seat at the table in redesigning rating agencies' credit rating systems."
Expired
SC,
"What's below Level 3?"
Ever see Wile E. Coyote dig through an outcropping cliff 1000 ft above the desert floor?
That's what beneath level 3.
Cheers,
Rival MBIA Inc. in its prepared testimony, takes a harsher tone. The company blames rating agencies for the current market disruption and suggests rating systems "may need to be revamped."
"Instability of decision making by the rating agencies has damaged the market's confidence in the financial guarantors, thereby destabilizing the broader financial markets," the testimony said.
"If they'd downgraded us when they should have, the markets could have confidence in our rating and wouldn't be 'destabilized'...."
S&P should downgrade Roger Clemens too after today's performance.
Congressman/woman-
"excuse me Mr. dumbbastard, but, you took a relatively low-risk muni bond insurance business, developed an insatiable appetite for risk, venturing into the CDO world for "diversification purposes" and, let's be honest, cause you're a greedy sob, and your risk assumptions failed, eh?
and let me get this straight, you think the ratings agencies cause your problem and you wish to help design new models to be used to rate your own portfolio?
Uh, no further questions, hey Eric, seize this morons assets.
SeattleSun writes:
Ministry of Truth writes:
SeattleSun, you should be able to find out the sales date once it is set, either by the owner getting a notice, public records and I think it is also advertised in the newspaper.
A notice of foreclosure sale must be made within 21 days of the date of the sale and at a time, place and manner as stated in the notice of default. Sale must take place in the same manner as an execution sale would occur in a judicial foreclosure.
If it is easy to move you could just wait until the 5 days to quite notice is posted on your door.
Ministry of Truth | 02.13.08 - 5:43 pm | #
Thanks again for the info.
Nerds on this site should understand that although I have a BS Aerospace and MBA both cum lauda and my math skills could put a cruise missle thru your bedroom window tonight I have no idea what these terms mean:
1) notice of foreclosure sale
2) an execution sale
3) a judicial foreclosure
4) quite notice
Is there a primer on the voculbary used on this site?
While I have someone attention is NV a "non recourse" state?
I actually know what that means!
TIA
SeattleSun
SeattleSun | 02.13.08 - 7:33 pm | #
Downgrading CDO's should hit the CDS's which were used to insure the CDO's which the monolines issued, which should, logically cause an automatic downgrade of the monolines.
But no monoline downgrade. So either these aren't insured, or someone is lying. It's like Home Simpson making booze in his basement trying to cover up the explosions by coughing.
Cheers,
SeattleSun writes:
Ministry of Truth writes:
SeattleSun, you should be able to find out the sales date once it is set, either by the owner getting a notice, public records and I think it is also advertised in the newspaper.
A notice of foreclosure sale must be made within 21 days of the date of the sale and at a time, place and manner as stated in the notice of default. Sale must take place in the same manner as an execution sale would occur in a judicial foreclosure.
If it is easy to move you could just wait until the 5 days to quite notice is posted on your door.
Ministry of Truth | 02.13.08 - 5:43 pm | #
To: Ministry of Truth
Thanks again.
A question on the other side of the coin.
But first I note by your "bunny ranch" comment that you are a Las Vegas or NV guy? The last time I drove HWY 95 (aka the HWY of Love)from LV to Reno the bunny ranch was closed. Another piece of "distressed real estate?"
Now for the question.
Q. Would like to buy a distressed luxary condo LV but can't quit figure out how to locate the available list.
Is there a web site that is actually useful?
Do I have to go to the banks for their REO lists?
How do I get started on this?
TIA
SeattleSun
SeattleSun | 02.13.08 - 7:18 pm | #
Seattle Sun,
could ya put a missle thru my room...
the stupidity of the stim package, the buffett fluffet, and the CDO mtm drip are enough to drive one insane...
just end it...
1600 pennnsylvania avenue...dc
tia
Markets should ramp on this. Just like today's +170 action on retail sales data indicating nothing more than inflation.
Gary-Come on, no one cares about this anymore. It's about 14.5 min into its 15. Move along.
Seattle Sun,
Getting close to spamming.
magna cum laude
CR,
Can you please post a formal rebuttal to Alex Tabarrok's recent post claiming that housing prices won't revert to the mean?
Marginal Revolution
You can defeat him with words and figures! His arguments seem pretty ripe for dismantlement.
Mtgspy over on KD's board raised an interesting theory that the FNM conforming limit raise was a red-herring to increase capital reserves and prevent a GSE implosion. Sounds good to me and it could explain Dodd's strange "must get it done or die trying" machinations recently. Any thoughts?
If the purpose of the limit raise was to "prevent a GSE implosion," why were the GSE's regulators opposed? I'd think they'd know more about the condition of the GSEs than Dodd....
d_rumsfeld,
"Can you please post a formal rebuttal to Alex Tabarrok's recent post claiming that housing prices won't revert to the mean?"
Silly old time Chicago School argument.
Firstly it stems from Rebooblican partisanship, as the Chicago school tends to be at least mildy biased that way.
Second he really provides no evidence. Just claims it's an equilibrium shift (which shows ignorance. It's a DEMAND shift...for his argument, I don't agree.)
Now demand did not shift, renters with no skin in the game thought they could strike it rich. With declining prices, they're going back to renting, disproving a real demand shift. Demand didn't shift, quantity demanded did, due to an engineered price drop.
However, as with any engineered price drop, suppliers, who were still getting the full value of their investment (at least initially) shifted supply by increasing it. (Remeber, buyers price on monthly payment. Builders get that loans full amount upon close of escrow.)
So now, reality sets in and equlibrium HAS shifted, only demand hasn't changed. More supply same demand (for the sake of argument) means lower than mean prices, until population with sufficient funds to purchase catches up with the overbuilding overhand.
Hope that helps.
Cheers,
risk capital, in other news, Charlie Manson's testimony suggests Charlie Manson should be freed.
Hey, let's not lose sight of the big picture...
They're bringing back American Gladiator. BOOYAH.
AND Night Rider.
Life is sweet.
Yalt, you are assuming that the OFHEO is playing straight. At this juncture it is very important to manage perceptions and if the OFHEO comes out strongly against the raising of the conforming limits, it gives the impression that the GSE are not actually insolvent and would be able to manage over time. Is this reality or a red-herring? Personally, I think Mtgspy is right on the money here. It cannot be allowed out that the GSE's are close to BK. That is the electric third rail that destroys everything.
Here's some of Mtgspy's reasoning,
"So I asked, how would I know for sure that it's not going to jumbo - and I mean 100% sure. I agree to volume is minimal, like $20B at most to FRE and FNM, which means just under $1B capital each.
First he said, the proof should be that OFHEO isn't releasing the 30% capital surplus. That's the first tell-tale a really big loss provision is building up.
Second, FRE and FNM preferred to common ratio is maxed out, about 20% at this time. Further capital issuance has to be done through COMMON stock. So if it's common instead of preferred, you know the story is for real.
Also, watch the amount. If FNM (or FRE) issues common stock in amount $3B or more, that's the confirmation. There simply aint no place to deploy that kind of capital."
Jumbo Red Herrings and today's FNM rumor [Lenders] - MarketTicker Forums
And while I often disagree with Misean, I do endorse razing the U. of Chicago to the ground, and seeding the earth there with salt.
That is Republican hackonomics run rampant.
"The slow steady drumbeat of downgrades continues ..."
I really hope it's at least a jazz funeral.
SeattleSun you sound like you are on the same page as myself. Email me and we can talk.
sale-562497898@craigslist.org
No, it's going to be a military funeral, part of the mobilization to win the war on the economy.
And while I often disagree with Misean, I do endorse razing the U. of Chicago to the ground, and seeding the earth there with salt.
That is Republican hackonomics run rampant.
Would you mind just taking out the b-school and the econ department? I've got friends down there in other departments and they really don't deserve to be razed just 'cause the business school keeps churning out crackpots.
Toll
I think Mtgspy is accurate in his theory that FRE/FNM are in trouble. I am not convinced that the Jumbo deal is anything more than political posturing. The mortgage insurers are in big trouble and by definition this means big trouble for FNM/FRE. This will be the next bailout discussion IMO. We have to "bailout" the mortgage insurers to save the GSE's.
Kind of sounds familiar?
is it late enough to get OT?
well tini time hit so damn right it is.
CR: if forced to speculate, why do you think setser, mish and the other bloggery luminaries that used to post here so regularly don't any more?
as well, how did Tanta go from being a commenter to your partner? has that story ever been told? i think in a drunken fit of archaeology i found her first post here but i dont think we ever got the scoop. and wrt to her, being that my wife is first generation german and i live in the DC area like her, the name "tanta" just makes me feel so warm. and then she sends icicles down my back.
personally, i'm at the end of a yo-yo yin and yanging every day.
if everything hit that we've identified and have offers out on, i'd have the best most robust year of my life.
but then again, i'm also positioning for an interview with Carlyle's distressed rmbs group.
damn 9-pronged attack!
i'm personally at the end of a yo-yo, one day yin one day yang
Yalt, I'm just a lazy typist . . . those are the only departments that should be targeted from above for divine retribution . . . preferably while hosting a conference of AEI, the Free Enterprise Fund, and the Club for Growth. Keynote Speakers: Larry Kudlow, Robert Samuelson, Alan Greenspan, Ben Stein, an animatronic Milton Friedman, and of course Art Laffer.
When will S&P lower its ratings on S&P because of how badly they've miscalled the market?
Cote, will you be attending the DR Horton sales this Saturday? We need boots on the ground.
Yeah, when will S&P, Moody's, Fitch be downgraded???
Yeah, if the three rating agencies are no longer AAA, can they actually have any outstanding ratings of AAA???
Ratings rate your debt issues' worth, not the worth of your ratings on debt.
I get poetic after a tini or two.
Cheers,
Gary, Grover Norquist should be the keynote speaker. Do be sure to invite Larry Lindsey.
The hearing tomorrow will be webcast.
http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht021408.shtml
Gary writes:
[Rob Dawg], will you be attending the DR Horton sales this Saturday? We need boots on the ground.
LOL. No, I will either be skiing at my mountain cabin or golfing. The "Un-Auction Sale" is not any of those things; a sale or auction or un-anything, just a sales gimmick.
When the market bottoms I will be the boots on the ground. Right now my Dawg Model B says don't even peek your head out of the trench until Sept 2008 and only then to see if the bottom is in sight.
is it late enough to get OT?
I have observed that the comments section goes OT everyday at 8PM CST sharp!
WHICH MEANS you still are obligated to stay ON TOPIC for another 20 min, plz thx.
go have a nuther tini & come back.
Liked the commment about Cramer and wwjcd. Jim would sell more worthless paper to the innocents so he could buy a new yact for his charitable trust!
Any predictions on the first North American bank to appear in similar headlines as this:
German government's live or let die dilemma for IKB
By Paul Betts
Published: February 13 2008 02:00 | Last updated: February 13 2008 02:00
By all accounts, the Berlin government appears set to step in to help rescue IKB, the German bank that last summer became the first victim of the US subprime crisis in continental Europe.
Since then, the lender to Germany's small and medium-sized companies has been bailed out twice. But this does not seem to have been enough and IKB needs a further injection of capital of 2bn (including 500m immediately) to stay afloat.
Keybank? WaMu?
Is there a primer on the voculbary used on this site?
While I have someone attention is NV a "non recourse" state?
I actually know what that means!
TIA
SeattleSun
SS, if you have a few hours to spare, check out the ubernerd collection (by the way Tanta, you should collect them and submit them to a publisher, there should be a market for them in hard copy) The ubernerd collection will teach you more than you ever thought you needed to know.
Anon 8:42, their invitations are in the mail.
Banks asking for FHA to bail them out:
Worried Bankers Seek to Shift Risk to Uncle Sam - WSJ.com
"One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers."
Disgusting.
God, I'd love to know how many tranches exist and the % downgraded.
It's like:
Exterminator: OK we killed 1357 roaches.
Owner: Thanks.
Ext: NP. Cya next week.
Owner: Uh, OK? Follow up?
Ext: Hope so, no guarantee. Read your contract.
Owner: !??!??!
Cheers,
The slow steady drumbeat of downgrades continues ...
On a dark and stormy night, the native islanders catch an finance executive. They march the wall street suit up the volcano, with both Hillary and Obama pumping their fists for show. The victorious candidate rips the still beating heart from chest of the financial system to the cheers of main street. The sacrifice gives new life to the avenger, Volcker Jr.
seattle,
notice is formal statement that something is pending
sale is the something, creating legal title
judicial foreclosure is the formal , court ordered procedure, precedes sale, often by only minutes
quite is quit, meaning an order from the judge to the sheriff actually ordering tenants or owners to leave
i am here in vegas, wait a year, too early to buy
mere 696 math sat, so i could screw up a missle
I'd just like to take a moment and think about the tranches. This can't be easy for them. Some of you people here are so negative. Perhaps we could have a moment of blog silence for the tranches
there. was that so hard.
Now, since i've shown respect, I really enjoy the term "synthetic CDO". If you couldn't afford the real thing, don't blame me when you lose some money. dumbass.
RUMOR:
Insurer downgrade Friday after closing.
Ben Jones has a link to his foreclosure site on his main blog,and as i recall it has info on all the states foreclosure rules.
Yahoo!Finance is reporting Bond Insurers to Blame Rating Agencies.
The troubled bond insurance industry is being hobbled by uncertainty surrounding the credit rating process, Ambac Financial Group Inc. Chairman Michael A. Callen is expected to tell a U.S. House panel on Thursday.
"Ambac and the industry's next critical step is to restore confidence. This requires stable and predictable credit ratings," Callen says in prepared remarks to be delivered Thursday before the House Financial Services Subcommittee on Capital Markets.
Rival MBIA Inc. in its prepared testimony, takes a harsher tone. The company blames rating agencies for the current market disruption and suggests rating systems "may need to be revamped."
"Instability of decision making by the rating agencies has damaged the market's confidence in the financial guarantors, thereby destabilizing the broader financial markets," the testimony said.
Callen said the problems facing bond insurers have been overstated. Ambac, he said, currently has the financial resources to "comfortably meet" all of its existing obligations, even under the most dire market conditions.
"Almost no one questions the ability of Ambac to make good on obligations to holders of Ambac guaranteed debt," Callen said.
Instead, he said the biggest challenge for Ambac is dealing with the uncertainty caused by rating agencies' decision to review their ratings on the company.
"We therefore see the current issues facing the financial guarantors not as a question of ability to meet obligations, but rather a challenge to maintain the stability of ratings that have supported our business in the past and that will support it going forward," Callen said.
seattle, its all very simple. just multiple or divide by zero depending on the situation. either one will fit something, the something by definition being all-inclusive.
see its simple, math covers it all, it being defined as everything.
Neal writes:
RUMOR:
Insurer downgrade Friday after closing.
Neal | 02.13.08 - 9:36 pm | #
Well, that would fit the pattern, and it is a 3-day weekend. So, by Tuesday, Wall Street will have forgotten all about it....and it will be rally time amid rate cut fever!
I second stdfs recommendation from the preious thread that the gretchen morgenson interview by terry gross on npr is worth listening to.
it is interesting to hear her judgments about outcomes...and hear an msm personality say it on a mass media outlet.
she comes out against the big CEOs drawing huge pay offs as they leave the sinking ship.
raises the question about sovereign funds taking over troubled banks.
also talks about FDIC insurance and bank failures.
estimates that the economic fallout from the SIVs and loans will take years to resolve.
worth the listen because terry gross is a good interviewer.
403 Forbidden sto...toryId=18942380
dc1000,
Hang in there!
And now an update on the economy from our experts:
Dr Ray Stantz: "Fire and brimstone coming down from the skies. Rivers and seas boiling."
Dr. Egon Spengler: "Forty years of darkness. Earthquakes, volcanoes..."
Winston Zeddemore: "The dead rising from the grave."
Dr. Peter Venkman: "Human sacrifice, dogs and cats living together - mass hysteria."
MBIA
(-$15.22) EPS related to a 10 year bond is like trying to forecast which direction a retarded drunk will wander after taking LSD in a casino about to be hit by a hurricane!
OT: or perhaps not - BoE governor Mervyn King warns the Brits that the standard of living will fall ! Jeez - some honesty at last; can we expect something similar from Bernanke ? Yeah right. Here is the extract:
Britons have enjoyed a decade of high spending on luxury goods, holidays and second homes, fuelled by low interest rates, easy credit and near-record lows in living costs.
But Mervyn King, the Governor of the Bank of England, issued a stark warning that this period had come to an end.
In an uncharacteristically blunt statement, he said rising inflation and the fallout from global economic turmoil would take its toll on the spending power of British households.
Mr King's warning came during his most sombre assessment of the economy since he took over as Bank of England Governor five years ago.
"The higher level of energy and food prices is a genuine reduction in our standard of living relative to where it would otherwise have been," he said.
"This is because of the higher prices that all of us are having to pay."
Standard of living will fall, warns Mervyn King - Telegraph
His view is still too rosy IMO but its a hell of a start.
-K
BeachBoy,
This is the way to do it:
YouTube -
Cheers,
Worried Bankers Seek to Shift Risk to Uncle Sam - WSJ.com
Cal writes:
Banks asking for FHA to bail them out:
WSJ Error Page - WSJ.com SB...s_us_whats_news
"One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers."
Disgusting.
Truly disgusting. How immoral can these corporate titans with golden parachutes get?
Aheadofthecurve@ 7:21 pm:
Although I sometimes wonder whether you're a smart bull or just full of bull, that was damn funny. Comic timing is a gift.
Calling all data hounds!
I have a puzzle, a riddle - to wit, a conundrum - hope the kids have gone to bed before they read that last one!
Viz, in the latest EIA summary release Table 1. U.S. Petroleum Balance Sheet, 4 Weeks Ending 02/08/2008
we see a 0.4% YoY increase in Finished Motor Gasoline supplied compared to the week ending 2/08/2007.
The puzzle comes from the source data, which is available at U.S. Weekly Product Supplied and you can get the historical from the link 'Download Series History' (middle upper left side). I constructed a 4 week moving average, and presto, the last number is an exact match for the 2/08/2008 number. BUT in 2007 there is not one single week with a value under 9,000 and yet from Table 1 we have a 4 week moving average of 8,925 for the week ending 2/08/2007 to provide the base our current number realizes a 0.4% increase over...
dr strangemoney, you too!
CR: if forced to speculate, why do you think setser, mish and the other bloggery luminaries that used to post here so regularly don't any more? -- dc1000
I think about that, too. Maybe it is my fault.
If you want to understand the equilibrium price of a tranche, consider its yield. $6.75 billion sounds like a lot, but it is maybe 2% of the $343 billion in principal involved. That isn't raising the yield much. Are 98% of the loans involved still performing? How many rate resets are lurking that tranche?
Someone is going to make a fortune buying junk loans once these things get properly priced.
Aw, Gary, U. of C. can't be that bad, can it? I vaguely remember that your candidate and U.S.' future savior, Osama, served as a lecturer in the law school.
Lots of great professors that I had in b-school, there.
FinanceGuy said: "We have to "bailout" the mortgage insurers to save the GSE's"
That is a very scary thing that you just said. Buffett laid down the gauntlet by stripping away any pretense of muni solvency from the monoline discussion. Now ABK and MBIA really have nothing holding them back from downgrades as the munis are more or less taken care of, right?
So are you basically saying that the mortgage insurers can't be saved therefore the GSE's can't be saved?!? What ma I missing here?
I have a cat named Eddie. He's the one I picked up at the pound, after he'd been hit in the head by a blunt object. He suffered brain damage, but he's an extremely friendly and sociable fellow, especially for a cat. I've tried to put together a philosophy: What Would Eddie Do?
In the end, there are really only four responses he has to stimuli:
1) Take a nap
2) Grab a bite to eat
3) Sit there looking stupid and purr
4) Jump in your lap, looking for attention
I've come to the conclusion that there are a lot of large financial companies that Eddie would be more successful at running than the people currently doing so.
SC writes:
"What's below Level 3?"
...(X-files soudtrack plz!....)
It should be Level 4...exactly like in infectious diseases laboratories, Level 4 is where you deal with the most deadly critters like Ebola virus et al. Full HazMat suit, negative atmosphere pressure, ultra-sophisticated filters and absolute containment.
Scary stuff!
"MBIA's testimony suggests financial guaranty companies should have a seat at the table in redesigning rating agencies' credit rating systems."
Oh! They SHOULD have a seat; the same type of seat reserved to the members of the Politburo when they were about to fall into disgrace and banishment from the Komintern of the good'ol USSR.
(evil grin)
freddyinP'town: dr strangemoney, you too!
Yep! And I was one of the early ones in the drum circle. It's cheap entertainment. Besides, somebody has to mock the greedy and powerful. I spend the rest of my time preparing for the fallout. Root growth is starting so I have not had much time to throw tomatoes lately -- the populists will still need to eat.
What's the question, again?
campaign main street wall street - Google News
Even though it must be done, when the only business in town is government business life is going to be sad.
dc1000: as well, how did Tanta go from being a commenter to your partner?
Thread hijacking. It was annoying. Every time you checked the comments she had something insightful and constructive to say. I was like... who is this person throwing darts? Doesn't she ever have anything funny to say?
We are vaporizing credit way faster than it's being originated which spells deflation, but they continue the drumbeat of inflation. Just wait until this all plays out down the line. Inflation will not be a concern.
Francois writes:
"MBIA's testimony suggests financial guaranty companies should have a seat at the table in redesigning rating agencies' credit rating systems."
Oh! They SHOULD have a seat; the same type of seat reserved to the members of the Politburo when they were about to fall into disgrace and banishment from the Komintern of the good'ol USSR.
I think the monolines should have a seat at the table... the same sort of seat Dr. Evil had for his henchment in the 1st Austin Powers movie.