OT Goldman halves principal strategies group in move NEW YORK, Jan 31 (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) moved roughly half its principal strategies trading assets and investors -- a group that has proved wildly successful betting the bank's own capital -- off Goldman's books and into its asset management division, a recent filing shows.
Thats where the level 3 assets went to. Poor investors or is it bag holders.
Credit rating agency Standard & Poor's said Tuesday it is requesting comments from mortgage and investment market participants on its proposal to have issuers provide more detailed information on mortgage-backed securities.
S&P is proposing a plan that would require any issuer of mortgage-backed securities to provide more detailed information on a loan-by-loan basis so the rating agency can better judge the security.
Bob_in_MA, I think this is a poke in the eye - with a sharp stick - for all these bank bailout plans we've been reading about. "Regardless of the ultimate capital level" seems to mean it doesn't matter how much good money they throw after bad - AAA just isn't appropriate.
Banish the rating agencies and make this all a more transparent game by allowing The SEC to join with FTC to oversee the valuation and ratings of public securities.
Nothing was learned with Enron or the dotcom failures and now The Subprime Flu and more corruption and a lack of disclosure by rating agencies and corporations. The public needs confidence in regard to securities disclosure and valuation.
The Bush era is over and this recession will linger and there will need to be restructuring ASAP to make up for the massive amount of destruction within financial markets, which is related to a lack of regulation and enforcement. Rating agencies obviously serve no value but the public interest regarding securities must become a serious issue!
CAKE (cheesecake factory) confirming weakening consumer. They just announced and missed on revs and eps...
This restaurant epitomizes the gorging consumer of the last several years imho. Who could possibly walk out of there feeling good about what (or how much) they ate?
From what I understand, the bailout will only cover Muni's. Everything else can still be written down. The banks involved can not afford to take losses and a lot of them dont have lots of capital to put up.
I vote to dump rating agencies!!!!! However, as we have seen, The DOL, FTC, SEC, DOJ and any other faction of this coup government or the next coup, will invent a new department which will be as corrupt as what we have now.
Maybe we should let the market destroy itself and then see what comes out of the ashes, as that may be better than the devil we know!
What about all these "anonymous auctions" the Fed has been having to the tune of hundreds of billions? The banks bail out the monolines with the procedes from these auctions, see, no taxpayer bailout?
CAKE (cheesecake factory) confirming weakening consumer. They just announced and missed on revs and eps...
This restaurant epitomizes the gorging consumer of the last several years imho. Who could possibly walk out of there feeling good about what (or how much) they ate?
I tell you, there's no recession at PF Chang's. I have one outside and the only time I could get some food there this weekend was during the Superbowl. Other restaurants nearby were empty the whole weekend.
They should build one of those things on every street corner.
Rating agencies were out with the gang for a bachelor party. Met up with the ex-girlfriend in a bar. Ended up drinking all night and the bong water in the early am. Wakes up in bed with the ex. Now in scramble mode to explain the dalliance that went too far. Bloodshot eyes try to focus on the cell phone ringing in his pants pocket. What to do........
I don't know what the hell is going on in my area but tons of for sale signs disappeared the last few days. Nothing is selling. I noticed NAR is trying to clean up the listings(old/duplicate) and they have dropped a bunch. The telltale is homes under 100k. We rocketed past 475 from 400 in about 3 weeks. Still hardly anything sells. Methinks its gonna be a long,hot,summer in Florida.
We are truly not desperate yet. I have been looking on Racingjunk.com for a good used race trailer. People still want damn near new prices for used stuff.When I start seeing 24-28' trailers for 3-4k in good shape then I will buy...No rush right now.
"...seems to mean it doesn't matter how much good money they throw after bad - AAA just isn't appropriate."
How likely is it that the rating agencies are waiting for the bailout du jour to be announced so that they can make their downgrade? They get to C their A's by saying "hey we downgraded them" meanwhile its a moot point because the monolines have been nationalized or quasi-nationalized. I'm willing to be my laundry money that a gov't takeover of the monolines is precisely the event for which advanced negotiations are now underway.
Yes, there's an interesting trade-off between capital and earnings: if you have enough capital to cover the new stress-case losses at the AAA level, you have too much to earn a return on equity in the AAA range. (The ratings criteria require a reasonable ROE.)
That said, there are other ways to cover the losses. Reinsurance involves reinsurer exposure, expense and cherry-picking; also, there aren't enough AAA reinsurers to accept the required cessions. So that's probably not a good option.
I think wraps of wraps (especially by FSA or Assured, the two bond insurers that have stable AAA ratings from all the agencies and relatively little exposure to problem assets) are a good possibility on a deal-by-deal basis. Such wraps are available in the secondary market; the insurers will quote a rate for insuring bonds wrapped by another insurer. Subject to their limits on double-default risk of the underlying bond and the primary insurer, which will probably be a constraining factor in the current environment.
Another possibility is one I've mentioned before: a P&C-type fund for bond insurers. One sub-fund (leg) for each bond insurer, and probably a relatively small overall fund available to all of them. Funded initially by third-party cash, replaced over (say) 7-10 years by a surcharge on the worldwide premiums of the bond insurers, adjusted for their respective sub-funds. Since the substantial bulk of the claims payments are further out than 7-10 years and the insurers would be amortizing the risk, that should be an overall investment-grade risk for the third-party investors. Then the fund could reinsure the bond insurers on an excess-of-loss basis (either their entire portfolio or just the structured finance portion). That would, I think, allow the AAA ratings to be maintained (without capital infusions).
The other alternative is just to downgrade the bond insurers that are on negative watch to AA (let's not argue about the ultimate rating level) and let the policy beneficiaries decide whether to get secondary market insurance or just take the marks. Then we'd find out whether or not there's a business model at the AA level (or wherever they wind up).
Whatever happens, bond insurance will never be the same again. They were selling ratings stability even more than default protection. It will take time to see where this all goes.
OT - Barry Ritholz posted an interesting article on the Fed stock valuation model (10yr T-bill yield = S&P 500 E/P), noting that the formula relies upon consensus earning estimations (which can be wrong, typically at the worst times, at the end of Bull markets). He then goes on to point out that if corporate earnings revert to historical means the S&P 500 would have to fall over 25% just to reach the average and then under shoot.
The rumor floated that Buffet, of all people, would invest in those unbelievably high and teetering crap-piles, was the most preoposterous thing I've ever heard.
I'll bet my sack (of money) that that rumor was floated by monoline shareholders in a classic pump and dump to chumps.
my pt is that Buffett should quelch any and all rumors immediately relating to him buying out individual companies. it would be the decent thing to do to stop the pump and dump scam artists.
idoc, I see your point, but I can see how that would work against him in the long run. Every time there is a rumor like that, he's got to confirm or deny it within a short period?
I wouldn't submit myself to that standard and neither would you, even though it would be nice of us to do so.
You'd think journalists who get burned on these "hot tips" would catch wise after a while, but they never seem to.
The U.S.A. has been drinking koolaide on stock valuations since the mid 1990s. There is NO way boomers can make up for a lack of savings by investing in over valued stocks. Ritholtz and all of the financial media over ten years late in making their bearish calls. Wall street sold the boomers roach motels.
Gary - at this juncture, a reasonable thing for Buffett to do is say, look, there are going to be rumors about me buying, because Im a savior kind of guy, and because Ive got bank, but I am not going to comment on any of them, and the above facts do not make any of them more likely, just because someone says so. Then each one that doesnt come through would be another crying wolf episode, and eventually, no one would care about the rumors. He cant very well go commenting on each and every one. He'd be out of breath.
I didn't understand how Warburgh could put that much money into MBIA before believing that ALL ratings agencies would maintain ratings on ALL major monolines.
It never was just about MBIA. If the industry goes, MBIA goes.
I still don't understand why Fitch is always out front and Moody's and S&P so far behind. But it only takes one agency to bring down the industry.
Others on this board have consistently speculated that MBIA or Ambac would survive, even if the industry didn't. We'll see.
My money's on some sort of federal gubbermint bailout of the insurers. The Bush Administration, no doubt already in private panic mode over the economy and its likely impact on the November elections, will not let this other shoe drop without a fight. The ramifications of letting everything fall apart are just too serious... there's too many campaign contributions that can go poof if nothing is done to stave off the inevitable until after the elections. And the Dems will have to get on board, too. Nobody will want to be seen as hampering efforts to save things.
The index has fallen 13 points in the past month, "an unsettling sign," ABC News said, noting a 13-point drop before the 1990 recession and a 14-point drop before the 2001 recessio
Ew. I live in the San Fernando Valley and 10% of the houses in my neighborhood seem to be for sale at bubble prices with no one willing to admit any market depreciation even though they've been sitting there for 4-6 months.
Somehow I'm not surprised. Thank goodness I bought many years ago.
omg - that "sleep on it" video is truly scary. It's like the worst of reality tv with the worst of the housing market all rolled into one useless show.
I love the Cheesecake Factory. My wife and I go there once or twice a year. Try the Skirt Steak next time. Also, try the baked macaroni for an appetizer.
"my pt is that Buffett should quelch any and all rumors immediately relating to him buying out individual companies. it would be the decent thing to do to stop the pump and dump scam artists."
Buffett likely wants to keep his options open with regards to buying another company -- after all, at the right price an investment makes sense.
But when he says he's NOT going to invest then that is a huge statement.
The established monolines are dead and Buffett (Berkshire) will end up becoming the principle player, collecting above average rates, and selecting from the best deals.
Nice week so far for shorts - I'm almost back to where I was at the beginning of last week (would be higher if I wasn't such an idiot, but as they say, bear markets are hell for bulls and bears).
Don't get complacent - bulls always have one surprise or another to rally the market.
DIS report was very positive regarding consumer, so tomorrow could be a bit of a rally. Also BHP Billiton upped their offer for Rio Tinto.
Productivity and Costs economic news tomorrow. Not sure how market sensitive this will be..
News and sentiment is trending bearish again, which is annoying if you are a bear, sets up these counter trend rallies too easily.
Also, everyone is looking for a retest and possible bounce off those, so if we hit the lows again (this week if CSCO tanks and jobless claims come in hot again), I'm taking a some off this time (learned my lesson), and wait for a confirm that we're breaking lower.
I wish I could convey to all those folks, especially Democrats, that it really doesn't matter who they vote for today. The differences, in the face of the cold equations in the economy, are really infinitesimal. Vote for whoever you please with a free conscience... it don't matter anyway.
Feb. 5 (Bloomberg) -- XL Capital Ltd., the Bermuda-based business insurer, said it lost $1.06 billion in the fourth quarter as it wrote down the value of investments including a stake in bond insurer Security Capital Assurance Ltd.
he record $3.1 trillion budget proposed by President Bush on Monday would produce eyepopping federal deficits, despite his attempts to impose politically wrenching curbs on Medicare and eliminate scores of popular domestic programs.
The Pentagon would receive a $36 billion, 8 percent boost for the 2009 budget year beginning Oct. 1, even as programs aimed at the poor would be cut back or eliminated. Half of domestic Cabinet departments would see their budgets cut outright.
Bush's overall request for defense spending in 2009 is $588.3 billion, compared with $670 billion this year. But it includes only $70 billion for initial war costs in Iraq and Afghanistan, $119 billion less than has been projected for this year. That $70 billion is almost certain to increase.
Funny how the national deficit is equal to the amount of writedowns on wall street!
"Chairman Michael Esposito resigned from XL's board in December to focus on his duties as chairman of Security Capital, which is 46 percent owned by XL."
Hmmm, I better secure my supply of cigars - though I might switch to Avo's - the way Conjure has been nailing calls lately I don't think I can outbid him in the Macanudo market!
Anyone think Buffetts $33 Billion in unobservable goodwill accounting will be an issue as level 3 assets are marked-to-market? Reinsurance is the next axe to fall, just wait a few weeks!
WASHINGTON (Reuters) - The chances of the United States avoiding a recession appear to be growing dimmer by the day, and any contraction in the economy will likely last longer and be more severe than other downturns in the past 20 years.
Recent reports have shown the housing market slump and rising defaults in the mortgage market are now taking their toll on job growth and on the manufacturing and services sector.
But heavy consumer debt, a growing federal budget gap, and rising prices could make any recession worse than Americans have experienced over the past two decades.
"If we do go into recession, it's going to be more severe and long-lasting than the last one," said Jeffrey Frankel, a Harvard professor and member of the private-sector panel that dates U.S. recessions.
And when/to whom did they spin out the rest of that dog SCA? Man, this whole structured finance market has been nothing but an organized criminal racket for the past few years.
Can someone spell out how the dominos are going to fall? I didn't get the schedule for the meltdown.
No AAA ratings for these insurers/financial guarantors
Many institutional investors are required by internal mandates to hold AAA (or am I confusing the rating of these insurers for the ratings on the CDOs they insure? or does the loss of AAA for one lead to the loss of AAA for the other)
Forced sales of these assets into a market that has no liquidity for these assets. Assets sold at fire sale prices
(do I have it right so far? what then? losses? write-downs that affect corporate earnings? what what what?)
As with any forward looking statement, I may be wrong in this, but it's my read that there will be no bailout of the monoline insurers.
Let's suppose that their capital needs were on the order of $5B. Given the largesse of the TAF, it's not inconceivable that Dinallo's attempted consortium would have taken the opportunity to get an erstwhile cash cow in a sheltered pasture. That they presently balk indicates that the figure is not knowably in that range.
That Fitch deems them questionably AAA "regardless of capital levels" implies that Fitch believes no realistic capitalization can prevent their failure. While certainly a cool $2.4T would absolutely ensure their future solvency, the thought of such a sum is pure fantasy. It is thoroughly unlikely that even $20B could be found outside of a bailout. As a stretch, I'll infer that Fitch sees their capital requirements short by at least several tens of billions.
Bill Ackman estimated the capital requirements of Ambac and MBIA to be about $24B, and the total losses due to downgrades to be on the order of $200B.
We've already got $150B in direct stimulus in the pipeline in an election year: that's good politics, despite it's dubious economic benefit. Adding an unknowable liability that lies somewhere between $25B and $200B to an abstruse financial institution isn't going to sell well with your average voter.
It's likely to be less expensive and quieter to allow the monolines to be downgraded and then use the Fed, Treasury, and FDIC to pick up the pieces. It will be messier, but it's politically easy, and will allow the larger, stronger institutions to consolidate.
That's just a guess however. What do you guys think?
I wonder about the fire sale - if it would be as large as speculated - but wouldn't banks need to increase reserve requirements for riskier (lower rated assets) at the most inopportune moment?
I wonder if part of the stall is to allow institutions with asset rating mandates to come up with bypass protocols...to slow down the burn rate of the fire sale.
I don't get it, CNBC says "Don't Worry--Recessions Can Be Good Time to Invest"
And in another story, "The most likely path for the US economy is sluggish growth for at least half a year before a gradual recovery begins, Richmond Federal Reserve Bank President Jeffrey Lacker said, and it may not need any more interest rate cuts from the Fed."
Actually I'm not sure a complete fire sale is necessary. A bit of a rushed disgourging by current holders, who by law or other mandate cannot hold them with lower ratings.
Of course I think RE is gonna go poof first, which will light a fuse attached to one nasty bomb.
Happy face stickers are great and soothing to wear, but it's the application procedure from Conjure that is problematic. With the dog ball fuzz and bits of flesh still attached.....
Cobradriver writes:
MAB | 02.05.08 - 4:32 pm |
We are truly not desperate yet. I have been looking on Racingjunk.com for a good used race trailer. People still want damn near new prices for used stuff.When I start seeing 24-28' trailers for 3-4k in good shape then I will buy...No rush right now.
Cobra - I'm using a similar barometer im my search for an airplane, however the small aircraft market has shown some weakness in the last couple months (more listings, new language in listings.. "motivated seller", "make an offer" etc)
Not surprisingly, they IPO'd that dog's breakfast SCA in August 2006 at the peak. Value? $1.5 billion. Eye those disclosures carefully, plaintiff firms . . . they knew this was coming.
When is the Fed or the comptroller of the currency going to step in and force all the banks in the country to cut their dividends by 99%. Not that such a step would cure the problem, but it would be a good first step to restoring some capital to the banking system. Paying out dividends in this environement seems almost crimminally irresponsible. Heck even if you are running a very well capitalized, boring little bank that managed to sidestep every pile of dog shit on wall st. it still would make sense to have that cash available to scoop up the wreckage later. Not that I think there are many of those banks with no crap on their shoes, but maybe there are one or two hiding out in the hinterlands.
I hope you all are taking this time to upgrade your daytrade stations, to improve upon your ability to take on new risks after this next period of economic adjustments; you will ned to be faster than you have been, and wake up and smell the coffee, before it is brewed:
bit is a simple unit of information that is represented by a "1" or a "0" in a conventional electronic computer.
A qubit can also represent a "1" or a "0" but crucially can be both at the same time - known as a superposition.
This allows a quantum computer to work through many problems and arrive at their solutions simultaneously.
"It is like massively parallel processing but in one piece of hardware," said Professor Ekert.
Pat, makes sense to me, your read of the politics.
Sue, nice Lenten missive.
Ellen, I agree with your thoughts; how I frame it in my mind is, 'Whomever gets elected will have his hands tied by cratering tax receipts, cratering interest in the purchase of U.S. Treasuries, and lengthening unemployment rolls.
rich writes:
I still don't understand why Fitch is always out front and Moody's and S&P so far behind.
Sweet revenge for having been shut-out of so many of the tasty CDO deals during the gravy years, when the insurers made the raters race-to-the-bottom on price and ratings, and Fitch tried (well, minimally tried) to hold the line, and got cut out of most good deals.
Can't anyone come up with a reasonable bribe for these leaches? The money was certainly good while Prince danced, but now they turn high brow on us. SARCASM OFF!
Too much doom and gloom on financial blogs in general. It has always been thus. Are they right once in a while - sure - just like Robert Prechter has been right a few times in the last 25 years or so. IMO - the only people worth listening to anywhere are those who are sometimes bullish - sometimes bearish. Unfortunately - most people like that aren't "talking heads" or bloggers.
Buffett has never been mentioned seriously in connection with buying all or part of a troubled monoline. But Wilbur Ross has been (especially WRT Ambac). It will be interesting to see what he does.
CD report - best deals this week in long term callable CDs are 20 years at 5.5-5.75% - call protection of 1-2 years. I am not sure anyone is interested in what's out there in the fixed income market for the average retail investor - as opposed to vulture fund investing in CDOs - but - if anyone is - I'll keep posting when I see anything interesting. Roby
Barnstormers and Trade-A-Plane. I am following airpark properties in Hidden River and Pine Shadows. Between 1999/2000 and now prices ran up almost 10x. Yep,thats sustainable. They ran everyone out with the build requirements. Ultra fancy homes...Christ I just want a hanger with a apartment inside.
These airparks will be CRUSHED. I can't wait!!! Sorry.
"They've had 4000 years to figure out how to make low expectations tasty."
Heeeeey. Some of their foood is tasty. Be nice:)
Correct me if I'm wrong but all this noise by the rating agencies sound like a bunch of geese at a park struting around flapping their wings and saying "I swear I'm Going to DO IT! I will downgrade you...(the following week)..I'm REAAALLLLY serious now". (next week) I'm super serious... blah blah blah. When will they pull the trigger? All three seem to be waiting on the other to do it first. Of the three who's has the most clout Big brother style?
"WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission's review of the credit rating agencies is in process and agency staff may make some recommendations on how to improve disclosure and conflicts of interest as early as June or July, a senior SEC official said on Tuesday."
Much like the rating agency confessions of late...I mean reviews, the SEC now moves when the barn door has been open and the livestock is gone. Unfrigging real!
When they say 513 TRILLION dollars in notional value, doesn't the term notional require an actual party able to pay when the bet goes bad?
For those who might remember that in late Aug I called the crash start due to the daily DJIA trading pattern, I'll drop the bomb today as it's now certain the market will crash.
The monthly DJIA has established a reversal pattern that has been seen never by me but is the highest probability reversal pattern I've ever discovered. The low, 12700's, was not violated. The bounce in January tagged the low and will now descend into the low 11's and then the 9's and then the 7's. This market is dead, irrespective of anything the governments may attempt to do. The pattern will not fail. End game occurred on December 31.
This marks the end of the boomer's retirement dreams. The next bubble, the convalescent homes, look less inviting as most boomers will be busted or lower and lower middle class. End game surprise to those who were indulgent early, eschewed the work ethic of their parents, lived to the hilt and will now experience old age the way they could never have imagined. Surprise!
Spectre - Much like the rating agency confessions of late...I mean reviews, the SEC now moves when the barn door has been open and the livestock is gone. Unfrigging real!
Spectre - just to play devil's advocate, the SEC is looking in multiple directions at the same time. It can be VERY difficult to know where the next crisis will come from. If it is looking at X bc that's where they think future issues will be and the crisis comes from Y, then they've missed it. But I know that they are very dedicated. Just underfunded...
Big, while I applaud their better late than never actions, I must say the SEC makes the Slowskys of Comcast commercial fame look like jackrabbits.
In simple terms we are toast. As many of us thought, we have had our high inflation period while no one noticed. It came in the form of asset inflation instead of the good old fashioned wage inflation. Global wage arbitrage took care of any wage inflation. We bought the wealth through no work at all BS hook, line and sinker. Now the very thingsa that boomers count on for income in their retirement years are depreciating.
This bears repeating:
he he
These guys are definitely in cover-our-butt mode.
Yeh, but their arses are a mile wide, and they've so far only found a g string in their dresser.
I think at this point the ratings agencies are facing serious liabilities, both civil and criminal, and are getting religion.
And they're still not getting it fast enough, IMO.
Time for another emergency rate cut....
BAIL OUT COMING.
how come they held RMBS? it is just unbelievable
OT
Goldman halves principal strategies group in move
NEW YORK, Jan 31 (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) moved roughly half its principal strategies trading assets and investors -- a group that has proved wildly successful betting the bank's own capital -- off Goldman's books and into its asset management division, a recent filing shows.
Thats where the level 3 assets went to. Poor investors or is it bag holders.
Credit rating agency Standard & Poor's said Tuesday it is requesting comments from mortgage and investment market participants on its proposal to have issuers provide more detailed information on mortgage-backed securities.
S&P is proposing a plan that would require any issuer of mortgage-backed securities to provide more detailed information on a loan-by-loan basis so the rating agency can better judge the security.
Bob_in_MA, I think this is a poke in the eye - with a sharp stick - for all these bank bailout plans we've been reading about. "Regardless of the ultimate capital level" seems to mean it doesn't matter how much good money they throw after bad - AAA just isn't appropriate.
Best Wishes.
MARKIT roundup:
ABX - not much happening
CMBX - 15 new highs, marked deterioration in rest
LCDX - spreads blowing out
Bob, my take exactly. The verbiage was full of weasel words. They're scared to actually cut, but do not want to be pilloried for not saying anything.
--
Fitch cut to under-perform.
Jas
POSSIBLE BAIL OUTS
3 GETS MY VOTE for what happens.
What do you guys think of mrkt reaction to bond insurers being taken over by feds?
They weren't AAA to begin with, amazing. Did Fitches vision suddenly change.
If you're a bank with assets backed by these monolines it seems like a quick default would at least put you at the front of the line.
Sounds like "first to worst" modeling will be in vogue.
Banish the rating agencies and make this all a more transparent game by allowing The SEC to join with FTC to oversee the valuation and ratings of public securities.
Nothing was learned with Enron or the dotcom failures and now The Subprime Flu and more corruption and a lack of disclosure by rating agencies and corporations. The public needs confidence in regard to securities disclosure and valuation.
The Bush era is over and this recession will linger and there will need to be restructuring ASAP to make up for the massive amount of destruction within financial markets, which is related to a lack of regulation and enforcement. Rating agencies obviously serve no value but the public interest regarding securities must become a serious issue!
Where's Cobradriver? I might be able to afford that place in Florida sooner than 2010.
energyecon,
What's the LCDX?
CAKE (cheesecake factory) confirming weakening consumer. They just announced and missed on revs and eps...
This restaurant epitomizes the gorging consumer of the last several years imho. Who could possibly walk out of there feeling good about what (or how much) they ate?
From what I understand, the bailout will only cover Muni's. Everything else can still be written down. The banks involved can not afford to take losses and a lot of them dont have lots of capital to put up.
x-man
I vote to dump rating agencies!!!!! However, as we have seen, The DOL, FTC, SEC, DOJ and any other faction of this coup government or the next coup, will invent a new department which will be as corrupt as what we have now.
Maybe we should let the market destroy itself and then see what comes out of the ashes, as that may be better than the devil we know!
OT -- days like this -- market down, my SDS up -- really kill my already marginal productivity.
Rating agencies obviously serve no value but the public interest regarding securities must become a serious issue!
Anonymous | 02.05.08 - 4:30 pm
Jeez, you think the government can solve this problem? That's the last place I'd look.
Nothing is more corrupt.
What about all these "anonymous auctions" the Fed has been having to the tune of hundreds of billions? The banks bail out the monolines with the procedes from these auctions, see, no taxpayer bailout?
CAKE (cheesecake factory) confirming weakening consumer. They just announced and missed on revs and eps...
This restaurant epitomizes the gorging consumer of the last several years imho. Who could possibly walk out of there feeling good about what (or how much) they ate?
I tell you, there's no recession at PF Chang's. I have one outside and the only time I could get some food there this weekend was during the Superbowl. Other restaurants nearby were empty the whole weekend.
They should build one of those things on every street corner.
Economic problems = solved
I don't the government can solve this problem. I think they will try though.
Anybody know what kind of channels a fed takeover would take? Would legislation be necessary?
JS the banks have been using the TAF auctions to meet reserve requirements.
Gov't bailout of these crappy monolines, here we come! Welcome to Japan, care for a side order to deflation to go with your negative real rates?
Man O Man, are the rating agencies going to have their arses sued off..... utter and complete incompetence and negligence.
how much does the market tank they day they do it?
Rating agencies were out with the gang for a bachelor party. Met up with the ex-girlfriend in a bar. Ended up drinking all night and the bong water in the early am. Wakes up in bed with the ex. Now in scramble mode to explain the dalliance that went too far. Bloodshot eyes try to focus on the cell phone ringing in his pants pocket. What to do........
"They should build one of those things on every street corner."
egg-drop soup kitchen, coming soon to a corner near you?
So who rates the ratings agencies?
(Apologies to Juvenal.)
"So who rates the ratings agencies?"
Aren't they vetted by the Feds?
The NRSROs are regulated by the SEC...
"egg-drop soup kitchen, coming soon to a corner near you?"
Hot'n sour rocks! In times of lowered expectations, Chinese is the way to go. They've had 4000 years to figure out how to make low expectations tasty.
http://en.wikipedia.org/wiki/Credit_rating_agency
Bob_in_MA
Markit Homepage
read on junk bond spreads. very helpful.
"What to do........
Bruce | 02.05.08 - 4:45 pm "
Let ring through to voice mail of course. Then make up an elaborate story even the most cynical politician would envy.
Then posture turn the tables and blame it on her!
MAB | 02.05.08 - 4:32 pm |
I don't know what the hell is going on in my area but tons of for sale signs disappeared the last few days. Nothing is selling. I noticed NAR is trying to clean up the listings(old/duplicate) and they have dropped a bunch. The telltale is homes under 100k. We rocketed past 475 from 400 in about 3 weeks. Still hardly anything sells. Methinks its gonna be a long,hot,summer in Florida.
We are truly not desperate yet. I have been looking on Racingjunk.com for a good used race trailer. People still want damn near new prices for used stuff.When I start seeing 24-28' trailers for 3-4k in good shape then I will buy...No rush right now.
Chris
Bloodshot eyes try to focus on the cell phone ringing in his pants pocket. What to do........
Bruce
Fortunately, nothing like that has happened to me. But I've come close, as such the story gives me the chills. Shudder
Larry Kudlow says we might be going into a recession.
3:46PM CST on Closing Bell; says this to MoneyHoney.
Is this capitulation?! We are not down enough for him to be proclaiming such.
Buffett will not invest in monolines:
Buffett Won't Invest in Outside Bond Insurers-Fox
| Reuters
"...seems to mean it doesn't matter how much good money they throw after bad - AAA just isn't appropriate."
How likely is it that the rating agencies are waiting for the bailout du jour to be announced so that they can make their downgrade? They get to C their A's by saying "hey we downgraded them" meanwhile its a moot point because the monolines have been nationalized or quasi-nationalized. I'm willing to be my laundry money that a gov't takeover of the monolines is precisely the event for which advanced negotiations are now underway.
*bet my laundry money, that is.
"regardless of their ultimate capital levels"
Yes, there's an interesting trade-off between capital and earnings: if you have enough capital to cover the new stress-case losses at the AAA level, you have too much to earn a return on equity in the AAA range. (The ratings criteria require a reasonable ROE.)
That said, there are other ways to cover the losses. Reinsurance involves reinsurer exposure, expense and cherry-picking; also, there aren't enough AAA reinsurers to accept the required cessions. So that's probably not a good option.
I think wraps of wraps (especially by FSA or Assured, the two bond insurers that have stable AAA ratings from all the agencies and relatively little exposure to problem assets) are a good possibility on a deal-by-deal basis. Such wraps are available in the secondary market; the insurers will quote a rate for insuring bonds wrapped by another insurer. Subject to their limits on double-default risk of the underlying bond and the primary insurer, which will probably be a constraining factor in the current environment.
Another possibility is one I've mentioned before: a P&C-type fund for bond insurers. One sub-fund (leg) for each bond insurer, and probably a relatively small overall fund available to all of them. Funded initially by third-party cash, replaced over (say) 7-10 years by a surcharge on the worldwide premiums of the bond insurers, adjusted for their respective sub-funds. Since the substantial bulk of the claims payments are further out than 7-10 years and the insurers would be amortizing the risk, that should be an overall investment-grade risk for the third-party investors. Then the fund could reinsure the bond insurers on an excess-of-loss basis (either their entire portfolio or just the structured finance portion). That would, I think, allow the AAA ratings to be maintained (without capital infusions).
The other alternative is just to downgrade the bond insurers that are on negative watch to AA (let's not argue about the ultimate rating level) and let the policy beneficiaries decide whether to get secondary market insurance or just take the marks. Then we'd find out whether or not there's a business model at the AA level (or wherever they wind up).
Whatever happens, bond insurance will never be the same again. They were selling ratings stability even more than default protection. It will take time to see where this all goes.
Kudlow capitulation - closing out all short positions!!!! Time to go long!
Buffett will not invest in monolines
now why the hell can't he come out and say that about CFC, HOV and every other company he's been rumored to buy? perhaps he has own monoline?
buffett rumors don't come from buffett
Cobradriver,
Thanks for the update. Prices are still sticky down it seems.
I'm with you. I won't be buying until their is blood on the streets and I can get a serious bargain. If it take a year or two, so be it.
My brother lived in Houston during the oil patch bust. I remember how low things actually went. Thirty cents on the dollar if your're patient.
They should be redeclared as AAA-insolvent. That means treat it as AAA if you want, but everyone knows it's insolvent.
OT - Barry Ritholz posted an interesting article on the Fed stock valuation model (10yr T-bill yield = S&P 500 E/P), noting that the formula relies upon consensus earning estimations (which can be wrong, typically at the worst times, at the end of Bull markets). He then goes on to point out that if corporate earnings revert to historical means the S&P 500 would have to fall over 25% just to reach the average and then under shoot.
I hate reversion to the mean..
The Big Picture
The rumor floated that Buffet, of all people, would invest in those unbelievably high and teetering crap-piles, was the most preoposterous thing I've ever heard.
I'll bet my sack (of money) that that rumor was floated by monoline shareholders in a classic pump and dump to chumps.
Gary
my pt is that Buffett should quelch any and all rumors immediately relating to him buying out individual companies. it would be the decent thing to do to stop the pump and dump scam artists.
OT
house prices in San Fernando Valley down 18% in 6 months.
that's annualized -36% peeps.
MODEL THAT
Just in case anyone is interested - this is a 2003 Report produced by the SEC's Office of Compliance Inspections and Examinations concerning NRSROs.
http://www.sec.gov/news/studies/credratingreport0103.pdf
idoc, I see your point, but I can see how that would work against him in the long run. Every time there is a rumor like that, he's got to confirm or deny it within a short period?
I wouldn't submit myself to that standard and neither would you, even though it would be nice of us to do so.
You'd think journalists who get burned on these "hot tips" would catch wise after a while, but they never seem to.
Toyota Profit May Fall After Slowest Growth in a Year
http://www.bloomberg.com/apps/news?pid=20601080&sid=aacRQblAxHC4&refer=asia
The U.S.A. has been drinking koolaide on stock valuations since the mid 1990s. There is NO way boomers can make up for a lack of savings by investing in over valued stocks. Ritholtz and all of the financial media over ten years late in making their bearish calls. Wall street sold the boomers roach motels.
Boomer bust and pain city dead ahead.
Gary
no. i think if he did it one or two times it would crush the hedgies doin the squeezin enuf that they wouldn't dare do it again.
Gary - at this juncture, a reasonable thing for Buffett to do is say, look, there are going to be rumors about me buying, because Im a savior kind of guy, and because Ive got bank, but I am not going to comment on any of them, and the above facts do not make any of them more likely, just because someone says so. Then each one that doesnt come through would be another crying wolf episode, and eventually, no one would care about the rumors. He cant very well go commenting on each and every one. He'd be out of breath.
I didn't understand how Warburgh could put that much money into MBIA before believing that ALL ratings agencies would maintain ratings on ALL major monolines.
It never was just about MBIA. If the industry goes, MBIA goes.
I still don't understand why Fitch is always out front and Moody's and S&P so far behind. But it only takes one agency to bring down the industry.
Others on this board have consistently speculated that MBIA or Ambac would survive, even if the industry didn't. We'll see.
My money's on some sort of federal gubbermint bailout of the insurers. The Bush Administration, no doubt already in private panic mode over the economy and its likely impact on the November elections, will not let this other shoe drop without a fight. The ramifications of letting everything fall apart are just too serious... there's too many campaign contributions that can go poof if nothing is done to stave off the inevitable until after the elections. And the Dems will have to get on board, too. Nobody will want to be seen as hampering efforts to save things.
Consumer comfort gauge plunges to 14-year low
Consumer comfort gauge plunges to 14-year low - MarketWatch
The index has fallen 13 points in the past month, "an unsettling sign," ABC News said, noting a 13-point drop before the 1990 recession and a 14-point drop before the 2001 recessio
add warburg to the list of early VULTURES (now deceased)
BofA, Abudabi, et al
Carrion birds that eat poisoned vermin die painfully.
"unbelievably high and teetering crap-piles"
ha... wonderfully apt description.
DIS with a good report.
Interesting.
!!!CONJURE ALERT!!!
Conjure says, "Zero hour is almost upon us."
mp
my feeling too. but pls elaborate on your alert.
Regardless of capital levels.
BEAR MARKET HAIKU
vultures too clever
by half die convulsing in
the hot desert su
Conjure says, "Zero hour is almost upon us."
I haven't been keeping up, last I saw the Clock was at 11:59:30?
Moving company BK
Forbes.com File Not Found
Ew. I live in the San Fernando Valley and 10% of the houses in my neighborhood seem to be for sale at bubble prices with no one willing to admit any market depreciation even though they've been sitting there for 4-6 months.
Somehow I'm not surprised. Thank goodness I bought many years ago.
What happens if two rating agencies have MBIA at AAA while the other has it down a notch? Is the effective rate still AAA?
"vultures too clever
by half die convulsing in
the hot desert sun"
especially when what looks like
cool water on hot asphalt
turns out to be
green antifreeze
Where is Ken Fisher when you need him to remind us this is all NOTHING??
"Regardless of capital" = "can not be contained"
-- Hiding Out
tiny yield increase
exponential risk jump
why . . . why cdos?
crispy
the BK's are starting huh?
I wonder if Warburg or those SWFs have ever read a chart in their lives?
Teach 'em not to mess with falling knives.
"What do you guys think of mrkt reaction to bond insurers being taken over by feds?"
Dunno. Will that make them AAA+, or not?
PS: My favorite is the 800 sqft., 1 bdrm, 1 bath house for 425k.
I mean really?!?! C'mon.
Lehman's Head of Fixed Income Unit, Nagioff, to Leave
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLUSJGwwfF74&refer=home
>
Lehman to visit confessional?
Hiding in NM writes:
"Regardless of capital" = "can not be contained"
And Conjure adds, "equals meltdown."
All, I found a crazy video - it's a trailer for a new tv series: "Sleep on it" (see bottom of posts). It's pretty funny.
Best to all.
WARBURG HAIKU
fear of missing out
on greed. seemed like a good i-
dea at the time
Moving company BK
foreclosed homeowners usually can only afford the volunteer pickup truck caravan to their next residence.
IDOC-
The weak hands are folding fast.
omg - that "sleep on it" video is truly scary. It's like the worst of reality tv with the worst of the housing market all rolled into one useless show.
Robbie,
I love the Cheesecake Factory. My wife and I go there once or twice a year. Try the Skirt Steak next time. Also, try the baked macaroni for an appetizer.
mp writes:
Hiding in NM writes:
"Regardless of capital" = "can not be contained"
And Conjure adds, "equals meltdown."
And Hiding in NM asks, does this lead to a "China Syndrome"?
-- Hiding Out
MAY cut ratings. What is Fitch now playing a Goomba doing a shake down.
Fitch: Real nice rating you got there. Be a shame if something were to impair it.
Cheers,
Dow off 370 points. Maybe the market is finally getting the message?
i just don't see how they grow the balls to make the cut. they know all hell will break loose. must know some solution around the corner.
Wow, Allied Van Lines BK?
That's not just any moving company. They've been around FOREVER. Since before the Great Depression, I believe.
Geoff, the music is great, and the RE agent is scary! I agree - the worst possible reality TV.
mp, I guess zero hour is almost here!
Best Wishes.
Ziggurat
u still think the dow is a forward looking indicator?
Wile E Coyote moment.
And Hiding in NM asks, does this lead to a "China Syndrome"?
Fitch is saying it may not matter how much capital they have. The market might burn right through it. Meltdown.
Conjure Bag says, "Die, Citigroup, die. Take me to zero."
downgrade on Feb. 15th (options expiry) after hours?
"This bears repeating"
I think you missed an apostrophe.
"my pt is that Buffett should quelch any and all rumors immediately relating to him buying out individual companies. it would be the decent thing to do to stop the pump and dump scam artists."
Buffett likely wants to keep his options open with regards to buying another company -- after all, at the right price an investment makes sense.
But when he says he's NOT going to invest then that is a huge statement.
The established monolines are dead and Buffett (Berkshire) will end up becoming the principle player, collecting above average rates, and selecting from the best deals.
I was going to stay up late for the election, however, if the world markets open bad this might be like the MLK Monday.
CalculatedRisk writes:
mp, I guess zero hour is almost here!
CR, I hope you and Tanta have your seat belts cinched and flash visors down.
A lot of bulls are about to take a ride on the express elevator to hell.
Repost from last thread:
Nice week so far for shorts - I'm almost back to where I was at the beginning of last week (would be higher if I wasn't such an idiot, but as they say, bear markets are hell for bulls and bears).
Don't get complacent - bulls always have one surprise or another to rally the market.
DIS report was very positive regarding consumer, so tomorrow could be a bit of a rally. Also BHP Billiton upped their offer for Rio Tinto.
Productivity and Costs economic news tomorrow. Not sure how market sensitive this will be..
News and sentiment is trending bearish again, which is annoying if you are a bear, sets up these counter trend rallies too easily.
Also, everyone is looking for a retest and possible bounce off those, so if we hit the lows again (this week if CSCO tanks and jobless claims come in hot again), I'm taking a some off this time (learned my lesson), and wait for a confirm that we're breaking lower.
This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.
Et tu Conjure?
-- Hiding Out
mp, see that Conjure bag gets his exercise . . . at this rate I worry about type-2 diabetes from gorging on balls.
I am completely addicted to this blog.
I imagine I feel like those listening to the radio before TV, sitting on the edge of my seat listening for the latest news from the front.
I am starting to fear that I might be able to just walk outside to hear artillery.
Hillary just conceded:
http://www.fembotinthewhitehouse.com/
"sleep on it" video - what, no curt gowdy play by play?
I wish I could convey to all those folks, especially Democrats, that it really doesn't matter who they vote for today. The differences, in the face of the cold equations in the economy, are really infinitesimal. Vote for whoever you please with a free conscience... it don't matter anyway.
Oh, and be nice to your fellow man.
Red Pill,
I hear helicopters;-}
I smell financial napalm...
Someday this war's gonna end...
Ellen, thanks for the useless platitudes. I feel so much better now.
In other news, has anyone thrown out a pithy "Lost another $724 Million to DiTech!" yet?
Today is Fat Tuesday. Tomorrow, Ash Wednesday. Will the financials eat the bread of sorrow and drink the water of repentance?
What will be given up this Lent?
Wealth?
That video makes me feel like a genius for not having cable. Self esteem baby !!!
Feb. 5 (Bloomberg) -- XL Capital Ltd., the Bermuda-based business insurer, said it lost $1.06 billion in the fourth quarter as it wrote down the value of investments including a stake in bond insurer Security Capital Assurance Ltd.
http://www.bloomberg.com/apps/news?pid=20601087&sid=atjqjGbEk51s&refer=home
What will be given up this Lent?
Sue | 02.05.08 - 5:57 pm | #
Lots of Helicopter fuel ?
I feel so much better now.
Your feeling better does not matter either, grasshopper.
Bush Budget Would Bring Record Deficits
Bush Budget Would Bring Record Deficits
he record $3.1 trillion budget proposed by President Bush on Monday would produce eyepopping federal deficits, despite his attempts to impose politically wrenching curbs on Medicare and eliminate scores of popular domestic programs.
The Pentagon would receive a $36 billion, 8 percent boost for the 2009 budget year beginning Oct. 1, even as programs aimed at the poor would be cut back or eliminated. Half of domestic Cabinet departments would see their budgets cut outright.
Bush's overall request for defense spending in 2009 is $588.3 billion, compared with $670 billion this year. But it includes only $70 billion for initial war costs in Iraq and Afghanistan, $119 billion less than has been projected for this year. That $70 billion is almost certain to increase.
tj,
Well at least it's all in the family:
"Chairman Michael Esposito resigned from XL's board in December to focus on his duties as chairman of Security Capital, which is 46 percent owned by XL."
Cheers
Hmmm, I better secure my supply of cigars - though I might switch to Avo's - the way Conjure has been nailing calls lately I don't think I can outbid him in the Macanudo market!
Anyone think Buffetts $33 Billion in unobservable goodwill accounting will be an issue as level 3 assets are marked-to-market? Reinsurance is the next axe to fall, just wait a few weeks!
Did someone steal Reuters koolaide?
U.S. recession could be worse than recent downturns
Tue Feb 5, 2008 5:38pm EST
By Joanne Morrison - Analysis
WASHINGTON (Reuters) - The chances of the United States avoiding a recession appear to be growing dimmer by the day, and any contraction in the economy will likely last longer and be more severe than other downturns in the past 20 years.
Recent reports have shown the housing market slump and rising defaults in the mortgage market are now taking their toll on job growth and on the manufacturing and services sector.
But heavy consumer debt, a growing federal budget gap, and rising prices could make any recession worse than Americans have experienced over the past two decades.
"If we do go into recession, it's going to be more severe and long-lasting than the last one," said Jeffrey Frankel, a Harvard professor and member of the private-sector panel that dates U.S. recessions.
[snip]
And when/to whom did they spin out the rest of that dog SCA? Man, this whole structured finance market has been nothing but an organized criminal racket for the past few years.
Can someone spell out how the dominos are going to fall? I didn't get the schedule for the meltdown.
Roubini's pretty much calling TEOTWAWKI:
RGE - The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster
As with any forward looking statement, I may be wrong in this, but it's my read that there will be no bailout of the monoline insurers.
Let's suppose that their capital needs were on the order of $5B. Given the largesse of the TAF, it's not inconceivable that Dinallo's attempted consortium would have taken the opportunity to get an erstwhile cash cow in a sheltered pasture. That they presently balk indicates that the figure is not knowably in that range.
That Fitch deems them questionably AAA "regardless of capital levels" implies that Fitch believes no realistic capitalization can prevent their failure. While certainly a cool $2.4T would absolutely ensure their future solvency, the thought of such a sum is pure fantasy. It is thoroughly unlikely that even $20B could be found outside of a bailout. As a stretch, I'll infer that Fitch sees their capital requirements short by at least several tens of billions.
Bill Ackman estimated the capital requirements of Ambac and MBIA to be about $24B, and the total losses due to downgrades to be on the order of $200B.
We've already got $150B in direct stimulus in the pipeline in an election year: that's good politics, despite it's dubious economic benefit. Adding an unknowable liability that lies somewhere between $25B and $200B to an abstruse financial institution isn't going to sell well with your average voter.
It's likely to be less expensive and quieter to allow the monolines to be downgraded and then use the Fed, Treasury, and FDIC to pick up the pieces. It will be messier, but it's politically easy, and will allow the larger, stronger institutions to consolidate.
That's just a guess however. What do you guys think?
q_t,
You have it right so far.
What's next is mark to market level 3 assets..no more mark to fantasy. What that does to balance sheets is not likely to be positive...so to speak.
Cheers,
Misean, query:
I wonder about the fire sale - if it would be as large as speculated - but wouldn't banks need to increase reserve requirements for riskier (lower rated assets) at the most inopportune moment?
I wonder if part of the stall is to allow institutions with asset rating mandates to come up with bypass protocols...to slow down the burn rate of the fire sale.
Is Roubini channeling Conjure?!
probably
I don't get it, CNBC says "Don't Worry--Recessions Can Be Good Time to Invest"
And in another story, "The most likely path for the US economy is sluggish growth for at least half a year before a gradual recovery begins, Richmond Federal Reserve Bank President Jeffrey Lacker said, and it may not need any more interest rate cuts from the Fed."
Too much doom and gloom at CR?
energy,
Actually I'm not sure a complete fire sale is necessary. A bit of a rushed disgourging by current holders, who by law or other mandate cannot hold them with lower ratings.
Of course I think RE is gonna go poof first, which will light a fuse attached to one nasty bomb.
Cheers,
Paul, with the house fully engulfed in flames, CNBC would be telling us now was a good time to buy furniture.
Too much doom and gloom at CR?
Paul | 02.05.08 - 6:23 pm |
Conjure says, "Paul, would you like a happy face sticker?"
mp - Yes please!
Can I have one with bear fangs?
Paul-
During the .com meltdown CNBC's (bubble vision) rating drop 40%, they are doing anything prevent that again.
Actually, I was just serving up a nice fat CNBC hanging curve ball for y'all to bash out of the park.
I need an editor for my shitty posts.
Happy face stickers are great and soothing to wear, but it's the application procedure from Conjure that is problematic. With the dog ball fuzz and bits of flesh still attached.....
"Don't Worry--Recessions Can Be Good Time to Invest"
Don't Worry--Funerals can be good for family unity.
Don't Worry--Severe auto accidents can be great buying opportunities for new cars.
Don't Worry--A severe heart attack can be a good opportunity for changing ones diet.
BAH! CNBC---fffttt!
Cheers,
Cobradriver writes:
MAB | 02.05.08 - 4:32 pm |
We are truly not desperate yet. I have been looking on Racingjunk.com for a good used race trailer. People still want damn near new prices for used stuff.When I start seeing 24-28' trailers for 3-4k in good shape then I will buy...No rush right now.
Cobra - I'm using a similar barometer im my search for an airplane, however the small aircraft market has shown some weakness in the last couple months (more listings, new language in listings.. "motivated seller", "make an offer" etc)
Not surprisingly, they IPO'd that dog's breakfast SCA in August 2006 at the peak. Value? $1.5 billion. Eye those disclosures carefully, plaintiff firms . . . they knew this was coming.
IPO Home - Page Not Found
When is the Fed or the comptroller of the currency going to step in and force all the banks in the country to cut their dividends by 99%. Not that such a step would cure the problem, but it would be a good first step to restoring some capital to the banking system. Paying out dividends in this environement seems almost crimminally irresponsible. Heck even if you are running a very well capitalized, boring little bank that managed to sidestep every pile of dog shit on wall st. it still would make sense to have that cash available to scoop up the wreckage later. Not that I think there are many of those banks with no crap on their shoes, but maybe there are one or two hiding out in the hinterlands.
I hope you all are taking this time to upgrade your daytrade stations, to improve upon your ability to take on new risks after this next period of economic adjustments; you will ned to be faster than you have been, and wake up and smell the coffee, before it is brewed:
bit is a simple unit of information that is represented by a "1" or a "0" in a conventional electronic computer.
A qubit can also represent a "1" or a "0" but crucially can be both at the same time - known as a superposition.
This allows a quantum computer to work through many problems and arrive at their solutions simultaneously.
"It is like massively parallel processing but in one piece of hardware," said Professor Ekert.
Future directions in computing
http://www.tamilstar.com/news/publish/article_4317.shtml
ASX down 1.86%
Aussie Market not happy.
Lucky its a holiday here in NZ today. Time for a beer and Happy Birthday to Bob Marley RIP.
Super Conjure wednesday?
Carlomagno
can u post a link to the ENTIRE Roubini article?
Tavakoli calls monoline downgrade "done deal" and in passing calls the rating agencies "junk science".
http://tinyurl.com/29ptfr
Misean wrote:
"by law or other mandate cannot hold them with lower ratings.
Good grief, Misean! What's the point of buying all these politicians if they won't mandate our latest follies?
One rating for everyone, I say. It's the only way in a democracy.
idoc: I think you need to register to get the full thing.
Pat, makes sense to me, your read of the politics.
Sue, nice Lenten missive.
Ellen, I agree with your thoughts; how I frame it in my mind is, 'Whomever gets elected will have his hands tied by cratering tax receipts, cratering interest in the purchase of U.S. Treasuries, and lengthening unemployment rolls.
bruce -
roflol!
(please, somebody..anybody..make that mental image go away)
Pat- If you think that's all there is to it, and that there will be any discernable pieces to pick up, you are sadly mistaken.
Anonymous,
Your arguments are so detailed and persuasive that I find it impossible to respond to you without sarcasm.
Regards,
rich writes:
I still don't understand why Fitch is always out front and Moody's and S&P so far behind.
Sweet revenge for having been shut-out of so many of the tasty CDO deals during the gravy years, when the insurers made the raters race-to-the-bottom on price and ratings, and Fitch tried (well, minimally tried) to hold the line, and got cut out of most good deals.
The problem with this country is we don't manufacture anything. Can someone please start manufacturing Mortgage Pig and Conjure Bag t-shirts?
On a side note - I think conjure bag would like the movie "there will be blood", if he does movies.
Pat- Think global.
CR-
My first thought is that this is being widely telegraphed so as to allow for the potential hedging of risk within our financial institutions.
Can't anyone come up with a reasonable bribe for these leaches? The money was certainly good while Prince danced, but now they turn high brow on us. SARCASM OFF!
"Too much doom and gloom at CR?
Paul"
Too much doom and gloom on financial blogs in general. It has always been thus. Are they right once in a while - sure - just like Robert Prechter has been right a few times in the last 25 years or so. IMO - the only people worth listening to anywhere are those who are sometimes bullish - sometimes bearish. Unfortunately - most people like that aren't "talking heads" or bloggers.
Buffett has never been mentioned seriously in connection with buying all or part of a troubled monoline. But Wilbur Ross has been (especially WRT Ambac). It will be interesting to see what he does.
CD report - best deals this week in long term callable CDs are 20 years at 5.5-5.75% - call protection of 1-2 years. I am not sure anyone is interested in what's out there in the fixed income market for the average retail investor - as opposed to vulture fund investing in CDOs
- but - if anyone is - I'll keep posting when I see anything interesting. Roby
"Are they right once in a while - sure - just like Robert Prechter has been right a few times in the last 25 years or so. "
That's about comparable to Robyn's track record of having something interesting to add to a discussion.
robbie | 02.05.08 - 6:35 pm |
Barnstormers and Trade-A-Plane. I am following airpark properties in Hidden River and Pine Shadows. Between 1999/2000 and now prices ran up almost 10x. Yep,thats sustainable. They ran everyone out with the build requirements. Ultra fancy homes...Christ I just want a hanger with a apartment inside.
These airparks will be CRUSHED. I can't wait!!! Sorry.
Chris
"They've had 4000 years to figure out how to make low expectations tasty."
Heeeeey. Some of their foood is tasty. Be nice:)
Correct me if I'm wrong but all this noise by the rating agencies sound like a bunch of geese at a park struting around flapping their wings and saying "I swear I'm Going to DO IT! I will downgrade you...(the following week)..I'm REAAALLLLY serious now". (next week) I'm super serious... blah blah blah. When will they pull the trigger? All three seem to be waiting on the other to do it first. Of the three who's has the most clout Big brother style?
SEC means business-
"WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission's review of the credit rating agencies is in process and agency staff may make some recommendations on how to improve disclosure and conflicts of interest as early as June or July, a senior SEC official said on Tuesday."
SEC may recommend credit rater guidelines by July
| Reuters
Ah Gary - I bow to the wisdom of your messages in this thread - 11 in all. They were all mesmerizing - like this one:
"mp, see that Conjure bag gets his exercise . . . at this rate I worry about type-2 diabetes from gorging on balls."
I can see why you get annoyed when people write messages of lesser quality. Roby
rc "SEC means business"
SEC - Shrunken toothless tiger. Gets to the carcass after the vultures have left.
Much like the rating agency confessions of late...I mean reviews, the SEC now moves when the barn door has been open and the livestock is gone. Unfrigging real!
When they say 513 TRILLION dollars in notional value, doesn't the term notional require an actual party able to pay when the bet goes bad?
For those who might remember that in late Aug I called the crash start due to the daily DJIA trading pattern, I'll drop the bomb today as it's now certain the market will crash.
The monthly DJIA has established a reversal pattern that has been seen never by me but is the highest probability reversal pattern I've ever discovered. The low, 12700's, was not violated. The bounce in January tagged the low and will now descend into the low 11's and then the 9's and then the 7's. This market is dead, irrespective of anything the governments may attempt to do. The pattern will not fail. End game occurred on December 31.
This marks the end of the boomer's retirement dreams. The next bubble, the convalescent homes, look less inviting as most boomers will be busted or lower and lower middle class. End game surprise to those who were indulgent early, eschewed the work ethic of their parents, lived to the hilt and will now experience old age the way they could never have imagined. Surprise!
Spectre - Much like the rating agency confessions of late...I mean reviews, the SEC now moves when the barn door has been open and the livestock is gone. Unfrigging real!
Spectre - just to play devil's advocate, the SEC is looking in multiple directions at the same time. It can be VERY difficult to know where the next crisis will come from. If it is looking at X bc that's where they think future issues will be and the crisis comes from Y, then they've missed it. But I know that they are very dedicated. Just underfunded...
Big, while I applaud their better late than never actions, I must say the SEC makes the Slowskys of Comcast commercial fame look like jackrabbits.
In simple terms we are toast. As many of us thought, we have had our high inflation period while no one noticed. It came in the form of asset inflation instead of the good old fashioned wage inflation. Global wage arbitrage took care of any wage inflation. We bought the wealth through no work at all BS hook, line and sinker. Now the very thingsa that boomers count on for income in their retirement years are depreciating.
This is a classic deflation spiral.
OT: CR got a hat tip in Floyd Norris' column in today's NYT. Way to go CR!
I am completely addicted to this blog.
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