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Hah. First.
What a mess.
Don't they realize that the Ponzi scheme must fail and they can't stop it. Let an entity fail and the we'll know how much the paper they hold is worth in the market. It ain't pretty, but it's the only way out.
Was the SEC at the meeting since Cox had backed Bears statement about cash levels the day before. Way to regulate SEC.
It Is Tough to Value Bear, But It Had Better Sell Fast
Because the value is dropping by the millisecond.
When will the idiots let the discovery begin? It's the only thng that will end this misery.
wsf, Yes, the SEC was involved. From the article:
On a conference call at 7:30 p.m. Thursday, officials from the Securities and Exchange Commission and Bear disclosed to the Fed that Bear had lost far more of its liquidity that day than it had realized. A team of examiners from the Fed spent the night at Bear.
Best Wishes.
This event will catch the public attention in a way that nothing else in this whole mess has done so far. It is an Enron-scale event. It also will put an end to the too-big-to-fail illusion and that will be a major eye-opener.
I'm truely thankful that no one on WS has been injured during this melt down. I'm sure that Ben will help others in need and as a liberal I feel this is the best for the nation, I could never see anyone hurt in this short term problem. I now from listening to Fox, better times are just around the coner for me and my fellow workers.
I feel warm and fuzzy inside like the math that being used on WS just likr Enron and we wonder were all the accounts went?
jo6pac
The race to the bottom continues.
How come no one was 'surprised'?
jo6pac, you had a couple of drinks?
My favorite quote:
Mr. Cayne dialed in from Detroit, where he was playing in a bridge tournament, say people familiar with the matter.
If Bear Sterns is sold, then the value of crappy MBS they own should be calculated prior to sale, correct?
"the value of crappy MBS they own should be calculated prior to sale, correct?"
Yep... we should loan out the "Barney Frank 90" to them.
So far we're only hearing about residential mortgages and it's caused this panic and drain on the Fed's balance sheet. We still have option arms, commercial, car loans, credit cards and student loans to deal with. I think we're in deep doo.
Here's the problem with valuation.
A majority of Bear's client list is or will be defecting, taking large amounts of coin with them.
Bear Stearns' Key Employees will be jumping off this Titanic and landing jobs with rival firms, taking more clients and cash with them.
And finally, but probably most crucial, is counterparty risk. BSC has leprosy now, and no other investment bank, hedge fund or investor wants to catch the disease.
Maven,
I liked that quote to. it's like wtf, people familiar with the bridge tournament?
"Hazard writes:
jo6pac, you had a couple of drinks?"
Who hasn't tonight - unless he or she is running a 5k at 8 tomorrow morning (smile)? It's been a tough week.
I do agree with some stuff Paul said in the last thread though. It's better to think of what people can do to help themselves personally - and to think how we as citizens can help our country manage its way out of this mess - than to stand on the sidelines and cheer on destruction. The latter talk reminds me of people burning down their own cities in the US quite a few years ago - and people standing there applauding them. And where did those actions get those cheerleaders?
Anyway - I am glad tomorrow is Saturday. Roby
If BSC has about 28 days to assess the value of its portfolio and sell it (or whatever), is this a signal to the overall market about the extent of the systemic problems?
Could they use this to extrapolate?
Which bank is going to follow the Bear?
Although Lehman is more diversified than Bear, it has a similar investment profile, with huge holdings in mortgage-backed debt. Lehman sought to reassure the market when it said yesterday that it had secured a $2 billion (£1 billion) credit line with Paolo Tonucci, the banks global treasurer, calling it a strong signal from the market and our key bank relationships.
However, Chris Whalen, of the Wall Street consultancy Institutional Risk Analytics, said: This is going to go all the way up the chain. There is a risk that all broker dealers are going to become an endangered species if the credit crisis is not sorted out. If they cant fund themselves, they will have to shrink. All the other firms are in danger, too.
He said that should the US Federal Reserve, the US Treasury and the Securities and Exchange Commission not devise a broad rescue plan to address the credit turmoil on Wall Street this weekend, I would not be surprised to see an emergency bank holiday announced. That hasnt happened since Roosevelt. During the Depression, 75 years ago almost to the day, Franklin Roosevelt declared a four-day bank holiday, which stemmed a frantic run on banks. Mr Whalen added that should banks such as Lehman continue to be unable to sell the billions of dollars of mortgage-backed securities held, they were doomed. He said: Broker dealers have to be able to get rid of assets. If they are illiquid, they die.
Which bank is going to follow the Bear? - Times Online
"all the way up the chain" Uh-Oh
Hazard, thanks for the laugh
I am shocked, shocked!
Its a mystery to me as to why people think Bear can be valued in a weekend. Let's start with the realization that the firm is heavily levered: that is, its equity is a small part of its liabilities. In that case, relatively small fluctuations in the total value of the assets can wipe out the value of the equity. Put another way: its like a house with a 98% LTV mortgage. A slight difference in appraisal value wipes out the equity. So wouldn't it take more than a couple of weekend days to conduct that appraisal? Think about all those hard to value securities, the counterparty risk on failed-hedge fund CDS, the lack of transparency on CDS documents.
At the end of the day, if J.P. Morgan buys Bear, its probably because they have a serious amount of counterparty risk to the firm, and its better to sweep that risk under the rug for a cool billion.
Robyn, good point. But, it's the lack of transparency that keeps us frustrated, guessing and angry. Are we positioned right to be in a position to help or will be needing help?
Robyn:
This is a huge learning tool, truly huge.
Sat down with eldest kid this PM and talked about market drop. idoc had called the mid-PM drop about half hour before start (note, she's taking a "gifted" class in stock picking) and we watched numbers fly on CNBC.
Then went to site for 529 account and explained as I moved her college funds yet again to shelter what can given the limited options available.
Forget the spending mantra from DC and the markets, we're cutting back and saving as much as possible. What to do to help country? Clear your own decks first, then help with the others.
to all of the people bitching about this being an unjustified, save the rich, bailout:
do you have any comprehension of what would have happened if bear just fell over today? remember REFCO? imagine that x 1,000,000^2.
an orderly unwind of their derivatives (CDS and IR swaps!) and other positions is essential. allowing the PB clients to get out is also a big deal - although all of the smarter ones are probably long gone.
"to think how we as citizens can help our country manage its way out of this mess"
Stop spending borrowed money on crap you don't need would be a good place to start and that goes for our corrupt government as well.
FT.com | Willem Buiter's Maverecon |
"Asked early in the afternoon how his spirits were, he said, "I feel fine." He declined to answer further questions"
So he should feel fine his billions are now supported by jo6pak! Way ta go!
Which Bank is next: My opinion C.
The beauty of the American dream is that getting ahead is stepping on a few and its all legal.
Friggin' unbelievable. I had a sense a body would be floating. However, I didn't believe it would BSC.
On a conference call at 7:30 p.m. Thursday, officials from the Securities and Exchange Commission and Bear disclosed to the Fed that Bear had lost far more of its liquidity that day than it had realized.
Sorry, this sounds pretty fishy to me. How can smart and well paid ivy league employees of BSC get so blindsided? Don't they have people looking at this type of stuff 24/7/365? So the Risk Management people stayed home to watch American Idol repeats? I am sure that they say this one coming from a mile away and then called in the bailout monkeys at the very last minute.
Still no details of the $$$ amounts here. Why???
Also, NO 8-k was filed for this - WHY????
so what should one do with a custody account at Bear that is full of short term treasuries and long term puts on the xlf and some other financials...
only risk seems to be the inability to trade for a day or 2 if liquidation,
Thoughts? Advice?
How can a company on the verge of collapse not file an 8-k?
Kudos to the Fed. Clearly they understand the importance of maintaining the finest "Financial Disaster Engineering" industry in the world.
Life would be far too dull if honest, competent people were in charge.
Plus when everybody think's your economy is a joke they stop asking you for handouts all the time.
"an orderly unwind of their derivatives (CDS and IR swaps!) and other positions is essential"
Bull - just let it happen. When traders make a millisecond million they dont sit back and say gez lets do that orderly and make a penny a day. Risk means reward. Risk also means eating the losses.
These folks invented the products if they are or could be toxic why infect the wallets of everybody.
I'm afraid I am embarrased at the bailout. What a shame.
crispy&cole writes:
How can a company on the verge of collapse not file an 8-k?
It will be explained when you file taxes in 2009.
"You now owe the US Treasury $56.00 to cover the unrealized losses of Treasury friends. Thanks and have a good day"
Rating agencies cut their credit ratings on Bear. Moody's rating is now three levels above junk
uhhhh... what do you have to do to get lowered to junk?
Given that BSC, the smallest of the "major" investment banks, has now been deemed to be too-big-to-fail, exactly what institutions are considered small-enough-to-fail?
In the most optimistic scenario, where BSC is the floor, that means every Wall St. IB, plus pretty much every national bank, plus most of the large hedge funds, plus most of the large private equity groups, are now considered too big to fail. And don't forget to throw in Fannie/ Freddie/ Ginnie/ FHA. Where is the Fed going to get the 10s of trillions needed to bail all of them out?
And if they decide to stop this madness and stop bailing out every company because they're afraid the poor market couldn't take the hit (what happened to the robust invisible hand?) then you can be sure that the companies in the back of the line will cry bloody murder. After all, if you bailed out BSC, how could you argue against bailing out Lehman?
And that's assuming the Fed stops at companies the size of BSC. I'm not too sure that limit is going to hold. Bernanke has not yet shown even one iota of resistance to meeting any demand placed on it by whining Wall Streeters. Anybody have a 10 mil portfolio that lost money last month? Line up, my friend. Uncle Ben will help you out because God knows the market couldn't take the shock of you going out of business.
---Said it will be case by case. Where do you draw the line?
---Bear has a big PB business, big derivs business (IR, CDS), big mtge trading business - if they fall over, PB clients lose access to their money and securities, and a multitude of counterparties take huge losses - and more dominoes would fall quickly.
---the private market will sort it out much more quickly.
---Don't know that. But this is the usual discount window collateral schedule: http://www.frbdiscountwindow.org/discountmargins.pdf
---Discount rate is currently 3.5%, no?
---why don't you read this: discount window faq: http://www.frbdiscountwindow.org/cfaq.cfm?hdrID=21&dtlID=
---see above
Better then the Bridge tournament guy is the FED Governor who was in Europe and out of contact. In the middle of all this tzouris he goes to Europe? Without a cellphone?? Unreal
Or did he go across the pond cause he's slicker then Spitzer, and turned off his cell
The state of Carlyle's fund made it clear that the street has started to eat its own. So we know Bear's fate. After all, WHO would buy Bear whole and take on all those VIEs, CDOs, CDSs, and whatever else might lie beneath? Right now, the street prefers small risk-free shreds of Bear meat.
"""an orderly unwind of their derivatives (CDS and IR swaps!) and other positions is essential"
Bull - just let it happen. When traders make a millisecond million they dont sit back and say gez lets do that orderly and make a penny a day. Risk means reward. Risk also means eating the losses.""
--I don't think you understand the scale of the fallout. This isn't just like some $1BN loss that would happen - it's much much bigger - and would likely bring down a number of otherwise safe companies.
the Fed is going to get their money back, i'm not really worried about that.
even if they lose 50%, it's a smaller loss than what would result from a total collapse.
I'm debt free, except for taxes and such and a lease payment on a car. Home is paid off and have an fairly good job.
Bank Holiday? Ugh! I went to the bank today and took out $5000 in cash. Just in case. Never thought that I would do anything like that. Makes me feel like and oakie.
There are alot of private equity companies desperate to sell some of their good holdings to hold off debt covenants that the mortgage equity implosion is triggering. I'm afraid many of these will be sold off to overseas investors as there's not enough money available here. It's not easy getting a good price when you're desperate.
Meanwhile, a few of the Big-4 firms are laying off PE group staff (who are unemployed for 20 minutes or so).
So...-
If the credit derivatives market is that essential to the nation's financial health, then it's too essential to be left in the hands of private companies. You can't have it both ways.
"You now owe the US Treasury $56.00 to cover the unrealized losses of Treasury friends. Thanks and have a good day"
LOL!!
"Makes me feel like and oakie."
Try euros. They get results faster than a platinum card.
One of the other reasons for doing this is to allow people to terminate swaps with Bear in an orderly fashion. That's not as easy as it might sound. It's not like moving a deposit to a different bank. Lots of arrangements have related swaps with different banks. A good portion of the swaps were to hedge some risk. Thus, you could get out without a loss, but have your risk back. It's similar to having your insurance company go under when you don't have a claim and haven't prepaid any premium.
That might not sound so bad, except maybe you are now unable to get homeowners or auto insurance at similar terms. Or worse, the other players know they can really put it to you because a lot of people are looking to move business at the same time. The insurance analogy is homeowners insurance after a hurricane. The remaining solvent insurers often raise rates just because they can.
I think forest fires and how we fight them may provide a good analogy here. There is no way to win fighting every little flare-up. You have to let some parts of the forest burn -- in fact you burn some areas on purpose -- while you try to contain the fire behind a defensible line. The Fed, by fighting all these "small fires", is going to exhaust itself pretty soon, and we'll lose the whole forest.
Anonymous - Hope that comment wasn't personal to me. My husband and I have zero debt - and we live well within our means. I do feel a little awkward telling people how they should or shouldn't live - but I did agree with today's op-ed piece in the WSJ which dealt with college students whining how bad things are when they have toys my husband and I never would have dreamed of having when we were young.
Homedad43 - I don't understand a course - high school - college - or otherwise in stock picking - gifted or not. My husband takes courses at our local university - and about 30% of the students there need remedial math when they start. They can't even do 8th grade algebra. I don't know why anyone has to know how to select investments until they have enough skills to go out and make a living where they wind up with enough dollars so they'll have something left over to invest.
Roby
"If the credit derivatives market is that essential to the nation's financial health, then it's too essential to be left in the hands of private companies. You can't have it both ways."
err, Bear is no more private than Citigroup, Bank of America, or GM.
The death of liberty of capitalism is met with thunderous aplause! The FED taking over private banks is a "good" thing? Sometimes you have to destroy something in order to rebuild something new. Is now the time?
The death of BSC puts me in mind of a star wars exchange, seeing the light if you will:
Anakin Skywalker: Luke, help me take this mask off.
Luke Skywalker: But you'll die.
Anakin Skywalker: Nothing can stop that now. Just for once, let me look on you with my own eyes.
And the truth is seen. Good luck all.
the Fed is going to get their money back, i'm not really worried about that.
But that's not the point. Whether the Fed gets their money back doesn't answer the question of why Bear shouldn't be forced to eat their losses. The Fed could also bail out every homeowner who can't make his payments and might lose his house by allowing him/her to borrow directly from the Fed at the overnight rate. But that doesn't happen because it creates a huge moral hazard. Why BSC shouldn't be held to the same standard is beyond me. And before you say it's too big to fail, please define exactly what is small enough to fail because it seems that every institution now is viewed as too big to fail. Every institution that is, except the individual who's going to be footing the bill while simultaneously being thrown out of his house.
Tom Servo | 03.14.08 - 11:14 pm
Exactly. 24 hours? WTF? The real reason they fessed up was 'cause they got caught.
So..., you are so... wrong: '...otherwise safe companies...' They are all toast. Just take a gander at the junk they have for assets, their leverage, and their off-balance sheet commitments.
Let 'em fail. The sooner that they do, the sooner that we can start anew.
anyone know which governor was unavailable?
err, Bear is no more private than Citigroup, Bank of America, or GM.
All of which should be allowed to fail, IMHO. See at least I'm a consistent populist with pitch fork in hand
Someone mentioned this earlier, but BSC is the smallest IB. If they are too big to fail, who is too small? After all, countrywide has 50,000 employees, and Indymac has tens of billions in deposits. Their failure would cause major market disruptions. Airlines (even sh*** ones like US Air) can't fail, because, you know, they are strategic, en stuff. Next thing you know, major retailers will be kept afloat to keep unemployment low. Just like Japan.
Don't forget these Bear gems. They're going to turn into classics...
Li'l White Lie
.
Cramer/Bear Meltdown
Lune - I may be wrong - but Bear is gone. The "bailout" today simply gives the markets time to sell/liquidate it and its assets in an orderly fashion. Roby
Everybody gettin' bailouts and shit - I want my goddamned pony!
Speed Racer:
I've been slowly accumulating cash for several weeks. Don't want to do it too overtly. Even passed along an email to some family after reading here tonight.
Robyn:
Was surprised at choice offered, too. She doesn't want too much help from me so I just offer some generalized comments on sectors. She popped on Abercrombie and Fitch, and I passed on an article about them. She has opened up more at home as she accesses the market game site; highly educational to see all of the red ink hemorraging from their accounts. One team has lost almost a full third in about 6 weeks. Math for these kids isn't the issue, it's awareness of the general society and life beyond My Chemical Romance (which I actually like), Britney and the Disney Channel.
Her lights are starting to go on. And that's why I'll live with such an odd option.
Red:
I think that it was Warsh. Something about a frat party.
Robyn-
You're probably correct. This is more a measure to allow people who have positions with Bear to get out reasonably intact. But I would go further. If people didn't factor in counterparty risk and liquidity risk and six-sigma event risk (which somehow happens every 5-10 years) into their models when they entered into these contracts, then they deserve to take a loss.
Let's be clear: all the above risks are well known to everyone from academics to the average Wall St. trader. The only reason people give short shrift to them in their models is because they expect the Fed to come riding to their rescue when one of those things happens. Only when they are really convinced that the Fed isn't going to be the insurer of last resort against those risks will they start pricing those risks accordingly. As they say, spare the rod, spoil the children.
The only reason people give short shrift to them in their models is because they expect the Fed to come riding to their rescue when one of those things happens.
You know, I just don't but that. But, I live in the midwest. What do I know?
Well Mortimer I would have bet anything Citi would go first. Oh well here is your dollar.
"why Bear shouldn't be forced to eat their losses"
Bear is eating their losses. Bear is gone.
There is no reason for every single Bear counterparty to have to eat Bear's losses too.
If the Fed did nothing, you would be complaining about that in a month too.
...And it would be much, much, much worse. Conceivably a nasty unwind from Bear could take out a lot of people, like Fannie and Freddie for example.
Why?
Perspective of their rather large PB/clearing business: Bear goes to BK today - more panic - repo/margin lines tightened yet again (especially for bear pb clients) - margin calls - but Bear PB clients have their assets stuck with Bear because of BK stay - can't meet margin calls - liquidations...
From the perspective of IR swap ctrprty - shitshow, plain and simple. and if you think the CDS world is big...[the IR swap world like 400 trillion notional big]
From the perspective of CDS counterparties - shitshow - lots of hedged risk comes back on the books - lots of writedowns - probably a few firms would become insolvent. what happens when firms lurch toward insolvency? liquidations...
What happens when this all happens? people need to dump assets. what do they dump first? safe stuff like treasuries and agency mbs. the treasury market is all trading pretty special now so that could use a little supply. but what happens when 10s of 10s of billions of additional agency mbs gets dumped? spreads up, prices down. who are the biggest holders of agency mbs? the agencies. who has thin capital cushions already? the agencies. who would also get hurt from private label mbs being dumped? the agencies. who likely has material exposures to Bear Stearns? the agencies. who would be really really expenisve to bail out? the agencies. what would happen if fannie or freddie went out?
total meyhem.
And that would be rather costly to fix.
I need to do a little DD, but I think The SEC can shut the market down, just like 9/11, at which point Bush will explain why we need to trade our dollars in for the new soon to be issued currency.
Debt Reckoning: U.S. Receives a Margin Call
http://online.wsj.com/article/SB120554473788438679.html?mod=hpp_us_whats_news
The U.S. is at the receiving end of a massive margin call: Across the economy, wary lenders are demanding that borrowers put up more collateral or sell assets to reduce debts
FA&AC
Come on now - settle down.
REBear - Margin Call - this is a good thing. How do we manage the painful transition to a more rational economy?
Anonymous wrote: Barton Biggs who now runs a $1.5B Traxis Partners hedge fund says we are in for a 1,000 point rally on the dow "next week or the week after"
Is this the same Barton Biggs that wrote, in his 2008-dated "Wealth War and Wisdom", page 323:
"If wars and apocalypses are recurring and inevitable, what should the person with wealth do? Experience suggests, that for in-country wealth, land and properties in your own country are the safest havens in a chaos-prone, vulnerable world...if you have a self-sufficient farm, you could hunker down on it and with luck wait out the disaster.
...
Supposing the tsunami...could be in the form of a derivatives-leverage driven, financial tsunami that bankrupts major record-keeping institutions". Was the sub-prime mortgage debacle of the summer of 2007 a warning? What would happen to all the connected dominoes if a major financial institution failed? Perhaps the barbarians next time come dressed as investment bankers, traders, and leveraged hedge fund managers."
The Bear Facts About the Fed's Priorities - Barrons.com
Simply put, it's Forsyth's article at Barron's Online.
REBear:
Tried to read the article, but they want me to sign up after the first two paragraphs. When I tried to, they wanted 4 months of paystubs and 3 years of back tax returns.
Take your word for it.
Re: How can a company on the verge of collapse not file an 8-k
It's called aiding and abetting in a criminal conspiracy! For those that want to Help America, do you DD and look at this type of crap and don't be so sure these Fed people are helping.
The illusion of a bailout is diretly related to antitrust laws, and The Fed should not be using discretionary powers to use taxpayer money to be bailing out a bank which competes with other banks! The Sherman and Clayton Acts prohibit this type of market manipulation, which will benifit a bigger bank that will gain a greater market share. Does anyone see this point??? They call this financial concentration, Bear is bailed out, then someone gets a great deal and has a bigger market share, and then you end up with fewer players that have more power. That's wrong, and Bear needs to melt away into the toilet and the other market players should not be abusing The Fed to gain market share.....this is very corrupt!
I an reminded of an essay by von Mises. Basically, prices are information transferred via markets on the relative value and scarcity of different goods and services. Consumers and producers use this info to adjust their consumption and production. When government interferes (thru subsidized home loans, abnormally low interest rates, etc), the system breaks down and information is lost. Then you have massive mal-investment (like in housing). This is an age old economic problem first discovered nearly a century ago by some very clever Austrians. Simply electing a vacuous pol is not going to cure this disease.
"When I tried to, they wanted 4 months of paystubs and 3 years of back tax returns."
Every Dow-Jones read is a rag and not worth the bother.
OK, I get it, everyone's pissed that Bear isnt being left for dead - although it will never walk again.
What does someone with a brokerage account do there?
I have no risk in my portfolio at all - but I have it with Bear Stearns. My broker says my securities are safe because they are mine, free and clear and Bear cannot pledge them - so even if BS goes down I'm fine as my brokerage account will be sent to another firm.
Anybody with knowledge and experience in this area care to share their views on this?
Essentially we need to ask the question, what if Dell Computer was going to fail, would we want The Fed to come in and give them money, so that they could retool and become more efficient, at taxpayer expense? As a society do we want free competition or socialized bailouts to corporation which evolve into inefficient and corrupt organizations? Where do taxpayers or The Fed draw a line between efficient markets and markets that need synthetic subsidation? Furthermore, if you as a customer dont like Dell computers, why should The Fed use your tax dollars to subjectively make discretionary judgement calls as to who gets bailed out and who doesnt -- maybe Apple should be bailed out, or Gateway? Maybe, this is a good step to socialize drugs and doctors?
The cascade started this week with Carlyle. I don't know what's likely to stop it. The Fed and the rest of the PPT will be busy all weekend for sure. There will be some surprises before the open Monday, if there is an open at all. We may get an imposed holiday until there's some well orchistrated plan in place.
The sh1t hiy the fan today.
Your certificates have serial numbers which are registered in your name. This was an issue and remains an issue with E*TRADE, but your certificatesare just held in storage
Robyn
Yes it's coming to drinking, my blue job could be history in the next few months but I live so close to the ground and have tools that I would need to earn a few $ here and there so that I will eat, not to mention gold bought 6 months ago for that very reason. No payments, do not own and as much I coundn't imgine moving from Calif. I would if need be. I say good luck to you all in the coming nightmare brought to you by Greenspane and friends.
I love this site and the commentors
jo6pac
The race to the bottom continues.
Fed Aiding - thanks - so it sounds like there's no risk just the possibility of being in limbo for a few days during account transition in a liquididation. Since I dont intend on trading these securities that should be ok.
Anonymous, about forty years ago I had an account with Dempsey-Tegeler & Co., a St. Louis firm. Some of you here may remember them.
Anyway, Dempsey went tits up overnight and it took months for them to finally get my account straightened out. Basically, my account was frozen and I could do nothing. It cost me some considerable coin, as it happened at the beginning of the bear market.
Although the laws and technology have changed, you can expect similar treatment when any of these clowns belly-up.
My advice, for what it's worth:
clear it out.
Thanks mp - thats what I figure the risk is - but we're basically talking about treasuries and some 09/10 puts - so I dont expect to trade. That being said, I may move all the stuff anyway. Thanks for your sharing your wisdom on this one.
The rewards of fame
Maybe a little OT but this is way too cool to ignore:
How Will Washington Finesse a Bailout? « naked capitalism
In the 2nd comment, last sentence:
"When a bank is folded, why do they give it a choice of who to merge into? The delicate sensibilities of the incompetent execs?
The solution is simple. When you nationalize a failed bank, make it very clear that their risk tolerances were not just "poor" but rather grossly incompetent and utterly contemptible. Bring in the exec team from the bank system who bothered to care about the quality of their loans. Ensure that system's Tanta-esque character has the needed pull."
Are you blushing yet?
He he!
Dell has no systemic risk potential. Bear does. that is a terrible analogy.
mp, what do you think of Vanguard?
I presume that they are safe as I think the only loans that they make are margin loans. Also, as far as I know, they do not have an investment arm, like Fidelity's venture capital arm.
As far as I can tell, other than margin loans, they are strictly a broker/middleman.
Anonymous
Please do your own DD on this really, but go here as a strating point and call your broker, look at your paperwork!
Holding Your Securities -- Get the Facts
Holding Your Securities
Get the Facts
As an individual investor, you have up to three choices when it comes to holding your securities:
\tPhysical Certificate The security is registered in your name on the issuer's books, and you receive an actual, hard copy stock or bond certificate representing your ownership of the security.
\t"Street Name" Registration The security is registered in the name of your brokerage firm on the issuer's books, and your brokerage firm holds the security for you in "book-entry" form. "Book-entry" simply means that you do not receive a certificate. Instead, your broker keeps a record in its books that you own that particular security.
\t"Direct" Registration The security is registered in your name on the issuer's books, and either the company or its transfer agent holds the security for you in book-entry form. The "Direct Registration System" (also known as "DRS") allows investors to transfer securities held this way. For more information about DRS, please see our Frequently Asked Questions below.
HomeDad -
I'll wager there's a few hedge fund managers out there who would take your kid's 30% haircut to this point in '08 in exchange for a clean balance sheet and consider themselves lucky. Did you say that was the 'gifted' stockpicker's class or the placebo group comprised of chimpanzees throwing darts at the listings?
Either way they're one up on the Fed which would rather prop up the house of cards a little longer (thus setting up a true market crash) than take a bitter pill short term...it would appear that they are now completely and irrevocably politicized - god help us.
So,
That was a simile, not an analogy
jg, I have not put money into a fund in more years than I care to remember. Also, Conjure hates funds. So, sorry, but you're asking the wrong guy.
Example: Realizing that the company would go out of business if it did not receive a significant amount of money to turn the company around, Iacocca approached the United States Congress in 1979 and asked for a loan guarantee. While it is sometimes said that Congress lent Chrysler the money, it, in fact, only guaranteed the loans. Most thought this was an unprecedented move, but Iacocca pointed to the government bail-outs of the airline and railroad industries, arguing that more jobs were at stake in Chrysler's possible demise. In the end, though the decision was controversial, Iacocca received the loan guarantee from the government.
Thank you, sir.
I'm no fund guy (except for VGPMX, which was very good to me over '05-'06), either.
Until I move things to Switzerland (I think I will accelerate things, now), I use Vanguard as my broker for my SDS bet.
The SEC is a criminal organization. If a person thinks that there is consumer or investor protection ? forget it. CCox is a "free markateer" which means he is part of the fascist movement....
Why do you think they replaced Bill Donaldson ?
jg,
Just butting in, but look very carefully at the prospectus material. I have reviewed Vanguard and find only The Treasury Money Market to have "safety", which depends on The Fed staying in business, which at this point is not a given! Vanguard has lots of things like VIPERS and repurchase agreements and embeeded nasties, so please do your DD! This goes for every fund, but IMHO, we are entering a liquidity trap, so there is no where to go really.
SEC's Cox is the same Cox who has been the ultra-conservative, Republican Congressman from Orange County, California. His family made a fortune supporting the Cold War as translators of Russian doc's for the USGovt.
While he attended Harvard (law school), the president attended Yale and some other name MBA school.
Cox was born with a silver spoon in his mouth. He has forever been a laissez faire promoter. He is the wrong man for the job...yet another in the endless stream of incompetent choices by the Bush Administration.
Nothing said by this man is trustworthy without your own challenge to yourself as to its accuracy.
Thank you for butting in; I appreciate thoughtful comment.
I look forward to the market crash, getting out of SDS and into physical gold, held in a private Swiss bank.
Ben's new plan. Each dollar has "$1" printed on each of the four corners. Tear each dollar into four quadrants. These quadrants are now worth $1 each as is marked. Problem solved. Off to the beach.
Homedad:
Thanks for the Barrons link. Now that I know the term its easier because I too believe that debt depreciation is the greatest worry. We saw it at work recently in the dumping of munis.to allo
All the major players may seem independent competitors. But they are in fact all strongly interlinked. They can each rise or fall slowly but a sudden fall can bring almost all of them down. So Bernanke needs the unwinding process to proceed slowly.
More importantly he has to establish himself as wise and powerful leader.
Don't smirk. The Munchkins needed the Ozwiz. The sheepies need a shepardie.
The scariest thing for most is not that the Devil is in charge. It is the thought that Nobody is charge.
Bush long ago lost what the Chinese call the "Mandate of Heaven". Only the fringe utterly most fearful of not having any Leader empower him.
So in this crisis BB has to go from tent to tent convincing his troops that he will lead them to victory at Argincourt.
I do think if he can establish himself as a wizard, then he may well be able to orchestrate the transition to a better system
Is today's Bear Stearns conference call available to listen somewhere? Thanks.
"Is today's Bear Stearns conference call available to listen somewhere?"
For entertainment, right?
Bear Stearns
Inspired by South Park this week... (I think I skew the younger demographic here)
Tried to amend my inflationist habits, Make it nearly seventy days,
Infusin' not without speed, just what I need, using up all of our juice and soakin' up shorts...
But at night I'd have these wonderful dreams, Some kind of airborne treat, Not zucchini, Roubini, or some elite, But a helicopter and a huge bag of green....
Crash-burger is paradise!
Heaven on earth take the chopper high!
All too big-to-fail, not too precise!
I'm just a crash-burger in paradise!
If you'll just come to my window, Don't chapter eleven I won't screw the builders, Big kosher bailout and a cold hard screw, Well, God Almight, which way do I steer, For my crash-burger in paradise!
Heard about me I'm 'Copter Ben,
I do the same thing again and again,
Warm beer and bread, I will raise the dead. Hell, trust me we won't ever have Weimar again
But times have changed for bankers these days. When I'm a-food I give them they need; Not just Havanas or Kirsten-as, or daily-fees, But that American creation I feed!
Crash-burger is paradise, I don't care I'll retire nice, Heaven on take the chopper high, I'm a crash-burger in paradise!
Well, I hope it makes sense... learning from you old fellas is entertaining...
if the fed dudes and tres sec didnt sleep last night, and they sent in fed examiners, i am wondering what they will come up with before monday morning. thats the Q?
that article on a bank holiday has me thinking that it is a good thing we have the weekend to do some visible handshakes!
isn't it really all a confidence game when it is boiled down?
ben and paul, get some sleep!
The main thing to be done this year, is for Bush to call off his poker game with Iraq and to stop making more bets, and doubling down. He needs to come clean and walk away from the table and bring the troops back home.
What should have happened in the first place, was to initiate surgical strikes and to have a faster moving force to destroy the majority of the enemy, versus taking $3 Trillion dollars to attempt to bring democracy to a bunch of tribes that wanted us all dead. Did bush fail to watch TV during The Vietnam War, or is he just unaware that there is no solution there? How many lives will it take to know the real cost of this stupidity?
I don't really know the facts on Bear, but things are not that complex, but more complex then a simple 'don't sweat it.'
There was a lot published on the E*Trade site when they were melting down.
If you have a cash account, it should be simple. A margin account might be more of a problem to sort out. The SPIC should be able to cover losses, if any.
What kind of sweep account do you have?
One other factoid....E*Trade has a $10 million policy with Lloyds of London which they were pitching. Problem is, the $10 million is an aggregate limit, so it is more or less worthless. That is, the $10 million covers everyone, not just you.
The most likely outcome probably isn't too bad. It is probably too late to panic -- the hedge funds took their money this week. If you try to move a retail account Monday, it will be a pita.
Even the pb clients said they didn't think there was much risk (at least before they pulled their funds out), but their thinking was there was no reason to take any risk they weren't getting for.
I wouldn't be too worried, but I didn't want to take any risk that was uncompensated, so I took almost all assets out of E*trade, but gave it a week or two to settle down.
Oh for Chrissakes. It all happened at 5am est. Hoocoodanode.
Horse poop. Why believe these ass wipes now.
Grrrrr.....
Cheers,
BSC is releasing 1Q earnings and having a conference call Monday morning.
Newsticker
They somehow have 'fiscal' quarters ending Feb, so they just pushed up the announcement.
The results will probably be fine, although not particularly useful given their sudden loss of liquidity.
Anyone think that big spike early in the week was a last chance for insiders, brokers and wall streeters to bail before The bear news? I thought that was a very bogus move, either by PPT with The Fed or something not right or normal, but in the wake of bear exploding, funny how that uptick was so large! Me thinks this is retarded:
The lady doth protest too much, methinks.
Gertrude, scene ii
Why, look you now, how unworthy a thing you make of me. You would play upon me; you would seem to know my stops; you would pluck out the heart of my mystery; you would sound me from my lowest note to the top of my compass; and there is much music, excellent voice, in this little organ, yet cannot you make it speak. 'Sblood, do you think I am easier to be played on than a pipe? Call me what instrument you will, though you can fret me, you cannot play upon me.
Hamlet, scene ii
Here is a table of the assets, tangible equity and leverage of the big five Wall Street banks.
ticker Assets Equity Lev (Assets/Eq)
GS $1100B $37.7B 29.2
MS $1000B $27.2B 36.8
MER $1000B $26.8B 37.3
LEH $690B $18.3B 37.8
BSC $395B $11.8B 33.5
So if their assets decline in value by 3%, they are wiped out.
This answers the question of why the Fed needs to prop up the AAA tranch of CDOs and why S&P has recently declared the end of the subprime write downs.
Basically, they are all probably on the edge of solvancy. If one of them fails and has to sell their assets in a fire sale or declares bankruptcy, then they will all need to write down those assets to market value. That would be at least a 3% writedown of assets and that will probably bankrupt all of them. Somehow the powers that be need to stop any such things from happening. Of course if the big 5 go down, it will just spread to the next layer of leveraged financial institutions. Where would it end?
So how will this end? All of these need infusions of real capital. Where will it come from? Who has hundreds of billions of dollars that they might want to invest in these banks?
Foreign central banks ($trillions)
Sovereign Wealth funds ($trillions)
The Fed ($unlimited)
The US government (can borrow unlimited amounts from the Fed)
That is about it. These players now get to argue over the spoils of Wall Street.
Fishy story -
How is it that dear old Gretchen has a hard time splaining the nuances of mortgage finance shadenfreude, but we get from another reporter at the same paper a Minute-by-Minute account of the Fed,BSC,JPM,PPT daisy chain from the caribean, to 5th ave, to detroit, all the very day that it's supposed to have happened.
"Was surprised at choice offered, too. She doesn't want too much help from me so I just offer some generalized comments on sectors"
This is, frankly and plainly, disgusting. Homedaddy43 doesn't realized he is oh-so part of the (continuity of the) problem. unbelievable.
On a conference call at 7:30 p.m. Thursday, officials from the Securities and Exchange Commission and Bear disclosed to the Fed that Bear had lost far more of its liquidity that day than it had realized.
Bear might be lying. But, they might also have been caught by counterparty risk. There's rumors about Lehman, too, suggesting maybe it is something that happened to several people with a bang.
Very good, DaveJ. You get a cigar. You're thinking what Conjure and I are thinking.
S&P and Moody's are probably complicit. Conjure and I now think it likely they received a courtesy call from Ben. The exchange of angry letters between MBIA and Fitch seems to provide the answer here.
I would like to know who people think are getting bailed out. It isn't BSC shareholders.
Read a little about bank failures in the 30's and get an sense of what a run on a bank is all about.
You can get a cascade where solvent institutions, which include those that we (the government) are already on the hook for get blown up by liquidity issues.
If anyone thinks a panic is a good way for 'price discovery' they are talking their book.
we're gonna hear some crazy sh*t between now and monday morning. any guesses?
So...-
I don't disagree with you that the results of not intervening in the markets would be catastrophic. But you haven't made a case for why intervention would make things better. Ultimately, all the unwinds that you forsee will happen. I don't see intervention as helping.
As an example, everyone from Jim Cramer et al has been screaming for Fed rate cuts since the summer, saying the sky will fall if it isn't done. Well, the Fed did the markets' bidding, lowering rates faster than at any other time in history. What's happened? The financial sector is still facing bankruptcy, hedge funds are still imploding, credit markets are still frozen, spreads are still skyrocketing, and agency debt is still becoming suspect and impaired. But thanks to the Fed, on top of all that, the dollar is now plummeting and inflation expectations are soaring. Heck, the 10 year treasury rates have increased while overnight rates are slashed.
All of our economics friends gave the Asians some very sound advice during their crises: let the banks fail, clean up the mess as quickly as possible, and restart your economy on a sounder footing. Yet when it comes time for us to take the same medicine, we balk.
Tell me (and I ask this sincerely): how does extending a 28-day repo prevent all the things you talked about from happening?
1) Fannie and Freddie spreads are going up because people are worried about the quality of debt that they hold (and are about to hold with the new raised conforming limits), while starting to ask the very serious question of how much they're willing to depend on their implicit govt. guarantee.
2) Counterparty risk is a well-documented problem. Again, if people who entered CDS contracts didn't account for that, then they should lose. Not necessarily because I enjoy seeing companies go bankrupt (anymore than a parent enjoys spanking their child), but because if you don't allow it to happen, then the next time some "genius" re-invents the concept in 10 years, people will be more cautious about creating a 400 trillion dollar market without understanding all the attendant risks (what entity in the entire world can be expected to guarantee against counterparty risk in a market that enormous? Particularly one as complex and opaque as CDSs???)
3) As much as I can tell, the end-result of the series of "shitstorms" that you outline is that treasury rates go up, and agency rates go up higher. Good. Every economist out there is saying what got us into this mess was interest rates that were too low, and housing loans that were too easy to obtain (not to mention incredibly low risk premiums for products like junk bonds). As painful as it is, your end-result is the correction that we need. And the faster we get there, the sooner we can start to rebuild. Unless you want to be like Japan and lose a decade in a hopeless battle to prop up institutions and markets that should be allowed to die.
4) It's funny (in a grim, gallows-humor way, I concede
that Wall streeters think that the world will end if they die off (otherwise known as systemic risk or "we're too big to fail"). Remember that when the last asteroid hit the earth, it may have taken out the dinosaurs, but it didn't extinguish all life. If the services that the financial industry provided are truly needed by the rest of the country, new firms and new markets will arise to fill that need. Those firms may be in Mumbai or Shanghai or Dubai, or some other country with hoards of capital. But it will come about. Quite frankly, I'm more concerned about the loss of manufacturing in this country and their attendant high-paying jobs and exportable products than I am about the destruction and/or outsourcing of the financial services industry (perhaps I'm discounting its importance too much; I suspect the truth lies somewhere between our respective perspectives).
Stinky, as I said here some days ago, the Fed has the power to go into the business of building submarines, if they want to use it.
My concern is that, with so many IBs ready to throw in the towel, they may see this latest episode as a way out. If one of them does, get ready for another IB to fold next week.
It's just human nature.
Frankly, I think Morgan Stanley is next up on the list. In fact, I expected them to go first.
Lowering rates isn't going to do a goddamned thing to solve this problem.
Not now.
This is, frankly and plainly, disgusting. Homedaddy43 doesn't realized he is oh-so part of the (continuity of the) problem. unbelievable.
anoninCA | 03.15.08 - 1:13 am
So maybe I'll give her a Che Guevara poster for Xmas. Perhaps I'll feed her a copy of some of the stuff on the Trilateral Commission and the Freemasons. Hey, how about a beret a la Patty Hearst?
The problem?
The problem is that we bought into a pipe dream and wildly overextended ourselves. The problem is that we stripped the governor off of the engine and tossed it down the road about a mile back. The problem is not the stock market and buying or selling stocks...the underlying value of something. The problem is ultimately that we took our eyes off of the ball and went on an extended tour of whereever it was.
Perhaps you want a barter economy? Some were reduced to that in the '30s and according to family, it sucked.
Like I said in the last part of that post, the lights are going on. THAT is the point of this, not how much is she going to make as an uberanalyst.
Give me a break.
lune,
Great post!
Re: Unless you want to be like Japan and lose a decade ...
I think we will take the 10 year plan, because Bush will obstruct progress, and the next elected president will be sitting at the dock as Katrina comes ashore, and thus, that's about 5 years of nothing, and then, as 2020 looks not too far out, another Bush will come to power and destroy any progress that is made. Go figure.
I posted this thought over at NakedCapitalism last week, which is, as a society, a global network, we have lost the simple ability to value "money". We don't know what money is and in the cross-linked, hedged world of synthetic derivatives which are fueled by credit debt and subprime loans, packages and pools or collateral linked to derivative laced trusts that connect to money markets and on and on, people simply have no clue what things are worth. They can't value, stocks, homes, autos, bonds, CDOs, SIVs, SPVs, Treasury notes, etc, etc! We have a world filled with financial retards and anyone that is in power, got there by nepotism, they had a pal, like Paulson, or Warsh, or Ben or Bush......disgusting aint it!
jg - Regarding Swiss banks and physical gold, make sure to ask and be certain that it really is. The last time I checked (years ago now), I got stories about certificates, etc., etc.
mp - I'm curious, where do you and Conjure keep all those shinies when you aren't playing with them?
"How come no one was surprised?"
LOL, REBear, good question. This is a first.
Are we finally leaving behind the "hucudanode stage"? Had to happen sometime I guess.
Ain't it funny how for all the hatred of Herbert Hoover his legacy was the most economically successful nation ever?
Just sayin'
The New Bernanke Dollar is now available from the US Mint
CertainRuin - a stock picker's record: The New Bernanke Dollar
Sorry for the mispell. That's Hucoodanode, I believe.
Maybe now that everyone knows, the word'll become obsolete and we won't have to worry about the spelling anymore.
waiting - Everyone doesn't know everything yet. I think Hucoodanode has got a good 6 months to a year left in it.
mp
Yeah I am sure S&P has been talking to Ben. I don't think he told S&P to lie. Rather what he said is that the Fed was willing to buy the AAA tranche and so it is no longer very risky. S&P then said, "Yeah, I guess you are right. As long as the Fed is willing to buy it, it must be AAA."
Something like that.
Or the Fed might have said to S&P. "If you drop AAA from the AAA tranche, then you are not going to have any customers anymore because every bank will fail. Then you will fail. So you are better off lying and calling it AAA since then all you have to face is possible lawsuits."
Seems logical enough to me.
Short the market if you see any unusual activity at night in either Bernanke or Paulson's house.
We can call somebody who's living in the tent city in front of BB's house and ask if the lights are on.
homedad43: I think what anoninCA was getting at was, regardless of what you perceive in the market, you are essentially teaching your daughter to gamble.
The stock market isn't about buying a piece of a company anymore. Yeah, sure, you could say that I own a very small fraction of Google, but you know what? I really don't. I own a completely speculative vehicle based upon Google's future.
So, in the long run, the lesson that your daughter (and everyone else who plays these simulations) is to try to predict the future and outguess the most intelligent financial minds out there (who have real skin in the game). You may as well be teaching her how to play the Pass/Don't Pass line.
The lesson she needs to learn (which is the same lesson that I'll be teaching my daughter when she grows old enough) is about preservation of capital. Speculation vis a vis the stock market is only one very risky way to preserve your capital. She could have a much, much more insightful lesson in learning about, say, why AAA-rated bonds aren't as safe as we think, and why a 5% return on a CD in this market isn't a bad thing.
If Cheney is on the conference call, we can sit back and wait for the ambulance.
I've been following the Levy Forecasting Center since 2000, when they had a lot of spot on commentary about the economy. Here's a note from Alan Abelson's March 10 column in Barron's:
But as Jay and David Levy, father and son proprietors of the famed Jerome Levy Forecasting Center, contend in their latest commentary, this is a much different animal than the tame and docile recessions we've grown accustomed to.
Never, they point out, "have such broad and severe credit-quality problems preceded a recession. Recessions cause burgeoning financial problems to intensify, not recede. Credit problems lag the business cycle, not the other way around."
Not surprisingly, then, they mock as "bizarre" the popular notion that the economy will rebound smartly after only six months of negative growth. Instead, they warn, "The financial damage accompanying the recession will be unprecedented in modern history and the economic consequence will be dire."
Of course, they probably haven't factored the Wright Model B into their projections.
"homedad43: I think what anoninCA was getting at was, regardless of what you perceive in the market, you are essentially teaching your daughter to gamble."
Mark, you must be doing really really terrible in stock market to dispense advise like this. Give me a break, you are not successful doesn't mean other can't be successful in investing. Can you tell me how do you save for your retirement if all you do is protect your money by investing in CD? or pay for your kids college tuition or buy the first house.
Homedad speaks of Agincourt: that was a seminal event in warfare where technology far outstripped strategy, the next time that happened was WW1 with the introduction of the machine gun, the tank, the airplane, gas and mechanized transport...
Agincourt was all about the English longbow... the only part really Henry 5th had in it was in our romantic imaginations (thanks Will)
consider financial engineering technology today and risk strategy... have we outstripped ourselves?
Davej, thanks for explaining the situation so that even I could understand it.
My money's on the Saudis.
Financial Times: "There is a whiff of 1929 about all of this."
FT.com / UK - Exit Bear, pursued by its creditors
o worries, the VP has been dispatched to the Middle East to clear up the oil price problem. And its a good thing, with the future GCC countries contemplating a drop of the dollar peg.
Dow up 800 monday!
lol!
oh yeah, forgive me for being uninformed, but what happened to the bond insurers? everything solved itself? i missed that piece of the puzzle.
Here is a table of the assets, tangible equity and leverage of the big five Wall Street banks.
ticker Assets Equity Lev (Assets/Eq)
GS $1100B $37.7B 29.2
MS $1000B $27.2B 36.8
MER $1000B $26.8B 37.3
LEH $690B $18.3B 37.8
BSC $395B $11.8B 33.5
Leverage means borrowed money.
WHO WAS DUMB ENOUGH TO LEND THESE HUGE AMOUNTS OF MONEY TO THESE INVESTMENT BANKS?
I do not get it, who were the lenders of these leverage?
Fed Aiding & Abetting criminal,
If you look at this from a network perspective, then yes we have. Fundamental characteristics of the network - in particular its latency, have changed over the last few years, and the effects of that are more far reaching than we've realised.
Networks are real time systems, and there are rules about how information behaves in that environment. Those rules, and some of the states that the network can occupy change quite dramatically with latency changes. I don't think economics has even started to realise the implications of that yet, or if it has i haven't seen it.
So if there is any validity at all in the supposition that money is in some sense information in a real time network sense, then we're basically screwed. But i think we already knew that, anyway.
System effects now dominate.
-- w
Fed made matters worse says Carlyle
FT.com / UK - Fed just made matters worse, says Carlyle
Uh, oh.
WHO WAS DUMB ENOUGH TO LEND THESE HUGE AMOUNTS OF MONEY TO THESE INVESTMENT BANKS?
Your pension fund. The banks borrow through the commercial paper and bond markets.
When everything was going great they were earning a lot. They also had more capital and so didn't look as leveraged. However after the huge writedowns, they actually had a lot less capital.
xofruitcake writes:
Mark, you must be doing really really terrible in stock market to dispense advise like this. Give me a break, you are not successful doesn't mean other can't be successful in investing.
Actually quite the opposite. I have been very successful in my stock picks. But that's not my point. I'm a successful gambler. Most other people are not, because they don't have the time or ability to do proper research. Let's be honest here, just how many blue collar folks do you know who bought into SKF?
Can you tell me how do you save for your retirement if all you do is protect your money by investing in CD? or pay for your kids college tuition or buy the first house.
This is how sad and pathetic our society has become: the perception that if you don't play the stock market, you won't be able to retire. That is absolute crap. The way to wealth is through saving what you have, not by putting it all on 23 Red. I'm sorry if you didn't start saving up money at an early age (which makes the whole process easier), but them's the facts of compound interest.
warlock,
I just came back to look and see your message.
One of my on-going interests is the general concept of entropy. I think society is becoming more fragmented as a result of "the network", which may seem ironic in terms of the network being like a substrate that holds data in a unified field, i.e, you would think the mass organization of data would be efficient, but I see it as compounded errors that multiply inefficiency to greater numbers of people or nodes, which rely on inaccurate information. This goes back to the topic of not understanding money, or even the flip side, that too many understand too much about money, which is really funny! I doubt that to be the case, because there is too much confusion as to what valuations should be, e.g, the valuation of Bear is somewhat in the air tonight, as is the valuation of everything in the network.
Something just occurred to me, Bernanke, as he came to power, suggested he would be very visible and The Fed would be more active; guess I should do my DD on that, but the point just came to me that we have a very hyper Fed that is intent on over-reaction to realtime data which is tainted. The Fed is under-staffed, over-worked, inefficient, stressed and not able to control data or to model financial systems. They are failing, because they should have 7 members and the overload of realtime systemic collapse is obviously not helped by inexperience and highly complex chaos.
Oh well, go find Warsh if you can.....LOL!
There's a big difference between 10 years and a relatively orderly unwinding of stressed positions.
I don't have that much faith that the markets that have bid up housing to an unrealistic level can instantaneously get to a 'correct' price.
If markets were so efficient, we wouldn't be in this mess in the first place.
There is already a lot of friction and other crap that is distorting things. i am thinking especially of financial innovation, and the fact that no one knows how it will preform under unprecedented stress.
Robyn sez:
"It's better to think of what people can do to help themselves personally - and to think how we as citizens can help our country manage its way out of this mess - than to stand on the sidelines and cheer on destruction. The latter talk reminds me of people burning down their own cities in the US quite a few years ago - and people standing there applauding them. And where did those actions get those cheerleaders?"
Which riots, Robyn?
The ones following the savage recorded beating of Rodney King by white cops? Or further back, the ones following the assassination of MLK? And why is it that I think you neither know nor care -- could it be because your blithe reference to these miseries reduces history's actors to puppets in your imagination, where you can make them dance and shake your finger at them?
This meltdown isn't about "our country" and what "we as citizens" can do as much as it is about a wanton class of gold-toothed pirates whose ship went marauding with no look out and now has run aground and sprung a most bubbly gusher.
They'll thank you for walking the plank for them, of course. Do not forget that while sailing the good ship America into this catastrophe, they gave no thought at all to the consequences; nay, matey, they just wanted more gold!
By all means do what you can "as a citizen," Robyn, whatever the hell that means in relation to big capital. Hold a bake sale. Let a Bear Stearns junior executive pitch a tent in your back yard. When you get tired of Stockholm syndrome, you can join the effort to regulate these SOBs so they can't do it to us again.
Mark:
Nothing wrong with that. I don't know when we would have ever gotten around to developing probability theory without games of chance.
I agree that a lesson on the difference between investment and speculation is a good place to start, and starting with bonds instead of stocks.
As far as AAA, you must mean CDO's -- There are very few AAA's that aren't government or agency stuff, which will do fine. If bona fide AAA stuff collapses, I wouldn't see FDIC far behind.
For the history books & FYI:
Maverick freethinker must adapt to life as new Fed chairman
By Christopher Swann in Washington
Published: October 24 2005
Although Ben Bernanke was considered the frontrunner to replace Alan Greenspan at the helm of the Federal Reserve, he has established a reputation as an intellectual provocateur rather than a policy leader.
FT.com / World - Maverick freethinker must adapt to life as new Fed chairman
Re: He quickly revealed a knack for sparking debate within markets and policy circles. When fears of inflation emerged in the winter of 2002, he grabbed the attention of markets by hinting that the Fed might use unorthodox measures, including printing money, to stave off deflation. This talk of unconventional monetary policy was important in reassuring the market that the Fed would do what was necessary, says Stephen King, chief economist at HSBC.
See Also: output gap model"+deflation^+"Phillips Curve"
Bonus material Package (oh My God):
Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here
But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8
hus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.
8:Keynes, however, once semi-seriously proposed, as an anti-deflationary measure, that the government fill bottles with currency and bury them in mine shafts to be dug up by the public.
As far as the 33x leverage of BSC, I was looking at the 10k holding company balance sheet and they had about $100 billion of assets, $15+ in cash and over $10 billion in capital.
I saw the table at the end with the 33x, but couldn't figure out how they got there.
Not that 5 to 10x leverage can't get you killed off pretty fast.
The real take away is that it isn't obvious what the hell they actually do. They seem to do a lot of it, and some of the stuff, sure. But I wonder how many people have really tried to read the 10k with all the risk factors and Byzantine tables and feel comfortable about owning it.
I'm probably as far left as anyone on this blog, but I can see the benefit of these stopgaps.
It may not work at all - matter of fact, I suspect that it'll be a lot like trying to stop a tsunami with a boat paddle but it would be stupid not to try.
There is a difference between an orderly liquidation and instantaneous collapse. There is still some small hope that retarding the inevitable meltdown might reduce it's severity and contagion of healthy institutions. A panic is not a good thing. I don't want my tax dollars bailing out some Wall Street fat cat either - but those guys are long gone. Mark my words, the major damage is going to be done to little guys. Their pensions, their 401ks and yeah their taxes.
I notice that there has been an Enron style employee lockdown on selling the shares - anyone wanna bet that upper management sold tons before that key was turned?
If you have any kind of asset anywhere in this country right now, it isn't safe. The right moves now by the Fed just might protect some of those assets until we can get some responsible leadership in Washington. Enough of the wrong ones and nothing or no one is safe.
So let me get this straight..BSC is not a bank, so it shouldn't have been helped. And legally, it couldn't be, directly, so help had to come through loans to middleman JPM. Now, since the Fed doesnt owe BSC anything, and legally shouldnt have helped, and chose to help anyway, it had to believe that it was too risky to the financial system for BSC to fail. BSC is one of the smallest IBs, so all investment banks are now too big to fail. (Moral hazard creation, bah humbug) So, next, all IBs too big to fail, CFC too big to fail, CFC forced to merge with BOA, and now BSC forced to merge with JPM. So now, the merger is a way to somehow pretend these losses arent real? Can someone perhaps splain me how anyone buying these turds is changing anything about the reality of the junk out there that used to be a blow up boom credit bubble of ultraexpansionary power that basically was the only thing driving our economy? What synergies will take place that could possibly make up for the excess? Isnt this a way of still pretending it is a liquidity problem? Granted, a liquidity problem would have been what killed BSC, but that junk is still floating around in space, and if BSC couldnt handle it, what makes anyone think that BSC + JPM has enough liquidity? Im not buying it (literally)
@ jg You still around? Do you have first hand experience depsositing Au in Switzerland. The last time there three years ago I couldn't find a bank that would do a safety deposit box w/o a minimum of $200,000 savings acct. Any suggestions for smaller fry?
Yep, everybody seems to be right. Can't solve the underlying problem, can't just sit and do nothing. Zugzwang Just got to wait for tomorrow.
And for those complaining about other people complaining about our leaders,...Well, what else is there to do? You think that if we all pull together as a team it'll make a difference? Reminds me of a song,...
Everybody else is just green, have you seen the chart?
It's a hell of a start, it could be made into a monster
if we all pull together as a team.
And did we tell you the name of the game, boy,
we call it Riding the Gravy Train.
,...not in the same context though.
Bank Of China unzips, swings:
Bank of China eyes expansion in Asia, Middle East
| Reuters
By Zhou Xin
BEIJING, March 15 (Reuters) - Bank of China (3988.HK: Quote, Profile, Research) 601389.SS on Saturday ruled out swooping on Western financial institutions felled by the still-spreading global credit crisis.
"We certainly will not buy into institutions like Bear Stearns," Xiao Gang, the chairman of China's fourth-largest bank by assets, told reporters."
article closes with this:
Bank of China, the country's largest foreign-exchange lender, expects brisk expansion in its overseas lending this year, the chairman said. Syndicated loans would be a particular priority.
"As we all know, many overseas banks have less money to lend," said Xiao. "We can take the opportunity to find good projects." (Reporting by Zhou Xin; Editing by Alan Wheatley)"
Sorry, but I don't really see the 'fascination' here.
So, these banking guys (Bernanke, Paulson and Steel) are going to "lend/give" taxpayer dollars to an insolvent company and knowingly accepting worthless collateral in return. And, they announced that the three of them had a secret meeting about it, beforehand.
Isn't that called conspiracy to commit fraud?
"Isn't that called conspiracy to commit fraud?"
It is just the way it is.
Just create a plan and work your plan.
@Drew 10:57pm,
A majority of Bear's client list is or will be defecting
Ah, yes, OK. At first glance I thought you might be suggesting the clients were sh*tting themselves.
I am surprised at how openly people are talking about Lehmans going under. No bank can survive that kind of talk unless savers or lenders are given guarantees they will not fail as a working business to take risks with scare capital.
And then there are the endless Citi rumours - the worlds lagest bank.
Confidance is collapsing.
I dont see how this can be changed unless the population of the USA get control of their own money.
Without trust no banker can save himself from ruin. Trust up till now has all been built on smoke and mirrors.
Risk Capital please tell me what i dont understand about capital markets
What am i missing here??
@Duke of Con Dao,
Agincourt also had a seminal impact on social thinking.
The French elite were fully aware of the potential of the longbow; they had in fact specifically banned it (along with everyone else on the European continent) because in their view it was IMMORAL for the common people to have a weapon which gave them a chance of killing armoured knights on horseback (I.e their feudal masters).
Crossbows were grudgingly accepted because at the time they were expensive technology which required specialist handling, plus their reload rate was slow enough that a determined cavalry charge would still succeed against them. Crossbows were also a target weapon, whereas the English used massed longbow volleys as an area-effect weapon like a medieval cluster bomb.
@Worried,
One of the better themes on the CNBC review of the Bear issue was that such rumours could be self-fulfilling in the current climate.
I call bullshit, ozajh.
Try to start the same rumor about Berkshire Hathaway.
It ain't the talk.
It's price declines on massive leverage.
No amount of shutting up will fix that.
ozajh
Do you have a link for that?
I keep thinking we are not as far down this path as we have come. I am in Finland. Nobody knows about a credit problem here. Nothing different. Similarly my Berlin friends or New zealand friends know nothing but then i go to the MSM in the USA and its like openly talked about now......
I often think it is best to keep my thoughts to myself but it seems the gig is up and everybody now knows it.
Insteresting times for sure!
I met a guy who works in upper management for UBS in tokyo a few days ago, he is of course annoyed that his pay packet was raped by the UBS ticker last year, but thinks his options will come back eventually. He doesn't believe in doom and points to china. He thinks that even a full-on US recession is not going to knock back chinese growth more than a percent or two. The flight from cities to urban landscapes is unstoppable. And they need every commodity the planet can give them.
As long as China continues to grow, there will be european, asian and multi-nationals who do very well and the pesoification of all of the US won't really matter much on a global perspective. Not in the long run. It'll just act to close the wealth gap between china and the USA that much faster. Perhaps the oversized military and the 20th century political position in the world gave america economic momentum in the 21st century that it cannot maintain with a mere 300 million people, and is now squandering.
The UK and several other 1st world nations may not be decoupled from the US, but resource rich canada and australia and a lot of multinationals might really be more immune to the larger shocks than some here suggest - all thanks to the east asian growth explosion.
In other words, if wall street goes down into a mess of lawsuits and layoffs and the economy damn near freezes up, Shanghai really might just shrug.
Just a theory..
For entertainment, right?
mp | 03.15.08 - 12:57 am | #
I liked the first question
"What is your current gross notional non-exchange traded derivative exposure?"
There's so much talk about the severity and duration of this unravelling, it's hard to tell exactly where we are and/or how we will know when we've reached bottom.
While I can't say when it will come, I have settled on what I think will be a good indicator of having reached bottom: the end of the downturn will begin with indictments.
They can bail all they want. I'll know they're serious when people start going to prison.
Anybody else notice how history is repeating? It's always J.P. Morgan.
Panic of 1907 - Wikipedia, the free encyclopedia
Complete ruin of the national economy was averted when J.P. Morgan stepped in to meet the crisis. Morgan organized a team of bank and trust executives. The team redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. Within a few weeks the panic passed, with only minimal effects on the country.
Fed Races to Rescue Bear Stearns In Bid to Steady Financial System - WSJ.com
Some time after 6 p.m., Mr. Schwartz called James Dimon, CEO of J.P. Morgan, the second-largest U.S. bank in stock-market value.
...
Mr. Dimon sprang into action. He got on the phone with Steve Black, co-head of J.P. Morgan's investment bank, on vacation in the Caribbean. The group had a number of conversations with Fed representatives, concluding that something needed to be done for Bear, in part because a failure of the firm could have wide consequences.
Worried-
for months I have been telling you that there is a mounting crisis of confidence and the fed and regulators needed to act immediately, for literally months.
It is obvious by this weeks events that the fed and regulators remain behind the curve and choose to be more reactive than proactive. They have chosen to work to far down the food chain and in my opinion this is adding to the crisis.
I will state again what I had stated previously, the fed must immediately, directly back fannie and freddie (you can speak all day long about the implications of such a move, but, this is what is needed). They also must immediately shore up the municipal market through either direct backing or the establishment of a municipal trust with a direct line of credit to the fed. In other words, they need to work from the top of the food chain down.
The underlying problem is and always has been about leverage, bsc catered to the hedge community which eventually led to its own demise, the desire for huge fees led to overexposure to ignored risk due to fast money, flawed models, concentrated positions, etc, etc, etc The money flies throughout the day and chases momentum, the money flew from bsc at the first sign of trouble.
It is all about greed. So now we have a commodity bubble, one that has been driven by the same leverage, the IB's and regulators have allowed this bubble to foster into a market which formally had never seen liquidity like it has in recent months.
In my opinion, margin requirements should be raised immediately to those exposed to this market. The broad economy will only benefit from reduced inflationary pressures which, by the way, were dramatically overstated by the flight of these levered assholes into the space to begin with.
Nemo-
what is interesting to me is that JP Morgan was itself under intense srutiny follwing 9-11 concerning their derivative exposure and was thought to be under extreme stress, now they are considered one of the better positioned players.
Last point worried-
In summary, if they wish to shore up the problems, then shore them up, and stop @#$%^& around with band aides.
Uneasy one is right that an orderly unwind will be far better for everyone than a Panic that brings down potentially solvent financial institutions.
My guess is that the Fed and other central banks will need to do a triage of banks and IBs. Those that are solvent (for reasonable assumptions of write-downs on loans & MBS securities) simply need access to liquidity (as now but made explicit to markets that this will continue as needed). A second tier might not be able to take the capital hit now but could survive if they can write-off losses gradually and/or get capital infusions - both can be arranged and liquidity provided as per the first group. Finally, there are those with too big an exposure to bad debts or too big a level of hard-to-price MBS to be easily rescued. These will need to be run-down or re-organised, in the latter case probably via an RTC or "Bad Bank" operation to take over the bad assets. The difficulty will be dealing with derivative positions - unwinding these for BSC is likely to be the trickies task.
As for Hedge funds, I suspect they'll be on their own. If they're highly leveraged with MBS portfolios, then they're probably dead. Where they have active positions and manage risk well they could thrive - but they'll be a bit like WWI British battle cruisers at Jutland - one big hit and they'll ex(im)plode.
Fun weekend for a lot of lawyers, bankers and regulators.
Canary in the UK
This is how sad and pathetic our society has become: the perception that if you don't play the stock market, you won't be able to retire. That is absolute crap. The way to wealth is through saving what you have, not by putting it all on 23 Red. I'm sorry if you didn't start saving up money at an early age (which makes the whole process easier), but them's the facts of compound interest.
Mark | 03.15.08 - 3:02 am
that's pretty naive
Fed and regulators are going exactly the oppose of what it needs to be done to restore faith in the financial system.
Instead on insisting that suspect models are fixed, suspect ratings are withdrawn, and banks disclose their situations honestly, Fed is using less and less legal ways of helping them hide the losses, bails them out, and lies about their exposure.
So how is this supposed to restore trust in the system from the investors? If I were an investor, all these antics and gymnastics would only convince me even more that the whole system is rigged against me by an evil conspiracy of Wall St. and the government.
Is it maybe why Chinese are not helping with the crisis?
that's pretty naive
Punditry | 03.15.08 - 9:08 am
Sounds conservative and fairly realistic, to me. Have and hold vs. gamble.
yeah, if you want to retire on your own savings, you have two choices:
@Knotrp,
I should have been clearer. Yes indeed, there has to be an underlying problem before a self-fulfilling rumour can gain traction.
JP Morgan this JP Morgan that. The old man was nothing but a Civil War profiteer selling inferior goods and a step'nfetch it for Rockefeller/Rothschild.
risk capital,
While I'd like to see the current system burn to the ground, there is only one painful way to save it. It's the same solution Paul Volker came up with. At the next FOMC meeting the Fed hikes rate 500bps. That should about do it.
I'd rather the whole fiat system burn to the ground but, that might save it.
Cheers,
Misean,
and that is exactly why the whole Fed 'panic' looks fishy.
While they look like they are taking super-duper-extraordinary measures, they don't seem to be doing what would actually fix the system.
Which leads me a scary thought that they are not fighting the disaster, they are just trying to direct where it would ultimately benefit the elite.
I'm sorry if you didn't start saving up money at an early age (which makes the whole process easier), but them's the facts of compound interest.
Interest from savings < rate of inflation
That's the real problem.
yyy: Alternatives are CEF and GTU
Mr. Cayne dialed in from Detroit, where he was playing in a bridge tournament, say people familiar with the matter.
And where, no doubt, he was also losing.
Misean-
thank God you aren't Bernanke!
My opinion is that this situation remains manageable.
Tough period, yes, manageable, absolutley.
Bloomberg had an interesting comment here (which may have been lifted from the WSJ reports)...
At about 4:30 p.m. local time that day Chief Executive Officer Alan Schwartz became convinced'' Bear Stearns was facing adesperate situation'' after securities firms began insisting on cash instead of accepting collateral and hedge funds started withdrawing cash, the newspaper said.
Maybe the "ridiculous" comment at the beginning of the week triggered something that snowballed ?
My opinion is that this situation remains manageable.
If what you mean is that they can manage to rob the taxpayer and the investors while saving every single Wall Street firm, then I think are correct.
maybe we should all go and read Happy News - Real News. Compelling Stories. Always Positive.
and nothing else for the weekend.
you know, as therapy.
risk capital,
I HOPE you are correct. I am a bit more skeptical. I'm not disagreeing with you, rather I'm less optimistic.
Missed Information,
That is not only possible but probable. These kinds of thoughts are what happens when trust breaks down.
Cheers,
ozajh writes:
@Duke of Con Dao,
Agincourt also had a seminal impact on social thinking.
Great points Ozajh!
I'm not sure that the topography of Agincourt lent itself well to that particular strategy.
In WW1 the Continent was quite aware of mustard or phosphine gas yet commanders were locked into an order of battle that negated creative and flexible responses.
That's the corollary I was trying to draw today about financial engineering complexities and their impact on markets.
yyy - Check out bullionvault.com It's probably as close as you can get without going there. In the interest of disclosure, I do have an account with them, and I do worry that their model hasn't been stress tested, even though I don't see any flaws on the face of it.
Some ass hat named Rich Miller is saying that of course the Fed will cut by 75bps.
My Glod! They want to destroy the dollar. Good thing I've got Glod.
Cheers,
Oh btw, I'm watching Bloom TV.
Cheers,
Misean - They absolutely do want to destroy the dollar (or a reasonable approximation), just in a controlled way. It's the only path out from under the heap of s&^t we are in.
MLM,
If you are underwater and running out of air, the best strategy is NOT to swim deeper. Just a thought.
Cheers,
where do I sign up to destroy the dollar? I wanna help.
I much rather do that than destroy Iraq.
Missed Information,
No need for your efforts. The Fed is doing a fine job all by itself. B.S. Bernutty and crew have that well in hand.
Cheers,
Missed Information,
"I much rather do that than destroy Iraq."
Unfortunately, that has already happened....to theirs, and our great sorrow.
Cheers,
The Fed is doing a fine job all by itself.
20% a year is fine job?
Even my former Soviet leaders, beset by retardation, obesity and alcoholism, did a much better job of destroying the currency!
So I would still like to help.
well our soviet leaders had an excuse, as Missed Informaion writes they were retarded alcoholics, what is BiBis excuse?
Missed Information writes:
yeah, if you want to retire on your own savings, you have two choices:
there is a third choice: marry your 401k which is why I'm engaged to the Duchess of Con Dao (there is an embedded irony in this)
Totaly off topic but did anyone see Bloomberg reporting civil unrest in Tibet and simultaneously running footage involving Indian troops dealing with Tibetian monks. Friggin Americans , such kitchy amateurs smometimes.
Missed Information,
"Even my former Soviet leaders, beset by retardation, obesity and alcoholism, did a much better job of destroying the currency!"
Their currency was not the world's reserve currency. Nor was it traded.
At 20% per anum, I think that, given the circumstances, they're doing a (bushism) hellov a job.
Cheers,
yyy,
"Friggin Americans , such kitchy amateurs smometimes."
Sometimes? We have always gone in shooting first and asking questions later. That's why were in the mess we're in.
Cheers,
if you guys follow the link that mp posted with respect to Carlyle you might find something very interesting. According to Carlyle when the fund which as we all know was filled with garbage and leveraged beyond all reason was liquidated in a panic market at firesale prices the banks which had extended the credit lost no money meaning that even in this environment the garbage wasn't garbage afterall
we are in the stage of panic where firms can take advantage of weaker counterparties in order to effectively steal their assets. I would suspect that with bsc being offered up as a sacrifice the fed is going to put a stop to this behavior
all is not what it seems
do the math
don't rely on other people talking their book
david_in_ct
all is not what it seems
does that make you a goliath_from_china?
Their currency was not the world's reserve currency. Nor was it traded.
well, when dollar devaluation is finished, it won't be the reserve currency either. Hell, it may not even be traded!
So why keep the pretenses?
Risk Capital
I think the problem might be the banks want to save themselves and there is no regulator. An absurb situation.
But it needed an absurd situation to have created the mess in the first place
What now?
Things will never be the same it seems
Hard to believe the Fed is going to back the GSE's surely?
david_in_ct writes:
"According to Carlyle when the fund which as we all know was filled with garbage and leveraged beyond all reason was liquidated in a panic market at firesale prices the banks which had extended the credit lost no money"
In the case of Carlyle, the assets held were not the 'garbage', the garbage was the structure of the fund itself -- an irresponsible use of leverage.
In other words, if wall street goes down into a mess of lawsuits and layoffs and the economy damn near freezes up, Shanghai really might just shrug.
Just a theory..
Justin | 03.15.08 - 7:08 am
Please send an advance copy of 'Shanghai shrugged' to Alan Greenspan.
Damn, I miss Banker.
I think I would actually pay to hear his insights right about now.
Nemo,
I was wondering about our friend Banker yesterday when the BSC bailout hit the wires...
worried-
"WASHINGTON, March 15 (Reuters) - President George W. Bush plans to meet on Monday with top U.S. financial policymakers, the White House said, with the meeting coming at a time of increased strains in credit markets.
The White House said on Saturday that the meeting, scheduled at 2:10 p.m. EDT (1810 GMT), is with members of the President's Working Group on Financial Markets."
Bush to meet with U.S. financial policymakers
| Reuters
David/CT
Excellent point that Carlyle's assets were agency securities.
I think the banks were just following the principal of panicing early.
They went from valued customers to deadbeats in record time.
One of the partners said something to the effect of dealing with the collections area instead of the sales guys.
I think the problem is that anyone that loses a single cent by keeping their business with BSC will be considered a fool and fired immediately. It they lost money in a more conventional way, it would just be a bad deal. Losing anything by being the last guy out of BSC would be a total career killer.
But back to Carlyle, the banks could deleverage by liquidating collateral without losing any money. Once the first bank issued the first margin call, it was all over.
The thing I am wondering is what the banks would have done if they weren't agencies.
Would they have been more likely to try a workout if they would have to take a haircut on the loans?
The banks are panicing and liquidating the best credits instead of the worst credits.
Anonymous writes:
"to think how we as citizens can help our country manage its way out of this mess"
Stop spending borrowed money on crap you don't need would be a good place to start and that goes for our corrupt government as well.
Anonymous | 03.14.08 - 11:11 pm | #
Couldn't agree more. Friday we closed on our three bedroom town house sale. We had lived there since 1995 and got the mid-2006 price in a non-bubble area. We were very satisfied. Renting a 2 bedroom condo for now. Trying to protect our cash. Only cash we will spent is to fix up the dents on our 1998 VW.
How do we refuse to bail these rich guys out with hard-earned money? Refuse to file tax en mass. Let's start doing it collectively as a mean of civil disobedience to our phony leaderships in DC.
Bush to the FED: Fix it right now, or we will abolish your a$$, like saddam.
President's Saturday speech
1]many young couples trying to buy their first home have been priced out of the market because of inflated prices. The market now is in the process of correcting itself, and delaying that correction would only prolong the problem.
2] allow state housing agencies to issue tax-free bonds to help homeowners refinance their mortgages.
404 Page Not Found | The White House
Risk Capital
The top US Financial policy makers you refer to are:
A former head of Goldman Sacks
The Fed chair
The Chairman of the Securities and Exchange Commission,
The Chairman of the Commodity Futures Trading Commission,
These people represent the industry. Not the people. These people will save themselves not the people.
Who represents the people?
Tanta perhaps.
Only people like Tanta still believe in the American dream and the dream is so broken now it has a painful cost.
If ever a new deal was needed it is needed now.
Surely?
Maybe,
The investment banks could sell there mortgage holding back to the home owners. If its a fire sale anyway, it could be a good way to put a bottom on the housing market, I might buy my mortgage for 80 to 90 cents on the dollar. It's one way to move illiquid mortgage assets, put a bottom under housing, add liquidity to the banking system and put a value on these securities. I think it's better than any government bailout scheme that could cause more people to default to get a gov't sponsored deal.
"WASHINGTON, March 15 (Reuters) - President George W. Bush plans to meet on Monday with top U.S. financial policymakers, the White House said, with the meeting coming at a time of increased strains in credit markets.
The White House said on Saturday that the meeting, scheduled at 2:10 p.m. EDT (1810 GMT), is with members of the President's Working Group on Financial Markets."
People might want to look up Galbraith's discussion of the "no-business meeting" in the 1929 crash book.
anyone in NYC.
I am told large amount of FED peple in BSC HQ.
is it true ?
I support anything that brings destruction and unhappiness to American Women. They definitely deserve it.
Handsey--hunh?
Did you mean to post this somewhere else.
Hmmm, maybe the 600 was intended to prevent a taxpayer revolt? Can't get the bucks unless you file? A fine conspiracy theory!!
anonymous